Intensification of the trade war: China blacklists US drone companies
China continues to fuel the trade war with the USA and is targeting the US drone industry. Drone companies are no longer to receive components.
A drone from Skydio, one of the US companies affected by the Chinese trade ban.
(Image: Skydio)
The Chinese Ministry of Commerce (Ministry of Commerce – MOFCOM) has placed a total of eleven US drone companies on the Unreliable Entity List (UEL), a blacklist of companies with which no import and export relationships may exist. This was announced by MOFCOM, as reported by the Chinese state media Global Times on Friday. The decision could have a major impact on drone manufacturing in the USA, which relies on imports of Chinese components and raw materials.
Specifically affected by the decision are the US drone companies Brinc Drones, Domo Tactical Communications (DTC), Firestorm Labs, HavocAI, Insitu, Kratos Unmanned Aerial Systems, Neros Technologies, Rapid Flight, Red Six Solutions, Skydio and Synexxus. These are all companies that are important to the US drone industry – be it autonomous, tactical or defense-related drones.
China cites US military cooperation with Taiwan, which China counts as its territory, as the main reason for the measure, according to Global Times. The Chinese leadership sees a danger for China, as this is said to disrupt China's national sovereignty, security, and development interests. According to MOFCOM, however, companies based in Taiwan are disregarding China's interests because they are not complying with Chinese regulations.
Restricted access to components and materials
Companies on the UEL are now no longer allowed to conduct import and export business with Chinese companies. Companies that violate this rule will face severe penalties in the future, which could have a major impact on their business activities or even put an end to them in China. The trade ban means that US drone companies will be cut off from important components and materials. However, these are vital for the production of drones and cannot be easily sourced from other countries. These include batteries and rare earths, for example. If companies are unable to find other suppliers at competitive prices, this could significantly weaken the US drone industry, possibly even forcing smaller manufacturers to go out of business.
US companies are also no longer allowed to invest in China. This restricts their expansion into the important Chinese market. Even entering into partnerships is no longer possible. In addition, the entry regulations for employees of the affected US companies may be restricted. This includes the withdrawal of residence and work permits to make cooperation more difficult.
China is apparently assuming that the domestic drone industry will benefit from the measure in global trade. The Chinese drone manufacturer DJI in particular could be strengthened as a result. This currently also applies to the USA, where DJI has narrowly escaped a ban on the sale of its drones at the end of 2024.
However, this has not stopped the USA from preventing DJI from importing drones into the USA. The Customs and Border Protection (CBP) recently stopped the import of some drones, as Commercial UAV News reported on Monday. The reason given was that the drones may have been manufactured in China using Uyghur forced labor in the Xinjiang Autonomous Region. According to the Uyghur Forced Labor Prevention Act (ULFPA), however, such goods may not be imported into the USA. DJI has rejected the allegation as false.
(olb)