Illumina (ILMN) stock skidded Tuesday after China signaled it would ban the importation of the company's gene-mapping products as part of an escalating tariffs battle with President Donald Trump.

China's Ministry of Commerce tapped 15 American companies, including Illumina, for punitive trade measures "to safeguard national security and interests," according to New York Times. It also added 10 new companies to its "unreliable entity list," which prohibits them from doing any business in the country. Illumina was added to that blacklist last month.

China accounted for 7% of Illumina's sales in 2024, down from 10% and 11% in 2023 and 2022. Still, Illumina stock has declined about 36% since it was added to the unreliable entity list on Feb. 4. In early trades on today's stock market, Illumina shares shed 1.7% to 82.74.

An Illumina spokeswoman said the company respects the ministry's decision and is assessing how it will impact operations in China.

"Importantly, today's announcement does not ban Illumina from operating in China," she said in an email to Investor's Business Daily. "Illumina will continue to serve our customers in China, supporting the important work they are doing to improve human health."

Illumina Stock Slammed In Tariffs Battle

In the past, China focused its trade war efforts on defense companies. But this time Beijing's actions are broader, taking on Illumina, a biotech company; clothing maker PVH, which makes Calvin Klein and Tommy Hilfiger brands; and a drone maker called Skydio, among others.

Late last month, Illumina Chief Executive Jacob Thaysen said the company was still selling in China. It's tools are helpful in diagnosing disease and running clinical research.

"We have had a lot of dialogue, both with Chinese customers that has reached out and truly want to make sure that Illumina stays in China," he said during the Advances in Genome Biology and Technology Conference. "We are very important for them both from a clinical studies perspective, but also in the clinic and other applications. They see us in China also as the main innovative leader there."

He noted the company has had conversations with "the right parties in China" to maintain its business in the country.

China Accounts For Less Than 5% Of Profits

But the move on Tuesday shook Illumina stock.

The development is "a disappointment for the company," RBC Capital Markets analyst Connor McNamara said in a report. He estimates China accounts for less than 5% of Illumina's profits due to recent price competition.

Evercore ISI analyst Vijay Kumar estimates losing Chinese imports would hit Illumina's earnings per share by 50 cents. He notes the release from China's officials doesn't mention whether Illumina can sell other products, including consumables, and serve current customers in the country.

"We think ILMN is still able to sell some consumables as an abrupt stop would impact some diagnostic companies," he said in a client note.

In its recent guidance for 2025, Illumina said it didn't attempt to reconcile the potential it would be ousted from China. But, given Illumina stock's tumble over the last month, "we believe the removal of ILMN from the China market was already priced into shares," RBC's McNamara said.

He kept his outperform rating on Illumina stock, but noted "we struggle to find a near term catalyst that will reverse the sell-off."

Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.

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