China slaps restrictions on 18 US firms over Trump tariffs

By Eduardo Baptista

BEIJING (Reuters) -China's commerce ministry slapped restrictions on more than a dozen U.S. defence firms on Wednesday after President Donald Trump made good on his threat to impose an additional 50% tariff on Chinese imports.

Beijing added 12 U.S. companies to a control list that prohibits exports of dual-use items and another six to its "unreliable entities" list, which allows Beijing to take punitive actions against foreign entities, according to commerce ministry statements.

China also announced it would raise its levies on U.S. goods by 50%, adding to the 34% increase previously announced and due to be implemented on Thursday, to bring the total additional duties on U.S. imports to 84%.

The most recent round of trade restrictions, also effective Thursday, are mainly targeted at U.S. firms that supply the Pentagon and federal government agencies, adding to the 60 or so American companies Beijing has already punished over Trump's tariffs on China, the first of which took effect in February.

In the case of the unreliable entities list, Beijing said the six U.S. firms were added over arms sales or military cooperation with Taiwan and would be banned from China-related import and export activities, as well as investing in the country.

"In recent years, the six companies, including Shield AI and Sierra Nevada Corporation, have... seriously jeopardised China's national sovereignty, security and development interests," the commerce ministry said in a statement.

California-based Shield AI specializes in artificial intelligence-powered aircraft, especially military drones, while long-time Pentagon and NASA contractor Sierra Nevada Corporation last year was selected by the U.S. Army to convert a fleet of business jets into cutting-edge spy planes.

While the affected firms have little to no business in China, according to a Reuters review of corporate records, the new restrictions could potentially disrupt their supply chains.

When U.S. drone manufacturer Skydio was sanctioned by Beijing in October over arms sales to democratically governed Taiwan, which China claims as part of its territory, that quickly cut off the company's supply of batteries, according to the Financial Times.

But even as Beijing retaliates against Trump's tariffs by targeting U.S. imports and companies, it has sought to include in its public messaging reassurances aimed at foreign firms operating in China, or looking to invest in the country.

In a statement explaining the new additions to the unreliable entities list on Wednesday, the commerce ministry concluded by stating that the list only applied to "a very small number" of firms and that "foreign entities that are honest and law-abiding have nothing to worry about".

(Reporting by Eduardo Baptista, Yukun Zhang and Ryan Woo; Editing by Bernadette Baum and Alex Richardson)