China’s Ministry of Commerce on Monday added 10 US entities to its export control list, prohibiting the supply of dual-use goods and ordering the immediate halt of any ongoing transactions. Simultaneously, the Ministry of Finance barred Chinese public procurement agencies from purchasing products manufactured by 46 American firms. Both measures took effect at once and were explicitly framed as retaliation for the Pentagon’s early-June update of its list of “Chinese military companies”, which now includes Alibaba, Baidu, BYD and NIO.

The export ban targets firms with direct links to US defence supply chains and rare earth processing. Among them are Aveox, a maker of mission-critical motors with Pentagon aerospace contracts; Oshkosh Defense, which produces military vehicle fleets; and drone manufacturers Red Cat Holdings and Teal Drones. Crucially, the list also includes MP Materials, operator of the only active rare earth mine in the United States, and USA Rare Earth, a magnet producer. The commerce ministry stated that the prohibition extends to “organisations or individuals in any country or region” transferring or supplying Chinese-origin dual-use items to the listed entities, giving the controls an extraterritorial dimension.

The parallel procurement ban covers 46 companies, including Lockheed Martin, Raytheon, Boeing’s defence division, General Dynamics and Anduril Industries. US-invested enterprises operating inside China are exempt. Analysts in Washington and Beijing note that most of the targeted firms are defence contractors with negligible commercial exposure to China, making the measures largely symbolic in immediate economic terms. However, the inclusion of rare earth firms signals a willingness to weaponise supply-chain dependencies in a sector where China dominates global processing.

The tit-for-tat escalation comes one month after President Trump’s visit to Beijing, where he and President Xi agreed to pursue tariff reductions. That détente has been strained by the Pentagon’s blacklist, which under US law will bar the Department of Defense from directly contracting with listed Chinese companies from the end of June 2026, and from indirect procurement by 2027. The next concrete milestone is the entry into force of that contracting prohibition, which will test whether the two economies can compartmentalise the dispute or whether it spills further into trade and investment flows.