While China is known as the world’s factory floor, it’s also one of the largest consumer markets on Earth. And that’s exactly why S&P 500 CEOs are watching every twist in the negotiations.
According to Apollo data, companies in the S&P 500 made $1.2 trillion in revenue over the past 12 months from sales to Chinese consumers.
“That’s four times the size of the U.S. trade deficit with China,” Kobeissi noted, adding that China accounts for around 7% of annual revenue for the average S&P 500 company.
“If the U.S. decouples from China, it would result in a material drop in S&P 500 earnings. An immediate U.S.-China trade deal is needed.”
That urgency is easy to understand. Tech giants like Apple (AAPL), Tesla (TSLA), and Nike (NKE) count on Chinese consumers for a huge slice of their revenue.
Apple brought in around $65.6 billion fromChina last year, making up more than 17% of its total sales. Tesla sold over 657,000 vehicles in China, about 37% of its global volume. And Nike pulled in roughly $7.7 billion from the region, or 15% of its revenue.
For companies like these — and many others in the S&P 500 — China isn’t just a manufacturing hub. It’s one of their most important markets.
Any breakdown in trade risks dealing a major blow to their earnings and long-term growth plans.
White House Says a Deal Is Close — But Offers Few Details
After a fresh round of talks in Geneva over the weekend, the White House said both sides had reached a new “trade deal.”
“I’m pleased to report that significant progress has been made in the critical trade talks between the United States and China,” Treasury Secretary Scott Bessent said in a statement.
But the announcement was light on specifics, leading many to believe key parts of the agreement are still being worked out.
Even the hint of progress sent markets parabolic, and analysts say a full deal could send stocks to new highs. UBS CIO Alejo Czerwonko called it “the mother of all negotiations,” according to Barron’s.
But not everyone is convinced a quick resolution is coming.
“Right now, the market is maybe a little bit too optimistic in terms of what China and the U.S. can achieve and how fast events will move,” said Liqian Ren, head of investment at WisdomTree Asset Management.
Matt Gerken, an analyst at BCA Research, warned investors not to bet too heavily on a perfect outcome.
“Sell on strength,” he advised, noting there’s still no guarantee the talks will result in a full agreement anytime soon.
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