China hits back at the Pentagon with curbs on 56 US firms

China’s new trade curbs target 56 US companies, from rare-earth miners to drone makers. It is direct retaliation for Washington adding Chinese firms to its military blacklist.

China has answered the Pentagon’s blacklist with one of its own.

On Monday, Beijing aimed trade curbs at 56 American companies. The measures hit drone makers and defence contractors. Most pointedly, they hit the two rare-earth firms Washington is backing to loosen China’s grip on critical minerals.

The move is open retaliation. Earlier this month, the US Defense Department expanded its list of Chinese military companies under Section 1260H. It added a fresh batch of Chinese tech firms. Beijing’s answer landed in two parts.

Two lists, 56 targets

First, the Ministry of Commerce added 10 US firms to its export-control list. Chinese exporters can no longer ship them dual-use items. No one anywhere may pass China-origin dual-use goods their way either. Ongoing shipments must stop, though exporters can ask Beijing for a waiver.

The 10 span the US defence-tech world. They include the drone makers Red Cat Holdings and Teal Drones. Others are the radar firm IMSAR, Jaia Robotics, Ball Aerospace, Oshkosh Defense and L3Harris Maritime Services.

Two names stand out: MP Materials and USA Rare Earth. Both sit at the centre of Washington’s push to rebuild a critical-minerals supply chain outside China. Beijing has just cut them off from Chinese dual-use inputs.

Second, the Ministry of Finance went after procurement. It barred government buyers from purchasing products made by 46 US companies, effective Monday. The list reads like a roll-call of American defence. Lockheed Martin, Raytheon, Boeing Defense, Anduril, Shield AI and Edge Autonomy all feature. Their Chinese subsidiaries are exempt.

The rare-earth squeeze

The rare-earth listings are the sharpest signal. China processes around 90 per cent of the world’s rare earths. They feed the magnets in electric vehicles, wind turbines, fighter jets and missiles.

MP Materials runs the only large rare-earth mine in the US. USA Rare Earth is building magnet capacity. Both exist to cut American dependence on China, and Washington has backed both with public money. Now they are formal targets.

The US government became MP Materials’ largest shareholder last year, part of a push to onshore magnet production. Beijing’s listing is a pointed reply to exactly that effort.

It fits a pattern. Beijing has spent the year tightening its hold on strategic materials. That ranges from fresh checks on other exotic metals to broader licensing rules.

It has already curbed exports of gallium, germanium and antimony. All three are vital to chips and weapons systems.

Tit for tat, with no end in sight

The exchange is the latest turn in a long fight. For years, the US has curbed China’s access to advanced chips and the tools that make them. That dispute recently dragged in ASML, the Dutch maker of the most advanced lithography machines.

China leans on the lever it dominates: critical materials. It has also tried to win goodwill elsewhere. Beijing is pitching cheap AI to the developing world even as it trades blows with Washington.

For the named firms, the hit is uneven. Defence contractors sell little to China and can shrug off a procurement ban. The export controls bite harder. They choke off Chinese inputs the firms may still need.

The wider message is blunt. Each time Washington tightens the screws on Chinese tech, Beijing now has a practised reply. And the rare-earth card, the one the US most wants to neutralise, still sits in China’s hand.