The U.S. government has taken unprecedented action against domestic AI firm Anthropic, directing all federal agencies to immediately stop using its AI model Claude and officially designating the company a supply chain risk to national security, a classification historically reserved for foreign adversaries like Huawei.

The standoff came to a head on February 28, 2026, when President Donald Trump posted on Truth Social, directing every federal agency to “IMMEDIATELY CEASE all use of Anthropic’s technology,” allowing only a six-month phase-out period for departments like the Department of War (DoW) already deeply integrated with the company’s products.

Within hours, Defense Secretary Pete Hegseth followed with his own declaration on X, formally designating Anthropic a Supply-Chain Risk to National Security and announcing that “no contractor, supplier, or partner that does business with the United States military may conduct any commercial activity with Anthropic”.

This week, Anthropic delivered a master class in arrogance and betrayal as well as a textbook case of how not to do business with the United States Government or the Pentagon.

Our position has never wavered and will never waver: the Department of War must have full, unrestricted…
— Secretary of War Pete Hegseth (@SecWar) February 27, 2026

The dispute centers on two narrow exceptions Anthropic requested to the lawful use of Claude: mass domestic surveillance of Americans and fully autonomous weapons.

The Pentagon demanded full, unrestricted access to Claude for “all lawful purposes,” but Anthropic’s CEO Dario Amodei refused, stating the company “cannot in good conscience accede” to those demands.

Anthropic had been the first frontier AI company to deploy models on the U.S. government’s classified networks, operating under a $200 million DoW contract since June 2024. For months, both parties engaged in private negotiations that ultimately broke down. In a last-ditch effort, the Pentagon issued Anthropic an ultimatum: comply by 5:01 PM ET on Friday or face being blacklisted.anthropic+1

Anthropic alleges that a Pentagon contract offer framed as a compromise “was paired with legalese that would allow those safeguards to be disregarded at will”.

Amodei argued that today’s frontier AI models are not reliable enough for fully autonomous weapons systems — a position he says protects American warfighters and civilians and that mass surveillance would constitute a fundamental violation of Americans’ civil rights.

Anthropic has vowed to challenge any supply chain risk designation in court, arguing the action is legally unsound under 10 USC 3252, which limits the designation’s scope strictly to Department of War contract use, not broader commercial relationships. This means individual customers, API users, and non-DoW contractors remain completely unaffected by the designation.

However, the broader industry impact could be severe. Anthropic depends on cloud computing infrastructure from Amazon, Microsoft, and Google — all of which hold defense contracts.

A strict interpretation of Hegseth’s language banning any entity that “does business with the military” from working with Anthropic could theoretically threaten those cloud relationships. Legal experts have warned the designation sets a “dangerous precedent,” noting it waters down a tool historically reserved for entities tied to foreign governments.

Trump warned Anthropic of “major civil and criminal consequences” if it fails to cooperate during the phase-out period. Anthropic has stated it remains committed to supporting lawful national security use cases and will work to ensure a smooth transition for U.S. troops and ongoing military operations.

The company maintains that no amount of government pressure will shift its position on autonomous weapons or domestic surveillance.

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