Import Controls, CCP Industrial Policy & Supply Chains Hearing — September 16, 2026

31:00It's way through the process, but I wanted if you could talk about why these bills are important, why there's an urgency for us to act, and why Congress should be taking the initiative on this.

31:22Sure, I'm happy to start.

31:26One thing that we're noticing is that China is pursuing scale where they see connectivity, physical control, and then market concentration. And it happens to be in the robotics and vehicle space. These are not just cars.

31:41They're Huawei with wheels. These aren't just robots. We're already seeing the Chinese start to incorporate humanoid and quadruped robots into PLA planning, including for the invasion of Taiwan. I think what we have to remember is that the common denominator between these two pillars and sectors is ubiquity of them.

32:03We haven't made a national security risk assessment yet about the threat posed by the sensors that are on these vehicles and what they can collect and where they can travel across our country. And we might not make that determination before they are everywhere.

32:16And then it will be too late. So I think these two bills really address that challenge up front and they do so in a way that has been highly successful on the drone front.

32:24I certainly agree with all of that I would add a couple of things One is that I think it very important for Congress to act on these kinds of issues rather than to leave even similar administrative actions in place.

32:36The legislation both makes it permanent, which is important for negotiating purposes. These are things we are taking off the table from potential negotiations. And second, it creates the certainty that we really need for that domestic investment to come in line.

32:52I think the other thing and this goes to Mr. Singleton's point we should do these now before they penetrate our market. Ranking member Carson highlighted the issue of real cost we face as we try to strip out dependencies.

33:06Anywhere there is something that is obviously going to be very important and we can obstruct it before it makes inroads into the market time is of the essence. And then the final thing I would just say is that I I think it's important, particularly on the connected vehicle side, to realize that the connected nature is a primary national security concern, but fundamentally the broader question is just do we want to allow China to destroy our auto industry?

33:34And connected, unconnected, conventional electric, the answer simply has to be no.

33:40I will pick up on the point Mr. Cass made, as well as Mr. Singleton, about the importance of acting before these products fully penetrate our market. We have seen incredibly rapid growth of Chinese internet connected vehicles in Europe and in other markets where they have not been restricted, you know, going from low single digits to 20, 25 percent of new sales in a matter of 18 to 24 months.

34:09I think that if we do not have strong and durable action here in the U.S., you can see a similar trajectory of penetration by Chinese cars and it is going to be much cheaper and much more effective to address that early.

34:22I think robots is similar but in some ways even more important. We saw 10 years ago when drones first became common the development of an entire industrial ecosystem in China to build those drones that we now have to recreate largely out of whole cloth here in the United States at great cost.

34:42Robots are a similar point but very a decade ago we're in the early stages of building out a humanoid robot industrial base and we want that here rather than waiting five or ten years where we gonna have to pay tens of billions of dollars to replicate something the Chinese have already done Thank you Mr Cass I wanted

35:05to follow up with you on one of your points that you were making about the incentives for American businesses versus how Chinese businesses affiliated with the CCP, what their incentive structure is. Could you elaborate a little bit more because I think that's a really important point that we need to understand when we're talking about these kinds of issues.

35:26Yeah, thank you. You know, it goes really to the original mistake we made in opening up to trade with China, which is our too frequent assumption as Americans that everybody is like us and everybody is playing by the same rules.

35:36The reality is that all of our assumptions about capitalism and free markets and the good outcomes those generate require certain things to be in place. And if you try to to do free trade with a country like China that is communist authoritarian state-controlled market very aggressive industrial strategy you are importing all of those distortions into your market and so it's not symmetrical right we said we were going to export Liberty to China and they were very happy to block that instead they are exporting their economic priorities to us and so whereas we tend to think of free markets and free trade as going together.

36:23When it comes to a country like China, really it is free markets or free trade. Pick one. And if we value our free market, we actually need to establish a boundary that keeps China and its firms out.

36:36Thank you. My time is expired and I want to make sure we get to other members. Representative Carson. Thank you, Chairman.

36:44In my district, the FedEx Express Hub at the Indy International Airport is the second largest FedEx global network. It employs about 4000 people and sorts out about 100000 packages an hour. A huge share of that is international freight.

37:01So including low value parcels shipped directly from Chinese sellers. Mr. Herald, when when when Congress or an agency restricts a Chinese product from the U.S. market. How often do the Chinese sellers cheat their way?

37:21Through hubs like Indy.

37:24I think that a hugely important challenge and we have seen over the last five six years what I think of as two different kinds of Chinese cheating one of which is illegal and one of which is legal and they're both quite common so the illegal form as China creates a product in China they ship it to Vietnam they slap a little made in Vietnam label on it and that comes to the US illegal today there's a huge enforcement issue.

37:51We need to get you know CBP as well as importers focused more on the data. The other thing they do is legal. They ship, by and large, they ship a box of parts from China to Vietnam.

38:01They get it assembled into a thing in Vietnam and it comes to the United States that way. And that's usually legal under US law because it counts as a Vietnamese product. And I do think this is an area we need to think about for these high-risk national security products, how do we look at where some of the pieces come from, not just where this thing was actually put together?

38:33We often talk and assume restricting Chinese products from the U.S. market as if American innovation and even manufacturing capacity will simply appear to fill that gap. We know it won't, but especially without workers and and government support for innovation.

38:51And of course, manufacturers nationally report more than 400,000 open positions right now, and industry researchers project up to 1.9 million unfilled manufacturing jobs by 2023. Of the tools that are discussed today, like procurement preferences, tax credits, R&D, manufacturing incentives, which ones actually help to train workers and really support U.S. innovation in you all's minds.

39:23I think you've put your finger on a very important issue, which is that workforce development needs to come alongside the research, the capital investment, and so forth. I think it's important to say that we also need those other things.

39:38In other words, developing the workforce first will not work. If we don't have investment committed, if we don't have firms looking for workers, knowing what they need, knowing what skills they need, creating that pull, just doing the training is a recipe for failure.

39:54So I think what we've seen with the CHIPS Act is actually an illustration of a very good model, where training a semiconductor workforce first would not have been a good idea but in conjunction with the incentives to firms like micron and TSMC to start making these investments in fabs those firms have then had an enormous incentive to go out and partner with community colleges to define what the curriculum is to partner with labor unions very importantly and then I think there's an added federal role in making sure that we are contributing to the cost of that kind of thing.

40:28We put hundreds of billions of dollars into traditional higher education, but if you're actually trying to prepare to work in a fab, for the most part we just sort of say, good luck. And so I think rethinking what kinds of job preparation we support, ideally not going industry by industry, but saying where there are firms out there that are investing, they're partnering with community colleges, here's a form of support that comes from the public as well, just as it would for traditional education, is a huge accelerator of that.

40:59I would just add on to Mr. Cass's points, and I agree entirely, this is where public-private partnerships are just so important. The reason that the CHIPS Act has been successful is that we set the security destination early for markets in the private sector, and then we gave industry a credible runway to get there.

41:16So identifying those high-risk technologies early, I think, and applying firm, time-bound to sort of phase-outs allows us to get there. I do think we have to sort of though match some of these timelines to replacement difficulty, and that's something you mentioned.

41:31I don't think we need to make everything here. I don't think we need to replace Chinese toasters, right? But if we want to be thinking about controlling the drivers of the 21st century industrial revolution and empowering American workers to lead that revolution, we have to identify those core technologies now, and that's why hearings like this are so important.

41:50Thank you. Representative Hinson.

41:54Thank you, Mr. Chairman, and good morning to our witnesses. Thank you so much for being here today. Today's topic, obviously, a critically important one, and we have a responsibility to look at really methodically and with careful consideration.

42:07We know how China likes to play this game. They cheat. They dominate the marketplace across too many industries, and they steal as well. steel as well so I'd like to focus today on understanding how some of the critical supply chain conversations and concerns really impact Iowans back home specifically with one we call it a life and life product but infant formula which is a concern near and dear to my heart So Mr Cass in your written testimony you talk about how China now controls 70 upwards of 90 of the global supply of inputs to make key pharmaceuticals And so I think when I speak for all of us when I say those numbers are way too high and frankly alarming in terms of dependency on China for that supply chain.

42:53supply chain, so not only do they dominate in APIs, but also in key starting materials like the micronutrients and the precursors that are really critical to making infant formula and medications too. But just like medication, not all that information is reflected necessarily on the label.

43:12And as a mom myself, I believe everybody who is walking into a drugstore deserves as much transparency as we can get on what they're buying. And so one of the pieces of legislation that I worked with Congresswoman Matt Zui on across the aisle was the Drug Origin Transparency Act.

43:22This gives FDA the authority to be able to require more detailed reporting on the suppliers of each API and then also the intermediate product out of that, including identifying the original manufacturers and suppliers in the supply chain.

43:39So my question to you, Mr. Cass, is what actions would you recommend that we implement to help not only onshore the domestic supply of APIs, but other key starting materials as well in inputs, because I think it comes down to really being able to decrease our reliance on China, not just for these, again, day to day medications, but for things like infant formula.

44:03Thank you for the question, for focusing on this issue, which I think is an incredibly important one. And to your point about, you know, the consumer side, I think probably we can't expect consumers to, you know, choose American-made Tylenol over Chinese-made Tylenol, but I think the labeling is incredibly important in raising awareness of the problem and understanding that we need to do something about it.

44:25I think the policy tools that can be most effective here actually are exactly the sorts of import controls that we're talking about at this hearing, because this is an example of the kind of product that we certainly know how to make here.

44:37We used to make it all here. In many cases, we still have half shuttered or shuttered facilities that did make it. We have some capacity, but not a lot. And I think if we simply had very clear policies that said look the amount of stuff you can bring in from China is going to phase down at this rate over the next five years There very little preventing the companies that are the ultimate sellers of it that are very sophisticated pharmaceutical manufacturers from increasing that capacity again either here or sourcing from allies And also the good news that it's simply not that much more expensive.

45:15I mean, when we're talking about some of these things. figuring out how to do it here, building it, cost differentials are going to be huge. The cost difference on the bottle of Tylenol is not going to be huge.

45:28Right. If it's a difference between, you know, you look at 150 percent price increase versus 50 percent more and we're not reliant on the supply chain. And then if something bad happens, we we have the materials and we have the inputs that we can make our own medicine.

45:40I think that most consumers would find a relief in that, certainly. And obviously it still needs to be consumer choice driven. And I'm a big supporter of that. You know, consumers just need the education to be able to to know what they're buying.

45:52Question on you talked about some of these facilities that have been shuttered. How quickly do you think that we could turn that around right on the manufacturing side? We've we've done what we think we need to do to really do the shot in the arm and give businesses a certainty they need in tax policy to make those investments.

46:07How quickly do you think that could happen? I am not an expert on the exact speed. I would just distinguish it from something like electric vehicle batteries or drones where we have no footprint.

46:19We have no infrastructure. We have no logistical support. Bringing back online things that we have historically done here that we are still doing some of is going to be a lot easier. And just the one thing I would mention, I don't think it's a it's not a 50% swing in the title.

46:37It's likely to be a few cents. Professor Willie Shi at Harvard Business School, his entire area of expertise is international supply chains, makes this point specifically in the medical context. If you look at something like syringes, we've entirely offshored the production of syringes over essentially a penny.

46:57And that's because who buys the syringes? It's hospital systems buying 10 million syringes. And so for that, you say, oh, well, sure, we'll go overseas for the penny. In terms of what it looks like to the American consumer at the end of the day to have American-made stuff in a lot of these areas, it really is a matter of pennies.

47:18Thank you. I'm over time. Mr. Chairman, I yield back.

47:23Thank you Representative Krishnamoorthy Thank you Mr Chair First I like to discuss the need for frameworks for importing not just goods from China but also open AI models Unlike closed models such as ChatGPT, open-weight models can be downloaded, changed, and run on a user's own device.

47:44Mr. Harrell, good to see you. American companies have quickly adopted Chinese open-weight models because, as your testimony notes these model weights are online free for anyone to download right yes correct but there's no such thing as a free lunch there's always a cost first there's a data cost as we see here in the Chinese model deep seeks own privacy statement deep seek directly collects processes and stores your personal data in the People's Republic of China.

48:19They very helpfully pointed that out, right, Mr. Harrell? They do point that out. Second, even if a user downloads and uses a Chinese AI model locally on their own device, the model may not be trustworthy.

48:32According to the Commerce Department, DeepSeek AI agents are 12 times more likely than U.S. models to follow malicious instructions, including sending phishing emails and running malware. Mr. Harrell, in your testimony, you note that the U.S.

48:51does not have a law that clearly authorizes restrictions on Americans downloading and using open-weight models, correct?

49:00Yeah, that's correct. We do not.

49:02Any restrictions deserve extreme scrutiny. But I believe that we in America should have certain restrictions that safeguard all Americans when using open-weight models, especially from adversary countries. As a first step, the federal government should not procure any such models.

49:21My bill, the No Adversarial AI Act, prohibits that potential practice. I'd like to turn to another topic. Mr. Harrell, in your written testimony, you said that, quote, the US needs to make sure that it is working with allies and partners by default.

49:36That's what you wrote, right?

49:38That's correct.

49:39But how is Trump treating our allies? by imposing blanket tariffs and starting trade wars. Last year on Liberation Day, Trump set sweeping tariffs on nearly every country, including our closest allies, right?

49:54Yes, we've seen a historic increase in tariffs on dozens of countries.

49:58And after the Supreme Court found those blanket tariffs were illegal, the president turned to other tactics, such as threatening to ban products from our closest partners. Just look at Canada. Last week, as we can see here, he said, no more selling Bombardier planes in the United States.

50:20Their products aren't good enough. That's what he wrote, right? Yes. These tactics have a cost. They threatened more than 100 jobs in my district at the Mombardier facility there. And as this Pew chart shows, Canadians now view China more positively than the U.S.

50:39We need our allies in order to have a strong coalition to counter and police the CCP's aggression on a number of fronts. But we are threatening that coalition with bully behavior, and it will hurt Americans as much as our trading partners.

50:54We've got to stop this. Let me turn to my final topic. This year, President Trump has repeatedly said he'd be, quote, okay with China building cars in the U.S. Mr. Harrell, the current barriers to Chinese EVs being produced and sold in the U.S.

51:10are not fixed in statute, but instead are upheld at the discretion of the president, right? That is correct. Mr. Cash, CSIS, estimates Beijing has supported EV sector companies with more than $230 billion since 2009, which has given them a serious leg up.

51:30Just look at these prices of EVs. An average Chinese EV costs $10,000, which is clearly beneath their production cost. On the other hand, this is the lowest price of an American EV, which is about $29,000.

51:47At these prices, I respectfully submit, American companies are not competing with Chinese firms. They're competing with the Chinese government, right, Mr. Cass? Yes, that's correct. I've said this before, and as they've used in the glass, the steel, the aluminum, the solar panel, the shipbuilding, and now the EV sector, they're using the same playbook.

52:10produce more stuff than they can consume, export it at a cost beneath their production cost, and destroy their competition. That is their playbook. And so if the president allows Chinese EVs and connected vehicles into our markets as some as part of some grand deal next week we are succumbing to Xi Jinping playbook and we will absolutely bargain away the entire auto industry in Michigan among other places.

52:37So, Mr. President, I would just say as a committee, I think we should say our auto industry is not for sale. Thank you. And I yield back. Thank you, Representative

52:49Takuda. Thank you Mr. Chair. I've got a lot of thoughts going through my brain especially given next week who's coming to town essentially so this hearing is very timely. On the issue of import controls and market restrictions as a way to reduce our dependency on China, I have to wonder while we can have these robust discussions about what comes in.

53:15Right now we've got a number of American companies that continue to build factories, sell products, and enter into joint ventures and research in China itself. To what extent are those business decisions deepening our dependencies or potentially even transfer of technologies that our policies that we're talking about today are intended to actually reduce?

53:41And then are we able to even track and measure vulnerability and dependency on Chinese products, including not just the product itself, but component parts, software, embedded technology? I think that's a serious risk. There was conversation, I think, last year.

53:54Mr. Chair, you were concerned about it as well, when Ford entered into, you know, agreements, license agreements for EV battery technology with KATL which is a PRC defense corporation any thoughts there on if American corporate investment is literally undermining our ability to really decrease dependency and vulnerability from China and do we even have the capacity to track just how much China has us by the batteries and the and the EVs and the everything and the pharmaceuticals right now I'm

54:32I'm happy to start. I'm not opposed to partnerships. I'm opposed to calling dependency a partnership. I think the CATL-Ford deal is bad news and I think that's a Trojan horse. It's worthy of additional scrutiny.

54:42It's deeply problematic. I think we have to hold ourselves to a question of if the Chinese partner in the deal disappears tomorrow, could the American operation in question keep going Right And if the answer is no then you don have a partnership You have a dependency here I think one of the big risks is that these partnerships can lock in future leverage over us Once U.S. production and workers and customers and supply chains depend on technologies from the PRC, unwinding that relationship becomes economically and politically harder.

55:16Mr. Cass?

55:19I certainly agree with your broader point that there is a huge problem here on both sides with what we are doing in China and what we might be allowing China to do here. I think there are also a lot of good actions being taken in that direction, particularly on something like AI chips and chip manufacturing equipment.

55:42The House has moved on three very good bills in that respect. I agree something like, you know, the battery partnership is a concern. Certainly the idea of allowing Chinese companies to manufacture cars here is a terrible idea.

56:03I think the question in my mind is who is actually on the other side of these arguments? In my experience in this hearing, in another recent hearing for the Foreign Affairs Committee, looking at you know what what the president's own cabinet is doing and saying I don't see anyone on any side of the issue that doesn't want to put a stop to this stuff except a few corporations that are making an enormous amount of money and so from where I sit the question is simply how quickly can you move forward because it is an entirely bipartisan topic and whereas people are concerned about are we getting it exactly right?

56:44Do we it would be very hard to be getting it more wrong than we have been getting it? I would much rather see very strong action that flips how we are operating and then we can adjust from there.

56:53But Congress does need to move faster.

57:05So I think you raise a very important issue. And I think we have to expect companies are going to make the decisions they think are economically rational. That's just the reality of what they're going to do, and that is why policy is so important.

57:19Under the Biden administration the U government started an outbound investment rule to limit U investment in a handful of high technology sectors in China Congress has expanded that with something called the COINS Act which many members of the committee supported about a year ago which is now being implemented That act also though keeps those outbound investment restrictions fairly narrowly focused on high-tech sectors.

57:45I think there are important questions about how we should think about investment in China and what you might call industrial based sectors as well as high tech sectors and that the corporate community needs to understand that law and regulation may be coming or else they're just going to keep making the kind of economically rational decisions that they see today.

58:06Thank you and I know I've run out of time but I think I agree with all of you. There's a lot of talk on the Hill and throughout the cabinet and throughout the country.

58:10We can't just do hand wringing. We have to take action and have accountability and I can tell you Mr. Cass you touched upon it I'm concerned next week when Xi comes here we have been able to hold through export controls our greatest asset and advantage in the AI race which is our most powerful chips yet we have a president who has indicated he might be willing to sell if it means a profit to this country we have to hold the line and make sure we do not literally give away the farm when it comes to our most powerful chips and China's Nvidia will definitely be in town next week and I think this Congress has to make sure we are strong when we say no chips to China.

58:48Thank you I yield back. Thank you. Representative Newhouse.

58:56Thank you Chairman Molinar, Ranking Member Khanna as well for hosting today's hearing. I want to thank the witnesses for joining us today and sharing your testimony and your knowledge on this very important subject.

59:05So let me let me ask all three of you if I could. In your testimonies you underscore the importance of being proactive, meaning it's easier to prevent the U.S. from developing supply chain dependencies than it is to decouple trade networks once they get entrenched.

59:28How should federal government strategies and in particular the use of these import control strategies differ when we think about preventing future dependencies versus trying to decouple existing dependencies. And whoever would like to start, just go down the road.

59:53Thank you very much for the question. And as you say, Congressman, it is an area of agreement, I think, between all of us. on the committee. I think there are a couple of things that the federal government should be doing here.

60:05First I think we should start by having what you might think of as a survey of our import vulnerabilities. This is something Australia did a couple of years ago. They actually looked in a fairly systematic way.

60:15What are the products where we mostly depend on imports and then what are the of those things where we mostly depend on imports, what are the products where we are mostly dependent on China for that versus diversified or dependent on friends.

60:26We've never really done something like that as a country to try to get ahead of the problem. We kind of tend to wait till it burbles up. I do think, as you say, it is important to look at areas where an industry is emerging, because that is the opportunity to move now to foster investments here rather than trying to have to relocate them after the fact.

60:53That is why I think robots, for humanoid robots, is so important today. This is an industry that's going to boom over the next decade. And it will be much cheaper for us to get it right for investments here in the US today than if we have to move that industry 10 years from now when we're mostly dependent on China.

61:14I would add two considerations for how we structure policy. The nice thing about places where we are not yet dependent is it can just be a day one block. Where we are dependent, there are costs.

61:28And I think that means two things. First of all, we would ideally have phased downs to the extent that we are blocking stuff coming in faster than we can get it from somewhere else.

61:38We're really just hurting ourselves. And the second piece is I think we have to be a lot more thoughtful about the industrial policy to support the buildup of the replacements. because we need them to come online faster than they otherwise might in a natural market.

61:55So I think figuring out how long would it reasonably take to bring on capacity and set that kind of phase down in imports from China, and then what sorts of either subsidies or public financing would help bring things online faster helps to accelerate that as well.

62:13And I would just underscore, we've talked about this a few times, this is a place where legislation is so important. I think administrative action can be fairly effective, as we've seen with the FCC on things like robots But if let say we were looking at pharmaceuticals or fertilizers or certainly as we seen with rare earths you need that certainty and belief that this is actually happening We can sit it out and then scream and ask for a waiver to get the kind of shift that we need

62:45I would agree with both Peter and Oren. I think one of the challenges today is that so many of the existing authorities remain discretionary and episodic rather than standing and sectoral. If the risk is sectoral, then the remedy has to be sectoral as well.

62:58The good news is that the Chinese can't stop talking about the areas and the sectors that they want to dominate. We're certainly not starting at zero. They have laid out the roadmap where they would like to entangle us and it exists beyond advanced manufacturing and I wholeheartedly agree on robots, the physical AI manifestation that will be heading into our shores in the next few years and where China is ahead.

63:23But they have laid out their roadmap for the next five years. We don't have any guessing to do here. I think prioritizing the risks and to Mr. Carson's point, thinking about working with industry to identify where are the areas that we do need more public government support.

63:40Where are the areas where the private sector can actually do this on their own? It's going to be sector specific, but we're not starting at zero here. The Chinese have laid out their roadmap.

63:52Could I make one just quick point just to pick up on that? It's a very important point. China published its Made in China 2025 strategy in 2015. We had the list of things. And likewise, ahead it it is not impossible or even that hard to identify where we need to be concerned to Mr. Harrell's point at the margin really understanding the supply chain is very important but I think sometimes we get caught up in concern about you know so-called picking winners and losers and how can policymakers know what's going on in the market that's not what is going on here that's not the nature of these determinations these are exactly the places where I think policymakers are best equipped to make judgments.

64:38Okay, well unfortunately my time expired, Mr. Chairman. Thank you. Representative Swazi.

64:44Thank you, Mr. Chairman. Thank you, witnesses. Really appreciate all the good work that you all do on so many different topics. Thank you for being here today. You know, my view of the world is we in this big competition And on our side we got us and Canada who on our team really NATO and the Europeans I would include Israel I would include South Korea Japan and Australia That's kind of like our side.

65:08They share our values. And then on the other side, we have the Chinese Communist Party, the Russians, the Iranians, the North Koreans. And then in between are different people on a continuum between those two poles.

65:15So there's this massive competition going on. And next week the biggest strategic adversary we have, the president of the Chinese Communist Party, is coming to the United States of America to meet with our president.

65:30So can you just please explain to me what should we be doing? Should we be viewing this as a hawkish relationship between us and China? Or like we've got to beat these guys, they're out to get us, they're cheating, they're treating their people terribly with the Uighurs and the Hong Kong students and the Tibetans and the Mongolians and they're threatening Taiwan.

65:49and we've got to beat them. They're stealing ideas from us and they have this strategic competition against us really designed to beat us in every single way possible economically, militarily, air, land, space. Or should we be doing more of a cooperative relationship with them and trying to figure this out?

66:06Because we tried that for like 50 years ever since Nixon went to China and that didn't turn out very well for us. So I just need to understand the basic big picture of how we should view this relationship from like the most extreme a hawkish type of thing we don't want to go to war obviously but hawkish versus cooperative and what's the biggest thing the one thing because as many topics there's so many details what's the one thing we have to be careful of in the meeting between our president and the president of the Chinese Communist Party when he comes to town so I'll just go in order you've got three minutes one

66:39minute apiece I think to be concise there our strategy is quite simple it should be to slow them down and to speed up. I think that should be the central focus. Speed us up.

66:51Speed ourselves up. That should be the central focus. Especially in semiconductors and other technology and in other industry. So many of the technologies we're talking about here today. We are racing, I think, to reduce our reliance on the Chinese Communist Party.

67:03And by the way, it's not President Xi Jinping. He's Chinese Communist Party Chairman Xi Jinping. The word president doesn't exist in the nomenclature. It implies that he was selected by his people, and he was not.

67:13So let's remember what we're dealing with, and I think to your point, an access of dictators and aggressors that are coordinating there. I think we find ourselves today the dynamic is mutually assured disruption We spent the last two years mapping out each other weaknesses and deficiencies and now we racing here in the United States and I think in a bipartisan way to reduce our reliance on those core Chinese supply chains and inputs But the Chinese are working to cement those very dependencies because of the power it

67:41provides them.

67:43Very good. My biggest concern next week is continuous delays to Taiwan arms packages, because that's the one deliverable that the Chinese want more than anything.

67:51Very big. $1.8 billion. Mr. Oren Kass.

67:54Thank you. I think it's a wonderful way of framing the situation that we're in. I would say we need to be extraordinarily hawkish, but that we have to understand that in this context, dove to hawk doesn't mean how excited we are to start a war.

68:09It means to what extent are we optimistic or pessimistic that there can be a constructive relationship between the countries. And I think, to your point, going all the way back to Nixon going to China, but especially since the year 2000, it should be extremely obvious to us that there is no path to partnership, collaboration, mutually beneficial arrangements with China.

68:31At the same time, I think it's also very important to recognize that China is in many ways now a peer adversary. We don't get to dictate the terms. I think we need to be realist that they are going to have their sphere of influence.

68:43They are going to proceed how they want to proceed. we need to be sure we can proceed how we want to and be confident that our

68:50system will prevail. Very good. Mr. Harrell? So I'm quite hawkish on China. I think the one of the lessons the last couple of decades is we are not going to change China. They are going to be a strategic competitor and an outright adversary in a number of areas and so we need to manage this relationship to, as Mr. Singleton says, slow them down, speed us up, and then I would add the third topic we've all been talking about, which is reduce our reliance on them and reduce the leverage they have over us while managing tensions in the relationship.

69:24But it's just going to be a pretty hawkish, pretty managed relationship, at least as long as the CCP is in power.

69:33And let's also just emphasize, we've got to treat our friends better because they share our values. And we have to figure out how to bring more friends into our sphere, because right now we're pushing our friends into their sphere.

69:44We've got to be nicer to our friends and bring them in. We still want, you know, fairness and for them to treat us properly, but we've got to be nicer to our friends and bring them into our sphere.

69:55That chart that Raj showed earlier about Canada being more favorably disposed to China than America right now just blows my mind. Thank you, witnesses.

70:09Thank you, Mr. Swazi. The chair now recognizes Ms. Stevens for five minutes.

70:14Well, thank you to the gentleman from Washington State and to our witnesses for today's very important hearing, as a matter of fact, because as we talk about supply chain dependencies, import-export controls. There are real lives behind these policy decisions that we will make, trade rules of the road, and frankly, there are small businesses like the ones that I represent in Michigan, in our automotive sector, in manufacturing.

70:49Some of them are multi-generational, whose lives are just kind of hanging in the balance. They've got sometimes multi-million dollar pieces of equipment. They're looking at mergers and acquisitions. They're looking at shrinking production value.

71:13And they are being challenged in this current dynamic. And so there is a reason why as a four-term member of Congress, I have dedicated a huge practice of my work to going and spending time with manufacturers.

71:34I call it Manufacturing Monday in a lot of respects when I'm home. And it's easy to brag the innovation is profound. The moon shots of the 21st century are still running through the place that I call home in terms of mobility, aerospace, and defense.

71:53And yet, our realities have changed. And the great breadth of policy work that each and every one of you on this panel are responsible for and have contributed to means so much to us, really, truly.

72:10And if and when you get the opportunity to come to Michigan, call me. because I'd love for you to see Automation Alley and this rich concentration of startups and or legacy manufacturers doing incredible work And look we can wax you know poetic in some regards as it pertains to the president current policies and the administration's current policies.

72:39It absolutely surprised me as a congresswoman from Michigan to hear a president who campaigned rigorously in my state say, we're gonna take on China, we need to take the jobs from Shanghai to Sterling Heights and then get into office and attack Canada.

72:55You know, the rules-based industrial world order has got to be looked squarely in the face by writ of what we are going to look like in the year 2050. We as the United States of America, our role in the world, our rules of the order, the congressman from New York talking about who our real allies are.

73:19Now China exists. The Chinese Communist Party exists. We've said it ad nauseum in this committee, that they got into the WTO, and guess what? They never normalized. And by the way, 25 years of wars in the Middle East, another war still going on, that hasn't normalized either.

73:39There still isn't democracy, and yes, there's only one democracy in the Middle East at this point. So until we, as policymakers, choose to wake up to the global realities coming down on us. Look, I'll celebrate history to the best of them and recognize it.

73:57I had a World War II veteran, 95 years old, Lithuanian tied to Ukraine, you know, standing outside my office yesterday. You know, the Ukraine-Russia war now longer than World War II. You know, folks within our own borders questioning how we position ourselves?

74:21What does freedom mean? What does open free market capitalism that promotes equal opportunity bring and arrive? Mr. Swazi's right. We're in a competition. We all know that. The question is, is how does our freedom continue to ring out so that the tool and die manufacturers from Grand Rapids, Michigan to Troy, Michigan, continue to stay strong and competitive.

74:53And there a whole suite of things You guys have probably contributed to books and policy papers that we care deeply about I got legislation I was supposed to talk to you about you know about protecting America from the Chinese cars stuff you know all those little parts component.

75:10I encourage you to check out that bill. It's with Senator Slocken. I encourage you to check out my other bill, the No Chinese Cars Act, but I I really use these poetic five minutes that I got here on this committee hearing.

75:26For those of us to feel the drumbeat, the pride, the joy, but the eye on the prize, as President Truman once said, that America is not built on fear. America is built on courage, determination, and the willingness to do the job at hand.

75:45And so our job is to secure our freedoms, secure the ability of small business owners and manufacturers and workers to succeed. And with that, Mr. Chairman, I yield back.

75:59Thank you, Ms. Stevens. Let me turn to Mr. Carson for another question, if the witnesses would be open to that. Mr. Carson.

76:08Thank you so very much, Chairman. You're appreciated. Rolls-Royce just completed a $1 billion decade-long investment in the Indianapolis campus that employs 3,500 Hoosiers, many of them UAW members and building more Rolls-Royce defense engines than any other site in the world.

76:27The B-52, the Army's new MV-75, the V-22 Osprey, the Navy's MQ-25. Indianapolis is building the engines our warfighters fly. Mr. Harrell, engines like these or any other panelists, engines like these depend on specialty alloys, rare earth magnets and titanium where China holds significant processing dominance.

76:52If we restrict critical inputs for an operation like this because they pose a broader security threat, what happens to production capabilities and the associated jobs? And Mr. Singleton and Mr.

77:06Kass please weigh in as well. Thank you very much. It's a hugely important problem, and we obviously learned very sharply last spring of last year when China cut off its exports of various rare earths just how dependent we are That was a dependency that built up over 15 or 20 years and that we not going to solve overnight I think there have been multiple very important steps that have been taken by the Department of Defense, by other U.S. government agencies to make investments to begin to reduce that vulnerability.

77:43And I am actually reasonably optimistic that over the next couple of years we will reduce that vulnerability. But we can't cut that off overnight. And I think that illustrates the point that Mr. Cass has been making a couple of times today, which is that we have to recognize for these dependencies we have today, there has to be a very aggressive but realistic path to reducing those dependencies.

78:11It's not something we can turn off overnight. It's something we need to turn off as quickly as possible as we scale up these alternative sources so that we don't inadvertently shut down some of our own manufacturing.

78:23I would just add one thing that's really almost more of a messaging point in a way, which is that I think sometimes we talk about these kinds of problems as places where things actually look okay now and we're subjecting ourselves to these costs if we do something about it.

78:41And I think it's important just to recognize that things are not okay now, that it is the extraordinarily foolish policy of our predecessors that has sort of dug us this hole or left us in this debt in a way the fact that our most advanced and critical war fighting machines rely are desperately dependent on Chinese inputs means we are we are paying the costs already and so standing up and saying we need to fix this it's gonna cost something to fix it it's going to take time, but it is the only option.

79:17I think it's really important, and to acknowledge that we have put ourselves in this position, and we are now going to have to climb out, but that doing so costs an awful lot less than staying where we are.

79:31I would agree with everything that Mr. Harrell and Mr. Cass said. I think, obviously, China tipped its hand when it cut off rare earths, and we still are not today receiving the rare earths that were promised during the Busan I think our policies need to be four things.

79:47Predictable, principled, pragmatic, and precise. And that should be the driving factor across these different sectors. I'm quite bullish on rare earthen magnets simply because to your point, And as other experts like Roche Doshi have mentioned, there's the potential for allied scale to really address this problem.

80:06But I think the challenge is that sectoral risk doesn't mean that it's indiscriminate when we're talking about it. We can be quite precise and define those risks precisely and then be very concrete in the pathway towards success.

80:24And it will vary by sector to sector.

80:27Thank you. Thank you, Chairman. I yield back.

80:30In listening to your responses to Mr. Carson's questions, I've heard that before, and in no disrespect meant by, but I've heard the same kind of admonition from several different people that we need to do, we recognize there's a problem, we need to do something about it.

80:53So my question is, are we? Other than just saying that, are there specific things that are being done today in order to address these vulnerabilities that we all seem to recognize and admit that we have to do something about?

81:14Have we actually, are we, we, I mean the country at large, are we taking actions?

81:21could give some specifics there would be helpful. So I'll give a couple of examples on the critical minerals and rare earths and I think we should realize it's not these are not things that are going to come to fruition overnight and we also need to realize we're talking about critical minerals and rare earths we're talking about you know a couple of dozen different substances we're not talking about one or two different substances but we have seen over the last couple of years particularly over the last 18 months since the cutoff from China in spring of last year, a set of measures that I view as complementary to each other to spur U.S. and allied production of key substances.

82:04So we have seen with neodymium, which is a particular rare earth, we have seen the Department of Defense both provide grants and loans and make equity investments in neodymium mining and processing here in the US, and also enter into off-take agreements to purchase some of the off of that So there both a supply incentive we help the US producer in this case scale up and there also a demand incentive We going to make sure that if you can produce this stuff here in the United States, you're going to have a market.

82:35And I think that you need to see both of those. I do think on critical minerals in particular, across the board I think, but in critical minerals really brings the case home, this is something we cannot do alone and that we have to do with allies and partners.

82:49We do have opportunities to mine and produce some of these minerals like neodymium. It's coming out of a mine in California here in the U.S. Some of them we just don't. We're going to have to work with Canada on critical minerals.

83:03We're going to have to work with some sites in Brazil. They're promising sites in Africa. So this illustrates the need and the importance of taking an allied approach and to being willing to deploy some of these tools across an allied set of nations as well as having the incentives here at home.

83:23One thing I've found very encouraging over the last year and a half or so is that we have seen so many actions being taken, whether it is starting to invest in some of these new supply chains, whether it is imposition of tariffs, particularly on China, whether it is the kinds of actions the FCC has taken on imports, and even an acknowledgement that there are costs.

83:50You know, President Trump, Secretary of Treasury Scott Besson have been very forthright in saying these things have costs and there is more to life and then GDP growth even. I think that's incredibly important.

84:02And for us to succeed in this, it is essentially we're going to have to think of it as an element of foreign policy where bipartisanship is so important. If every time we start to make progress on something it just becomes a campaign ad that this made it 14 cents more expensive, we're never going to get anywhere.

84:26And so, you know, I think of even the FCC has been doing work on the bizarre situation that virtually all testing of electronics for the U.S. is done in China. Why can't we do it here?

84:40well because the CCP covers the cost of doing it there basically this makes no sense we should be certainly testing for anything sold in the United States in the United States but industry shows up and says well if we have to pay the costs of testing the United States that will raise the cost of something how much is that really going to raise the cost of a device we have to say that that is simply not an argument we going to accept that there are there are these priorities There are these things we have to get right.

85:06There could be much more cost if we don't get them right. And we have to have both political parties saying we both believe that's true and we're not going to take pot shots at each other for the thing we both know we need to do.

85:20I think our objective should be a trusted market, not a closed market. That should be our goal. And there will be different tools to address different challenges here. Some things that we're doing are working really well.

85:32And I think Mr. Kass hits the nail on the head with the FCC. Congress should work to expand and codify what the FCC is doing today because it's probably the most impactful part of the administration that's working on global measures in these high-tech sectors.

85:46We should be looking at Chinese internet-connected modules. And we have to be looking at sensors like LiDAR and these next generation technologies expanding that scope. We have to give the 1260H list more teeth.

85:59I think if you are a company that ends up on 1260H, it should be an automatic review for FCC covered lists. There should be automatic reviews for federal procurement bans. On the procurement bans alone, I can't tell you the number of government offices I walk into when I see a Lenovo printer sitting on the counter.

86:15That's a Chinese company. It's headquartered in China. They're linked to 1260 age companies. These are simple steps that I think Congress could take to eat away at China's industrial edge. And in some cases, there's already a lot of movement in these different sectors.

86:31Good, thank you all very much. Now the Chair's happy to recognize a gentle lady from the state of Ohio who represents proudly the Rock and Roll Hall of Fame, Miss Brown.

86:43Thank you, thank you, thank you. I appreciate that. Look, I like to focus it for a moment on the people I represent in Northeast Ohio, home of the Rock and Roll Hall of Fame.

86:56Specifically, I like to focus on the security of their jobs, their communities, and the services they depend on. Our region deeply understands the importance of making things in America. Manufacturing supports families and entire communities.

87:11When unfair competition drives production overseas, we lose more than a factory. We lose skilled workers, supplier networks, and steady paychecks. We also depend on reliable transportation strong infrastructure and world healthcare from Greater Cleveland RTA and the Port of Cleveland to the hospitals serving our communities These organizations and businesses need equipment they can trust.

87:37They also need affordable alternatives and a realistic path to replacing technology when that technology presents a security risk. It's clear that an American label or final assembly location does not necessarily tell us who controls a product's software, its components, or its next update.

87:57Congress should address those vulnerabilities while helping American workers and businesses build alternatives. That means investing in domestic manufacturing, supporting smaller suppliers, and ensuring local communities can make the transition. Mr. Harrell, what should Congress pair with import restrictions so employers and public agencies can obtain secure alternatives and help create good paying American jobs.

88:25Thank you, Congresswoman, for the question. And I've enjoyed touring the Rock and Roll Hall of Fame. I appreciate it. I think it is critically important that as we cut off our dependencies from China, as we reduce our dependencies from China, as you say, we have to do more to invest here in the United States.

88:48And I think there are really three parts to that investment suite that we need to be looking at. So there is one part, which is how do we do R&D in this area? So as we reduce our dependence on China, say for critical minerals, do we just want to replicate the same kind of processing that China has here in the U.S., or do we actually want to invent a different kind of processing?

89:15And to give an example, some scientists at the University of Minnesota, not your district, but further north and a little west, have invented a technology that can create certain kinds of rare earth-free magnets to just replace this dependency, not just by mining here, but by an entirely different technological process.

89:35So there's an R&D piece of this. Then there is a domestic investment part of providing incentives, whether they're grants or loans or other kinds of incentives, including for small businesses, to scale up the manufacturing capacity here in the United States.

89:53And then, as Mr. Cass suggested earlier, as we are scaling up that manufacturing here, for many years, much of this manufacturing we don't currently have the workforce. You know, for many years we have under invested in the manufacturing part of our workforce and we've encouraged younger Americans to pursue other kinds of careers.

90:09If we are going to succeed in bolstering that manufacturing here, if we're going to have workers in those facilities we're building up, we very much do have to make the education workforce training investments so that we can have the people we need to actually do that manufacturing and give them the good paying jobs here.

90:33Thank you for that. Mr Singleton, your testimony warns that Chinese controlled technology can reach our market through third party factories, licensing agreements or American subsidiaries. For purchasers, tracing that control through multiple suppliers is a significant undertaking.

90:51What should the federal government require manufacturers to disclose and verify so local purchasers can identify secure equipment without needing to conduct their own investigation?

91:03Absolutely great question. Thank you for it. I've not been to the rock and roll. I guess I need to go. The key challenge that we face is we need to follow the technology, not the logo.

91:13I think that's a key risk that we're facing here. We have these challenges where a restriction can't work when a covered company takes the same technology and puts it in a different box with a different brand on it, right?

91:26And then small and medium-sized enterprises here in the United States are trying to figure out how many degrees they have to go down the rung to understand the supply chain security. Supply chain provenance is so critical.

91:38This is of course an area where the private sector is investing a lot but we need to do more to force the government for everything that coming into our country to understand who controls the technology where was it produced where are the components made There are probably a lot of opportunities as we think about USMCA reauthorization to include some of these restrictions there.

91:57Not only as we think about reassuring and reinvesting here in the United States, but in the broader North American market. And I think these are areas that the administration is taking pretty seriously, but it's certainly these are areas where Congress on both sides of the aisle need to press them to include these rules of origin restrictions to prevent the exact thing that you're describing.

92:15Thank you so much. For Northeast Ohio, success means American workers making the equipment we need, local businesses competing on fair terms, and hospitals and transit systems delivering reliable services without exposing our communities to foreign interference.

92:27If Congress restricts a supplier, we must help build the replacement capacity. That requires investment, clear standards, and accountability so these policies deliver good paying jobs and lasting security for the people we represent. And with that, I yield back.

92:47Thank you. Thank you, Mr. Newhouse.

92:57Let me thank again our witnesses for being here for this important hearing. Appreciate that very much for sharing your expertise and knowledge on a very important subject. Reminder to all members that questions for the record are due one week from today.

93:15And with that, without objection, the hearing is adjourned.

93:20Mrs. Carson.

93:21Thank you, sir.