China Eases Export Controls on U.S. Defense Firms: Lifting or 90-Day Suspension

Reuters Yonhap News

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With the tariff truce between the United States and China extended for another 90 days, the Chinese government has decided to suspend the export control measures it imposed in April against U.S. defense companies.

On August 12, the Chinese Ministry of Commerce announced in a spokesperson's statement that it would suspend, effective immediately, the export control measures on dual-use items (goods that can be used for both military and civilian purposes) targeting 12 U.S. companies, which were announced on April 9. In addition, the ministry lifted sanctions, also effective immediately, on six U.S. companies that had been placed on the "unreliable entity list" on April 9.

Furthermore, export control measures targeting 16 U.S. companies, which were announced on April 4 but suspended following the U.S.-China truce agreement in May, will be further postponed for 90 days. Sanctions on 11 U.S. companies that were added to the "unreliable entity list" on April 4 have also been deferred for 90 days.

The Ministry of Commerce stated that if Chinese companies apply to conduct transactions with these U.S. firms, it will review whether the conditions are met and grant approval accordingly. However, the ministry did not clarify in this announcement whether it would continue restricting the supply of rare metals and minerals to defense contractors.

This shift follows the joint statement issued in Stockholm last month, in which both countries agreed to extend the tariff truce for an additional 90 days. The Chinese government included in the joint statement its commitment to suspend and eliminate non-tariff retaliatory measures against the United States.

Previously, after the second Trump administration imposed universal tariffs on Chinese goods starting in February and then raised tariffs to 34% in April, China responded with "reciprocal measures" at the same tariff rates. China also introduced export controls on rare earth elements essential for advanced industries and imposed sanctions on U.S. companies.

On April 4, China imposed export controls on dual-use items for 16 companies, including U.S. defense and robotics firm High Point Aerotech, defense contractors such as Source Intelligence and Sierra Nevada Corporation, and logistics company Universal Logistics Holdings. On April 9, China added 12 more companies to the export control list, including American Photonics (lens manufacturing), Novotech (biotechnology), Ecodyne (drones), and other U.S. defense contractors.

Additionally, on April 4 and 9, citing U.S. arms sales to Taiwan, China placed a total of 17 U.S. defense companies?11 on April 4 and 6 on April 9?on the "unreliable entity list," banning them from conducting transactions or investments related to China.

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