On June 6, 2025, US President Donald Trump signed two executive orders—"Unleashing American Drone Dominance" and "Restoring American Airspace Sovereignty"—mandating that the US drone industry exclude technology, parts, and materials from controlled countries (China, Russia, Iran, North Korea). The orders encourage adopting allied technologies to build an autonomous, resilient domestic ecosystem supporting the low-altitude economy and critical defense needs.
According to the October 2025 National Manufacturing Day declaration, the federal government facilitated over US$5 trillion in private and foreign investment within 100 days, creating 450,000 jobs. The drone sector is a key engine driving America's manufacturing transformation.
Federal policies and NDAA compliance updates
Companies, products, or supply chains involved in US defense-related procurement, investment, or collaboration must comply with all regulations under the National Defense Authorization Act (NDAA). Originally limited to defense procurement, these requirements have expanded to include federal agencies, with state and local governments expected to follow suit.
Sourcing and country of origin
Use of designated products or materials from controlled countries is prohibited; non-US-made items must meet ally/qualified source/case approval rules; traceability of materials and components is required.
Product and technology
NDAA-prohibited items, such as certain communications equipment, optical systems, batteries, and chemicals, are banned; critical tech, IP, and data cannot be controlled by "foreign entity concerns."
Supply chain and manufacturing
Tier-2 and Tier-3 suppliers must also comply; no "self-compliance" if upstream suppliers are noncompliant.
Cyber and governance
CMMC/DFARS cybersecurity standards and maintain audit-ready internal controls must be met.
NDAA enforcement across agencies
The Department of Defense (DOD) must fully comply, covering defense procurement, military systems, research, and supply chains, including Tier-2/Tier-3 suppliers.
Most other federal agencies face direct legal mandates on specific NDAA provisions, notably Section 889, banning certain communications and surveillance equipment. Agencies like DOD, DHS, DOC, DOE, DOT, NASA, law enforcement, and federally funded research institutions adhere to these rules. The Office of Management and Budget's M-26-02 memo (Nov 21, 2025) requires all federally funded entities and subcontractors to comply.
Many federal units voluntarily adopt DOD standards through contracts referencing NDAA/CMMC to mitigate national security risks and avoid congressional scrutiny or retroactive policy changes.
State and local governments indirectly affected
While states are not directly bound by NDAA, those using federal grants or collaborating with DOD, DHS, FEMA, etc., must avoid NDAA-restricted items or meet equivalent security standards. This drives public safety, emergency response, and infrastructure sectors to shun high-risk equipment like noncompliant drones and communication devices. FEMA and DHS fund counter-unmanned aircraft system (counter-UAS) technologies via grant programs, reinforcing compliance and benefiting local manufacturers.
States actively competing to attract drone companies with tax incentives and infrastructure include Alabama, Texas, Ohio, North Dakota, New York, Florida, and Virginia.
Blue UAS: NDAA's trusted drone framework
Blue UAS refers to the official list and system recognized by the DOD for drones that pass cybersecurity, supply chain, and national security vetting, ensuring trustworthiness for defense adoption.
It encompasses national security and cybersecurity safeguards against data leaks, remote control threats, or backdoors; supply chain security excluding reliance on controlled countries' critical components, especially China; and standardized procurement enabling confident, rapid acquisition by US government agencies.
Blue UAS covers entire systems, not just airframes, but also flight control, communication modules, sensors (cameras, LiDAR), software, ground stations, and cloud/data processing.
Any noncompliance disqualifies the whole system. It serves as NDAA's drone implementation mechanism, providing a whitelist for DOD, federal, state, law enforcement, firefighting, disaster relief, and defense research buyers.
At the end of 2025, Blue UAS oversight shifted from the Defense Innovation Unit (DIU) to the Defense Contract Management Agency (DCMA), which manages supply chain and manufacturing risk bottlenecks.
Advanced air mobility (AAM)
Commercial AAM falls mainly under Federal Aviation Administration (FAA) regulation, focusing on airworthiness, type certification, and airspace integration without mandatory Blue UAS restrictions. However, many AAM operators proactively align with or partially adopt Blue UAS-listed suppliers.
AAM businesses often start commercial operations before pursuing government contracts involving public safety, homeland security, infrastructure inspection, or emergency missions, where NDAA, Section 889, and Blue UAS compliance become mandatory. Common practices include avoiding restricted-country components, ensuring auditable communications and flight controls, preventing sensitive data upload to risky clouds, and maintaining supply chain traceability. Long-term market expansion depends on meeting Blue UAS criteria, even if immediate listing is not urgent.
Companies targeting government procurement can partner with US integrators to develop dual-use product lines aligned with NDAA/CMMC and gain Blue UAS certification.
Additionally, the Green UAS standard and trusted commercial drone list promoted by US industry groups like AUVSI emphasize cybersecurity, supply chain transparency, software and data risk management, and exclusion of high-risk countries. This acts as a stepping stone toward Blue UAS, especially relevant for customers in state/local government, public safety, energy, transportation, infrastructure, and federally funded projects.
Investors now favor clean bills of materials (BOMs) free from Chinese or high-risk suppliers, making inclusion even in Green UAS lists crucial for funding and mergers/acquisitions.
FCC Covered List tightens market access
On December 22, 2025, the FCC added all foreign-made drones and critical components to its Covered List, severely restricting new models and key parts from obtaining FCC equipment authorization. Without this certification, products cannot legally sell or deploy in the US market.
The FCC granted conditional temporary exemptions until January 1, 2027, only for systems on the Blue UAS list certified by DoD/DCMA and products qualifying as domestic end product/Buy American (assembled in the US with traceable supply chains excluding controlled sources).
Unlike legislation or tariffs, FCC certification is a technical approval effective immediately, acting as a choke point blocking new product launches without lengthy congressional processes.
This creates strong incentives to assemble in the US, adjust supply chains to enter Blue UAS, or obtain domestic end product status.
Foreign vendors lacking US manufacturing or certification strategies, especially those aiming to export complete drones or key components directly to the US, face significant setbacks.
Federal funding eases supply chain bottlenecks
US drone manufacturing heavily relies on foreign-sourced critical components, some from controlled countries like China. Federal initiatives such as the DOD's Industrial Base Analysis and Sustainment (IBAS) program and Defense Production Act Title III prioritize funding for vulnerable key parts, advanced technologies, and materials—including actuators, flight controllers, advanced sensors (optoelectronic/infrared), rare earth elements, motors, electronic components, communication systems, and batteries. This support extends beyond final assemblers to benefit Tier-2 and Tier-3 suppliers.
The CHIPS and Science Act, while primarily a semiconductor incentive, also covers advanced packaging and rare-earth magnets related to drone motors, flight controllers, and sensor modules, offering secondary suppliers advantages.
Various states aggressively compete to attract drone firms with incentives addressing supply chain gaps, notably Ohio, Arizona, Texas, New York, Alabama, and Mississippi.
Drone supply chain gaps create opportunities for Taiwan
With NDAA compliance demands, large supply chain gaps present policy benefits for domestic manufacturers. Taiwanese suppliers should approach the US market not merely as exporters seeking subsidies but as integral parts of the US supply chain, focusing on filling critical bottleneck components eligible for funding.
Establishing US-based manufacturing remains essential to capture these opportunities, requiring early engagement with local governments and strategic planning despite additional considerations and negotiation space beyond this article's scope.
Article translated by Charlene Chen and edited by Jack Wu
