Why It Matters
Countries that spend more on their own militaries are supposed to move up the line for American weapons. A Congressional Research Service (CRS) report released Monday, July 27 traces how two executive orders rebuilt U.S. defense export policy around that idea, tying arms sales to allied defense budgets and to the health of American factories. The market it governs is not small: Direct Commercial Sales (DCS), the channel where U.S. companies sell straight to foreign buyers under State Department license, reached $226.8 billion in fiscal 2025, up 13 percent.
The Big Picture
The Trump administration's April 9, 2025, executive order reinstated the Trump's first administration's 2018 Conventional Arms Transfer policy and directed reforms intended to improve the timeliness and predictability of U.S. arms transfers.
A second order, signed February 6, elevated industrial-capacity building from a supporting rationale to an organizing principle of arms transfer policy. It directed agencies to develop a sales catalog of priority systems informed by U.S. defense industrial base needs and to prioritize transfers to partners that invest in their own defense, tying arms sales explicitly to domestic defense manufacturing and to allied military spending.
Congress has signaled its own interest in widening the commercial channel. Section 1213 of the fiscal 2026 National Defense Authorization Act required the executive branch to review and report back on defense articles currently confined to the government-to-government list and assess which could instead be offered through DCS, where private U.S. companies contract directly with foreign buyers under State Department licensing.
The Department of State's Directorate of Defense Trade Controls serves as the licensing authority for those private sales, with the Secretary of State holding export control authority delegated by the President under the Arms Export Control Act. Review runs through several layers: policy assessments by regional and functional bureaus, technology-security evaluations, end-user verification, and congressional notification for cases meeting certain criteria. Once a license clears, companies must implement any conditions attached to it and complete preexport filings.
The Bottom Line
The 13 percent jump in commercial authorizations covers fiscal 2025, which closed before the February order took effect, meaning the figure reflects demand rather than the new industrial-capacity framework. The real test arrives with fiscal 2026 totals and the priority systems catalog, and because DCS notifications stay out of public view, Congress will be the only outside party positioned to see whether the strategy is changing what actually gets sold.
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