Tax credit for advanced manufacturing now blocked for foreign supply chains
H.R. 2871 — Safeguarding U.S. Supply Chains Act · Filed by Max Miller (R-OH) · Introduced Apr 10, 2025 · Referred to committee
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What it does
This bill amends the advanced manufacturing production credit (Section 45X of the tax code) to bar companies from claiming the credit for components produced by or involving foreign entities of concern, as defined in the 2021 National Defense Authorization Act. It applies to all eligible components and specifically to battery components, effective immediately upon enactment.
Why we flagged it
The bill's operative mechanism is a targeted tax-credit restriction designed to enforce supply-chain security by penalizing manufacturers who source from or partner with foreign entities of concern. It is a regulatory use of tax policy to achieve national-security objectives, not a general tax cut or subsidy.
What the text implies
- The definition of 'foreign entities of concern' is imported from Section 9901(8) of the 2021 NDAA; changes to that definition in future legislation or regulatory interpretation will automatically alter the scope of this credit restriction without requiring amendment to the tax code.
- Manufacturers may face compliance costs in auditing supply chains and documenting the origin and technology provenance of components, particularly for battery components where technology licensing chains may be complex.
The full analysis lists 4 implications of this text.
Who stands to gain
domestic advanced manufacturing companies; domestic battery component manufacturers; domestic semiconductor and electronics manufacturers