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The new Executive Order reframes U.S. arms transfers as a strategic tool of national security and industrial policy.

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Export decisions will increasingly prioritize allies and transactions that strengthen the U.S. defense industrial base.

The Administration intends to streamline Foreign Military Sales (FMS) and Direct Commercial Sales (DCS) processes while maintaining robust compliance oversight.

Companies should anticipate evolving scrutiny of end-use monitoring, third-party transfers and U.S.-control expectations for foreign entrants.

Allied innovators and U.S. defense stakeholders should consider consulting counsel to effectively navigate export controls, foreign ownership and control (FOCI) mitigation, and U.S. defense procurement positioning as arms transfers become more tightly linked to U.S. national security and industrial policy.

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In February 2026, the White House issued an Executive Order titled “Establishing an America First Arms Transfer Strategy.” Although the Order does not amend the Arms Export Control Act or the Export Control Reform Act of 2018 (ECRA), or directly revise the International Traffic in Arms Regulations (ITAR) or Export Administration Regulations (EAR), it represents a significant policy reorientation. The Administration has directed federal agencies to treat arms transfers not merely as commercial transactions, but as strategic instruments of U.S. national security, alliance management and industrial base resilience.

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The Executive Order emphasizes that U.S. defense exports should advance American operational priorities and reinforce domestic production capacity, clarifying that “the United States will prioritize arms sales and transfers to partners that have invested in their own self-defense and capabilities, have a critical role or geography in United States plans and operations, or contribute to&nbsp;our economic security.” In practice, this suggests that arms transfer decisions may increasingly favor transactions that expand the U.S. defense industrial base, strengthen supply chain security and align allied procurement with U.S. strategic objectives. At the same time, the Order calls for modernization and acceleration of the arms transfer process, including streamlining Foreign Military Sales and Direct Commercial Sales pathways, supported by new interagency coordination and performance metrics.

Importantly, the Executive Order does not relax existing compliance obligations and requires that an End Use Monitoring coordination group be established to improve end-use monitoring activities. The Group will be comprised of designees from the Departments of War, State and Commerce, among possible others. Export licensing requirements, congressional notification procedures, end-use monitoring and third-party transfer restrictions remain fully in force. However, companies should expect administrative practices and policy priorities to evolve, including potentially tighter controls on downstream transfers and greater linkage between export approvals and U.S. security oversight mechanisms.

Companies involved in defense exports, cross-border teaming or allied market entry may be affected by the Executive Order’s new policy emphasis in several practical ways. First, arms transfer and export licensing decisions may increasingly favor transactions that align with U.S. strategic objectives and domestic industrial base policies, potentially accelerating some deals while delaying others. Second, companies should anticipate heightened attention to end-use monitoring, third-party transfers and retransfer pathways, particularly in multinational teaming or supply chain arrangements. Third, foreign defense and dual-use companies may face stronger expectations to establish U.S.-controlled structures, such as a U.S. subsidiary or other entry structure, early in the market entry process.

As arms transfers become more explicitly tied to industrial base strategy, national security alignment and compliance rigor, allied defense and dual-use technology companies will require integrated legal guidance. Foreign innovators should consider consulting with counsel to structure compliant U.S. market entry, navigate ITAR/EAR licensing, address foreign ownership and control (FOCI) mitigation, pursue U.S. security clearance pathways where needed, and position themselves effectively within the U.S. defense procurement ecosystem. In this evolving policy environment, early strategic legal structuring will be essential to maintaining competitiveness and securing successful access to U.S. defense opportunities.

The new Executive Order closely aligns with the core services offered through BakerHostetler’s <a href="http://www.bakerlaw.com/services/mission-bridge/">Mission Bridge initiative</a>. Please contact any of our attorneys to discuss these important issues.

New Executive Order, ‘Establishing an America First Arms Transfer Strategy’

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