China Strikes Back: MP Materials and USA Rare Earth Hit With Export Controls After Pentagon Move

TLDR

• China added 10 U.S. companies to its export control list, including MP Materials and USA Rare Earth
• The move blocks dual-use exports from China to the named firms
• China’s Finance Ministry also barred Chinese buyers from procuring goods from 46 U.S. companies
• The action is a direct response to the Pentagon adding Chinese firms like Alibaba, Baidu, and BYD to its 1260H military-linked list
• Analysts say the impact is largely symbolic, as most targeted U.S. firms have little business exposure in China

China placed 10 American companies on its export control list on Monday, targeting firms tied to defense, drones, and rare earth materials.

MP Materials and USA Rare Earth were among the companies named. Both are involved in the rare earth mine-to-magnet supply chain, and MP Materials operates the only active rare earth mine in the United States.

The export controls block all dual-use exports from China to the named companies. Dual-use items are goods with both civilian and military applications.

Applied Materials, Inc., AMAT

Other companies on the list include drone makers Teal Drones and Jaia Robotics, electronics manufacturer Aveox, Ball Aerospace and Technologies, and Oshkosh Defense.

Beijing Responds to Pentagon’s 1260H List

China’s Commerce Ministry said the measures were taken to protect national security and fulfill international obligations. The ministry said the move was a direct response to what it called the U.S. government’s “malicious practice.”

The Pentagon recently updated its 1260H list, which names Chinese companies believed to be helping China’s military. The latest additions included Alibaba, Baidu, BYD, and NIO.

China’s move is seen as a direct counter to that decision.

China’s Finance Ministry also announced it would bar Chinese buyers from procuring products from 46 U.S. companies, mostly defense contractors. Foreign-funded companies operating locally in China and linked to those firms are still exempt.

Market Reaction Stays Calm

Stock markets have not reacted sharply to the news. Shares of MP Materials and USA Rare Earth were largely unchanged following the announcement.

Analysts say the practical impact of the controls is limited. Most of the U.S. firms named have little or no meaningful business in China.

George Chen, a partner at the Asia Group, described China’s response as “proportional” and “largely symbolic.” He noted that most of the targeted companies are defense-focused and were never doing significant trade with China.

Han Shen Lin, also at the Asia Group, echoed that view, saying the targeted firms have “little or no meaningful business exposure in China.”

The controls do not create an immediate revenue loss for most of the named companies.

However, the direction of policy matters to investors. China is showing it can respond to U.S. blacklists with its own restrictions, particularly in areas tied to defense, drones, and critical minerals.

Companies with exposure to rare earths and military supply chains may benefit from long-term U.S. efforts to reduce reliance on China for critical materials.

But the trade environment is becoming more complex as both countries continue to expand their national security tools.

The move follows a pattern of tit-for-tat trade actions between Washington and Beijing that has been building throughout 2026.

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