Trump Order Cuts Off Waivers for China-Linked Minerals in Defense Supply Chains Starting 2027

President Trump signed an executive order Monday, July 20, directing the Department of War to shut off waivers that let defense contractors buy critical minerals from China, Russia, Iran and North Korea, according to Manufacturing Dive. The cutoff hits January 1, 2027.

The underlying restriction already exists under 10 U.S.C. §4872, a statute barring the Pentagon from buying weapons, aircraft, ships and tanks built with specialty metals or components from foreign adversaries, according to the Coalition for a Prosperous America. The problem, per CPA, is that the law has been "riddled with exceptions" for years. This order is Trump telling the Pentagon to stop handing them out so easily.

The executive order gives Defense Secretary Pete Hegseth six months to write policy requiring every prime contractor and subcontractor to map their entire supply chain, tracing "all components, parts, equipment, software, and materials back to the origin of raw materials," according to Breaking Defense. Companies have to submit what CPA describes as a complete "Bill of Materials" showing exactly where everything comes from.

After January 1, 2027, no more automatic waivers. A contractor that still needs banned materials has to prove it made "exhaustive efforts" to find alternatives and document the money it spent trying, according to Manufacturing Dive. If the Pentagon later finds a company committed fraud, lied to the government, or blew off its own mitigation plan, the Department of Justice can get involved.

Why now, and why this framing

Trump's order doesn't name China directly, but nobody's confused about the target. China controls roughly two-thirds of global rare earth mining and about 90% of refining capacity, according to the South China Morning Post. That's the leverage point the order is written around. The text itself calls for securing supply chains against "physical, cyber, and economic subversion" in an "era of renewed great power competition."

Manufacturing Dive reported Trump accused defense contractors of not prioritizing domestic military production. That's a real shot at the industrial base, not just at Beijing. If contractors can't find a domestic or allied alternative and can't justify a waiver, the order says the government can modify or terminate their contracts.

Industry's real concern

Defense contractors and trade groups have raised a legitimate problem: 18 months is a short runway to rebuild supply chains that took decades to route through China. Rare earth refining capacity doesn't get built overnight, and alternative suppliers in allied nations are limited and often more expensive. A contractor that discovers a single point of failure deep in a sub-supplier's parts list may not be able to fix it by the deadline no matter how hard it tries.

Michael Cadenazzi, the assistant secretary of defense for industrial base policy, acknowledged this directly to Breaking Defense at the Farnborough Airshow. He said the Pentagon wants companies to come forward with "a legitimate gap" and a mitigation plan, not just miss the deadline quietly. "If there's a gap, a legitimate gap, [and] you have a plan and you need a window to see you through [to] bridge that gap, that's what we want to know," Cadenazzi said, adding that the department wants a plan for "the long haul," not a permanent excuse.

That's a meaningful concession. It means the January 2027 date functions more as a forcing deadline for documented progress than a hard wall that ends every waiver overnight, provided a company is negotiating in good faith. Cadenazzi told Breaking Defense the Pentagon would consider requests like needing a bridge "until next summer" if the plan is credible.

The open question: copper

CPA flagged one unresolved detail. Copper was added to the Interior Department's critical minerals list in 2025. Whether copper falls under this executive order's mitigation and waiver rules isn't yet clear from the order's text, and given how deeply copper runs through virtually every electronic and mechanical defense component, that ambiguity alone could determine how disruptive this policy turns out to be.

What happens next

Hegseth's six-month clock to write implementation guidance runs through roughly January 2027, the same window as the waiver cutoff, according to Manufacturing Dive. The Pentagon also owes the National Security Advisor a report on measurements and remedial actions taken against noncompliant companies. Contractors now face a choice: start documenting alternative sourcing now, or wait and hope the mitigation-plan process buys enough time. Given Cadenazzi's public comments, the Pentagon appears to be signaling it wants the former, not a wave of last-minute waiver requests in December 2026.