China imposes sweeping export controls and sanctions on ten US defence and technology firms on Monday, escalating a tit-for-tat confrontation that began when Washington blacklisted Chinese companies including Alibaba, Baidu and BYD. The measures, announced by the Ministry of Commerce in Beijing, bar shipments of sensitive dual-use items and rare-earth processing technology to the targeted firms, which range from Lockheed Martin subsidiary Sikorsky to Nvidia’s AI chip distributor in Texas. The list covers companies headquartered in Virginia, California and Texas, and takes effect immediately .

The move follows Washington’s May 22 decision to expand its military-end-user list, which now includes more than fifty Chinese entities spanning cloud computing, electric-vehicle batteries and quantum computing. Beijing’s response is framed as a defensive countermeasure against what it calls “unilateral bullying,” yet it risks choking global supply chains for advanced semiconductors and aerospace components. Analysts at the Mercator Institute for China Studies in Berlin note that rare-earth oxides—critical for F-35 engines and hypersonic guidance systems—are now subject to licence requirements, potentially forcing US primes to seek alternative suppliers in Malaysia or India.

Taipei, meanwhile, has launched five days of live-fire drills simulating the defence of the northern coast, exercises the Taiwanese defence ministry described as “preparation for combat.” The manoeuvres, which began at 06:00 local time near Keelung, include anti-ship missile launches and electronic-warfare countermeasures. China’s Taiwan Affairs Office reiterated that “reunification by force remains an option,” a stance unchanged since the 2022 White Paper on Taiwan. Taiwanese President Lai Ching-te, speaking in Taipei, urged calm but warned that Beijing’s sanctions and military posturing “threaten regional stability.”

European diplomats in Brussels are privately assessing whether the dual crises—trade sanctions and cross-strait brinkmanship—could derail next month’s EU-China summit. A senior EU official said the bloc would seek “de-escalation channels” but cautioned that any attempt to link the two disputes would be “counterproductive.” The US State Department has summoned the Chinese ambassador in Washington for a formal protest, while the Chinese foreign ministry accused the US of “weaponising interdependence.” Global equity markets reacted with muted volatility, with chipmakers in South Korea and the Netherlands shedding less than 1.5 % as traders priced in a prolonged standoff rather than an immediate conflict.

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