US-China Trade War: Impact on Italian Investors and Global Portfolios
The US-China trade war is the most significant and structural economic conflict of the decade: it is not simply a dispute over customs tariffs, but a progressive decoupling process between the two largest economies in the world that involves trade, technology, finance and geopolitics. For every investor, the US-China trade war is a variable that impacts portfolios even indirectly — through emerging market ETFs, US technology stocks, and European companies exposed to both markets. Therefore, understanding the dynamics of this conflict and how to position accordingly is now an essential skill. According to the IMF — World Economic Outlook 2025, trade fragmentation caused by the US-China trade war and other conflicts could reduce global GDP by up to 7% in the long term. This guide includes the USChinaTradeMap simulator with the updated trade balance, the conflict timeline from 2018 to 2025, sector winners and losers, and the 5-step strategy to protect and optimise your portfolio. For the full picture of commercial conflicts, also read the guide on trade wars and tariffs 2025 and on economic sanctions 2025.
US-China trade war timeline from 2018 to 2025
First of all, to understand the current risk level for investors in the US-China trade war, it is useful to trace the conflict timeline: each phase produced distinct market effects and progressively widened the scope of confrontation from tariffs to technology to finance.
Sector winners and losers of the US-China trade war in 2025
Portfolio impact: how exposed are you without knowing it?
| Typical ETF / asset | China weight | US weight | Most exposed sectors | Risk level |
|---|---|---|---|---|
| MSCI Emerging Markets ETF | ~28% | 0% | Chinese tech, EV, e-commerce | 🔴 High |
| MSCI World ETF | 0% | ~65% | Big Tech US with China revenues | 🟡 Medium |
| MSCI ACWI ETF | ~4% | ~60% | Mix US + China, EU automotive | 🟡 Medium |
| S&P 500 ETF | 0% (direct) | 100% | NVIDIA, Apple, Qualcomm (China revenues) | 🟡 Medium-low |
| MSCI China-specific ETF | 100% | 0% | Alibaba, Tencent, BYD, Baidu | 🔴 Very high |
| MSCI EM ex-China ETF | 0% | 0% | India, Brazil, Taiwan, South Korea | 🟢 Low (conflict) |
| European/US Defence ETF | 0% | Variable | Rheinmetall, Lockheed, BAE | 🟢 Conflict beneficiary |
| Gold (physical ETC) | 0% | 0% | N/A — safe haven | 🟢 Conflict hedge |
5 steps to protect and optimise your portfolio during the US-China trade war
- First of all, calculate your real US and China exposure via ETF KIIDs — download the information prospectus (KIID) of every ETF you hold and check the geographic weighting. In particular, MSCI Emerging Markets funds typically have China at 25-28%. Sum all indirect exposures: you may discover that your concentration on the US-China trade war is far greater than you thought. Therefore, knowing the real numbers is the first step towards making informed decisions.
- Subsequently, consider replacing part of MSCI EM ETFs with MSCI EM ex-China — if your total China exposure exceeds 10-15% of the portfolio, consider replacing a portion of standard MSCI Emerging Markets ETFs with MSCI EM ex-China ETFs. These replicate the same high-growth emerging markets (India, Brazil, Taiwan, South Korea, Indonesia) eliminating the specific US-China trade war risk and potential future delisting. Consequently, you maintain EM growth exposure without concentrating on the most risky front of the conflict.
- Then, add exposure to structural reshoring beneficiaries: Vietnam, India, Mexico — the US-China trade war is redesigning global supply chains in a structural and short-term irreversible way. Countries absorbing production relocated from China are long-term beneficiaries regardless of the diplomatic outcome. ETFs on Vietnam (VNM), India (INDY, NDIA), Mexico (EWW) and Indonesia (EIDO) can capture this reshoring trend. To explore international market ETFs further, read the dedicated guide.
- Subsequently, within technology favour semiconductor producers with diversified supply chains — instead of exposing yourself to NVIDIA or Qualcomm (dependent on Chinese revenues now limited by export controls), consider semiconductor ETFs that include TSMC (Taiwan), ASML (Netherlands) and Samsung (South Korea): these benefit from global chip demand without depending on a single front of the US-China trade war. In fact, ASML holds a global monopoly on EUV machinery essential for producing the most advanced chips, making it structurally indispensable to both parties in the conflict.
- Finally, maintain gold and bonds as shock absorbers during escalation phases — the acute phases of the US-China trade war — new tariff announcements, technology restrictions, Taiwan tensions — produce rapid and intense sell-offs. Gold and government bonds appreciate during these risk-off moments, allowing portfolio rebalancing by buying equities at discounted prices. Therefore, a structural 5-10% gold allocation and 10-20% quality bonds is the best strategy for turning US-China trade war volatility into opportunity. Also read the guide on supplementary pension and automatic savings.
Frequently asked questions about the US-China trade war for investors
What is the US-China trade war and how does it work in 2025?
The US-China trade war in 2025 is a multidimensional economic conflict involving mutual trade tariffs (average 19-21%), advanced semiconductor export restrictions, 100% tariffs on Chinese EVs and a financial decoupling process. Therefore, it is not simply a tariff dispute but a structural reshaping of the global economic order with long-term consequences for every investor.
How does the US-China trade war impact investor portfolios?
The US-China trade war impacts investor portfolios mainly through emerging market ETFs (China weighs 25-28%), US technology stocks with Chinese revenues (NVIDIA, Apple, Qualcomm) and indirectly European companies exposed to both markets (German automotive). Therefore, even without holding direct Chinese securities, many investors have significant hidden exposure to the conflict.
Which sectors suffer most from the US-China trade war?
The most affected sectors are US semiconductors with China revenues (20-65% of revenues hit by restrictions), China-oriented German automotive (VW, BMW, Mercedes with 30-40% Chinese revenues) and US agriculture (soybeans, corn with exports −35% vs 2018). Conversely, non-US semiconductors (TSMC, ASML), defence, and reshoring beneficiary countries (Vietnam +340%, India +180%, Mexico +95% export growth to US since 2018) benefit.
Is it still worth investing in China in 2025?
Investing in China in 2025 is possible but requires risk awareness: historically low valuations but high risks of further escalation, potential index exclusion and Taiwan geopolitical risk. Therefore, a limited exposure of 5-10% of the portfolio via ETF is defensible as diversification, but larger concentrations require high geopolitical risk tolerance.
How to build a portfolio resilient to the US-China trade war?
The optimal strategy to withstand the US-China trade war in 2025 is: MSCI EM ex-China ETFs to maintain EM exposure while reducing China risk, overweight reshoring (Vietnam, India, Mexico), TSMC and ASML in semiconductors, 5-10% gold as geopolitical hedge, and maintaining the monthly DCA plan to average purchase costs during escalation phases.
Deepen your strategy: trade wars and tariffs 2025, economic sanctions 2025, invest in ETFs, real estate investment, automatic savings and supplementary pension 2026.