China sanctions 10 U.S. defense firms in retaliation move

China widened its fight with Washington on Monday, moving from broad warnings to targeted retaliation against 10 American defense-linked companies and, separately, cutting government procurement from 46 more U.S. firms. The new curbs run through the trade in dual-use goods, a category that can support civilian manufacturing one day and military production the next, and they signal that Beijing is willing to answer U.S. pressure company for company.

The Commerce Ministry said Chinese firms are blocked from exporting dual-use items to AVEOX, Red Cat Holdings, Teal Drones, IMSAR, Jaia Robotics, Ball Aerospace & Technologies, Oshkosh Defense, L3Harris Maritime Services, MP Materials and USA Rare Earth. It also said third-country transfers of those restricted goods are prohibited, though companies can apply for export approval if the goods are genuinely necessary. The ministry framed the step as a response to what it called the U.S. government’s wrongful expansion of its list of Chinese military-linked companies, and tied it to China’s national security concerns and export-control law.

The move lands in sectors that sit close to modern defense supply chains. Several of the named firms are involved in military drones, sensing systems, logistics, or rare-earth mining, areas where cross-border parts, materials and processing can shape whether production stays on schedule. For companies on both sides of the Pacific, the immediate risk is not only lost sales but the added cost of rerouting sourcing, finding alternate suppliers and proving that shipments do not cross into restricted use.

Beijing’s response follows a June 8 update by the U.S. Department of Defense to its 1260H list, which now reportedly covers 188 Chinese companies. That list can block direct defense contracts later in June 2026 and indirect procurement through third parties in June 2027. Alibaba Group, Baidu Inc and BYD were among the names added, and Baidu said the implication that it had any military role was totally baseless. China’s Commerce Ministry said the U.S. sanctions ran counter to the consensus reached by Xi Jinping and Donald Trump during Trump’s May 2026 visit to Beijing.

The latest retaliation also broadened beyond export controls. China’s Finance Ministry separately barred government entities from buying products from 46 U.S. companies, including multiple units of Lockheed Martin, Raytheon and General Dynamics. That combination of procurement bans and export limits shows how quickly trade policy and national security have become fused into one pressure system, with defense suppliers, rare-earth producers and aerospace contractors all being pulled into the same confrontation. Beijing had already added 28 U.S. companies to its export-control list in January 2025, underscoring that this is now a widening cycle, not a one-off response.