Trump signs order tightening defense waivers on China minerals by 2027

The White House is forcing defense contractors to prove they can't source critical minerals domestically before buying from China, threatening contract loss.

President Donald Trump signed an executive order Monday tightening waiver rules for defense contractors buying critical minerals from China, requiring them to prove they searched for domestic alternatives or face contract termination.

"No more: 'we tried nothing and we're out of options,'" Peter Navarro, White House senior counselor for trade and manufacturing, told reporters before the order was released.

Starting in 2027, companies must document their material origins, submit plans to phase out prohibited suppliers and assess subcontractors for foreign ownership and financial vulnerability, according to the executive order. The Pentagon will also require prime contractors to map critical defense supply chains from raw materials through finished military products, extending government visibility to lower-tier suppliers.

The crackdown comes as the Pentagon pushes Lockheed Martin Corp. and Boeing Co. to accelerate weapons production while 17 U.S. service members have been killed in the escalating conflict with Iran, exposing persistent vulnerabilities in supply chains that still depend on Chinese suppliers for many critical minerals used in missiles, aircraft and advanced systems.

Critical Minerals Gap Persists

Many critical minerals and processed materials used in U.S. weapons systems still rely on Chinese suppliers, leaving companies caught between Washington's push to decouple from Beijing and the need to keep weapons flowing to American forces and allies. The U.S. imports more than 50 percent of its rare earth elements from China, according to U.S. Geological Survey data, creating a strategic bottleneck the executive order aims to address.

Market and Geopolitical Fallout

The order adds to mounting trade tensions as the U.S. and Iran inch closer to all-out war. Benchmark Brent crude rose above $90 a barrel Monday, while the average U.S. gasoline price hit $4 a gallon, further pressuring American consumers. Defense contractors including Lockheed Martin and Boeing face rising compliance costs and potential supply disruptions as they navigate the new waiver requirements.

The last major U.S. effort to reduce reliance on Chinese critical minerals came in 2022, when the Defense Department awarded $35 million to MP Materials Corp. to process rare earths at its Mountain Pass facility in California. That project has yet to achieve full-scale domestic production, highlighting the difficulty of rebuilding supply chains that took decades to develop.

This article is for informational purposes only and does not constitute investment advice.