China Could Sell Its US Holdings Without Having To 'Give In,' Says Expert: 'Risk Asset Prices Are Trump's Achilles Heel'

As the U.S. and China move toward initiating trade talks, this expert says that China could use “geopolitical game theory” by selling all its U.S. holdings, which could force the administration to cave in without any negotiations.

What Happened: According to economist Craig Shapiro, the macro strategist at Bear Traps Report, China can skip any trade talks using the “geopolitical game theory,” and sell its U.S. stocks and bonds, as the flight of capital could force the U.S. to retract the tariffs.

He said that President Donald Trump was vulnerable to the changes in the price of risk assets, which could be triggered by a selling spree from China.

“Risk asset prices are Trump’s Achilles heel as we have already learned. A little pressure on the tape and all the extra tariffs will be gone by the weekend without China having to actually give in on anything,” said Shapiro in his latest X post.

The other ways in which the U.S. stands to lose amid the tariff battle include the loss of revenue from the U.S. companies that sell to China.

Data highlighted by Kevin Gordon, the director and senior investment strategist at Charles Schwab & Co., Inc., shows that U.S. companies made $1.2 trillion in revenue selling to Chinese consumers.”

“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,” stated Gordon in his X post.

Start Futures Trading Fast — with a $200 Bonus

Join Plus500 today and get up to $200 to start trading real futures. Practice with free paper trading, then jump into live markets with lightning-fast execution, low commissions, and full regulatory protection.

Why It Matters: Following a hiatus since the trade war’s inception under President Trump, the U.S. and China are set to hold high-level trade discussions in Switzerland this weekend, their first major engagement.

Adding a layer of cautious perspective, Marko Kolanovic, former Chief Strategist at JP Morgan, also commented on the news of potential U.S.-China negotiations.

In a social media post, Kolanovic warned against premature optimism concerning the nature of other geopolitical conflicts. He suggested that the initial contact between the two economic powerhouses should not be interpreted as an end to the trade war, highlighting the potentially lengthy and complex nature of such negotiations.

Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose in premarket on Wednesday. The SPY was up 0.40% to $561.06, while the QQQ advanced 0.37% to $483.17, according to Benzinga Pro data.