On June 22, 2026, the central government issued two new policies simultaneously, which caused foreign trade companies to face new compliance challenges.
The Ministry of Commerce has added 10 U.S. military-related entities to the export control list, and the Treasury Department has banned the purchase of products originating from 46 U.S. companies. This is like building a wall on the export side and government procurement side at the same time.
The new compliance risks that foreign trade companies need to avoid can be summarized as follows: they cannot directly or indirectly export dual-use items to the 10 military-related US companies, and they cannot introduce products originating from 46 US companies in government procurement projects. Once they violate the rules, they will face fines of up to 20 times the value of the goods, revocation of export qualifications, and even market bans.
The risks that enterprises need to avoid are mainly divided into the following three categories.
The first is the exit end.
Selling directly to these 10 entities would hit a minefield.
The list includes drone, radar, and rare earth companies such as Red Cat Holdings, Teal UAV, Oshkosh Defense, and Mountain Pass Materials.
All Chinese export operators must immediately stop exporting any dual-use items to them, and existing orders must also be stopped on the day of the announcement.
Penalties for violations are based on the “Export Control Law” and can be fined up to 20 times the value of the exported goods and revoked export qualifications.
The second is the re-export port.
Even if 0.1% of China’s rare earth content flows to controlled entities, it is illegal.
The new policy breaks the inertial perception of “decoupling after transit”. Even if the goods are processed in a third country, as long as they are traced to the above 10 entities, it is a violation.
Foreign trade companies must establish a screening mechanism for downstream entities in the entire supply chain. They must not only check direct customers, but also penetrate the final destination of overseas middlemen.
Customs has required that exports of controlled items must fully report the full name of the overseas consignee, and it is prohibited to use cross-border e-commerce to simplify the declaration model.
Finally, there is the government procurement end.
The source of product parts must be verified before participating in bidding.
The Ministry of Finance’s ban covers the procurement activities of all budget units across the country, and explicitly prohibits the purchase of products originating from 46 US companies. Only the products of these companies’ US-owned factories in China are exempted.
This means that if the integrated products a company bids for contain locally produced components from Lockheed Martin, Raytheon, Boeing Defense and other companies on the list, they will not get the project.
Tianjin Customs specifically reminds that bidding companies must proactively verify and explain the source of upstream components, otherwise the bid may be deemed invalid or even held accountable.
Past public cases have demonstrated the severity of penalties.
If dual-use items are concealed for export, the illegal enterprise will have the goods confiscated and be fined 30% of the value of the goods; if the enterprise provides false materials or violates the contract and abandons the bid in government procurement, the enterprise will be fined up to 1% of the procurement amount and banned from participating in national government procurement projects for one year; more seriously, being listed on the list of untrustworthy enterprises will also affect cross-border payment and regulatory ratings.
So, the correct operation for foreign trade companies is: first, put all 10 controlled entities and 46 prohibited US companies into the partner blacklist, and the existing orders will be terminated immediately; second, for each item exported to the United States, it must be confirmed that the end user is not on the controlled list; third, when participating in government procurement, first dismantle the product BOM to ensure that each component is not an original product of the 46 US companies.
As long as these two red lines are not stepped on, other businesses can continue as usual.
