Stricter procurement rules are set to take effect from 2027, including restrictions on rare earth magnets. A new executive order aims to further limit exemptions and strengthen supply chain oversight.
Starting on January 1, 2027, stricter procurement requirements will apply to acquisitions by the U.S. Department of Defense. Certain rare earth magnets, as well as tantalum and tungsten products, will no longer be permitted if any part of their supply chains is linked to China, Russia, Iran, or North Korea. A new executive order issued by U.S. President Donald Trump further tightens these upcoming requirements.
The main focus is on making exemptions more difficult to obtain. Contractors will be required to demonstrate that no compliant alternative source is available and provide a binding roadmap for transitioning to a different supplier. At the same time, defense companies will have to disclose their supply chains in significantly greater detail. The U.S. Department of Defense has been instructed to develop corresponding implementation guidelines within 180 days.
Companies that continue to use materials or components from foreign suppliers classified as unreliable may be required to transition to alternative sources where available. Failure to comply could result in measures including the suspension or termination of contracts. At the same time, the Department of Defense intends to accelerate review and approval procedures.
However, implementing the stricter regulations could prove challenging. Despite increasing investments in domestic supply chains and raw material projects in partner countries, the United States remains heavily dependent on China. Additional pressure could come from China’s export controls, announced in October 2025, that cover additional rare earth products, production equipment, and related technologies. These measures are currently suspended until November 10 of the current year. If they come into force, they could significantly affect the U.S. defense industry, as many of the materials involved are also used in military applications.
Photo: iStock/Bill Chizek
