The American Pentagon shows a “red card” to China, and its close ally Donald TrumpElon Musk risks being a collateral damage. The Pentagon will blacklist China’s biggest EV (electric vehicle) battery maker and the Asian country’s biggest tech company from June 2026, barring them from Defense Department contracts and sending a strong message to US companies the Washington Post comments on the potential risks of doing business with them.

In an announcement in the Federal Register on Monday, the US Department of Defense published a list of companies it believes are doing business in the US for, or on behalf of, the Chinese military, or contributing to China’s military development.

The “1260H list,” set annually by Congress starting in 2021, includes CATL, the world’s largest electric vehicle battery company; which supplies her Tesla, the EV maker owned by President Donald Trump’s ally Elon Musk. It also includes social media giant Tencent, China’s most valuable tech company.

Other notable companies added to the list include China’s top commercial jet maker and a DNA sequencing company with ties to the US.
“When the Pentagon confirms that you are a Chinese military company, it is an official, “scarlet card” which can affect everything from the perception of the risk of working with a company that can affect its stock price to its long-term viability in the US market”commented Eric Sayers, a fellow at the American Enterprise Institute and former aide to the top US military commander in the Pacific.

The Pentagon blacklist is among the actions taken by Congress, the Biden administrations and the first Trump administration to curb China’s aggressive military and technological ambitions. The issue is largely seen as bipartisan, though the tech mogul’s political rise Musk – who has significant business interests in China – may complicate the policy picture under the incoming government.

Trump’s transition team did not respond to WP’s request for comment.

Pentagon spokeswoman Selina Rhodes called the new list “an important step in securing our supply chains and removing entities that support” China’s strategy of integrating military and civilian technologies.

CATL’s blacklisting is significant, noted Craig Singleton, senior fellow for China at the Foundation for the Defense of Democracies, because of its control over data collected by charging stations and battery management systems. may enable spying on the Chinese government. “Chinese law requires CATL to provide the Chinese government with access to all proprietary and customer data – no questions asked” underlined.

Additionally, Singleton said, CATL’s integration into the U.S. electric grid through its partnership with U.S. power companies is not only likely to increase U.S. reliance on CATL’s charging infrastructure but also creates potential security vulnerabilities that could be exploited to cause problems in essential services, similar concerns have been expressed about the widespread integration of Chinese of tech giant Huawei in global telecommunications networks.

It should be noted that Trump’s choice for Secretary of State, Marco Rubio, led efforts to block a partnership CATL and Ford’s $3.5 billion electric battery deal in Michigan. As the top Republican on the Senate Intelligence Committee, Rubio in 2023 introduced legislation to block CATL from receiving environmental subsidies and called for a national security review of the deal, citing concerns about reliance on China.

CATL and the Chinese embassy in Washington did not respond to WP’s request for comment.

For its part, Tencent, based in the Chinese city of Shenzhen, oversees the popular social networking site WeChat and is a leading force in online payments, e-commerce and gaming. He owns a large stake in Epic Games, the maker of the popular Fortnite game based in North Carolina, and has invested in entertainment having a presence in Warner Music and Universal Music Group.

Valued at more than $480 billion, Tencent saw its stock drop nearly 10% on Monday after the announcement.

“Tencent’s inclusion on this list is clearly wrong,” the company said in a statement. “We are not a military company or supplier. However, we will work with the Department of Defense to address any misunderstanding.”

Although the ban does not take effect until 2026, the Pentagon’s blacklist could strengthen the momentum of other US agencies in their investigations of Chinese companies. It will also likely warn U.S. and third-party companies that sell to or provide services to the Defense Department that those Chinese companies are seen as supporting the Chinese defense industrial base, which has potential implications for their prestige, said Anne Kowalewski, a former assistant at the Foreign Affairs Committee. Relations and Foreign Affairs of the House of Representatives, who is now a senior fellow at the Project 2049 Institute.

The announcement of the US list comes after China’s Commerce Ministry last week added 10 US companies to its “distrusted entity list”, imposing export controls in response to US sanctions on Chinese companies.

The timing is likely coincidental, Kowalewski explained, as the Pentagon is required to release the list annually, and did so last year around the same time. The impact of China’s entity list is largely symbolic, he noted: “It’s a way for them to make their grievances about the sale of arms to Taiwan and our export controls.”

Several companies on the Chinese Commerce Ministry’s list are major U.S. defense contractors barred by law from exporting arms and defense services to China, analysts said.

A notable addition to the Pentagon’s list is the Commercial Aircraft Corporation of China Limited, or COMAC, China’s top commercial aircraft maker, which was responsible for China’s first passenger jet in 2017.

Also added to the list were ChangXin Memory Technologies, Inc., China’s leading memory semiconductor company, BGI Genomic’s DNA sequencing unit, MGI Tech Co., Ltd., which has a San Jose-based subsidiary called Complete Genomics . Also on the list is facial recognition technology company Xiamen Meiya Zhongmin Electronic Technology Co., Ltd., whose services, along with SenseTime’s counterparts, the U.S. says are being used by China to suppress ethnic minorities in the country.

Indeed, although the list published Monday does not include Hesai, a company whose LiDAR (Light Detection And Ranging) system is used in autonomous vehicles and robotics, a Pentagon official he made it clear that he will be on the final list which will be issued on Tuesday.

CXMT, SenseTime and MGI did not respond to WP requests for comment. Similarly COMAC and Xiamen Meiya Zhongmin Electronic Technology could not be immediately reached for comment.