China Trade War Escalation
◆ What's Happening
The US-China trade war has escalated steadily throughout 2025-2026, with tariffs on Chinese goods now ranging from 25% to 60% depending on the category. Chip equipment export restrictions have been tightened repeatedly, with the Commerce Department closing loopholes almost as fast as companies find them. China's retaliation has been targeted — tariffs on US agricultural products, export controls on rare earths and critical minerals, and restrictions that increasingly weaponize China's dominance in key supply chains.
The supply chain shift is accelerating. The US-India trade deal signed earlier this year (18% tariff rate) was explicitly positioned as a China alternative. Companies are implementing "China+1" strategies at scale, with Apple, Tesla, and others diversifying manufacturing to Vietnam, India, and Indonesia. But the transition is slow and expensive — TSMC's Arizona fab is operational but behind schedule, and Intel's domestic foundry ambitions face execution challenges.
The wildcard is Taiwan. "Gray zone" tensions in the Taiwan Strait continue to simmer, with periodic military exercises and diplomatic provocations. A Taiwan crisis would be orders of magnitude more disruptive than tariffs — it would sever the world's most critical semiconductor supply chain overnight. The US military buildup in the Pacific and the $961.6B defense budget signal that Washington is preparing for that scenario. Meanwhile, DeepSeek's AI efficiency breakthrough threatens the US AI dominance narrative, adding a technology dimension to what was primarily a trade and security conflict.
📈 Bull Case
Escalation continues — more tariffs, tighter export restrictions, potential Taiwan crisis. Reshoring beneficiaries surge as domestic manufacturing becomes a national security imperative. Intel's foundry services gain urgency and government support. Defense stocks benefit from Pacific military buildup. Rare earth alternatives like MP Materials become strategic assets. Companies with minimal China exposure (AVGO, CRDO) are valued at a premium over China-exposed peers.
📉 Bear Case
A comprehensive trade deal emerges — tariffs drop significantly, export restrictions ease, diplomatic thaw begins. China-exposed stocks rally 15-25% as the "China discount" evaporates. Apple, Tesla, and Nike see China revenue stabilize. Reshoring urgency fades, hurting INTC's foundry narrative and domestic manufacturing plays. The premium paid for "China-safe" stocks compresses.
◆ Trade Exposure
28 stocks across 3 categories. Tap a category to expand.
📋 Also Impacted — scored for this event but uncategorized
US-designed microinverters. IQ8 manufacturing in US and India avoids China supply chain.
China threat drives government spending on cybersecurity and intelligence technology.
Some reshoring tailwind for US-manufactured cooling.
Marginal government tech competition spending.
US hyperscaler customer base. Negligible China exposure.
Some reshoring tailwind for US semi equipment.
Government contracts benefit from China tech competition.
US-based manufacturing. Grid modernization is a domestic priority.
US-based infrastructure. Negligible China exposure.
Diversified global manufacturing. Some reshoring benefit.
US nuclear technology. Domestic energy independence.
Some reshoring benefit for US industrial automation.
Safe haven demand increases in trade war uncertainty.
US nuclear technology. Energy independence.
Domestic construction company. Reshoring drives more infrastructure projects.
🛡️ At Risk — negative exposure to this event
19% revenue from Greater China. Massive Foxconn manufacturing. iPhone ban risk.
Shanghai Gigafactory is largest facility. China EV competition intensifying (BYD). Retaliation risk.
China was growth engine. Consumer boycotts, local brand competition (Anta, Li Ning). Revenue declining.
China handset chips major revenue driver. Huawei developing alternatives. Memory chip shortage compounding problems.
THE geopolitical risk stock. China-Taiwan tensions directly threaten operations.
China export controls directly limit GPU sales. H200 access being negotiated with Trump admin. ~15% revenue at risk.
China export controls affect GPU sales. CPU supply shortages reported for Chinese customers. ~15% revenue exposure.
China banned Micron products in 2023. Ongoing geopolitical headwind.
China licensing revenue significant. Arm China subsidiary is semi-independent and contentious.
Manufacturing in Taiwan and Asia creates tariff/supply chain risk. Investing $200-300M in China DC capacity adds direct exposure.
China export controls could limit semi equipment sales.
Supply chain has Asia exposure. Export controls could impact.
No China search revenue but tech sentiment suffers in trade war.
Global supply chain exposure. Some China enterprise revenue.
Some China revenue exposure in networking/storage.
China demand slowdown reduces global oil consumption.
Display glass business has China exposure. Gorilla Glass supply chain.
China revenue exposure and potential sanctions risk.
Some Asia supply chain exposure.
Asia manufacturing and supply chain exposure.
International banking operations. China uncertainty reduces cross-border deal flow.
Minimal China exposure. US hyperscaler customer base.
Some APAC revenue (~22%) but primarily US/Europe.
Some international banking exposure. Trade uncertainty is net negative for deal flow.
Global DC portfolio includes some Asia exposure. Minor.
Global DC portfolio. Minor Asia exposure.
International real estate and PE investments. Some China/Asia exposure.
◆ Catalyst Calendar
💡 Cross-Event Note
The China-AI intersection is the most important cross-event dynamic. If tariffs escalate while AI capex booms, stocks with minimal China exposure (AVGO, CRDO, ALAB) win biggest because they capture AI demand without China risk. But if de-escalation happens alongside AI capex, the beaten-down China-exposed AI names (MU, QCOM) have the biggest upside because the China discount unwinds while AI demand persists.