Trump Administration Backs Down After China Threatens Harsher Retaliation
In early June 2026, the United States added a series of Chinese technology giants to the US Department of Defense (DoD/Pentagon) blacklist, known as ‘1260H’ or ‘CMC’. This move immediately triggered a harsh reaction from the Xi Jinping 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 Chinese companies, it carries significant consequences. Under US law, the Pentagon is prohibited from entering into direct contracts with companies on this list and is barred from purchasing their products or services through third parties starting in 2027.
These measures could impose material costs on Chinese companies and their partners. Inclusion on the list also sends a potentially damaging signal to Pentagon suppliers and other US government agencies.
“We will certainly respond firmly and harshly,” stated the Chinese Ministry of Commerce in a statement responding to the US decision, as quoted by Reuters.
Beijing urged the Donald Trump administration to cease these erroneous practices, calling for the US to return to a path that builds a strategic and stable relationship between the two nations.
Other Chinese companies included on the list are CXMT and YMCO, prominent chip manufacturers, WuXi AppTec, which operates in the biotechnology sector, RoboSense Technology, an AI-based robotics maker, and Unitree, a well-known Chinese robotics and humanoid company.
The US Suddenly Yields and Softens
Shortly after the threats from the Chinese Ministry of Commerce, the Trump administration has adopted a more lenient stance. This does not pertain to the Pentagon list, but rather to another ‘blacklist’ established by the US Department of Commerce.
According to Reuters on Wednesday (17/06/2026), the US has suspended the addition of more than 100 Chinese companies to the ‘Entity List’. Two of these include the AI startup DeepSeek and the chip manufacturer CXMT, according to two sources familiar with the matter.
It is reported that the Trump administration is avoiding escalating tensions with Beijing, thereby suspending the addition of these entities to the blacklist.
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 told Reuters last year. The official added that the startup has attempted to use shell companies in Southeast Asia to illegally access advanced US chips.
Earlier this year, Anthropic stated it had identified a campaign by DeepSeek and two other Chinese AI laboratories to illegally extract capabilities from its Claude AI platform to enhance their own models. OpenAI has also warned lawmakers that DeepSeek is targeting its models.
CXMT, China’s leading memory chip maker, was designated as a Chinese military company by the Pentagon under the Biden administration. The Department of Commerce had been considering its inclusion on the Entity List for over a year, according to Reuters and other reports.
US companies are unable to export goods, software, and technology to companies on this list without a licence, which is likely to be denied.
DeepSeek and CXMT could not be reached for comment outside of normal business hours. The Bureau of Industry and Security (BIS) of the Department of Commerce, which oversees the list, did not directly respond to queries regarding 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 criminals,” the BIS stated in a release.