05 April 2025

Geoeconomic Tensions Escalate Amid Targeted Restrictions

​In retaliation to President Donald Trump's announcement on April 2, 2025, of reciprocal tariffs on Chinese imports, China’s Ministry of Finance declared on April 4 that all US-origin goods will be subject to an additional 34% tariff, effective April 10, 2025, and is on top of an existing 20% that had already been imposed earlier this year.

Concurrently, China’s Ministry of Commerce and the General Administration of Customs issued Announcement No. 18 of 2025, introducing export controls on a range of medium and heavy rare earth elements. These measures took immediate effect and were enacted under the legal frameworks of the Export Control Law, Foreign Trade Law, and regulations governing dual-use items. 

Beijing cited national security, strategic interests, and non-proliferation obligations as the rationale behind the restrictions, marking a sharp escalation in the ongoing trade and technology confrontation between the Trump administration and China.

China’s export restrictions apply to specific forms of the following elements, including their compounds, alloys, oxides, and target materials, and extend across a wide range of material formats integral to industrial and high-tech manufacturing, ensuring comprehensive coverage from raw material processing to advanced component fabrication.

• Alloys encompass standard industrial formats such as ingots, bars, rods, wires, plates, tubes, particles, and powders.

• Target materials include sheet, tube, and other specialised forms designed for thin-film deposition and precision manufacturing applications.

• Permanent magnets refer to both finished magnetic materials and magnetic powders, including those used in high-performance NdFeB systems.

• Oxides, compounds, and mixtures are covered in all processed forms, including powders and blended compositions, regardless of physical state.

Jamie Underwood

Principal Consultant

China’s Sanctions Strategy: Expanding Economic Statecraft

Since 2022, China has increasingly leveraged economic tools to counter perceived threats from the United States. While Lockheed Martin and Raytheon were the initial targets, the ripple effects of Beijing’s policies now extend across a broad swath of the defence, aerospace, semiconductor, and dual-use technology landscape.

China’s expanding sanctions framework represents a calculated and intensifying response to U.S. technology controls and mounting geopolitical pressure. By targeting a growing array of defence contractors, aerospace firms, AI developers, and critical supply chain actors, Beijing is wielding economic statecraft as a strategic instrument of national security and foreign policy.

More than a retaliatory measure, this evolving regime reflects China’s broader ambition to shape the global technological order by leveraging its dominant position in key supply chains. Sanctions and export controls are becoming proactive tools of influence, aimed at reshaping global dependencies and asserting long-term strategic leverage. For U.S. firms operating in sensitive sectors, the risk of being drawn into Beijing’s geoeconomic crosshairs is rising rapidly.

Targeted Sectors and Escalating Measures

To date, more than 60 U.S. companies have been affected by Chinese sanctions or export restrictions. The consequences for supply chain resilience, defence readiness, and technological cooperation are becoming increasingly apparent. If geopolitical tensions continue to escalate, additional firms, particularly in emerging technologies, semiconductors, and dual-use manufacturing, are likely to face similar penalties.

Companies listed under China’s dual-use export control regime are now barred from receiving Chinese-origin goods, materials, and technologies. These restrictions are expected to disrupt global supply chains tied to military platforms, surveillance systems, aerospace components, and semiconductor devices. The policy signals a broader shift in Beijing’s strategy, using export controls not only to retaliate, but to exert strategic leverage over rival powers. Sectors most affected include defence, aerospace, logistics, and advanced technology, where reliance on Chinese inputs remains substantial.

Firms designated on China’s "Unreliable Entities List" face particularly severe penalties: bans on trade with Chinese companies, prohibitions on investment, asset freezes, and restrictions on executive travel to China. These designations effectively sever access to the Chinese market, imposing both economic costs and strategic deterrence.

In 2024, China imposed two significant rounds of sanctions targeting U.S. defence and semiconductor companies, particularly those supplying advanced systems to Taiwan’s military. The second wave, announced on 27 December, added seven firms to the restricted entity list. These sanctions included asset freezes and a ban on transactions with Chinese entities, while also extending export controls to high-bandwidth memory (HBM) chips—critical for AI training and next-generation defence platforms.

In 2023, Beijing sanctioned several U.S. firms linked to arms sales to Taiwan and military logistics. This included subsidiaries of Raytheon Technologies, Lockheed Martin Corporation, and General Dynamics. These actions involved asset freezes and trade bans. That same year, China also sanctioned 13 U.S. defence firms and six executives, expanding the Unreliable Entities List. Simultaneously, six Chinese companies were penalised for allegedly assisting Iran’s missile and drone programmes—signalling China’s selective enforcement of non-proliferation principles in line with its geopolitical agenda.

The first major step in this strategy came in 2022, when China sanctioned Lockheed Martin Corporation and Raytheon Missiles & Defense, the inaugural additions to the Unreliable Entities List. Sanctions included bans on trade and investment, as well as restrictions on executive travel and residency. That year, China also tightened its Export Control Catalogue for dual-use items, broadening controls on sensitive technologies without naming further companies.

China’s Unreliable Entity List (2022–2025)

April 2025 – Targeted Drone, AI, and Defence Tech Sanctioned Entities

• BRINC Drones (drone technology firm)

• Firestorm Labs (defence-focused tech firm)

• HavocAI (artificial intelligence company)

• Insitu Inc. (a subsidiary of Boeing specialising in unmanned aerial systems)

• Kratos Unmanned Aerial Systems (unmanned vehicle systems manufacturer)

• Neros Technologies (technology solutions provider)

• Rapid Flight LLC (unmanned aircraft manufacturer)

• Red Six Solutions (military technology company)

• Skydio Inc. (drone manufacturer)

• SYNEXXUS (electronics design and engineering services)

• Tactical Communications Group (communications systems company)

January 2025 – Sanctions on Defence, Intelligence, and Logistics Sanctioned Entities

• ACT1 Federal LLC (defence and space programme integrator)

• Cubic Corporation (military training and communications technology company)

• Exovera LLC (AI-enabled analytics and intelligence platform provider)

• Huntington Ingalls Industries Inc. (military shipbuilding and defence services company)

• Planate Management Group (infrastructure and facilities support contractor for military operations)

• S3 AeroDefense (military aircraft sustainment and logistics provider)

• Stick Rudder Enterprises LLC (defence consulting firm)

• TCOM Limited Partnership (aerostat surveillance and ISR systems manufacturer)

• Teledyne Brown Engineering Inc. (defence, aerospace, and marine systems engineering firm)

• TextOre, Inc. (open-source intelligence and data analytics company). 

2024 – Expanded Controls on Aerospace, Maritime, and Semiconductor Entities

• AEVEX Aerospace (provider of airborne ISR and data exploitation solutions)

• Aerkomm Inc. (aeronautical communications and satellite connectivity company)

• Anduril Industries (developer of autonomous defence systems and AI-enabled surveillance technologies)

• General Dynamics Information Technology (defence IT services and mission-critical systems integrator)

• General Dynamics Mission Systems (communications, command, and cyber systems for defence applications)

• Hudson Technologies Co. (specialist in refrigerants and industrial gas reclamation with defence supply links)

• Insitu, Inc. (unmanned aerial systems manufacturer and intelligence solutions provider)

• Lockheed Martin Corporation (global aerospace, defence, and advanced technology company)

• Maritime Tactical Systems (developer of unmanned surface vehicles for naval missions)

• Oceaneering International, Inc. (provider of marine engineering and subsea robotics for defence operations)

• Pacific Rim Defense (supplier of naval systems and maritime defence technologies)

• Raytheon Australia (subsidiary supporting integrated defence systems and advanced weaponry)

• Raytheon Canada (provider of defence electronics and surveillance systems for allied forces)

• Raytheon Missile Systems (manufacturer of precision-guided munitions and missile technologies)

• Saronic Technologies, Inc. (developer of autonomous maritime platforms and naval AI systems)

• Summit Technologies (provider of defence training, simulation, and systems integration services)

2023 – Semiconductor, Aerospace, and Taiwan-linked Sanctioned Entities

• Anduril Industries (developer of autonomous defence platforms and surveillance technologies)

• Applied Technologies Group (provider of mission-critical systems engineering and defence solutions)

• Axient (aerospace and defence contractor supporting advanced missile and space programmes)

• Biren Technology (Chinese semiconductor firm developing high-performance GPUs)

• General Dynamics (Subsidiaries) (divisions supplying defence systems, IT, and aerospace capabilities)

• Inspur (Chinese server and AI hardware manufacturer with military applications)

• Inter-Coastal Electronics (developer of simulation and training systems for US and allied forces)

• IronMountain Solutions (engineering support contractor for aerospace and missile defence programmes)

• Lockheed Martin Corporation (Subsidiaries) (divisions engaged in advanced aerospace and missile systems)

• Loongson (Chinese state-backed semiconductor firm producing CPUs with military relevance)

• Maritime Tactical Systems (developer of unmanned maritime vehicles for defence missions)

• Moore Threads (Chinese GPU manufacturer with links to military AI and simulation applications)

• Raytheon Technologies (Subsidiaries) (subsidiaries engaged in aerospace, defence electronics, and weapons systems)

• System Studies & Simulation (provider of training systems and operational support for defence platforms)

2022 – Initial High-Profile Defence Sanctioned Entities

• Lockheed Martin Corporation (leading US defence contractor specialising in aerospace and missile systems)

• Raytheon Missiles & Defense (developer and manufacturer of advanced weapon systems and missile defence platforms)

China’s Dual-Use Export Control Regime (2024–2025)

April 2025 – New Export Restrictions Target Defence and Logistics Entities

• ACT1 Federal LLC (defence and space programme integrator supporting US federal operations)

• Coalition For a Prosperous America (policy advocacy group with ties to trade and industrial strategy efforts)

• Cubic Corp. (provider of military training, simulation, and tactical communications technologies)

• Cyberlux Corp. (developer of unmanned aircraft systems and tactical lighting for defence applications)

• Edge Autonomy Operations (manufacturer of unmanned aerial systems and ISR solutions)

• High Point Aerotechnologies (aerospace firm specialising in drone and counter-UAS technologies)

• Hudson Technologies (industrial gas and refrigerant recovery company linked to defence supply chains)

• Oceaneering International (marine engineering and subsea robotics firm with defence operations)

• S3 AeroDefense (provider of military aircraft sustainment, logistics, and component support)

• Saronic Technologies (developer of AI-enabled unmanned surface vessels for maritime defence)

• Sierra Nevada Corp. (aerospace and defence contractor focused on ISR, space, and cybersecurity systems)

• Source Intelligence, Inc. (supply chain compliance and risk analytics platform with defence relevance)

• Stick Rudder Enterprises (consulting firm supporting defence operations and contracting)

• TCOM L.P. (manufacturer of aerostat surveillance and intelligence-gathering systems)

• TextOre, Inc. (open-source intelligence and data analytics company serving defence and security sectors)

• Universal Logistics Holdings, Inc. (logistics and freight services provider supporting military supply chains)

January 2025 – Export Control List Expanded to Core US Defence Contractors and Drone Tech Entities

• Aerkomm Inc. (provider of aeronautical communications and satellite-based connectivity systems)

• AeroVironment Inc. (developer of small unmanned aircraft systems and tactical missile solutions)

• Boeing Defense, Space & Security (division of Boeing focused on military aircraft, satellites, and defence systems)

• General Atomics Aeronautical Systems Inc. (manufacturer of unmanned aerial vehicles including the MQ-9 Reaper)

• General Dynamics (major US defence contractor with operations across aerospace, land, and marine systems)

• General Dynamics Land Systems (producer of armoured vehicles, including the Abrams tank series)

• Gibbs & Cox Inc. (naval architecture and marine engineering firm specialising in warship design)

• Group W (provider of defence and intelligence consulting services)

• HavocAI (emerging defence tech firm developing AI-powered autonomous and ISR systems)

• IP Video Market Info Inc. (publisher and intelligence source on surveillance and video security technologies)

• L3 Harris Technologies (developer of communication, electronic warfare, and sensor systems for defence)

• Leidos (defence and intelligence contractor offering cybersecurity, ISR, and IT systems)

• Lockheed Martin Corporation (leading aerospace and defence manufacturer across air, space, and missile domains)

• Neros Technologies (developer of advanced drone technologies and autonomous flight systems)

• Rapid Flight LLC (manufacturer of modular unmanned aircraft systems for military operations)

• Raytheon Missiles & Defense (developer of precision-guided weapons, missile defence, and radar systems)

• Raytheon/Lockheed Martin Javelin Joint Venture (collaborative producer of the Javelin anti-tank missile system)

• Red Six Solutions (strategic advisory firm providing intelligence and threat analysis to defence clients)

• Shield AI Inc. (AI-powered drone developer focused on autonomous combat aviation systems)

• Skydio Inc. (US manufacturer of autonomous drones for military and public safety use)

• Sourcemap Inc. (supply chain transparency platform used for defence compliance and traceability)

December 2024 – Initial Export Controls Focused on Unmanned Systems, AI, and Surveillance Entities

• Aerkomm Inc. (provider of satellite-based inflight communications and connectivity solutions)

• AeroVironment Inc. (producer of tactical unmanned aircraft systems and loitering munitions)

• Boeing Defense, Space & Security (Boeing division delivering military aircraft, satellites, and advanced weapons systems)

• Cyberlux Corporation (developer of tactical drone platforms and advanced lighting technologies for military use)

• Edge Autonomy Operations (supplier of autonomous aerial systems and ISR capabilities)

• General Atomics Aeronautical Systems Inc. (pioneer in unmanned aerial vehicles for defence and intelligence missions)

• General Dynamics (major defence contractor across aerospace, cyber, and combat systems)

• General Dynamics Land Systems (manufacturer of tracked and wheeled armoured vehicles for military forces)

• Gibbs & Cox Inc. (naval architecture firm specialising in advanced warship and maritime system designs)

• Group W (provider of technical analysis, modelling, and simulation services for national defence)

• HavocAI (developer of AI-driven ISR and autonomous combat solutions)

• Hudson Technologies (specialist in refrigerant recovery and industrial gases with defence supply chain relevance)

• Intelligent Epitaxy Technology (IntelliEPI) (producer of compound semiconductor wafers for military electronics)

• IP Video Market Info Inc. (intelligence and market analysis platform for surveillance and video security systems)

• L3 Harris Technologies (provider of advanced communications, ISR, and electronic warfare systems)

• Leidos (defence contractor offering cybersecurity, analytics, and mission support services)

• Lockheed Martin Corporation (premier US defence contractor across aerospace, space, and missile systems)

• Neros Technologies (innovator in autonomous drone systems for military and surveillance applications)

• Rapid Flight LLC (developer of deployable unmanned aerial systems for tactical defence)

• Raytheon Missiles & Defense (manufacturer of missile systems, radars, and integrated defence technologies)

• Raytheon/Lockheed Martin Javelin Joint Venture (producer of the Javelin portable anti-tank missile system)

• Red Six Solutions (strategic consulting firm providing threat assessments and defence advisory services)

• Saronic Technologies (creator of AI-enabled unmanned surface vessels for naval operations)

• Shield AI Inc. (autonomous systems developer focused on combat drone technology)

• Sierra Nevada Corporation (aerospace and national security contractor with expertise in ISR and electronic warfare)

• Skydio Inc. (US-based producer of AI-powered autonomous drones for defence and critical infrastructure)

• Sourcemap Inc. (supply chain mapping and risk intelligence platform used in defence compliance and traceability)

Chinese Companies Sanctioned by the US

Technology & Telecommunications

• Advanced Micro-Fabrication Equipment (AMEC)

• Alibaba (AliPay)

• Biren Technology

• Changxin Memory Technologies Inc. (CXMT)

• China Mobile Communications Group

• China Telecommunications Corporation

• GOWIN Semiconductor Corporation

• Huawei

• Loongson

• Moore Threads

• Nettrix (Sugon subsidiary)

• Semiconductor Manufacturing International Corp (SMIC)

• Singleton Electronics

• SMIC Beijing

• SMIC Shenzhen

• Suzhou SIP Hi-Tech Precision Electronics

• Tencent Holdings Ltd

• WeChat (Tencent)

• ZTE

Surveillance, AI, and Facial Recognition

• Hikvision

• Beijing Innovation Wisdom Technology

• Chengdu Dahua Wisdom Information Technology

• Cloudwalk Technology

• Megvii

• SenseTime

• Zhejiang Dahua Technology

Drone & Aerospace

• Autel Robotics

• Aerospace CH UAV Co., Ltd.

• DJI

• Kratos Unmanned Aerial Systems

• Xiamen Limbach Aircraft Engine Co.

• Redlepus Vector Industry

• Spacety China

Military, Defense & Dual-Use Tech

• Aero Engine Corporation of China

• Aviation Industry Corporation of China (AVIC)

• AVIC Shenyang Aircraft

• AVIC Xi’an Aircraft

• Beijing Academy of Artificial Intelligence

• CATL (Contemporary Amperex Tech)

• Changsha Jingjia Microelectronics

• China Aerospace Science & Industry Corporation (CASIC)

• China Aerospace Science & Technology Corporation (CASC)

• China General Nuclear Power Group

• China National Nuclear Corporation

• China North Industries Group Corporation (Norinco)

• China Shipbuilding Industry Corporation

• China South Industries Group Corporation

• China State Shipbuilding Corporation

• China Three Gorges Corporation

• Fujian Torch Electron Technology

• Inner Mongolia First Machinery Group

Shipping & Logistics

• China Cargo Airlines Co., Ltd.

• China Communications Construction Group (CCCG)

• China International Marine Containers (CIMC)

• China Railway Construction Corporation (CRCC)

• COSCO Shipping including, COSCO SHIPPING (North America). and COSCO SHIPPING Finance Co.

Cybersecurity

• Qihoo 360 (360 Security Technology Inc.)

Financial Links and Software

• Alipay

• Tencent

• WeChat

Fentanyl Supply Chain

• A fentanyl production network (Oct 2023)

• Shouguang Luqing Petrochemical

• + Seven unnamed companies (2023)

Supporting Russia

• AOOK Technology Ltd

• Beijing Yunze Technology

• Sinno Electronics

• Spacety China

• Xiamen Meiya Zhongmin Electronic Technology