China expands retaliation against 10 U.S. firms as finance ministry bars purchases from 46 companies

China has widened its retaliation against U.S. companies by imposing sanctions on 10 American tech and military-related firms and separately barring government entities from buying products from 46 others. The commerce ministry said the export restrictions cover dual-use items, meaning goods that can have both civilian and military applications. The finance ministry's separate move adds a second layer of pressure, although it did not give a public explanation for the purchasing ban.

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The companies affected by the export controls include drone makers and firms involved in rare earths, according to the ministry statement. The measures were announced on Monday and were presented as a response to recent U.S. restrictions on Chinese companies, including Pentagon blacklisting actions earlier this month. Beijing said the export ban was intended to safeguard national security and to answer what it called the wrongful expansion of Washington's list of Chinese military companies.

The latest steps deepen a cycle of retaliation between the world's two largest economies and raise the stakes for strategic supply chains. Dual-use goods are especially sensitive because they can be used in both commercial and defence settings, making them central to technology, aerospace and military manufacturing. The finance ministry's ban on purchases from 46 American companies, including units of Lockheed Martin, Raytheon and General Dynamics, also signals that Beijing is using both export controls and procurement restrictions as policy tools.

The move comes after the Pentagon added several Chinese technology companies, including Alibaba and Baidu, to a list of firms it says have links to the Chinese military. Baidu rejected the suggestion, calling it totally baseless. Beijing has argued that the U.S. measures run counter to understandings reached between Chinese leader Xi Jinping and U.S.

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President Donald Trump during Trump's visit to China in May, underscoring the political as well as commercial dimension of the dispute. The 10 sanctioned firms include AVEOX in California, Red Cat Holdings and Teal Drones in Utah, IMSAR in Utah and Jaia Robotics in Rhode Island, according to the ministry's list. The announcement also said companies or individuals in third countries are prohibited from transferring dual-use items from China to the sanctioned firms, while Chinese companies may apply for export approval for goods that are genuinely necessary.

That leaves open the possibility of limited exemptions, but only on a case-by-case basis. What remains unclear is how quickly the restrictions will affect supply chains and whether the targeted companies will seek exemptions or alternative suppliers. It is also not yet clear whether Washington will respond with further measures of its own.

For now, the latest sanctions add to uncertainty around trade in strategic materials and the broader contest over access to sensitive technologies and defence-linked inputs.

China has added 10 United States companies to its export-control list, suspending Chinese exports of dual-use items to the firms immediately. The move was announced on Monday and is being presented by Beijing as a response to earlier U.S. restrictions on several Chinese companies this month. Among the companies named are MP Materials, USA Rare Earth and Aveox, all of which have links to sectors seen as strategically sensitive.

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According to the Chinese commerce ministry, the companies were identified as having ties to the U.S. military. The ministry said organisations and individuals in any country or region are now barred from transferring or supplying dual-use items of Chinese origin to the listed entities. It also said any export activity already under way must stop at once.

In practical terms, the decision goes beyond a licensing requirement and amounts to a full suspension of such exports to the affected firms. The companies named include two rare-earth producers, MP Materials and USA Rare Earth, as well as Aveox, a maker of motors for critical applications. MP Materials is backed by the Pentagon and operates the only active rare-earth mine in the United States, while USA Rare Earth is part of the supply chain running from mineral extraction to magnet production.

That makes the decision significant for industries that depend on rare-earth materials and related components, including defence-linked manufacturing. The announcement comes amid a wider cycle of trade retaliation between the world's two largest economies. Beijing said the measures were taken to protect national security and national interests, and to meet international non-proliferation obligations.

The timing also follows Washington's earlier decision to place several Chinese companies under restrictions at the start of the month, deepening pressure on already strained commercial ties. The export-control move was accompanied by a separate announcement from China's finance ministry, which imposed sanctions on another 46 U.S. companies. Under those measures, Chinese buyers are barred from purchasing products made by those firms, although companies funded by U.S. capital that operate in China are still allowed to do so.

Together, the steps show that Beijing is using both export controls and sanctions as tools in its response to U.S. policy. What remains unclear is how quickly the restrictions will affect supply chains and whether the targeted companies will seek exemptions or alternative suppliers. It is also not yet clear whether Washington will answer with further measures of its own.

For now, the decision adds another layer of uncertainty to trade in strategic materials and to the broader effort by both sides to limit each other's access to sensitive technologies and inputs.

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