In a move that is largely seen as symbolic, China has imposed sanctions on three U.S. defense contractors, including Boeing Co. BA, for their involvement in arms sales to Taiwan.
What Happened: The sanctions were announced by China’s Commerce Ministry on Monday, targeting Boeing Defense, Space & Security, General Atomics Aeronautical Systems Inc., and General Dynamics Land Systems Inc., reported Bloomberg.
The companies have been added to China’s “unreliable entity” list, a punitive measure against entities that compromise national security. The sanctions could lead to trade restrictions, investment limitations, and visa constraints.
These sanctions come on the same day that Taiwan inaugurated a new president, Lai Ching-te, who has vowed to maintain strong ties with the U.S., including in the military sphere. China has consistently expressed its intention to eventually bring Taiwan under its control, even if it requires the use of force.
Despite the sanctions, the impact on the U.S. defense companies is expected to be minimal, as they do not conduct significant business in China.
Why It Matters: This move by China is the latest in a series of actions that illustrate the escalating tensions between the U.S. and China. Earlier in May, the Biden administration imposed new tariffs on Chinese imports, targeting sectors such as electric vehicles, batteries, and semiconductors. This was seen as a strategic move to protect U.S. jobs ahead of the November election.
China, on the other hand, has been facing its own set of challenges. In April, its major banks halted transactions related to Russia due to concerns over U.S. sanctions, forcing Chinese companies to resort to alternative channels for payments, including cryptocurrency.
Boeing, one of the companies affected by the recent sanctions, has had its share of issues with China. In February, the company agreed to pay a $51 million penalty to settle a U.S. administrative charge related to unauthorized exports of technical data to countries including China and Russia, which were found to have “caused harm to U.S. national security” by the State Department.
Price Action: Boeing last traded at $184.95 and is down 0.68% in pre-market trading on Monday, according to the data from Benzinga Pro.
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