U.S. equity investors will be watching closely as trade talks kick off between the Trump administration and China, with trillions of dollars hanging in the balance for American companies.

The average member of the S&P 500 made 6.1% of its revenue from selling goods in China or to Chinese companies in 2024, according to an analysis from Bloomberg Intelligence’s Gillian Wolff and Gina Martin Adams.

“The bottom line is that if the U.S. has to decouple completely from China, it would result in a significant decline in earnings for S&P 500 companies no longer selling products to Chinese consumers,” Torsten Slok, chief economist at Apollo, wrote.

U.S. firms generated $1.2 trillion in revenue selling to Chinese consumers, which is about four times more than the size of the trade deficit in goods between the countries, according to an analysis from Slok.

On top of that, there are the costs for companies that sell Chinese-made goods in the U.S., which will get hit by the levies imposed by the Trump administration. Mattel Inc., for example, withdrew its forecast for a return to sales growth in 2025, citing the plan to impose tariffs on imported toys. Trump called out the company by name on Thursday and said he would impose a 100% tariff on any toys produced overseas.

Though it is hard to isolate the impact of the trade spat with China on the profits of S&P 500 companies, strategists have been sharply lowering their earnings estimate for the benchmark this year, often due to concern that policy uncertainty is going to hurt growth. Earnings for the index are currently expected to be about $265 in 2025, down from $273 in early January.

China has been at the center of the trade offensive that President Donald Trump launched on April 2, when the administration announced the harshest trade barriers in a century. While the levies on most countries were put on a 90-day pause a week later, those on China were pushed higher. Several rounds of retaliation have raised the U.S. tariffs on imports from China to 145%, while the Chinese have put in place a 125% duty on U.S. goods.

The S&P 500 erupted into a phase of historic volatility when the tariffs were first announced and then paused, leaving the index down 15% for the year by April 8. Since then, however, stocks have recovered, buoyed by hopes that negotiations will bring rates lower than initally proposed. On Thursday, Trump said that a trade agreement with the UK is likely to be the first of many, and he expressed confidence that the talks with China can result in tangible progress.

The equities benchmark is now down only about 3.7% in 2025, but many of the biggest companies are still caught in the trade crossfire. Smart-phone maker Apple Inc. and semiconductor behemoth Nvidia Corp. both have big revenue exposures to China, according to data compiled by Bloomberg. Electric-vehicle giant Tesla Inc. makes more than one-fifth of its sales from the country.

“Technology and apparel companies are at the epicenter of the trade embargoes for now,” said Joe Gilbert, portfolio manager at Integrity Asset Management. Gilbert is avoiding semiconductor capital equipment companies and smaller retailers that do not have the scale to cope with tariffs or find new suppliers outside China.

Here are the sectors worth watching as the headlines on trade negotiations start to roll in.

Chipmakers

The makers of chips and the firms that develop related technology and equipment are highly exposed to China, putting them at the front line of the trade negotiations.

Monolithic Power Systems Inc., KLA Corp., Lam Research Corp. and Qualcomm Inc. — all semiconductor related names — were the S&P 500 companies with the highest exposure to China, according to the analysis from BI.

The first-quarter earnings season has seen several of these firms starting to sound the warnings about the trade uncertainty, particularly when it comes to China. Advanced Micro Devices Inc. said U.S. restrictions on sales to China will cost it $1.5 billion in revenue this year. Qualcomm Inc., which counts China as the biggest market for its chips and is the largest maker of smartphone chips, gave a tepid revenue forecast. Intel Corp.’s revenue forecast for the current quarter was also well below analysts’ projections and the company warned that a tariff-fueled recession could torpedo chip demand.

The Philadelphia Semiconductor Index is down 11% this year, compared to the 3.7% drop of the S&P 500. Declines in the chip index were led by Marvell Technology Inc., Teradyne Inc., ON Semiconductor Corp. and Amkor Technology Inc.

Consumer

Companies like Nike Inc., Estee Lauder Cos. and Philip Morris International Inc. are heavily exposed according to Bloomberg supply-chain data. Meanwhile, Starbucks Corp. and McDonald’s count thousands of Chinese locations each.

One of the starkest example of the impact of tariffs on this sector came on Wednesday. Shoe retailer Steven Madden Ltd., which said in February that it was expecting sales to grow nearly 20% this year, pulled that forecast, citing “meaningful near-term headwinds” from tariffs.

Amazon.com Inc., meanwhile, said it was bracing for a tougher business climate in the coming months.

The S&P 500 Consumer Discretionary Index has fallen 12% so far this year.

Autos

Auto components are the most-exposed S&P 500 sector to international demand, according to Bloomberg Intelligence’s Adams. BorgWarner Inc. and Aptiv Plc get a particularly large chunk of their revenue from China.

Automakers General Motors Co. and Ford Motor Co. both pulled their guidance for 2025, citing tariffs. GM imported nearly 55,000 cars last year from China. Harley-Davidson Inc. also withdrew its 2025 outlook, citing a lack of clarity around U.S. trade policy.

The S&P Composite 1,500 Automobiles and Components Index is down 26% this year, with Gentherm Inc., Fox Factory Holding Corp. and Winnebago Industries among the top decliners.

Industrials

U.S. industrial giants are firmly plugged in to global supply chains and markets and the trade war is already weighing on freight operators and big machinery makers, among others.

Caterpillar Inc. has said most of the hit it is expecting will come from China’s retaliatory levies. It tallied the cost from tariffs at $250 million to $350 million in the second quarter alone. Honeywell International Inc. was placed on one consulting firm’s list of the large U.S. companies most at risk from China exposure last year.

Boeing Co., the largest U.S. industrial exporter, has been a direct target of Beijing’s retaliation. Chinese officials last month ordered airlines not to take any further deliveries of its jets, leaving in doubt the fate of about 50 that were slated to go to China this year.

Home improvement products manufacturer Masco Corp. also withdrew its full-year guidance, and Truist Securities analyst Keith Hughes said the company’s exposure to China tariffs could see prices grow in the mid-single digits, contributing to a 50 cent to 70 cent hit to earnings per share in 2025.

Expeditors International of Washington Inc. said that it was seeing “early signs” that ocean freight volumes from China to the U.S. were falling significantly. Meanwhile, Matson Inc. earlier this week said that since the China tariffs were implemented in April, the company’s container volume declined about 30% year-over-year.

United Parcel Service Inc. did not update its full-year outlook, saying it would stand behind the 2025 guidance if conditions were to stabilize. However, UPS expects to see weakening demand between the U.S. and China, which is the company’s most profitable trade lane. Peer FedEx Corp. lowered its full-year guidance.

Materials

From chemical-makers to metals and mining companies, the resources industry also has major vulnerabilities to U.S.-China relations.

Eastman Chemical Co. last month provided a disappointing outlook for the second quarter, citing factors that included “tariffs between the U.S. and China.” Copper producer Freeport-McMoRan Inc. said the 145% tariffs the White House placed on China were the largest driver behind the increase in its cost of goods.

Companies are also subject to indirect shockwaves. Fertilizer company Mosaic Co. is watching for a hit to demand for crop inputs as Chinese buyers shift to purchasing grains elsewhere, including from Brazil, an executive said on an earnings call.

(With assistance from Katrina Compoli.)

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