China Sanctions Boeing and a bunch of U.S. Defense Companies Following Trump Admin's Taiwan Arms Sales

After the Busan meeting, China and the United States went through a brief period of calm. That calm is now once again being shattered by the United States’ unprecedented large-scale arms sales to Taiwan.

Today, during the Christmas period, China’s Ministry of Foreign Affairs announced sanctions against 20 U.S. defence-related companies and 10 senior executives. Sanctioned firms include Northrop Grumman, Boeing’s St. Louis-based defence unit, and Palmer Luckey, the founder of Anduril Industries.

Decision on Taking Countermeasures Against Relevant U.S. Defense Companies and Senior Executives

(Promulgated by Ministry of Foreign Affairs Order No. 19 of the People’s Republic of China on December 26, 2025; effective as of December 26, 2025)

The United States has recently announced large-scale arms sales to China’s Taiwan region. This seriously violates the one-China principle and the three China–U.S. Joint Communiqués, seriously interferes in China’s internal affairs, and seriously undermines China’s sovereignty and territorial integrity. Pursuant to Articles 3, 4, 5, 6, 9, and 15 of the Anti–Foreign Sanctions Law of the People’s Republic of China, China has decided to take countermeasures against the following U.S. defense-related companies and senior executives:

I. With respect to the 20 companies listed in the attached Countermeasures List—including Northrop Grumman Systems Corporation, L3Harris Maritime Services, Boeing’s St. Louis, Missouri division, Gibbs & Cox, Inc., Advanced Acoustic Concepts, VSE Corporation, Sierra Technical Services, Inc., Red Cat Holdings, Inc., Teal Drones, Inc., ReconCraft, High Point Aerotechnologies, Epirus, Inc., Dedrone Holdings Inc., Area-I, Blue Force Technologies, Dive Technologies, Vantor, Intelligent Epitaxy Technology, Inc., Rhombus Power Inc., and Lazarus Enterprises Inc.—all movable and immovable property and other types of assets located within China shall be frozen. Organizations and individuals within China are prohibited from engaging in transactions, cooperation, or other related activities with these entities.

II. With respect to the 10 senior executives listed in the attached Countermeasures List—including Palmer Luckey (founder of Anduril Industries), John Cantillon (Vice President of L3Harris Technologies; Vice President and Chief Accounting Officer of L3Harris Maritime Services), Michael J. Carnovale (President and Chief Executive Officer of Advanced Acoustic Concepts), John A. Cuomo (President and Chief Executive Officer of VSE Corporation), Mitch McDonald (President of Teal Drones), Anshuman Roy (Founder and Chief Executive Officer of Rhombus Power Inc.), Dan Smoot (President and Chief Executive Officer of Vantor), Aaditya Devarakonda (Chief Executive Officer of Dedrone), Ann Wood (President of High Point Aerotechnologies), and Jay Hoflich (Co-founder and Chief Executive Officer of ReconCraft)—all movable and immovable property and other types of assets located within China shall be frozen. Organizations and individuals within China are prohibited from engaging in transactions, cooperation, or other related activities with these individuals. No visas shall be issued to them, and they shall be denied entry into China (including Hong Kong and Macao).

This decision shall take effect as of December 26, 2025.

Attachment: Countermeasures List

Ministry of Foreign Affairs
December 26, 2025

Attachment

Countermeasures List

I. Companies

1. Northrop Grumman Systems Corporation

2. L3Harris Maritime Services

3. Boeing (St. Louis, Missouri)

4. Gibbs & Cox, Inc.

5. Advanced Acoustic Concepts

6. VSE Corporation

7. Sierra Technical Services, Inc.

8. Red Cat Holdings, Inc.

9. Teal Drones, Inc.

10. ReconCraft

11. High Point Aerotechnologies

12. Epirus, Inc.

13. Dedrone Holdings Inc.

14. Area-I

15. Blue Force Technologies

16. Dive Technologies

17. Vantor

18. Intelligent Epitaxy Technology, Inc.

19. Rhombus Power Inc.

20. Lazarus Enterprises Inc.

II. Senior Executives

1. Palmer Luckey (male), Founder of Anduril Industries

2. John Cantillon (male), Vice President of L3Harris Technologies; Vice President and Chief Accounting Officer of L3Harris Maritime Services

3. Michael J. Carnovale (male), President and Chief Executive Officer of Advanced Acoustic Concepts

4. John A. Cuomo (male), President and Chief Executive Officer of VSE Corporation

5. Mitch McDonald (male), President of Teal Drones

6. Anshuman Roy (male), Founder and Chief Executive Officer of Rhombus Power Inc.

7. Dan Smoot (male), President and Chief Executive Officer of Vantor

8. Aaditya Devarakonda (male), Chief Executive Officer of Dedrone

9. Ann Wood (female), President of High Point Aerotechnologies

10. Jay Hoflich (male), Co-founder and Chief Executive Officer of ReconCraft

Foreign Ministry Spokesperson Answers Questions on Countermeasures Against U.S. Arms Sales to China’s Taiwan Region

Question: The website of the Ministry of Foreign Affairs has released a decision to take countermeasures against 20 U.S. defense companies and 10 senior executives. Does the spokesperson have any further comment?

Answer: In response to the United States’ recent announcement of large-scale arms sales to China’s Taiwan region, China has decided, in accordance with the relevant provisions of the Anti-Foreign Sanctions Law of the People’s Republic of China, to take countermeasures against 20 U.S. defense-related companies and 10 senior executives who in recent years have participated in arming Taiwan.

I would like to emphasize once again that the Taiwan question lies at the core of China’s core interests and constitutes the first red line that must not be crossed in China–U.S. relations. Any provocation that crosses the line on the Taiwan question will be met with a strong response from China. Any enterprises or individuals involved in arms sales to Taiwan must pay a price for their wrongdoing. No country or force should underestimate the Chinese government and people’s firm resolve, strong will, and powerful capability to safeguard national sovereignty and territorial integrity.

China once again urges the U.S. side to abide by the one-China principle and the three China–U.S. Joint Communiqués, honor the commitments made by U.S. leaders, cease the dangerous practice of arming Taiwan, stop undermining peace and stability across the Taiwan Strait, and stop sending erroneous signals to “Taiwan independence” separatist forces. China will continue to take resolute and effective measures to firmly safeguard national sovereignty, security, and territorial integrity.

Beijing would freeze the assets of the sanctioned entities, ban them from conducting transactions in China, and prohibit the listed executives from entering mainland China, Hong Kong, and Macau. Specifically:

For companies, the most immediate and visible impact of being placed on the countermeasures list is a full restriction on cooperation and transactions with China. Chinese companies will proactively avoid signing contracts, making investments, or launching joint projects, while existing cooperation is frozen or put on hold indefinitely. Contracts involving the Chinese market face significantly slowed approval, payment, technical cooperation, and data exchanges, and in some cases are halted outright. In addition, cooperation between entities on the list and their affiliated entities—such as parent companies, subsidiaries, and controlling entities—and Chinese counterparts will also be affected. Chinese third parties, including banks, law firms, auditing firms, and business partners, will typically withdraw proactively from cooperation with the above-mentioned entities for compliance reasons.

At the individual level, the most direct consequence is that activities related to China are essentially brought to a complete halt. Visas and entry into China face substantive uncertainty—typically meaning that entry can no longer proceed smoothly. Chinese universities, think tanks, and enterprises will no longer invite the individual to participate in conferences, research, or consulting projects, and existing roles such as advisor, board member, or visiting scholar will be proactively terminated. Even in the absence of a formal announcement detailing specific restrictive measures, relevant organizations will engage in “preemptive risk avoidance” based on compliance and political risk considerations, effectively clearing out the individual’s academic, business, and public engagement space in China.

The companies listed in this round of countermeasures each have distinct characteristics, reflecting different positions and functions within the U.S. defense and technology supply chain.

For example, Red Cat and its subsidiary Teal Drones are among the core suppliers designated under the U.S. DoD’s Blue UAS (Blue Unmanned Aircraft Systems) program to replace DJI. The Blue UAS program, led by the Pentagon, is essentially a “secure drone whitelist” for military and government use. Within this framework, Teal Drones focuses on small reconnaissance and forward-deployed tactical UAVs—precisely the segment that most closely overlaps with DJI’s traditional strengths.

Although these U.S. drone companies have little to no commercial presence in China, they remain heavily dependent on China-based or China-dominated upstream supply chains for key components, including batteries, rare-earth permanent-magnet motors, and high-performance structural parts. As Red Cat and Teal Drones are added to China’s countermeasures list, the implications go beyond simple market exclusion; how their access to critical upstream and downstream inputs necessary for production may be affected also warrants close attention.

The inclusion of Intelligent Epitaxy (IET) is another noteworthy example. As the U.S. entity of IET-KY, IET sits at the intersection of Chinese and U.S. supply chains. Its compound-semiconductor epitaxial wafers are widely used in military communications, radar systems, and unmanned aerial platforms. For companies like IET, whether they will continue to have access to key upstream raw materials such as gallium and germanium is an open question.

A week ago, the Trump administration announced a massive package of arms sales to Taiwan valued at more than $10 billion, including medium-range missiles, howitzers and drones, a move that is sure to infuriate China.

This arms package is truly exceptional in many respects. It represents the largest arms sale of its kind to date and, if fully delivered, would substantially strengthen Taiwan’s ability to carry out its asymmetric “Porcupine” defense strategy.

The first four systems in particular would form the backbone of Taiwan’s efforts to blunt a potential PLA amphibious assault. HIMARS and the M109A7 self-propelled howitzers would significantly enhance Taiwan’s ability to deliver long-range, land-based fires against staging areas, landing forces, and logistics nodes. The ALTIUS loitering munition family would add a new layer of airborne strike and reconnaissance capability, enabling persistent targeting and rapid attrition of invading forces. The Tactical Mission Network (TMN) would serve as the connective tissue, integrating sensors, shooters, and command nodes into a more coherent, resilient command-and-control architecture. Importantly, all of these systems—or closely comparable variants—have been extensively employed and battle-tested in the war in Ukraine, shaping U.S. and allied thinking about modern high-intensity conflict and distributed fires.

The more immediate question, however, is not operational effectiveness but political feasibility: whether President Lai Ching-te’s administration can secure legislative approval for the necessary funding.

Taiwan’s Ministry of National Defense has emphasized that the proposed purchases would be financed through Lai’s ambitious, historically large special defense budget, totaling roughly US$40 billion. That package, however, has yet to clear the Legislative Yuan. The Kuomintang (KMT) and the Taiwan People’s Party (TPP) have jointly blocked debate on the defense bill, widely seen as a tactical move to gain leverage in broader budget negotiations. In particular, the opposition appears to be seeking concessions from the Democratic Progressive Party (DPP) on a separate fiscal proposal that would reallocate resources away from the DPP-controlled central government toward local governments, where the KMT retains greater political influence.

This is not without precedent. In 2001, Taiwan failed to complete a proposed US$15.3 billion U.S. arms purchase—larger in real terms than the current package—largely due to sustained legislative resistance. That episode remains a cautionary reminder that Taiwan’s ability to translate strategic intent into military capability has often been constrained less by external factors than by domestic political deadlock.

In addition, the Fiscal Year 2026 National Defense Authorization Act (2026 NDAA) already signed by President Trump also contains a large number of provisions providing assistance to Taiwan.

Notably, this round of provisions goes beyond simple support such as arms sales and funding. Instead, it places greater emphasis on further expanding joint and in-depth U.S.–Taiwan military cooperation, systematically helping Taiwan build wartime survivability and sustained combat capabilities across domains such as cyberspace, maritime operations, and future forms of warfare.

Taiwan provisions in the 2026 NDAA:

• Sec. 1265: Modifies the “Taiwan Security Cooperation Initiative” to include medical equipment, supplies, and related emergency care, as well as combat casualty care capabilities in cooperation programs. Authorizes up to $1 billion in funding for this initiative for FY 2026.

• Sec. 1266: Requires the Secretary of Defense, by March 1, 2026, in coordination with the Secretary of State, to seek engagement with Taiwan officials through the American Institute in Taiwan to establish a joint program to enable the fielding of uncrewed systems and counter-uncrewed systems capabilities, including co-development and co-production.

• Sec. 1255: Reaffirms strengthening the partnership with Taiwan based on the Taiwan Relations Act, the Three Joint Communiqués, and the Six Assurances.

• Sec. 1254: Requires the formulation of a strategy to strengthen multilateral defense in the Indo-Pacific region, expanding the scope and scale of multilateral military exercises and operations in the region, including transits of the Taiwan Strait and joint maritime missions in the South China Sea.

• Sec. 7263: Requires the development of a plan within 180 days of the enactment of this Act to expand joint training opportunities between the U.S. Coast Guard and the Taiwan Coast Guard Administration, and to strengthen training for Taiwan Coast Guard personnel.

• Sec. 8301–8305 (Taiwan Non-Discrimination Act of 2025): Supports Taiwan’s admission to the IMF and requires the Secretary of the Treasury to describe, in future testimony, the efforts taken to support Taiwan’s participation in international financial institutions.

• Sec. 1271: Restricts the use of travel funds by the Secretary of Defense until two specific documents are submitted:

  1. A multi-year plan to meet the defense needs of Taiwan’s military (i.e., the “roadmap for Taiwan security assistance” required by the 2023 NDAA);

  2. A report on Department of War/Defense activities to support the establishment of a regional contingency stockpile for Taiwan.

Notably, during the process of reconciling the legislative text between the House and Senate, the final version removed certain Taiwan-related provisions that had appeared in the House version:

1. The invitation for Taiwan to participate in the 2026 RIMPAC exercises was removed.

2. The requirement for the Secretary of Defense to submit a report identifying institutional or implementation obstacles encountered by the United States in assisting the strengthening of Taiwan’s self-defense capabilities, and proposing corresponding policy recommendations, was removed.

Regarding the “China-related negative content” in the 2026 NDAA, China’s National People’s Congress (NPC) issued a strongly worded response, demanding that the provisions not be implemented and warning that China would “take resolute measures in accordance with the law to firmly safeguard national sovereignty, security, and development interests.”

Statement by the Spokesperson of the Foreign Affairs Committee of the National People’s Congress on the China-related negative provisions in the U.S. ‘Fiscal Year 2026 National Defense Authorization Act’

On December 25, Xu Dong, spokesperson for the Foreign Affairs Committee of the National People’s Congress, issued a statement in response to the signing into law of the U.S. “Fiscal Year 2026 National Defense Authorization Act.” The full text is as follows:

Recently, the “Fiscal Year 2026 National Defense Authorization Act” passed by the U.S. Congress was signed into law and contains negative China-related content. The Act continues its consistent policy of containing China, hypes the so-called “China threat,” crudely interferes in China’s internal affairs, and harms China’s core interests. We express strong dissatisfaction and firm opposition to this.

We hope the U.S. side will view China’s development and China–U.S. relations objectively and rationally, work with China in the same direction, and jointly implement the important consensus reached at the meeting between the two heads of state in Busan. We strongly urge the U.S. side to abandon zero-sum thinking and ideological prejudice and refrain from implementing the China-related negative provisions in the Act. If the U.S. side insists on going its own way, China will take resolute measures in accordance with the law to firmly safeguard national sovereignty, security, and development interests.