China imposes sanctions against the American defense industry. What does it mean

Beijing has announced sanctions against the US defense company Lockheed Martin (LMT) for the supply of weapons to Taiwan, reports Reuters. Last week, the U.S. government agreed to supply an update for Patriot missile systems for $ 620 million, the main beneficiary of which was LMT. The representative of the Chinese Foreign Ministry called on Washington to stop supplying Taiwan with arms in order to avoid further deterioration of relations. The United States, like many other countries, does not have official diplomatic ties with Taiwan, but supports the independence of the island state.

What does it mean

China’s statements put pressure on LMT stocks, which are losing more than 1% at the premarket. Other companies from the defense sector, such as Boing, General Dynamics, etc., may be under certain pressure.

However, China has previously imposed sanctions on American companies for arms supplies to Taiwan. Only during the presidency of Donald trump was delivered more than 10 parties of various weapons. However, this did not lead to any consequences for the work of American defense enterprises.

Meanwhile, the supply of American weapons to China has long been banned. From this point of view, a clear influence on the business of defense companies is not expected. Nevertheless, we are witnessing an escalation of tension in relations between the USA and China, which is unnerving the markets. A few days earlier, Beijing imposed sanctions against several US congressmen. In such a situation, Washington’s response should not be ruled out, which is definitely not enthusiastic about the damage caused by the coronavirus pandemic. The blame for the spread of the virus, US authorities blame on Beijing.