China Adds U.S. Military-Linked Companies to Export Restriction Lists

­In a modest escalation of the US-China trade war, the People’s Republic recently added 46 U.S. aerospace and defense firms to its “procurement list” and 10 military-linked companies to its “export control list.”

One might think this is the natural evolution of the ongoing Sino-American trade war, but in fact, said conflict has cooled down recently.

After America’s maximum tariff rate on Chinese-made goods ballooned to around 145% -- causing retaliatory rates on American goods of 125% -- President Trump and General Secretary Xi Jinping declared a trade truce and negotiated the tariffs down to about 30% for China goods and 10% for American ones.

China even agreed to purchase critical U.S. agricultural exports (including soybeans, sorghum, and logs), but much of the company-specific restrictions remain (and many have increased in breadth and scope).

The U.S. recently updated its “1260H list” to include companies like Alibaba Group, Baidu Inc., and even carmaker BYD, alleging that they’ve aided the Chinese military and have close ties with Beijing.

As such, the U.S. Department of Defense is prohibited from contracting directly with all the companies on the 1260H list, and even civilian companies – eager to maintain close ties with the DoD – could be scared away from doing business with the aforementioned China firms.

In retaliation, China added 10 military-linked companies to its export control list, including the following:

·      Red Cat Holdings

·      Teal Drones

·      Imsar

·      Jaia Robotics

·      Ball Aerospace & Technologies Corp.

·      Oshkosh Defense

·      L3Harris Maritime Services

·      MP Materials

·      USA Rare Earth

While the separate “procurement list” includes mainstays like Lockheed Martin Corporation and Raytheon Missiles & Defense, the names on the export control list were often linked to the U.S. military more indirectly – like MP Materials and USA Rare Earth, which supply processed rare-earth materials to magnet manufacturers, who then provide the items for use in military equipment like the F-35 Lightning II aircraft.

China’s new edicts take effect immediately.