China Sanctions 10 US Defense and Rare Earth Firms Over Pentagon's Expanded Blacklist

Trade tensions between Washington and Beijing have flared up again, with China imposing export controls on 10 American defense and rare earths companies in direct retaliation for the Pentagon's expanded blacklist of Chinese firms. The move signals that even after a high-profile summit aimed at stabilizing ties, the broader US-China rivalry over technology and defense remains very much alive.

What China Actually Did

China imposed export controls on 10 US companies involved in defense and rare earths mining in response to Washington's blacklist of Chinese firms, Beijing's commerce ministry said on Monday. The Chinese Ministry of Commerce placed the 10 American industrial suppliers on its export control list, barring exports of any dual-use items originating in China to the listed companies. Officials made clear the restrictions take effect immediately: exporters are prohibited from providing dual-use items to the listed entities, with the commerce ministry adding that "any relevant export activities currently underway must cease immediately".

The targeted list spans rare earths, drones, aerospace, and defense manufacturing. Companies named include rare earth miners MP Materials Corp and USA Rare Earth, drone makers Teal Drones and Jaia Robotics, California-based electronics manufacturer Aveox Inc, Ball Aerospace & Technologies Corp, and military equipment provider Oshkosh Defense. Also listed were divisions of General Dynamics and Anduril Industries, both major US military contractors, along with several aerospace firms.

A Second, Broader Round of Retaliation

Beijing didn't stop at export controls. In a separate statement Monday, China's Finance Ministry excluded 46 US companies, mostly defense contractors, from participating in government procurement projects, with the procurement ban list including Lockheed Martin, Raytheon, and Boeing's defense division. Foreign-funded, locally registered entities associated with the excluded firms are exempted from the ban, with measures taking effect from Monday.

Why Beijing Is Retaliating Now

This round of countermeasures is a direct response to a Pentagon action earlier in the month. The US Defense Department released its updated Section 1260H list on Monday as required by American law, expanding the roster to 188 entities, up from 134 the year before. The latest additions span sectors ranging from artificial intelligence and electric vehicles to robotics and biotechnology, including Alibaba Group Holding, Baidu, BYD, WuXi AppTec, RoboSense, and Unitree Robotics.

China framed its response as a matter of national sovereignty and economic fairness. China's new export controls came "in response to the US government's egregious act of adding to its so-called 'Chinese military enterprise list,'" the commerce ministry said, adding the move was also meant to "safeguard national security". Beijing had previously accused Washington of "continuously overstretching the concept of national security, abusing state power, and unreasonably suppressing Chinese companies," warning the actions "seriously undermined the international economic and trade order".

How Much Does the Pentagon List Actually Do?

Despite the dramatic headlines on both sides, the practical bite of the 1260H designation is more limited than it might appear. The designation does not impose immediate sanctions but bars the US Department of Defense from awarding direct contracts to affected companies starting June 30, with restrictions on indirect procurement following in 2027. Even so, the designation is likely to deter other federal agencies and commercial partners from doing business with listed companies.

Largely Symbolic, Analysts Say

Trade and China analysts broadly described Beijing's countermeasures as more about signaling than substantive economic damage. Han Shen Lin, China country director at The Asia Group, told CNBC the move is "largely symbolic," noting most listed companies do little actual business in China. Similarly, Dan Wang, China director at Eurasia Group, said the latest countermeasures provide a "model example" of how China will likely handle mild escalation from the US while keeping the broader relationship stable, pointing to last month's Trump-Xi summit, which reset relations on a more positive footing.

This isn't the first time some of these firms have faced Chinese restrictions either. China's commerce ministry had already sanctioned a number of these firms and their subsidiaries in both 2024 and 2025 over US arms sales to Taiwan, a long-running flashpoint in the relationship. US Secretary of State Marco Rubio said this month that a proposed $14 billion arms package to Taiwan was "under review", underscoring how Taiwan continues to complicate efforts at broader stabilization.

For continued, in-depth tracking of the wider US-China tech and trade conflict, the South China Morning Post's US-China relations desk offers detailed, region-focused reporting on these developments as they unfold.

What Comes Next

With the Pentagon's procurement restrictions set to take effect June 30 and China's own export controls already active, both governments appear locked into a familiar cycle of measured, retaliatory escalation rather than outright confrontation. The bigger question is whether last month's Trump-Xi summit can keep this tit-for-tat contained to largely symbolic gestures — or whether deeper disputes, particularly over Taiwan arms sales and critical technology access, eventually force a more consequential break in the relationship.