Trade war turns red hot: 18 US firms hit with China sanctions after Trump’s tariff surge

China‘s Ministry of Commerce has imposed sweeping sanctions on 18 United States companies in a direct response to the latest round of tariff escalations from the Trump administration. The restrictions, announced on April 9, 2025, came just days after U.S. President Donald Trump followed through on his pledge to increase tariffs on Chinese imports by an additional 50%, intensifying the ongoing trade standoff. With this hike, total U.S. duties on Chinese imports now stand at a staggering 104%, marking one of the most aggressive protectionist moves in recent U.S.-China trade history.

The latest retaliatory move from Beijing targets defense contractors and firms linked to military and dual-use technologies. Twelve companies were added to China’s export control list, effectively prohibiting them from accessing Chinese-origin goods deemed to have civilian and military uses. An additional six were placed on the so-called “unreliable entities” list, a regulatory tool that allows Chinese authorities to impose strict bans on trade, investment, and operations involving blacklisted firms.

This decision is part of a broader Chinese strategy that reflects Beijing’s resolve to respond in kind to mounting economic pressure from Washington. The Ministry of Commerce stated that the six companies sanctioned under the unreliable entities list were penalized for their arms sales and military cooperation with Taiwan, which China views as a breakaway province. The ministry cited threats to “China’s national sovereignty, security and development interests” as justification for the action.

Which US defense and aerospace companies were targeted?

Among the blacklisted firms are high-profile names in the U.S. defense technology ecosystem. Shield AI, a California-based company that designs artificial intelligence-powered autonomous aircraft, and Sierra Nevada Corporation, a long-time contractor for the Pentagon and NASA, were both sanctioned. The move underscores China’s growing willingness to punish companies with even indirect links to sensitive military applications—especially those supplying systems relevant to Taiwan’s defense.

The six companies added to the unreliable entities list now face a complete ban on conducting import-export business with Chinese partners and are barred from investing in China. These measures reflect a significant escalation in Beijing’s use of trade restrictions as a geopolitical weapon, particularly aimed at curbing the flow of sensitive technologies to regions it considers off-limits, such as Taiwan.

Although several of these firms have limited commercial exposure to China, the sanctions could disrupt their global supply chains. A precedent was set in late 2024 when Chinese sanctions on Skydio, another U.S. drone manufacturer, led to immediate supply shortages of lithium-ion batteries sourced from Chinese vendors. The indirect fallout from such sanctions could ripple through procurement and manufacturing channels, even for companies not heavily reliant on Chinese revenue.

How do China’s new tariffs affect U.S. trade?

In parallel with the sanctions, Beijing also unveiled a dramatic hike in import duties on U.S. goods. China announced an additional 50% tariff on American imports, on top of the 34% increase previously scheduled to take effect on April 10. This brings the total retaliatory tariffs on U.S. goods to 84%. The increase significantly raises the cost of American products for Chinese buyers and further isolates U.S. exporters from one of their largest overseas markets.

This tariff escalation comes as a direct counter to Trump’s decision to ramp up pressure on China through unilateral trade measures. While the original 10% tariff imposed in February 2025 was already controversial, the administration doubled down in March with another 20% hike, then surged tariffs again in early April, bringing the total up by 50 percentage points. These aggressive moves reflect Trump’s renewed commitment to economic nationalism in his second term and a growing willingness to accept collateral damage across global markets.

What’s the historical context behind Trump’s tariff strategy?

Donald Trump’s trade policy has long been characterised by a confrontational approach, especially toward China. During his first term in office, the U.S. and China engaged in a prolonged trade war that saw tariffs slapped on hundreds of billions of dollars in goods, causing massive supply chain disruptions. While some relief followed under the Biden administration, Trump’s return to office in 2025 has reignited the economic conflict.

Trump’s tariffs are part of a broader effort to reduce U.S. dependence on Chinese manufacturing, punish alleged intellectual property theft, and restore what he describes as “fair trade” between the two countries. However, analysts and economists have repeatedly warned that such policies come at a cost, often increasing prices for American consumers and businesses while provoking sharp retaliation.

For China, the growing intensity of U.S. economic pressure has pushed policymakers to develop an arsenal of tools that can be used to hit back at foreign companies. These include the unreliable entities list, export bans on critical raw materials such as gallium and germanium, and antitrust investigations targeting U.S. and European firms operating in China.

How are global industries responding to rising trade hostilities?

The broader business community is increasingly alarmed by the growing rift between the world’s two largest economies. Companies in sectors ranging from semiconductors to luxury fashion are reassessing their exposure to U.S.-China trade tensions. In particular, the defense and aerospace industries, which rely heavily on complex global supply chains, are especially vulnerable to disruptions caused by regulatory actions or tariffs.

Some multinational corporations are already looking to shift parts of their supply chains away from China in anticipation of further restrictions. This trend, known as “decoupling,” has accelerated in recent years, with countries such as Vietnam, India, and Mexico emerging as alternative production hubs. However, the transition is costly, and the benefits are not immediate—especially for companies whose components are still manufactured in or exported through China.

Despite the tough rhetoric from both sides, Chinese officials have attempted to reassure foreign investors that they remain welcome in China, provided they abide by local laws and steer clear of politically sensitive areas. In its statement on the latest blacklisting, the Ministry of Commerce emphasised that the unreliable entities list targets only “a very small number” of companies and that the overwhelming majority of foreign businesses have nothing to fear if they are “honest and law-abiding.”

What does this mean for U.S.-China economic relations going forward?

The unfolding events signal a deepening of the strategic and economic rivalry between the United States and China. While each round of tariffs and sanctions has been justified by both governments on national security or economic grounds, the underlying political motivations are becoming increasingly clear. Washington is doubling down on efforts to contain China’s rise in key technology sectors, while Beijing is signalling that it is prepared to respond forcefully and systematically.

What makes this particular round of escalation significant is the symmetry of the measures: both sides are now targeting the other’s high-value, high-tech industries. This development suggests that future skirmishes may no longer be limited to agricultural goods or consumer electronics but will increasingly involve defense technology, semiconductors, artificial intelligence, and other strategic sectors.

As U.S. firms weigh the risks of doing business in China and Beijing fortifies its legal and regulatory tools to retaliate against perceived threats, the era of stable, predictable U.S.-China trade relations appears to be slipping further out of reach. For global markets, investors, and businesses alike, the message is clear: geopolitical tensions are no longer a distant risk—they are now a defining force in global trade.