H.R.2871 - Safeguarding U.S. Supply Chains Act (119th Congress)
Summary
H.R.2871, the Safeguarding U.S. Supply Chains Act, aims to amend the Internal Revenue Code of 1986 to restrict the advanced manufacturing production credit for components produced by or in connection with foreign entities of concern. This bill targets Section 45X(d) of the Internal Revenue Code, specifically addressing components produced by entities defined in section 9901(8) of the William M. Mac Thornberry National Defense Authorization Act for Fiscal Year 2021. The bill also places additional restrictions on qualifying battery components, prohibiting the use of technology designed, developed, manufactured, licensed, or supplied by foreign entities of concern.
Expected Effects
The likely effect of this bill is to incentivize domestic manufacturing of advanced technology components, particularly batteries, by limiting tax credits for companies that rely on foreign entities of concern. This could lead to increased investment in U.S.-based manufacturing facilities and a shift away from foreign suppliers deemed to be a national security risk. The changes would apply to components produced and sold after the enactment of the Act.
Potential Benefits
- Increased domestic manufacturing: Encourages companies to produce components within the U.S.
- Reduced reliance on foreign entities of concern: Decreases dependence on potentially adversarial nations for critical components.
- Enhanced national security: Strengthens supply chains and reduces vulnerabilities in key sectors.
- Job creation: Could lead to new jobs in the manufacturing sector within the United States.
- Protection of intellectual property: Reduces the risk of technology transfer to foreign entities of concern.
Potential Disadvantages
- Increased costs: Domestic production may be more expensive, potentially increasing the cost of goods for consumers.
- Trade tensions: Could strain relationships with countries considered "foreign entities of concern."
- Limited supply: Domestic manufacturers may not be able to immediately meet demand, leading to supply chain bottlenecks.
- Retaliatory measures: Foreign entities of concern could impose retaliatory trade restrictions.
- Reduced innovation: Limiting access to foreign technology could stifle innovation in certain sectors.
Constitutional Alignment
The bill aligns with the Constitution's broad goals of providing for the common defense and promoting the general welfare (Preamble). Congress has the power to regulate commerce with foreign nations (Article I, Section 8, Clause 3). The bill does not appear to infringe on any specific individual rights or liberties protected by the Bill of Rights. However, the specific definitions and applications of "foreign entities of concern" would need to be carefully scrutinized to ensure due process and equal protection under the law.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).