U.S. Executive Order on Critical Minerals: Comprehensive Tracking of Defense Supply Chains
On July 20, 2026, U.S. President Donald Trump signed Executive Order 14415, strengthening regulations on the procurement of critical minerals by defense industry companies. The new executive order focuses on establishing supply chains centered on the United States and its allies, and on tracking procurement pathways from raw materials to finished products, rather than simply relying on domestic self-sufficiency.
This measure restricts the exceptional approvals that defense companies have been receiving to use sensitive materials produced in non-aligned countries such as China. At the same time, it includes supplementary measures to support the industry’s transition to new supply chains, such as conditional exemptions, support for the certification of new suppliers, and easing of regulatory burdens for small and medium-sized enterprises.
Key mineral exemption requirements to be significantly strengthened from 2027
According to an executive order released by the White House, the U.S. Department of Defense will, as a general rule, suspend exemptions from procurement restrictions under Title 10, Section 4872 of U.S. law, effective January 1, 2027. This law restricts the procurement of sensitive materials, such as rare earth permanent magnets and tungsten, tantalum, produced in countries including China, Russia, Iran, and North Korea.
However, exemptions may be granted in cases where supply shortages make compliance unavoidable. The prime contractor or subcontractor must submit an official risk mitigation plan that includes information on the origin of the non-compliant material, the efforts made to find suitable alternatives, and the methods and completion schedule for removing the material from the supply chain.
It is difficult to be deemed unable to supply simply because domestic suppliers were not pre-certified. To be considered for an exemption, the company must demonstrate that it is actively pursuing domestic supplier certification by allocating sufficient budget.
Companies that submit false information or intentionally fail to implement approved plans may be subject to contractual penalties. Depending on the circumstances, this may include contract termination or cancellation, as well as referral for investigation by the Ministry of Justice.
From raw materials to weapon systems: creating supply chain maps
The executive order requires the Ministry of National Defense to develop policies and guidelines within 180 days to enhance the transparency of critical defense supply chains. Subsequently, a process will be initiated within 90 days to establish the relevant implementing regulations.
The companies subject to the regulation must submit a hierarchical bill of materials that connects components, equipment, software, and materials, all the way back to the source of the raw materials. When the regulation is implemented, the Ministry of National Defense will be able to examine not only the procurement structures of the prime contractors but also those of multi-tiered subcontractors.
The company must also verify the financial status and production capabilities of the supplier, as well as the potential for foreign ownership, control, or influence. If any significant risks are identified, the company must notify the Ministry of National Defense within 15 days of completing the verification and submit a plan, within 45 days, outlining the corrective actions and the completion schedule.
According to a Reuters report, the purpose of this measure is largely to identify remaining Chinese dependencies in the sub-supply chains of advanced weapon systems, such as missiles and aircraft. The Ministry of National Defense plans to use the collected data and AI-based analysis tools to identify bottlenecks and single points of failure.
Supplementary measures to reduce the burden on the industrial sector
Conditional exemptions and support for new supplier certification
The new executive order does not immediately halt the use of all non-compliant materials. Limited exemptions are permitted in cases where compliant materials cannot be obtained and when a supply chain transition plan is specific.
The Ministry of National Defense must also develop strategies to expedite the testing and certification of new materials and suppliers within 90 days. This includes reviewing and revising regulations that delay the certification of suppliers necessary for defense production, as well as improving testing procedures, certification methods, and related software.
Protecting Small and Medium-sized Enterprises and Government-Supported Projects
The regulations for supply chain tracking are designed to avoid placing excessive burdens on small and medium-sized enterprises, non-traditional defense companies, and new entrants. This measure reflects concerns that complex material specifications and the costs of due diligence on subcontractors could act as barriers to market entry for smaller companies.
Projects involving strategic critical minerals, including those in which the U.S. Export-Import Bank participates (Project Vault), and domestic and foreign projects that have received subsidies, loans, and equity investments from the U.S. government, are also protected. This explicitly allows defense companies to utilize U.S. and allied supply sources that have been established through government support.
The Reality of the U.S. Defense Industry’s Critical Mineral Supply Chains
The U.S. Government Accountability Office (GAO) assessed that critical materials such as rare earth elements, tantalum, and tungsten are essential for high-performance weapon systems, but domestic production is insufficient. According to GAO data, the United States imported more than 95% of the rare earth elements it consumed from 2019 to 2022, with approximately three-quarters of the imported volume coming from China.
The Ministry of National Defense has provided approximately $439,000,000 since 2020 to support the reconstruction of the U.S. rare earth supply chain. However, the Ministry of National Defense’s demand for rare earth elements is estimated to be less than 0.1% of the global total demand, which presents a structural problem: it is difficult to ensure the commercial viability of new mines and refining/processing facilities based solely on defense-related demand.
The U.S. Geological Survey’s 2026 Mineral Commodity Summaries report analyzed that the United States still exhibits a high level of import dependence for several critical minerals, and that the number of minerals for which China restricts exports is 14. This is why it is necessary to expand not only mining development, but also separation, refining, metal production, and permanent magnet production capabilities.
According to sources in the U.S. mining industry interviewed by the Associated Press, it will take a significant amount of time to expand non-China supply capabilities for certain materials, including tungsten and samarium. In the short term, a strategy that combines existing stockpiles, recycled materials, and supply sources from allied countries is likely unavoidable.
Impact on the defense industry and future schedule
Defense industry companies are likely to face increased costs related to verifying the origin of materials, managing subcontractors, and certifying new suppliers. Companies that fail to secure qualified alternative suppliers may also face the risk of not exercising contract options, having orders canceled, or having existing contracts terminated.
Meanwhile, the executive order could present an opportunity for mines, refineries, and manufacturers of metals and permanent magnets in the United States and allied countries to secure long-term defense contracts. The SAFE (Strategic Actions for a Resilient Economy) organization, a group focused on critical mineral policy, positively assessed the executive order, stating that it signals a connection between U.S. government-supported supply projects and the actual needs of the Pentagon.
The Ministry of National Defense must report to the National Security Advisor at the White House every six months, until January 1, 2028, on the progress of the administrative order implementation, exemption approvals, and risk mitigation plans. How the scope of applicable weapon systems and data submission is defined in the future implementing regulations will be a key factor determining the burden on the industry.
Frequently Asked Questions (FAQ)
When was the U.S. executive order on critical minerals issued?
This is Executive Order 14415, signed by President Trump on July 20, 2026. Its main content focuses on strengthening the procurement of critical defense materials by the United States and its allies, as well as enhancing supply chain traceability.
Can we completely stop using Chinese-made critical minerals starting in 2027?
In principle, the procurement restrictions and exemption requirements are being strengthened, but this does not constitute a complete and unconditional ban. Limited exemptions may be granted if suitable alternative products cannot be secured and a specific supply chain conversion plan has been submitted.
What documents must a defense industry company submit to obtain an exemption?
Companies must submit a risk mitigation plan that includes information on the origin of non-compliant materials, efforts made to secure alternative materials, and the method for removing the non-compliant materials, along with a strict completion schedule.
What information is included in a supply chain map?
The bill of materials includes a hierarchical structure, encompassing raw materials, components, equipment, software, and finished products. The financial risk of suppliers, their production capacity, and the possibility of foreign ownership or control are also subject to evaluation.
Do small and medium-sized defense companies also receive the same regulations?
While it may be included in the list of regulated items, the administrative order instructs that the implementation regulations should be designed to avoid placing excessive burdens on small and medium-sized enterprises and new entrants.
Does this measure signify U.S. self-sufficiency in critical minerals?
It is closer to establishing a stable supply chain centered on the United States and its allied countries, rather than complete self-sufficiency within the United States. This approach involves utilizing government-supported projects, stockpiled materials, recycling, and supply sources from friendly nations.
