China Bans Exports of Dual-Use Items to 10 U.S. Entities Over Trade Tensions

China has imposed export restrictions on 10 U.S. entities, barring shipments of dual-use items in a significant escalation of trade tensions between Beijing and Washington. The Ministry of Commerce's action, announced on Monday, targets major rare earth producers MP Materials Corp. and USA Rare Earth Inc., as well as technology companies including drone maker Teal Drones Inc. and autonomous underwater vehicle developer Jaia Robotics Inc. The move represents China's response to Washington's recent expansion of its military blacklist and reflects broader friction over critical supply chains.

The restrictions target U.S. efforts to reduce dependence on Chinese rare earth supplies, which are essential for a wide range of products from automotive systems to military equipment. The Trump administration has invested hundreds of millions of dollars in MP Materials and USA Rare Earth to revitalize domestic rare earth magnet manufacturing, an industry that had largely ceased production in the United States over 25 years ago. MP Materials operates a major rare earth mining operation in California and is constructing a magnet factory in Texas, while USA Rare Earth has restored idle magnet manufacturing equipment in Oklahoma and is building a domestic supply chain through acquisitions, including a pending deal to gain control of Serra Verde, a Brazilian company producing dysprosium.

China's restrictions build upon existing export controls implemented in April 2025 on seven rare earth elements—primarily heavy rare earths—and magnets made from them, which Beijing classified as dual-use items with both military and civilian applications. Data from China's customs authority reveals that critical supply channels have already been severely disrupted: shipments of dysprosium to the United States have been cut off since April 2025, and no terbium—an alternative heavy rare earth element—has been exported to the U.S. since October 2025, when Beijing approved a single six-ton shipment timed with a summit meeting in South Korea.

The restrictions highlight China's dominant position in rare earth processing, with the country refining over 98 percent of global heavy rare earth supplies and controlling approximately 90 percent of light rare earth supplies. Wade Senti, president of Advanced Magnet Lab in Florida, noted that magnet producers face "virtually complete unavailability" of dysprosium. While smaller manufacturers have sourced alternative supplies from European recyclers, companies preparing to scale production to 10,000 tons annually face severe supply challenges.

The timing of China's action follows diplomatic efforts that have yielded limited results. President Trump met with Chinese leader Xi Jinping in South Korea in October 2025 and subsequently claimed that China had agreed to resume rare earth supplies as needed. However, Chinese officials have not publicly described the agreement in those terms. A subsequent summit in Beijing last month failed to produce further progress on rare earth supply issues. Meanwhile, leaders of major industrialized nations meeting at the Group of Seven summit in France last week committed to reducing dependence on single suppliers, calling for rare earth imports from any single country not to exceed 60 percent by 2030. China has indicated it will implement even stricter global export restrictions on rare earths in November.