U.S.-China Trade Tensions Stiffen: ETF Areas Likely to Lose the Most

U.S. stocks tumbled on Oct. 10, 2025, after President Donald Trump threatened higher tariffs on Chinese goods, accusing Beijing of being “very hostile” with new restrictions on rare earth metals – key materials for tech and defense industries, as quoted on CNBC.

The Dow Jones fell 1.9% on Oct. 10, 2025, the S&P 500 lost 2.71%, and the Nasdaq sank 3.56%, its biggest one-day drop since April. Prior to Trump’s comments, markets were steady.

Trump said on Truth Social that he no longer plans to meet President Xi at the upcoming APEC summit. The remarks followed Beijing’s move to tighten rare earth exports, requiring disclosure of product use and Chinese government licenses from foreign companies starting Dec. 1.

ETF Areas Under Threat

Against this backdrop, it would be intriguing to note the sector ETFs or areas that are now in a vulnerable state given the escalation of the trade war. The following sectors and areas have considerable business exposure to China and are thus more susceptible to the trade war.

Semiconductor

Semiconductor and semiconductor equipment companies have a solid revenue exposure to China and are thus exposed to maximum risks from rising trade tensions.  Hence,several semiconductor companies find themselves in tough spots amid the escalating trade war.

In fiscal year 2024, Qualcomm (QCOM) earned about 46% (per TrendForce News) of its total global revenue from China. In 2024, Advanced Micro Devices Inc.’s (AMD) revenue from China amounted to 24% of its total revenue. NVIDIA (NVDA) generated 13% of its revenue come from China last year (per Reuters, quoted on Yahoo Finance). Intel (INTC) and Applied Materials (AMAT) also have considerable exposure to China.

The data show their businesses are heavily dependent on China, especially on its rare earth. NVDA was down 4.9% on Oct. 10, 2025 and AMD shares slumped 7.7% on Oct. 10. QCOM shares were down 7.3%.

Note that in August 2025, NVIDIA and AMD reportedly agreed to pay 15% of their revenues from Chinese AI chip sales to the US government to obtain export licenses. This clearly explains why the mood could be somber in the semiconductor space.

So, VanEck Vectors Semiconductor ETF (SMH) may see troubles ahead. Inverse semiconductor ETF Direxion Daily Semiconductor Bear 3X Shares SOXS could gain ahead. The SOXS added 19.3% on Oct. 10.

Apple-Heavy ETFs

Tech companies that have extensive trade relations with China would be at high risk of falling prey to the trade war. Apple AAPL is specifically under pressure. A substantial portion of iPhones are assembled in China, with estimates ranging from 70% to 90%. Evercore ISI estimated before that 55% of Apple’s Mac products and 80% of iPads used to be assembled in China, as quoted on CNBC.

Although Apple is trying to diversify its manufacturing hubs amid the ongoing trade war, the company’s China exposure is still significant. Apple-heavy ETF Technology Select Sector SPDR Fund XLK should be watched closely. Apple shares lost 3.5% on Oct. 10.Direxion Daily AAPL Bear 1X Shares AAPD gained 3.4% on the day.

Tesla-Heavy ETFs

China made up about 21% of Tesla's total revenues in 2024 (per Bloomberg, as quoted on Yahoo Finance). This means that the country’s business means a lot to the company. Tesla has production in China.

Tesla's China EV sales rose 2.8% year-on-year in September to 90,812, snapping a two-month decline as its new six-seater began deliveries in China, per Reuters. This bullish signal for sales could also be hurt. Tesla-heavy ETFs T-Rex 2X Long Tesla Daily Target ETF TSLT lost 10.2% on Friday.

Retail

With a large share of consumer goods from home appliances to toys sourced from China and Mexico, major retailers like Walmart WMT, Target TGT, Best Buy (BBY) and Costco (COST) are expected to see higher prices as a result of tariff tensions, that too ahead of the Holiday Shopping Season.SPDR S&P Retail ETF XRT and VanEck Vectors Retail ETF (RTH), thus, will likely be hurt.

Medical devices

GE Healthcare's GEHC stock fell about 4.3% on Oct. 10, after China's export controls on a rare-earth metal that is used in MRI scans. The country's announcement of an anti-dumping investigation into imports of certain medical CT tubes from the United States and India are other concerns, as quoted on Reuters. Global HealthTech ETF (LGHT) should be thus be watched closely. The fund fell 2.4% on Friday.

Energy

Global growth worries hurt oil prices, with United States Oil Fund LP USO falling about 4.3% on Friday. Oil majors Exxon (XOM) and Chevron (CVX) fell more about 2% each. Top oilfield service company SLB (SLB) slumped about 4%.

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