China Sanctions 56 US Firms After Pentagon Blacklist Expansion
China imposed export controls and procurement bans on 56 US defense and rare earth firms in retaliation for the US blacklisting 80 Chinese companies.
The Ministry of Commerce of the People's Republic of China and the Ministry of Finance implemented sweeping trade restrictions on June 22, 2026, targeting dozens of American firms. These measures serve as retaliation for the United States Department of Defense expanding its 1260H blacklist on June 9, which added 80 Chinese companies—including Alibaba Group, Baidu, and BYD—to a list of entities allegedly aiding the Chinese military. The US move bars these firms from receiving direct Pentagon contracts starting June 30.
As part of the response, the Ministry of Commerce placed 10 US entities on an export control list, prohibiting the shipment of dual-use items to them, including through third-party transfers. Targeted firms include rare earth producers MP Materials Corp and USA Rare Earth, as well as defense contractors Aveox, Oshkosh Defense, and L3Harris Maritime Services. This specifically impacts the US rare earth supply chain, as MP Materials operates the only large-scale active mining facility in the US.
Simultaneously, the Ministry of Finance banned Chinese government agencies from procuring products from 46 US firms, primarily defense contractors such as Lockheed Martin, Raytheon, and Boeing's defense division. US-invested companies operating within China remain exempt from these procurement bans.
Beijing officials characterized the US blacklist as a "wrongful expansion" and stated the retaliation is necessary to protect national security. These escalations follow a May summit between President Donald Trump and President Xi Jinping, where both leaders had agreed to a framework for a strategically stable relationship.
