U.S. Supply Chain Resilience to a China Shock: The Case of Chemical Products

22 Pages Posted: 9 Sep 2023

See all articles by Joseph Zenick

Joseph Zenick

American Chemistry Council

Keith B. Belton

American Chemistry Council

Date Written: September 8, 2023


In the aftermath of the 2020 global pandemic, the Biden Administration set out to enhance the resilience of U.S. supply chains. It has undertaken dozens of policy actions and declared mission accomplished. But China—with the largest share of global manufacturing—represents the true litmus test. How vulnerable is the United States to a supply chain disruption originating in China? And how can the United States most easily reduce its highest vulnerabilities? Choosing chemical products as a case study, we answer these questions. First, we identify how U.S. vulnerabilities have changed in the 21st century. Vulnerability in chemicals is growing, but the problem is still relatively small and tractable, and the United States is operating from a position of strength as its capabilities continue to exceed those of China. Second, we identify the most vulnerable traded goods based on two criteria: low domestic production capability and high dependence on Chinese imports. Of the 1,077 internationally traded chemical products based on harmonized system (HS) codes, 16% pose a high vulnerability. These vulnerabilities can be further prioritized based on China’s global market share. Third, we identify opportunities to reduce high vulnerabilities, identifying 11 products where onshoring would be easiest to accomplish, with four representing strategic bets offering the greatest societal benefit. We also identify 30 chemicals as onshoring opportunities for new federal incentives promoting domestic manufacturing in electric vehicles, computer chips, and infrastructure materials. We conclude with three policy recommendations for the Biden Administration: (1) Employ our methodology to inform efforts to enhance supply chain resilience; (2) Leverage federal resources in the CHIPS Act, Infrastructure Investment and Jobs Act (IIJA), and Inflation Reduction Act (IRA) to reduce high vulnerabilities through onshoring; and (3) Regulate domestic manufacturing without impeding U.S. capabilities to make the most complex products.

Keywords: supply chain resilience, industrial policy, Made in China, chemical manufacturing

Suggested Citation

Zenick, Joseph and Belton, Keith, U.S. Supply Chain Resilience to a China Shock: The Case of Chemical Products (September 8, 2023). Available at SSRN: https://ssrn.com/abstract=4566355 or http://dx.doi.org/10.2139/ssrn.4566355

Joseph Zenick

American Chemistry Council ( email )

1300 Wilson Blvd.
Arlington, VA 22209
United States
12027403368 (Phone)

Keith Belton (Contact Author)

American Chemistry Council

700 2nd Street, NE
Washington, DC 20002
United States
2022496219 (Phone)

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