Companies making goods from the Department of War (DoW) will now need much clearer visibility into their supply chains, especially if a product they make or buy includes critical minerals.
The July 20 Executive Order directs the DoW to initiate regulatory action requiring comprehensive supply chain mapping for “critical materials,” of which critical minerals are a part. The EO impacts defense contractors of all sizes who will now need a deeper understanding of sourcing and how their imports are made, especially if they include critical minerals.
The White House action is another step toward industrial policy being written through rules and regulations regarding government procurement, with tariffs being reserved for private enterprise. Moreover, we are getting greater clarity into how official Washington views supply resilience: it focuses on a handful of product lines, the product is considered a national security item, and defense industry sourcing is seen as a front line to forced reshoring or moving defense-related materials out of China. We are likely in the early innings of this endeavor, suggesting that future administrations will continue playing the same game.
The order really just directs the Pentagon to aggressively enforce existing law (10 U.S.C. §4872), which restricts defense procurement from foreign adversaries. Like many trade enforcement matters, this one has not been enforced consistently or is riddled with exceptions. This EO mostly ends waivers for critical materials from non-allied nations and in some cases will require mitigation plans to onshore import-dependent supply chains. Waivers are allowed, but now require written documentation that the part or material can only be found in China, for example, with evidence that the company used “exhaustive efforts” to search for alternatives.
CPA members who produce goods under defense contracts are encouraged to begin sourcing critical minerals, materials, and components used in designated national security procurement, from U.S. or allied-nations. This effectively puts the onus on defense contractors to decouple from China or risk non-compliance with the new Executive Order. Contractors must submit a complete indentured “Bill of Materials” to the Department of War that reveals all components, parts, equipment, software, and imported materials back to its raw materials used to make those goods they import to produce final products sold to the military.
The regulations target only a handful of the usual suspect countries – China, Russia, Iran and North Korea. But defense contractors know that the primary target is China. And the primary reason is China’s dominance in critical minerals and rare earth processing.
What Counts as “Critical Materials”
The question is whether copper is included in the mix. Copper was added to the Interior Department’s critical mineral’s list in 2025. The actual law that the EO is focusing its actions – 10 USC 4872, the acquisition of sensitive materials from non-allied foreign nations – is quite specific and copper is not included. “Covered materials” in the metals and minerals space include those used to make magnets, armor shields and gunpowder, primarily, such as tungsten metal powder and neodymium, a rare earth element.
Worth noting, the EO’s section on “Definitions” for what constitutes a critical material gives the Secretary of War broad authority to define what he believes to be a “critical supply chain” item. The EO is establishing a framework rather than an exhaustive list of what is and is not included.
Therefore we can expect the Secretary to focus on what we keep hearing about in Republican-led Congressional hearings on defense sector import dependence, namely:
rare earth elements
permanent magnets
specialty metals
defense electronics inputs
batteries
semiconductors
aerospace materials
These would all be components used in the manufacturing of missiles, fighter planes and military helicopters, ships, satellites and radar, and electronic warfare systems.
The EO gives the big defense contractors – whose supplier base is not even transparent to them, given their use of layers of subcontractors, many of which are China-based – six months to decouple from China. Or else give the Secretary a proper explanation as to why they cannot do that in the time allotted, if ever.
Greg Hayes famously told the Financial Times in 2023 during his tenure as CEO that,“Raytheon can de-risk but not decouple from China.” He said Raytheon had “several thousand suppliers in China” and that “decoupling fully is impossible.”
If those goods are not deemed critical, Raytheon can still source from China. If they are deemed critical, then they will be forced to find a new partner or risk compliance fights with the Pentagon and maybe even with Congress.
According to the EO, any contractor’s failure to qualify an alternative source of a “covered good” shall constitute grounds for contract suspension.
Defense Contractors Must List Foreign Company Partners
Any defense contract must list the names of foreign owned companies they work with, presumably those in the United States as well. This could impact U.S-based companies owned by foreign entities of concern, or even China outright.
The EO defines foreign ownership, control, or influence as any foreign interest that has “the power to direct or decide matters affecting the management or operations of a company in a manner that may result in unauthorized access to information or may adversely affect the performance of contracts or programs which support national security.”
“The key question is not simply where a product is assembled, but who controls the underlying supply chain,” said Mihir Torsekar, senior economist at the Coalition for a Prosperous America. “As the Defense Department defines critical materials, it should ensure that dependencies on Chinese-owned or Chinese-controlled suppliers, including those operating outside China, do not undermine the resilience the order is intended to achieve.”
Project Vault Treated Differently Exempt
Project Vault gets a carve-out here in the EO. The Vault is the fairly recently formalized strategic reserve backed by the Export Import Bank of the U.S. (EXIM) and is intended to secure non-Chinese mineral supplies. Project Vault’s exemption from the EO is mostly technical. It ensures that when Project Vault sells materials to defense contractors, those transactions aren’t inadvertently treated as export-credit transactions under a particular EXIM statute. That portion of the EO is making sure lawyers don’t accidentally create a legal obstacle to using the reserve.
The big picture remains clear in all this: the Administration knows everything cannot come from domestic supply chains, but it should at least come from supply chains that America trusts and, ideally, helped build or has an investor stake in.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Trump Tells War Department to Gain Better Visibility of Critical Minerals Used by Defense Contractors
Companies making goods from the Department of War (DoW) will now need much clearer visibility into their supply chains, especially if a product they make or buy includes critical minerals.
The July 20 Executive Order directs the DoW to initiate regulatory action requiring comprehensive supply chain mapping for “critical materials,” of which critical minerals are a part. The EO impacts defense contractors of all sizes who will now need a deeper understanding of sourcing and how their imports are made, especially if they include critical minerals.
The White House action is another step toward industrial policy being written through rules and regulations regarding government procurement, with tariffs being reserved for private enterprise. Moreover, we are getting greater clarity into how official Washington views supply resilience: it focuses on a handful of product lines, the product is considered a national security item, and defense industry sourcing is seen as a front line to forced reshoring or moving defense-related materials out of China. We are likely in the early innings of this endeavor, suggesting that future administrations will continue playing the same game.
The order really just directs the Pentagon to aggressively enforce existing law (10 U.S.C. §4872), which restricts defense procurement from foreign adversaries. Like many trade enforcement matters, this one has not been enforced consistently or is riddled with exceptions. This EO mostly ends waivers for critical materials from non-allied nations and in some cases will require mitigation plans to onshore import-dependent supply chains. Waivers are allowed, but now require written documentation that the part or material can only be found in China, for example, with evidence that the company used “exhaustive efforts” to search for alternatives.
CPA members who produce goods under defense contracts are encouraged to begin sourcing critical minerals, materials, and components used in designated national security procurement, from U.S. or allied-nations. This effectively puts the onus on defense contractors to decouple from China or risk non-compliance with the new Executive Order. Contractors must submit a complete indentured “Bill of Materials” to the Department of War that reveals all components, parts, equipment, software, and imported materials back to its raw materials used to make those goods they import to produce final products sold to the military.
The regulations target only a handful of the usual suspect countries – China, Russia, Iran and North Korea. But defense contractors know that the primary target is China. And the primary reason is China’s dominance in critical minerals and rare earth processing.
What Counts as “Critical Materials”
The question is whether copper is included in the mix. Copper was added to the Interior Department’s critical mineral’s list in 2025. The actual law that the EO is focusing its actions – 10 USC 4872, the acquisition of sensitive materials from non-allied foreign nations – is quite specific and copper is not included. “Covered materials” in the metals and minerals space include those used to make magnets, armor shields and gunpowder, primarily, such as tungsten metal powder and neodymium, a rare earth element.
Worth noting, the EO’s section on “Definitions” for what constitutes a critical material gives the Secretary of War broad authority to define what he believes to be a “critical supply chain” item. The EO is establishing a framework rather than an exhaustive list of what is and is not included.
Therefore we can expect the Secretary to focus on what we keep hearing about in Republican-led Congressional hearings on defense sector import dependence, namely:
These would all be components used in the manufacturing of missiles, fighter planes and military helicopters, ships, satellites and radar, and electronic warfare systems.
The EO gives the big defense contractors – whose supplier base is not even transparent to them, given their use of layers of subcontractors, many of which are China-based – six months to decouple from China. Or else give the Secretary a proper explanation as to why they cannot do that in the time allotted, if ever.
Greg Hayes famously told the Financial Times in 2023 during his tenure as CEO that, “Raytheon can de-risk but not decouple from China.” He said Raytheon had “several thousand suppliers in China” and that “decoupling fully is impossible.”
If those goods are not deemed critical, Raytheon can still source from China. If they are deemed critical, then they will be forced to find a new partner or risk compliance fights with the Pentagon and maybe even with Congress.
According to the EO, any contractor’s failure to qualify an alternative source of a “covered good” shall constitute grounds for contract suspension.
Defense Contractors Must List Foreign Company Partners
Any defense contract must list the names of foreign owned companies they work with, presumably those in the United States as well. This could impact U.S-based companies owned by foreign entities of concern, or even China outright.
The EO defines foreign ownership, control, or influence as any foreign interest that has “the power to direct or decide matters affecting the management or operations of a company in a manner that may result in unauthorized access to information or may adversely affect the performance of contracts or programs which support national security.”
“The key question is not simply where a product is assembled, but who controls the underlying supply chain,” said Mihir Torsekar, senior economist at the Coalition for a Prosperous America. “As the Defense Department defines critical materials, it should ensure that dependencies on Chinese-owned or Chinese-controlled suppliers, including those operating outside China, do not undermine the resilience the order is intended to achieve.”
Project Vault Treated Differently Exempt
Project Vault gets a carve-out here in the EO. The Vault is the fairly recently formalized strategic reserve backed by the Export Import Bank of the U.S. (EXIM) and is intended to secure non-Chinese mineral supplies. Project Vault’s exemption from the EO is mostly technical. It ensures that when Project Vault sells materials to defense contractors, those transactions aren’t inadvertently treated as export-credit transactions under a particular EXIM statute. That portion of the EO is making sure lawyers don’t accidentally create a legal obstacle to using the reserve.
The big picture remains clear in all this: the Administration knows everything cannot come from domestic supply chains, but it should at least come from supply chains that America trusts and, ideally, helped build or has an investor stake in.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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