China retaliates against Pentagon blacklist with export controls on 56 US firms, targeting rare earth miners

China's Ministry of Commerce added 10 American firms to its export control list on Monday, prohibiting Chinese exporters from supplying them with dual-use goods. The move, effective immediately, also bars any foreign entity from transferring Chinese-origin dual-use items to the listed companies. Ongoing shipments must stop, though exporters may apply for waivers.

The rare earth targets

Two names stand out: MP Materials and USA Rare Earth. Both sit at the centre of Washington's push to rebuild a critical-minerals supply chain outside China. MP Materials operates the only active rare earth mine in the United States, in Mountain Pass, California, and received a $400 million Pentagon investment last year. USA Rare Earth is building magnet capacity and this month secured federal funding commitments worth hundreds of millions of dollars. In April, it announced a $2.8 billion deal to acquire Brazil's Serra Verde mine, one of the few commercial sources of heavy rare earths outside China.

The restrictions cover seven rare earth elements that Beijing placed under export controls in April 2025. China dominates global supply, accounting for more than 80 to 90 percent of mining or refining capacity for light rare earths and over 98 percent of heavy rare earths refining. The impact on the two US firms may be largely symbolic, analysts say, because both have already substantially cut off supplies from China.

“You can debate what the actual impact of the controls are, but I do think that they want to hobble them.”

Broader trade retaliation

China's Ministry of Finance separately barred government procurement from 46 US companies, including Lockheed Martin, Raytheon, Boeing Defense, Anduril, and General Dynamics. Chinese subsidiaries of those firms are exempt. The two-pronged response follows the Pentagon's addition of about 80 Chinese companies to its list of "Entities Identified as Chinese Military Companies Operating in the United States" under Section 1260H on 9 June. That list includes Alibaba, Baidu, and BYD. The US designation does not ban business with the firms but blocks them from defence contracts.

“The export ban was issued to safeguard national security and interests and fulfil international obligations such as non-proliferation.”

G7 and global rare earth dynamics

Last week's G7 summit in France saw leaders pledge to reduce dependence on any single supplier, calling for no more than 60 percent of rare earth imports to come from one country by 2030. The world currently relies on China for about 90 percent of light rare earths. A follow-up summit between President Trump and Xi Jinping in Beijing last month produced no further progress on rare earth supplies, after Trump said in October 2025 that China had agreed to resume supplying the metals.

Timeline of escalation

The Chinese Commerce Ministry described the US measures as a "malicious practice" and warned that the Pentagon's blacklist went against the spirit of détente from the recent Beijing summit. The retaliation, while calibrated, risks reigniting trade tensions between the world's two largest economies.