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 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.