Senate Minority Leader Mitch McConnell, a Kentucky Republican, is pictured, center, in May.
CNN  — 

Senate GOP Leader Mitch McConnell has issued a major warning to Democrats: Republicans won’t agree to a bill to bolster US competitiveness with China if Democrats continue to pursue an economic agenda they are trying to pass along straight party lines this summer.

The China competitiveness bill has been the subject of negotiations for months and is being closely watched by industry groups – particularly automakers – because it includes funding for the development of semiconducter chips that are in short supply.

House and Senate Democrats have been at odds over the proposal, stalling its progress, but the Kentucky Republican’s threat could sink the effort altogether.

“Let me be perfectly clear: there will be no bipartisan USICA as long as Democrats are pursuing a partisan reconciliation bill,” McConnell tweeted, referring to the China competes bill acronym that stands for the United States Innovation and Competition Act.

McConnell’s threat comes as Democrats are pursuing a bill that would include capping the price of prescription drugs – as well as potentially energy and climate provisions – through the budget process known as reconciliation, which allows them to pass legislation along straight party lines.

Senate Majority Leader Chuck Schumer and moderate Democratic Sen. Joe Manchin of West Virginia are in talks about finding a way forward on this package, which would be more limited in scope than the Build Back Better bill that Manchin sunk late last year.

But Democrats are still trying to cut a deal on the economic package before the August recess. If they do continue to pursue that route, McConnell is warning that the China competes bill – which Schumer has been championing since last year – will collapse.

Justin Goodman, a spokesman for Schumer, responded to McConnell’s threat, saying: “Sen. McConnell is holding American jobs in key US industries hostage to help China and protect his friends in big pharma allowing them to keep screwing over Americans with outrageously high Rx drug prices.”