Trump Administration Backs Down After China Threatens Harsher Retaliation

In early June 2026, the United States added a string of Chinese technology giants to the Department of Defence’s (DoD/Pentagon) blacklist known as ‘1260H’ or ‘CMC’. This immediately drew a fierce reaction from Xi Jinping’s administration. The 1260H list comprises entities deemed to be assisting or involved with the Chinese military. Although the list does not officially impose sanctions on the Chinese companies, it carries significant repercussions. Under US law, the Pentagon is barred from entering into direct contracts with companies on the list, and from purchasing their products or services through third parties starting in 2027. These measures can impose material costs on Chinese firms and their partners. Being placed on the list also sends a potentially damaging message to Pentagon suppliers and other US government agencies. “We will certainly retaliate firmly and harshly,” China’s Ministry of Commerce said in a statement responding to the US decision. Beijing urged the Donald Trump administration to cease its erroneous practices and return to the correct path of building a strategic and stable relationship between the two nations. Other Chinese companies added to the list included veteran chipmakers CXMT and YMTC, biotechnology firm WuXi AppTec, AI-based robot manufacturer RoboSense Technology, and Unitree, a leading Chinese robotics and humanoid company. Shortly after the threat from China’s Ministry of Commerce, the Trump administration abruptly softened its stance. This did not concern the Pentagon list, but another blacklist maintained by the US Department of Commerce. The US suspended the addition of more than 100 Chinese companies to the so-called ‘Entity List’, including AI startup DeepSeek and chipmaker CXMT, according to two sources familiar with the matter. The Trump administration reportedly sought to avoid escalating tensions with Beijing, thus suspending the blacklist additions. DeepSeek, whose low-cost AI model shook the tech world in January 2025, has supported Chinese military and intelligence operations, a senior US State Department official said last year. The official added that the startup attempted to use shell companies in Southeast Asia to illegally access advanced US chips. This year, Anthropic stated it had identified a campaign by DeepSeek and two other Chinese AI labs to illegally extract capabilities from its Claude AI platform to enhance their own models. OpenAI warned lawmakers that DeepSeek was also targeting its models. CXMT, China’s leading memory chip maker, was designated a Chinese military company by the Pentagon under the Biden administration. The Commerce Department considered adding it to the Entity List over a year ago. US companies cannot ship goods, software, or technology to firms on the list without a licence, which would likely be denied. DeepSeek and CXMT could not be reached for comment outside normal working hours. The Commerce Department’s Bureau of Industry and Security, which oversees the list, did not directly respond to questions about why the Entity List update has not been published since last year, nor did it comment on DeepSeek and CXMT. The bureau uses “many policy and enforcement tools, including the Entity List, to ensure we combat bad actors,” BIS said in a statement.