Amid escalating tensions between the US and China, the US Treasury Department on Thursday imposed fresh sanctions on Chinese companies, barring Americans from buying or selling shares in the blacklisted companies. Among those blacklisted was Shenzhen-based SZ DJI Technology Co., the leading manufacturer of commercial drones in the world. Although DJI’s inclusion in the blacklist was officially declared to be due to its alleged complicity in human rights abuses against Uyghur Muslims and other ethnic and religious minorities in China, many believe that the move was informed by rising concerns over data security and possible espionage.

Of late, experts, former government officials, and politicians from both parties in the US have been voicing concerns about potential data theft by Chinese companies working on US soil, and with almost every device transmitting data these days, there are fears that China could glean unprecedented insights into the lives of ordinary Americans by utilizing data gathered by its companies. These very concerns precipitated the ban on TikTok and WeChat in 2020, and the US government appears to have shifted its focus to DJI, which commands roughly 50% of the commercial drone market in the US. While some say that fears of DJI drones transmitting military intelligence and personal data are far-fetched, politicians appear to be convinced of the existence of the threat nonetheless.

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The crackdown on DJI was set into motion in 2019 by the Trump administration, which banned the US military from purchasing Chinese drones and drone components. Subsequently, in 2020, the US Commerce Department placed DJI on its Entity List, thereby preventing US suppliers from selling to the company without an exemption. Now, DJI has been included in the investment blacklist and there are bills in the works that could make doing business in the US even more difficult for the drone manufacturer. The barrage of US sanctions against DJI appear to be hurting the company too, with DroneAnalyst reporting that DJI’s share in the $2 billion global commercial drone market had decreased from 74% in 2018 to 54% in 2021.

Meanwhile, the sanctions against DJI are creating new opportunities for smaller, US-based drone manufacturers such as Teal, which are landing government contracts. As it stands, the US government has 11 approved vendors for unmanned aerial vehicles (UAVs), most of them American.

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However, there are some concerns that the US government’s crackdown on DJI could raise the cost of commercial drones in the US, and some estimate that US-made commercial drones could cost up to 30% more and offer fewer features. The rising cost of drones and the lack of affordable alternatives could also affect poorly-funded local police stations that utilize drones for surveillance. That being said, some believe that despite sanctions, DJI’s presence will be hard to remove from the US, given its massive consumer base and the affordability of its products.