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Yellen Says Lifting Output May Need Protectionist-Like Steps -Breaking


© Bloomberg. Janet Yellen Photographer by Greg Nash/The Hill

(Bloomberg). — Treasury Secretary Janet Yellen stated that America’s dependence on foreign supply chain has made it vulnerable and that the United States must produce more essential goods in its own country to ensure national and economic security.

“It’s possible that policies that people will describe as protectionist are going to be necessary in order to create the appropriate incentives to produce things at home,” Yellen said in an interview recorded on Monday for an online conference hosted by the Financial Times.

The Treasury chief also said, “certainly we want to work with other countries — with our allies and partners — to address supply-chain resilience on a collective basis,” in remarks aired Tuesday. “So, I don’t think this is just about the United States making everything at home, but in some cases that may be part of the answer.”

The Covid-19 pandemic has caused disruptions in the supply chain of many goods. This includes semiconductors that are used in electronics and automobiles. Yellen said it may take “a couple of years” to resolve the bottlenecks for many products.

President Joe Biden ordered a review of such vulnerabilities earlier this year that’s focused on semiconductors, batteries, critical minerals and pharmaceuticals. Yellen stated that the second phase of the review will focus on supplies for defense, food and communication technologies.

In her opinion, the Treasury chief reiterated that high inflation was mostly caused by supply-related issues and that it would recede as soon as the virus became under control. According to her, there was no indication of an inflation spiral in wages that would sustain price rises for extended periods of time.

While the economy and the jobs market remained strong, she conceded that the continued low supply of labor was “a mystery” amid the high demand for workers.

“I’m not sure I know the answer,” Yellen said, adding that over time a tight labor market and improving health conditions are likely to bring some workers back.

©2021 Bloomberg L.P.

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