US Senate lawmakers have approved a massive spending plan to boost technology research and production.
The proposed measures come in the face of growing international competition, particularly from China.
Republicans and Democrats came together to pass the bill despite being deeply divided over a number of other issues.
The bill must pass the House of Representatives before it is signed into law.
Supporters say the package is one of the largest industrial bills in US history and the biggest investment in scientific research that the country has seen in decades.
“I believe that this legislation will enable the United States to out-innovate, out-produce, and out-compete the world in the industries of the future,” Senate majority leader and co-sponsor of the bill Chuck Schumer said on the Senate floor.
It authorises roughly $250bn (£176bn) in funding for technology research, semiconductor development and manufacturing as well as subsidies for robot makers and chipmakers amid a shortage of computer chips worldwide.
The computer chip shortage has hit automobile production at a time of rebounding global demand.
The bill includes a number of China specific provisions, including the prohibition of the social media app TikTok from being downloaded on government devices.
The purchase of drones manufactured and sold by Chinese state enterprises would also be blocked under the legislation.
Chinese organisations engaged in US cyber attacks or theft of US intellectual property from US firms would face sanctions too, once the bill is passed.
In a vote in the upper chamber of the US Congress, 68 of the 100-member Senate supported the measure with 32 against.
The Senate is evenly divided between Republicans and Democrats, with the US vice president Kamala Harris providing a tie-breaking vote for the Democrats.
Experts say it shows how the two political parties are united on the need to counter Beijing’s economic and military ambitions.
A version of the legislation must still pass the US House of Representatives and then reconciled with the Senate version before being signed by President Joe Biden to become law.
The legislation was passed amid some signs of a thaw in relations between Beijing and Washington.
In May, China and the US held virtual talks between trade negotiators in the first such meeting of the Biden presidency.
China’s Commerce Ministry in early June said China and the US had agreed to pragmatically solve bilateral issues and restart normal communications.
However, President Biden praised the bill’s passage.
“It is long past time that we invest in American workers and American innovation,” President Biden said in a statement.
“We are in a competition to win the 21st century, and the starting gun has gone off. As other countries continue to invest in their own research and development, we cannot risk falling behind.”