Protecting US supply chains from foreign influence
With the new Trump administration likely to place an even greater focus on reducing reliance on China, this trend is expected to accelerate.
In an increasingly interconnected global economy, supply chains face growing risks from foreign influence, with critical implications for U.S. security. Federal agencies tasked with safeguarding these supply chains are under mounting pressure to proactively identify and mitigate these threats before they disrupt operations or compromise national security.
With the new Trump administration likely to place an even greater focus on reducing reliance on China, this trend is expected to accelerate. Companies are already beginning to shift their operations and supplier relationships away from China to protect U.S. intellectual property and ensure innovation remains secure. This strategic shift reflects broader concerns about safeguarding critical technologies and staying ahead in key innovation focus areas for the U.S. Department of Defense’s Office of Strategic Capital, including AI, autonomy, semiconductors, quantum science and space.
Understanding the threat landscape
A common misconception about foreign influence in supply chains is that it only involves overt actions like cyberattacks or espionage. In reality, foreign influence can be subtle, embedded deeply within the supply chain through complex dependencies and hidden vulnerabilities. For example, companies may unknowingly rely on suppliers heavily influenced by foreign investors or tied to adversarial governments. This influence might not be geographically obvious — such as goods produced in Taiwan versus mainland China — but can still pose significant risks.
Foreign influence in supply chains can lead to:
- Geopolitical dependencies: Over-reliance on suppliers from nations with conflicting interests, particularly those known for economic espionage.
- Cybersecurity vulnerabilities: Exploitable weaknesses in digital infrastructure that can expose sensitive data.
- IP theft: Unknown infiltration of bad actors accessing intellectual property or strategic plans through supplier or contractors
- Employee affiliations connected to near-peer adversaries, education links with Defense Universities, and previous employment ties to restricted entities or affiliations with military entities pose a growing risk.
Agencies need robust strategies to detect and respond to these risks before they manifest into tangible disruptions or security breaches.
Strengthening supply chain resilience through partnerships
Federal agencies understand that ensuring supply chain security and protection against foreign influence requires more than periodic audits or supplier diversification — it demands collaboration with companies that specialize in supply chain risk management and advanced analytics. By working with supply chain resilience companies, agencies gain access to cutting-edge tools designed to proactively identify and address foreign influence risks.
Partnerships enable federal agencies to leverage AI-driven platforms that analyze supplier networks for geopolitical risks, foreign ownership and other vulnerabilities. With these capabilities, agencies can detect hidden risks and take preemptive actions to fortify critical supply chains.
An example comes from the Small Business Innovation Research (SBIR) program. In the past, some companies receiving federal grants through SBIR were later found to have significant ties to foreign adversaries, including entities with links to China. These connections, often deeply embedded within the supply chain, highlighted vulnerabilities in how federal dollars were allocated. For instance, a review of SBIR funding showed companies with ties to adversarial nations benefiting from millions in federal investments, potentially compromising U.S. security and innovation.
Recognizing this risk, the SBIR Reauthorization Act introduced stricter measures to ensure recipients of federal funds are screened for foreign ownership, control or influence (FOCI). These reforms have empowered federal agencies to scrutinize contractors more effectively, leveraging partnerships and advanced tools and data to identify risks before funds are distributed.
By combining these safeguards with advanced technologies like AI-driven supply chain monitoring, federal agencies can now detect hidden vulnerabilities, ensure transparency and make informed procurement decisions.
A three-step action plan for federal agencies
To effectively counter foreign influence threats, federal agencies can adopt the following action plan:
- Assess vulnerabilities through comprehensive due diligence: Conduct comprehensive audits of supplier networks in collaboration with private-sector experts to identify exposure to foreign influence risks. Leveraging advanced tools such as AI-driven analytics, agencies can screen suppliers for FOCI and uncover hidden ties to adversarial nations.
- Enhance collaboration across sectors: Foster cross-agency and public-private collaboration to share intelligence and align on risk mitigation strategies. Engaging with external experts and industry leaders provides access to the latest technologies and methodologies for monitoring supplier networks.
- Invest in technology to continuously monitor risk and prevent emerging threats: Equip agencies with supply chain risk management (SCRM) platforms that combine predictive analytics with actionable intelligence. These tools allow for real-time monitoring of supplier networks, enabling agencies to detect vulnerabilities such as geopolitical risks or weak cybersecurity protocols. The integration of these platforms empowers agencies to respond swiftly to both known and emerging threats, ensuring that federal investments remain secure.
- As an example of risk within supply chains, when screening for compliance and regulatory risk, 0.8% of top-level suppliers will have this type of risk, whereas 18% in the next tier down will have findings. This illustrates the need to assess risk at key tiers of your supply chain against foreign affiliations and compliance risks.
The path forward
As the stakes grow higher, federal agencies cannot afford to take a reactive stance on supply chain security. Bipartisan consensus underscores the urgency of protecting supply chains, intellectual property and national security interests. By adopting proactive measures and leveraging innovative technologies and partnerships, agencies can safeguard their supply chains from foreign influence, ensuring operational integrity and national security.
Brian Mackerer is the group director for government and defense sector at Craft.
Copyright
© 2025 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.
