The White House announced two policy moves aimed at reducing reliance on foreign suppliers while encouraging domestic metals production.
- Trump signed an executive order making it harder for defense contractors to obtain waivers to source critical minerals and materials from China and other prohibited suppliers.
- Contractors seeking waivers must now prove they explored alternative suppliers, disclose where materials come from and outline plans to reduce reliance on prohibited sources.
- Trump also signed a proclamation adjusting aluminum tariffs and creating incentives for companies to build, expand or refurbish U.S. aluminum smelters.
Shares of MP Materials Corp. (MP) closed 1% higher on Monday, while aluminum companies such as Alcoa Corp. (AA), Kaiser Aluminum Corp. (KALU) and Century Aluminum (CENX) were also in focus after President Donald Trump signed an executive order tightening sourcing rules for defense contractors and a separate proclamation aimed at boosting domestic aluminum production.
While AA shares edged 0.32% higher in after-hours trading after closing the regular session down 1.14%, KALU stock was flat after-hours following a 0.53% decline during the regular session. Meanwhile, CENX shares closed 3.23% higher before edging 0.28% lower in after-hours trading at the time of writing.
Trump Tightens Defense Supply Chain Rules
Trump signed an executive order making it harder for U.S. defense contractors to obtain waivers allowing them to buy critical minerals and other materials from China and other prohibited foreign suppliers, as the administration seeks to reduce reliance on overseas supply chains for weapons production.
Under the new rules, contractors seeking a waiver must prove they searched for alternative suppliers, disclose the origins of their materials and provide a plan to reduce reliance on prohibited foreign suppliers. Companies that fail to comply could face procurement consequences, including the loss of contract opportunities.
“No more: ‘we tried nothing and we’re out of options,’” White House Senior Counselor for Trade and Manufacturing Peter Navarro told reporters, according to Reuters.
The Pentagon has been pushing defense contractors, including Lockheed Martin (LMT) and Boeing (BA), to rapidly expand weapons production while identifying vulnerabilities deep within the military supply chain, stated the report. Many critical minerals and processed materials used in missiles, aircraft and other advanced systems still rely on Chinese suppliers, while China has gradually restricted access to critical minerals and used supply chains as leverage.
The order also directs the Pentagon to map lower tiers of the defense industrial base to identify where critical minerals, components and other materials originate and whether foreign-controlled suppliers could threaten weapons production during a conflict.
Trump Targets US Aluminum Production
Separately, Trump signed a proclamation adjusting tariffs on aluminum imports, saying domestic production of primary aluminum remains insufficient to meet U.S. demand.
The proclamation states that U.S. demand for primary aluminum currently exceeds the production capacity of domestic smelting facilities. It describes aluminum as critical to the U.S. economy and defense industrial base.
The White House said the proclamation directs the Commerce Secretary to establish an incentive program for companies investing in building, expanding or refurbishing aluminum smelters in the U.S.
MP, AA, KALU, CENX Stocks: Stocktwits Retail Sentiment
On Stocktwits, retail sentiment for AA and KALU remained ‘bullish,’ unchanged in the past 24 hours, with ‘high’ message volume for both. The sentiment for CENX was ‘neutral’ with ‘normal’ message volume, while MP saw sentiment improve from ‘bullish’ to ‘extremely bullish,’ with message volume remaining ‘high.’
Year to date, MP shares are down nearly 13% and AA stock has fallen 17%. Meanwhile, KALU shares has gained 35% and CENX stock is up nearly 11%.
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