President Trump signed a Section 232 proclamation on August 13, 2026 imposing tariffs on drones, drone docking stations, and drone parts and components. The proclamation ties the action to foreign sourcing of Unmanned Aircraft System components and to expanding U.S. drone production. The first tier of these tariffs took effect 21 days after signing.
The rates fall into three tiers:
- 100% ad valorem applies to drones the proclamation treats as particularly sensitive for national security. That category covers drones with a maximum takeoff weight above 25 kilograms and drones with thermal imaging capability, plus docking stations for those drones and certain critical components.
- 25% ad valorem applies to smaller drones that lack those capabilities, and to other drone components.
- 15% ad valorem applies to drones and components from the European Union, Japan, Liechtenstein, the Republic of Korea, Switzerland, and Taiwan. 10% applies to the United Kingdom. Both rates require that substantially all of the hardware, software, and technology originate in those countries or the U.S.
Timing splits along the same sensitivity line. The sensitive categories took effect 21 days after signing, while components the proclamation does not treat as particularly sensitive have 180 days before they take effect, which puts them in early February 2027. That same 180-day timing covers products the Department of War approved for an exemption from the FCC Covered List within 20 days of signing.
The proclamation also authorizes the Secretary of Commerce to establish an onshoring program for companies making new investments in drone and component manufacturing. Commerce has not yet published program terms, eligibility, or an application window, so the shape of that benefit remains open. We are watching for the notice.
What this does to domestic capital plans
At a 100% tariff, an imported airframe or thermal optic costs twice what it did before, causing defense manufacturers to question whether to buy the component abroad or produce it in the U.S. Capital that used to leave the country as purchase orders starts landing as buildings, production lines, test equipment, and tooling inside U.S. jurisdictions. Companies already producing here feel the same pressure on the component side, pulling sub-assembly work in house.
That shift has two effects:
The first is exposure. A larger domestic capital base means more property tax to manage. Assessors see new construction and new business personal property, and they default to the cost method when determining value.
The second is opportunity. Nearly every state and local program sizes the benefit off of capital investment and job creation, so a project that grew under tariff pressure can support a larger incentive package than the same project would have supported a year ago. These programs apply to expansions of existing operations, not just new builds. Capturing these opportunities depends entirely on timing.
Program deadlines often run ahead of construction
Most state and local programs require the incentive application to precede the commitment, which means the incentive decision has to close while the site decision is still open.
Texas JETI, the successor to Chapter 313, shows how this works in practice. JETI requires an applicant to show that the program was a compelling factor in a competitive site selection decision and to produce evidence that the incentive drove the investment. Once a company announces a site or breaks ground, it cannot make that argument. JETI thresholds scale by county population. We read the current range as roughly $20 million in investment and 10 jobs at the smallest county tier up to $200 million and 75 jobs at the largest, with a wage floor at 110% of the county average wage and a health benefit requirement. Construction jobs do not count towards new job totals. For confirmed figures, get in touch with our team. We’ll pull the thresholds for specific counties.
Chapter 312 abatements carry the same constraint in a different form. A Chapter 312 agreement abates only the value a company adds after it signs, so a company that signs once construction is underway keeps the value already in place fully on the roll.
The federal side has its own timing windows. The One Big Beautiful Bill Act added Section 168(n), which allows a 100% depreciation allowance for qualified production property that serves as an integral part of a qualified production activity. Construction has to begin after January 19, 2025 and before January 1, 2029, and the company has to place the property in service before January 1, 2031. The qualified production activity has to occupy at least 95% of the space, and a 10-year recapture provision applies if the company stops using the property that way. Those two conditions turn a floor plan and a program forecast into tax questions.
Specialized facilities carry a separate valuation problem
While timing determines what a company captures on the front end, what happens after the facility opens depends on how the jurisdiction values it, and defense assets offer a unique challenge to that process.
Secure facilities, classified space, purpose-built production lines, and custom test infrastructure share one trait: no comparable sales and no market rent. Jurisdictions often fall back on cost to determine value, and cost on a hardened or purpose-built facility typically substantially overstates market value. Personal property presents the same issue. EMI chambers, avionics benches, calibration equipment, and specialized tooling sit on depreciation schedules that fit general industrial equipment, not specialized defense uses.
Obsolescence compounds the challenges for defense facility owners. For instance, a line a company built for one program that now runs below capacity after a contract shifts carries economic obsolescence that no standard schedule captures. The solution lies within utilization and obsolescence arguments built and documented from operating data.
Strategies for defense manufacturers
Defense companies facing tariff challenges can strategize first by determining an incentive position before choosing a site. A company holds the most negotiating room before it commits to a location and considerably less once it announces one. Strategic defense manufacturers that are developing or expanding on-shore facilities can further strategize with:
- A statutory and discretionary inventory for each candidate jurisdiction: value limitations, abatements, Chapter 380 and 381 agreements, sales and use tax manufacturing exemptions, inventory exemptions, and workforce training funds.
- A pro forma tax line built on a sound valuation methodology, not on cost. This number is key to strategize so that it survives the first post-completion reassessment.
- A Section 168(n) design review while still in the design phase, given the 95% use test and the recapture provision. For a defense standup where program mix can shift, model the recapture risk from day one.
- A watch on the Commerce onshoring program. Programs that open under this kind of authority tend to run short application windows and reward early filers.
These four components work most effectively when part of a larger long-term strategy. The record that supports an incentive application, project cost, asset detail, job counts, and utilization assumptions is the same record that supports a valuation position once the facility comes online. Building it once and using it in both places keeps the two positions consistent with each other, which is important for when the abatement expires and the full assessment arrives. A company that negotiates incentives and defends value from the same set of project facts protects the benefit on the front end and the tax line for the life of the asset.
