Chinese technology giant Alibaba Group has filed a lawsuit against the US Department of Defense after being labeled a 'Chinese military company' and placed on a blacklist. The company argues that the designation was arbitrary and lacked proper legal procedure. The case was filed on Monday in a federal court in San Francisco, according to AFP. Alibaba claims the Pentagon’s decision has no factual or legal basis and violates its constitutional rights.

On June 8, the Pentagon released a new blacklist naming 80 companies and affiliates allegedly supporting Chinese military activities, including Alibaba, Baidu, and electric vehicle maker BYD. Under the decision, the Defense Department will be barred from entering new contracts with these firms or their subsidiaries from June 30. Alibaba’s lawsuit also contends that the restrictions hinder its ability to hire lobbying firms in the US, violating the First Amendment.

In response, China imposed export controls on ten US companies in the defense and rare minerals sectors, escalating trade tensions despite recent efforts by Presidents Donald Trump and Xi Jinping to stabilize relations.