Executive summary

On 20 July 2026, United States (US) President Donald Trump announced two measures intended to strengthen domestic manufacturing capacity and reduce reliance on foreign sources of strategic materials.

First, the President issued a Presidential Proclamation (Proclamation) directing the US Secretary of Commerce to establish a new incentive program for businesses that invest in building, expanding or refurbishing primary aluminum production facilities in the United States. Under the program, approved participants may be eligible to import specified volumes of primary aluminum at a reduced Section 232 tariff rate equal to one-half of the otherwise applicable rate.

Second, the President issued an Executive Order (EO) aimed at strengthening defense supply chains and increasing domestic acquisition of critical materials. Among other actions, the EO restricts the use of waivers for certain critical materials sourced from designated countries, establishes new supply-chain mapping requirements for defense contractors and directs the qualification of alternative domestic sources where available.

Together, these actions continue the Administration's broader effort to encourage domestic production of strategically important materials and increasing supply chain transparency for national security-related industries.

Aluminum production incentive program

The Proclamation directs the US Secretary of Commerce to establish an incentive program for businesses that commit to building, expanding or refurbishing facilities that produce primary aluminum in the United States.

According to the Proclamation, the Administration determined that domestic production and supply of primary aluminum remain insufficient, despite actions previously taken under Section 232 of the Trade Expansion Act of 1962. As a result, the Secretary of Commerce is authorized to solicit and review onshoring plans submitted by businesses seeking to expand domestic primary aluminum production capacity.

If approved, participating businesses will be eligible to import a quantity of primary aluminum corresponding to the reasonably anticipated annual production of their approved project at a reduced tariff rate equal to one-half of the otherwise applicable Section 232 duty rate.

Eligible projects include:

• Construction of new facilities capable of producing primary aluminum
• Expansion of facilities to become capable of producing primary aluminum
• Refurbishment of existing facilities to increase primary aluminum production or improve production efficiency

To participate, applicants must submit an onshoring plan that includes:

• A commitment to build, expand or refurbish a US facility that will produce primary aluminum
• A commitment that construction will begin no later than 20 January 2029
• Any additional information required by the Secretary of Commerce

The Secretary, in consultation with other executive branch officials, may consider a variety of factors when evaluating applications, including the anticipated construction start date, project timelines and milestones, projected annual production, anticipated costs and the allocation of benefits associated with the reduced tariff rate.

The Administration is expected to publish additional implementation guidance regarding the operation of the program and application procedures.

Executive Order increasing requirements for critical-material supply chains

The Administration also issued an EO intended to strengthen enforcement of domestic sourcing requirements for certain defense-related materials and components. The EO states that critical materials and components used to manufacture, maintain, sustain and repair military equipment should be sourced domestically or from allied nations and is designed to strengthen implementation of 10 U.S.C. Section 4872 while reducing reliance on designated foreign sources for covered materials.

The EO states that, beginning 1 January 2027, the US Department of Defense will generally stop issuing waivers for covered materials unless a contractor submits and receives approval of a formal mitigation plan.

Covered materials include:

• Samarium-cobalt magnets
• Neodymium-iron-boron magnets
• Tungsten metal powder
• Tungsten heavy alloy and finished or semi-finished components containing tungsten heavy alloy
• Tantalum metals and alloys
• Molybdenum

The restrictions apply to sourcing from:

• China
• Russia
• Iran
• North Korea

To maintain waiver eligibility, a contractor's mitigation plan must:

• Identify the noncompliant source of covered material
• Demonstrate exhaustive efforts to obtain compliant sources or establish that compliant material was unavailable
• Describe steps to remove noncompliant material from the supply chain
• Establish a timeline for implementation

The EO further provides that contractors generally may not rely on a "non-availability" claim unless they can demonstrate active, adequately funded and ongoing efforts to qualify a compliant source.

Department of Defense to require supply-chain mapping

The EO directs the Secretary of Defense to develop policy guidance within 180 days requiring prime contractors and subcontractors at any tier to map and illuminate critical supply chains associated with acquisitions that support, implicate or relate to US national security. Implementing regulations are expected within the 90 days of developing the policy guidance.

Among other requirements, contractors will be required to provide a complete bill of materials tracing components, equipment, software and materials to the origin of the underlying raw materials. Contractors also will be required to implement written supply-chain risk assessment procedures and proactively vet suppliers and subcontractors for financial, foreign ownership, control or influence, and manufacturing and supply-related risks.

Qualification of alternative sources

The EO further directs the Department of Defense to identify acquisitions that rely on materials or components supplied by unreliable foreign suppliers. Contractors will be expected to qualify and utilize alternative sources where available. Failure to do so may result in suspension or termination of task orders, non-exercise of contract options or termination of existing contracts.

The Secretary of Defense is also directed to develop a strategy by 18 October 2026 to accelerate testing and qualification of new sources and materials.

Reporting requirements

The EO requires semiannual reporting between 20 July 2026 and 1 January 2028 on implementation of the order, including continued waiver usage, accepted mitigation plans, progress in supply-chain mapping and efforts to qualify domestic sources.

Actions to consider

Aluminum producers, importers and investors, depending on their particular circumstances, may want to consider the following actions:

• Evaluate planned or prospective investments in US primary aluminum production facilities to determine whether projects may qualify for the forthcoming incentive program.
• Assess whether construction timelines, production forecasts and project economics align with the criteria outlined in the Proclamation.
• Monitor Department of Commerce guidance regarding application procedures, qualification requirements and administration of the reduced-tariff program.
• Monitor ongoing reporting and compliance obligations; the Administration has indicated that tariff benefits may be revoked, potentially on a retroactive basis, if approved participants fail to satisfy commitments under their onshoring plans.

Defense contractors and subcontractors, depending on their particular circumstances, may want to consider the following actions:

• Identify whether covered materials within existing supply chains originate from China, Russia, Iran or North Korea.
• Review current sourcing arrangements and assess the availability of alternative domestic or allied-country suppliers for covered materials.
• Evaluate existing bills of material, traceability and supply-chain mapping capabilities in anticipation of forthcoming Department of Defense requirements.
• Consider whether current supplier due diligence and risk assessment procedures adequately address financial, foreign ownership, control or influence, manufacturing and supply-chain risks.
• Develop transition plans for covered materials that may currently rely on suppliers located in covered countries, particularly if future waiver availability may be limited.