China Blocks Illumina’s Sequencers as U.S. Tariffs Double–Trade War Fallout Intensifies

China has banned imports of genetic sequencers from U.S. medical equipment maker Illumina (NASDAQ: ILMN), just minutes after U.S. President Donald Trump’s additional 10% tariff on Chinese goods took effect. The move is part of a broader set of actions China introduced in response to the new U.S. tariffs. This follows Beijing’s decision to add Illumina to its “unreliable entity” list in February. China makes up about 7% of Illumina’s sales, with the company’s gene sequencers playing a key role in studying DNA and RNA sequences to understand genetic variations linked to diseases and diagnose rare genetic conditions.

Illumina’s Gene Sequencers Banned from China as U.S. Tariffs Double from 10% to 20% Amid Trade Tensions

China has barred Illumina from exporting its DNA sequencers to the country in response to the Trump administration’s decision to expand tariffs on Chinese goods. This move comes after China placed Illumina on its “unreliable entities list” back in February, following the White House’s imposition of a 10% tariff on Chinese products. With the tariffs now increasing by another 10% and additional 25% tariffs on goods from Canada and Mexico, the tension between the U.S. and China has escalated further.

The Chinese Ministry of Commerce announced the ban on the biotech’s next-generation sequencers on Tuesday, effective immediately. The timing coincided with the Trump administration’s tariffs on Chinese exports to the U.S., which doubled from 10% to 20%. China said the sanction was necessary to “protect national sovereignty, security, and interests,” citing several laws including the Foreign Trade Law, National Security Law, and Anti-Foreign Sanctions Law.

Meanwhile, the medtech trade group AdvaMed has been lobbying for exemptions for medical devices, noting that a significant portion of U.S. hardware is manufactured abroad, with China and Mexico being key producers and Canada a major market for U.S. exports.

Illumina Faces Restrictions on DNA Sequencer Exports but Can Still Operate in China

Despite the impact of this decision, Illumina is still allowed to conduct business in China, though it faces restrictions on the export of its DNA sequencers. Gene sequencers analyze DNA and RNA sequences, enabling scientists to identify genetic variations linked to diseases and diagnose rare genetic conditions. CEO Jacob Thaysen emphasized that Illumina continues to operate in China, noting that the company is crucial for both clinical research and disease diagnosis. He also mentioned that the company is in ongoing discussions with Chinese officials to resolve the situation. “We have had a lot of dialogue with our Chinese customers who want us to stay,” Thaysen said at the Advances in Genome Biology and Technology Conference.

China contributes approximately 7% of Illumina’s sales, amounting to approximately $300 million in sales for 2024, a decrease from 10% and 11% in 2023 and 2022, respectively. The company has more than 300 employees across the greater region, and opened its first manufacturing site in Shanghai in 2022. Illumina had also planned to expand its operations, with plans to move into instrument production by 2028. However, the company’s sales in China have been on the decline in recent years, mainly due to intensifying competition from Chinese rivals like BGI Genomics and MGI Tech.

Since being added to the unreliable entity list on February 4, Illumina’s stock has dropped about 35%. On Tuesday, its shares initially fell by as much as 4.8%, but later recovered slightly, closing a fraction in the green at $84.89. Following news of the company’s struggles in the region, BGI’s stock surged by 8% on the Shenzhen exchange, while MGI Tech’s stock saw a 20% increase on the Shanghai exchange, hitting the daily trading limit. 

China’s Trade Sanctions: 15 Companies Added to Export-Control List and 10 to Unreliable Entity Blacklist

These developments come as part of broader trade tensions between the U.S. and China. In retaliation to new U.S. tariffs, China imposed additional levies of 10% to 15% on U.S. agricultural exports, including products like chicken, beef, and soybeans. 

Additionally, along with Illumina, 15 other American companies are now facing trade measures aimed at safeguarding China’s national security. These companies have been added to China’s export-control list, which restricts them from receiving dual-use items—products that can be used for both civilian and military purposes—from China. Notable companies on this list include drone maker Skydio and Shield AI, an artificial intelligence startup backed by Andreessen Horowitz that develops AI-powered systems for drones.

Moreover, 10 U.S. companies have been placed on China’s “unreliable entity list,” which prohibits them from exporting to or importing from China and prevents them from making new investments in the country. These companies are: ACT1 Federal, Cubic, Exovera, Huntington Ingalls Industries, Planate Management Group, S3 AeroDefense, Stick Rudder Enterprises, TCOM, Teledyne Brown Engineering, and TextOre.

The 15 companies added to the export-control list, according to Chinese state media, include: Aerkomm, AeroVironment, General Atomics Aeronautical Systems, General Dynamics Land Systems, Gibbs & Cox, Group W, HavocAI, IP Video Market Info, Leidos, Neros Technologies, Rapid Flight, Red Six Solutions, Shield AI, Skydio, and Sourcemap.

China’s Sanctions Target U.S. Firms Across Sectors, Uncertainty Surrounds Illumina’s Future in China

The recent sanctions mark a broader shift in China’s trade war strategy, as the country has targeted a range of U.S. companies, from defense contractors to biotech firms like Illumina. While these actions represent a significant escalation, Illumina remains focused on continuing its work in China, which remains an important market for its gene sequencing tools.

Despite the uncertainty, the company has stated it is committed to complying with China’s regulations and will keep serving its customers in the country. However, it remains unclear how the ban will affect Illumina’s existing operations and partnerships in China in the long term. Analysts are watching closely to see how this trade dispute evolves, with some expecting the company to adjust its guidance in light of the changing landscape.

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Author

Bernice Lottering