Beijing has added 15 U.S. companies to its export control list, including defense manufacturers Leidos Holdings (LDOS), AeroVironment (AVAV) and General Dynamics Land Systems, a subsidiary of General Dynamics (GD), as part of its retaliation against Washington imposing an additional 10% tariff on Chinese goods. Also included in the list is Shield AI, the maker of Hivemind drone software backed by Palantir (PLTR), while China said it would ban imports of Illumina’s (ILMN) gene sequencers having already added the company to a blacklist last month in retaliation for Trump’s first round of tariffs.
Leidos is a key player in the U.S. military’s hypersonic weapons program, underscoring the high stakes in play amid escalating U.S.-China tensions. Last year LDOS said it had completed two key reviews for the Air Force Research Laboratory’s (AFRL) cutting-edge air-breathing hypersonic system, Mayhem. In December the U.S. Air Force awarded the company a $987 million contract for F-16 fighter jet support to the Taiwan military. Shield AI meanwhile is the firm behind the Hivemind autonomous AI pilot which does not require GPS. It’s been working closely with Palantir on software integration for performing tasks such as autonomous operational decision-making.
China also said it would add 10-15% tariffs on a range of U.S. agricultural goods, including corn and soybeans, from March 10th. The retaliatory measures announced by China’s Ministry of Finance and Ministry of Commerce came just hours after additional tariffs on Chinese goods took effect. Earlier the White House confirmed the extra 10% tariff would take effect, bringing the total amount of new tariffs imposed in a month to 20%.
China Blacklists U.S. Defense Firms
A total of 15 U.S. companies were added to the export control list: Leidos, Gibbs & Cox Inc., IP Video Market Info Inc., Sourcemap Inc., Skydio Inc., Rapid Flight LLC, Red Six Solutions, Shield AI Inc., HavocAI, Neros Technologies, Group W, Aerkomm Inc., General Atomics Aeronautical Systems Inc., General Dynamics Land Systems, and AeroVironment. These companies will need special approval to receive shipments of “dual-use” items that have both civilian and military applications.
“The export of dual-use items to these 15 U.S. entities is prohibited. Any ongoing related export activities must be stopped immediately,” said China’s Ministry of Commerce in a release.
Meanwhile a further ten U.S. companies were added to China’s “unreliable entity list”, a national security blacklist.
These included TCOM Limited Partnership, Stick Rudder Enterprises LLC, Teledyne Brown Engineering Inc., Huntington Ingalls Industries (HII), S3 AeroDefense, Cubic Corporation, TextOre, ACT1 Federal, Exovera, and Planate Management Group, according to a Commerce Ministry statement.
These companies will be barred from any import and export activities related to China and from making new investments within the country. Last month China added Tommy Hilfiger and Calvin Klein owner PVH (PVH) and biotechnology company Illumina to its unreliable entity list.
Stocks Hit by China
Among the companies affected by the restrictions, only a handful are listed on the stock market, and they are involved in the defense industry. AVAV designs and manufactures unmanned aerial vehicles, HII is the largest military shipbuilding company in the United States, LDOS makes hypersonic weapons and GD-owned General Dynamics Land Systems makes military vehicles, including tanks and light armored fighting vehicles.
Is LDOS a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy rating on LDOS stock, based on nine Buys and six Holds. The average LDOS price target of $172.00 implies around 33% upside.
