Alibaba, a prominent Chinese tech company, has filed a lawsuit against the U.S. Department of Defense. The lawsuit disputes the Pentagon’s decision to classify Alibaba as linked to China’s military.

Alibaba, widely recognized for its e-commerce operations, is also a significant player in cloud computing and artificial intelligence in China. The legal action, initiated in the Federal District Court in the Northern District of California, asserts that Alibaba has no connections to the Chinese military and that the Pentagon’s designation was unlawful.

Recently, the U.S. has included Alibaba in a list of companies purportedly supporting China’s military, alongside notable firms in electric vehicle, memory chip, robot, and pharmaceutical manufacturing. The list includes BYD, an E.V. maker, and Unitree, a robotics company.

The designation halts Alibaba’s ability to engage in business with the Pentagon and prevents the Pentagon from collaborating with entities lobbying for listed companies. This decision could heighten tensions between Washington and Beijing shortly after efforts were made to stabilize relations between President Trump and China’s leader Xi Jinping. For 18 months, both nations have been at odds over trade, tariffs, and crucial technology supply chains.

China’s Ministry of Commerce has criticized the Pentagon’s decision, which it claims undermines the delicate agreement reached by the two leaders. It accused the U.S. of abusing power and jeopardizing global supply chain stability.

Alibaba, which has named Defense Secretary Pete Hegseth as a defendant in its lawsuit, claims the designation has led to reputational damage and loss of business associates, including lobbyists.

The company’s argument extends to a violation of its First Amendment rights, stating that the designation imposes commercial burdens and limits its ability to communicate and seek government input through its chosen representatives.

The Defense Department has not immediately responded to queries regarding the lawsuit.

Alibaba maintains it is not authorized to supply to China’s military and does not participate in any military procurement programs of China or the U.S. The firm also contends that the Pentagon misinterpreted its relationship with China’s Ministry of Industry and Information Technology, noting that interactions with the ministry are comparable to any tech company operating in China.

Xinyun Wu contributed reporting from Taipei. Meaghan Tobin covers business and technology topics in Asia, focusing on China, from Taipei.