The BLUF - June 23rd

Good morning everyone,

This is Atlas, and you’re reading the Bottom Line Up Front, where we cover the top geopolitical stories from around the world every Tuesday!

Today’s topics:

• China Blocks U.S. Defense Firms From Rare Earth Materials

• South Korean Justice Minister Gets 25 Year Sentence For Martial Law Declaration

• U.K. PM Starmer Resigns, Sets Path For 7th PM In 10 Years

China Blocks U.S. Defense Firms From Rare Earth Materials

_{By: Atlas}

China blocked rare earth and other dual-use exports to ten American companies on Monday, including the two firms at the center of Washington's effort to build a domestic supply chain, retaliating for the Pentagon's decision earlier this month to add several Chinese tech giants to its list of military-linked businesses.

The Commerce Ministry named MP Materials, which runs the only operating rare earth mine in the United States, and USA Rare Earth, a developer of refining and magnet manufacturing capacity, alongside a cluster of drone, robotics, and aerospace firms. Chinese companies are now barred from shipping dual-use goods to any of the ten, and parties in third countries are prohibited from passing Chinese-origin material along to them. The order took effect immediately, with a narrow carve-out for cases Beijing deems "genuinely necessary."

A separate measure from the Finance Ministry barred Chinese government bodies from buying products made by 46 American companies, most of them defense contractors, including units of Lockheed Martin, Raytheon, General Dynamics, and Boeing. U.S.-funded firms registered inside China are exempt.

What Beijing restricted

The export controls go further than the rules they replace. Some of the targeted firms previously needed only an export license to receive Chinese dual-use goods; the new order amounts to an outright ban.

The full list runs from rare earths into the hardware of modern warfare. Beyond MP Materials and USA Rare Earth, it covers Aveox, a California maker of motors for mission-critical uses; Red Cat Holdings and its subsidiary Teal Drones; the radar firm IMSAR; the underwater robotics company Jaia Robotics; Ball Aerospace, which builds satellites and sensors; Oshkosh Defense; and L3Harris Maritime Services.

The Commerce Ministry framed the action as a defense of national security and a fulfillment of China's non-proliferation obligations, casting it as a direct answer to what it called the U.S. government's "wrongful expansion" of its roster of Chinese military companies. Several of the listed firms had already drawn Chinese sanctions in 2024 and 2025 over U.S. arms sales to Taiwan, a package Secretary of State Marco Rubio said this month was under review at a proposed value of $14 billion.

The Pentagon list that set it off

The trigger came earlier in June, when the Defense Department updated its 1260H list, the congressionally mandated register of companies it identifies as Chinese military firms operating in the United States. The latest revision added Alibaba, Baidu, the electric vehicle makers BYD and NIO, and others, accusing them of supporting Beijing's military modernization through civil-military fusion. Baidu rejected the characterization as baseless.

The designation stops short of a sanction. It blocks the firms from direct Pentagon contracts starting June 30, with limits on indirect procurement to follow in 2027, though the label is widely expected to push other federal agencies and commercial partners away from the listed companies as well. Beijing had said at the time that the move cut against the understanding Xi Jinping and President Trump reached during Trump's visit to China in May, and it vowed to take "all necessary measures" in response.

A chokehold built on processing, not mining

China's leverage in this fight rests less on what it digs out of the ground than on what it refines. The country accounts for roughly 60 to 70 percent of global rare earth mining but processes close to 90 percent of the world's supply, the stage at which raw concentrate becomes the magnets and components inside drones, precision munitions, radar, electric motors, and data center hardware.

That imbalance is precisely what the two targeted American firms were built to address. MP Materials operates the Mountain Pass mine in California and last year signed a long-term agreement with the Defense Department tied to magnet purchases and price guarantees, a deal that left the Pentagon holding about a 15 percent stake and made it the company's largest shareholder. USA Rare Earth, which is standing up magnet manufacturing in the United States, reached a $1.6 billion arrangement with the administration in January that included federal funding and a loan through the Commerce Department's CHIPS program in exchange for an equity stake.

Neither can close the gap quickly. Mining is only the first step, and building out the refining, alloying, and fabrication that China already dominates would take years and heavy capital. Analysts cited in the trade press have put full diversification of rare earth supply chains as far off as two decades.

How much it actually bites

For all the symbolism, the immediate commercial damage may be modest. Analysts noted that most of the ten firms do little or no business in China to begin with, which blunts the practical effect of cutting them off. Han Shen Lin of The Asia Group described Beijing's countermeasures as largely symbolic rather than a substantive escalation, and Dan Wang of the Eurasia Group called them a model of how China intends to handle mild friction with Washington while keeping the broader relationship, reset at the May summit, intact.

The targeting still signals something larger. The Pentagon's net now stretches across artificial intelligence, consumer electronics, and biotech, and Beijing's reply shows a willingness to answer in the currency it controls best. Some designated Chinese firms are fighting back through the courts, a path that has worked before; Xiaomi won removal from a Pentagon list in 2021 after a legal challenge. On Capitol Hill, John Moolenaar, who chairs the House select committee on China, called the episode a warning to American business and government alike. Researchers at the Center for Strategic and International Studies have warned that the widening use of export controls by both sides risks an "arms race" in economic statecraft, with one survey finding that 56 percent of semiconductor and IT firms already faced license review times longer than 180 days. For now, the materials themselves have become the weapon, and the contest over who can make a magnet has moved to the center of the U.S.-China rivalry.

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