China Sanctions U.S. Firms After Pentagon Blacklists 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 U.S. Department of Defense updating its 1260H blacklist on June 9, which added 80 Chinese companies—including tech giants Alibaba Group, Baidu, and BYD—to a list of military-linked entities. This U.S. move prohibits the Pentagon from awarding direct contracts to those firms starting June 30.

China's response consists of two primary actions. The Ministry of Commerce placed 10 U.S. firms on an export control list, prohibiting the shipment of dual-use items to entities including MP Materials, USA Rare Earth, Aveox, and Oshkosh Defense. This specifically targets the U.S. rare earth supply chain, as MP Materials operates the only large-scale active rare earth mine in the United States. Simultaneously, the Ministry of Finance barred 46 U.S. companies, primarily defense contractors such as Lockheed Martin, Raytheon, and Boeing's defense division, from participating in Chinese government procurement.

Beijing officials characterized the U.S. expansion of the military-industrial entity list as a wrongful action that contradicts a consensus reached between President Donald Trump and President Xi Jinping during a May summit aimed at stabilizing bilateral relations. The escalation occurs ahead of President Xi's planned visit to the United States in September.