China added 10 American entities to its export control list, claiming the firms are linked to the U.S military. The move is in retaliation for Washington placing around a dozen Chinese companies – including tech giants Alibaba Group and Baidu – on its updated 1260H list published earlier this month. The latest salvos in the ongoing trade war between Washington and Beijing come just a month after President Donald Trump visited the Chinese capital.
The meeting between President Trump and Chinese leader Xi Jinping achieved tactical trade relief, rather than a full structural reset that some might have hoped for – but the U.S.-China trade war has escalated as Beijing announced the new export controls and procurement bans.
Trade Restrictions on Rare Earth Miners
Two of the companies specifically banned from doing business with China are the rare earth miners MP Materials Corp and USA Rare Earth. Chinese exporters will be prohibited from selling dual-use items to either company.
“Exporters are prohibited from exporting dual-use items to the aforementioned 10 entities, and any organization or individual from any country or region is prohibited from transferring or providing dual-use items originating in China to the aforementioned entities; any ongoing related export activities must be immediately ceased,” a statement from the Chinese Ministry of Commerce to the domestic media explained.
It added, “In special circumstances where export is truly necessary, the exporter shall submit an application to the Ministry of Commerce.”
The ban took effect on Monday after publication of the announcement.
China currently dominates the global “mine-to-magnet” supply chain.
As The New York Times reported, by halting exports to the two key U.S. providers, Beijing could create a major bottleneck. Moreover, by blocking “dual-use” exports – materials and goods that have both civilian and military uses, including mission-critical manufacturing equipment – China could leverage its monopoly and slow down domestic efforts in the United States to build a completely independent supply chain.
MP Materials currently operates the only active rare earth mine in the United States. Headquartered in Las Vegas, NV, it owns and operates the Mountain Pass mine in California, which is the only operating rare earth mining and processing facility in the United States. The company extracts and processes the high-grade rare earth ore bastnäsite into high-purity concentrates. It also produces magnetic precursor products and manufactures advanced Neodymium-Iron-Boron (NdFeB) permanent magnets, which are fundamental for electric vehicles’ traction motors, wind turbines, drones, robotics, and a variety of aerospace/defense systems.
USA Rare Earths controls the mining rights to the Round Top Mountain deposit in Hudspeth County, TX. The area is rich in heavy and light rare-earth elements. The vertically integrated mining and manufacturing company also operates a commercial-scale magnet manufacturing facility in Stillwater, OK, where it also produces sintered NdFeB permanent magnets.
Even as these two firms are actively working to neutralize China’s “kill switch” over western production, the Center for Strategic and International Studies warned in April that it will take years to fully realize, leaving the U.S. highly exposed to geopolitical vulnerabilities in the interim.
Other Firms Specifically Named
Beyond the rare earth firms, Beijing also added eight other U.S. companies to its Export Control List, including California-headquartered electronics manufacturer Aveox Inc.; BAE Systems subsidiary Ball Aerospace & Technologies Corp.; defense technology firm Red Cat Holdings; drone makers Teal Drones and Jaia Robotics; the Utah-based privately-owned radar maker IMSAR, LLC; Oshkosh Defense, LLC; and L3 Harris Maritime Services, Inc.
The Chinese Ministry of Finance also released another measure aimed at 46 additional U.S. companies, stating Chinese firms would be barred from procuring any products manufactured by the American entities.
Most of the firms on the Ministry of Finance’s list are defense contractors, and all would be participating in any Chinese procurement project.
However, foreign-funded, locally registered entities associated with the listed firms would be exempted.
