The trade war is all about goods. However, the US is also connected with China via sales of American products in China to Chinese consumers.
For example, McDonald’s has 6,820 restaurants in China, Walmart operates 364 stores in China, and Apple sold 43 million iPhones in China in 2024.
Calculations from FactSet’s Geographic Revenue Exposure Database show that China makes up about 7% of total annual revenue in S&P 500 companies. Comparing the magnitude of the trade deficit with the revenue generated by S&P 500 companies in China shows that US companies made $1.2 trillion in revenue selling to Chinese consumers—about four times more than the size of the trade deficit in goods between China and the US, see chart below.
The bottom line is that if the US 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.
Note: S&P 500 revenue is calculated as revenue exposure to China (6.7%) multiplied by LTM total revenue. Sources: FactSet, BEA, Apollo Chief Economist
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