Trump Signs Order Aimed at Boosting Domestic Defense Suppliers

President Donald Trump signed an executive order on July 20 aimed at boosting domestic suppliers of defense contractors.

The directive became the latest action from the administration to reduce dependency on overseas supply chains, tightening waiver rules that allowed contractors to use cheaper or easier options in purchasing materials from China and other foreign suppliers.

“The United States military is the most effective and powerful fighting force on the planet,” Trump’s order reads. “It is the policy of the United States that not only the finished equipment deployed by our military, but also the critical materials and components necessary to manufacture, maintain, sustain, and repair that equipment, are sourced domestically or from allied nations.”

American defense contractors have historically under-prioritized domestic production, the president said.

Trump instructed Secretary of War Pete Hegseth and other military officials to cease issuing waivers for the acquisition of minerals and materials for defense production—with some exceptions—to encourage contractors to instead use domestic suppliers.

Defense contractors will have to show much further proof when seeking a waiver, according to the executive order, requiring them to prove that “exhaustive efforts” were made in searching for alternatives, explain where materials came from, and lay out a plan to shift away from using prohibited suppliers.

Contractors risk losing contracts if they cannot prove that they are working enough to source minerals and materials domestically.

“No more: ‘We tried nothing and we’re out of options,'” Trump adviser Peter Navarro, an economist, said to reporters before the executive order was released.

It also requires contractors to evaluate defense suppliers for foreign ownership, financial vulnerability, and manufacturing risks, while directing them to replace suppliers found to be unreliable.

The executive order comes as the United States has ramped up attacks against Iran, with 10 consecutive days of strikes in response to Iran’s own military action. Three American service members have been killed in recent days.

Trump’s directive also comes as the Pentagon has pushed domestic defense contractors, such as Lockheed Martin and Boeing, to rapidly expand weapons production.

Aside from tightening waiver rules, the order directs the Pentagon to draft rules requiring contractors to intimately detail their defense supply chains, from raw materials to finished products.

The companies will be required to disclose the origin of their materials, components, software, and other things used in weapons systems.

“This is not paperwork,” Navarro said. “It is battlefield preparation.”

He said that the Pentagon must know whether missile systems or other military products depend on foreign-controlled suppliers before a conflict begins.

Potential penalties for defense contractors that do not comply are also included in Trump’s order.

Hegseth is directed to take all necessary actions consistent with the law against companies that engage in fraud or deliberately mislead the federal government in attempting to circumnavigate the new rules. He is authorized to refer any contractors in violation to the U.S. attorney general for investigation and possible prosecution.

Reuters contributed to this report.