Time as an Ally: Why the Trade War’s Clock is Ticking Against China—and How Investors Can Prepare

The escalating U.S.-China trade war has reached a critical juncture, with billionaire investor Bill Ackman sounding urgent alarms about its trajectory. In 2025, Ackman framed the conflict as a race against time, declaring that "time is a friend of the U.S., but an enemy of China." His warnings underscore a stark divide in how prolonged tariffs could destabilize global markets—and why investors must position themselves for a prolonged standoff.

The Case for Time Favoring the U.S.

Ackman’s thesis hinges on the idea that the U.S. possesses greater structural and geopolitical resilience to endure a prolonged trade war, while China faces mounting vulnerabilities. U.S. markets, though down $6 trillion since 2023 due to tariff-driven volatility, have historically shown a capacity to rebound from crises. Meanwhile, China’s retaliatory tariffs—34% higher on key U.S. exports—risk exacerbating its economic slowdown, particularly as its manufacturing sector grapples with overcapacity and debt.

The data reveals a stark divergence: while tech-heavy NASDAQ stocks have been volatile, the broader S&P 500 has shown relative resilience, reflecting the U.S. economy’s diversification.

The Economic Toll: Markets, SMEs, and Consumer Confidence

Ackman highlights the immediate casualties: small and medium-sized businesses, which lack the resources to absorb tariff spikes or pass costs to consumers. The $6 trillion market loss since 2023 is not merely a headline figure—it reflects eroded confidence in the U.S. as a reliable trade partner, deterring global investment.

Manufacturing investment has stalled, while services remain resilient, signaling a sectoral divide. For investors, this suggests a focus on domestically oriented industries or companies with diversified supply chains.

China’s retaliation, meanwhile, has backfired. Its 34% tariff hikes on U.S. goods have inflated domestic consumer prices, squeezing households already burdened by weak wage growth.

Geopolitical Risks and Policy Missteps

Ackman’s criticism extends to the U.S. administration’s approach. He accuses Commerce Secretary Howard Lutnick of a conflict of interest, as Lutnick’s firm profits from bond market gains amid instability—a stark contrast to the collapsing stock market.

While bond yields have risen, stock markets have faltered, illustrating the inverse relationship between safe-haven assets and equities during crises.

President Trump’s defiance—dismissing a proposed 90-day "time out" as "fake news"—risks prolonging the conflict. Ackman warns this could trigger an "economic nuclear winter," with global supply chains fracturing and trust in free trade eroding irreparably.

The Path Forward: Negotiation or Isolation?

Ackman’s proposed 90-day pause aims to reset negotiations, leveraging U.S. leverage in key industries like semiconductors and agriculture. However, China’s 34% tariff hikes and the EU’s preparation for retaliatory measures suggest a hardening stance.

Investors should prepare for prolonged uncertainty. Sectors tied to U.S. domestic demand—such as healthcare, utilities, and renewable energy—are less exposed to trade volatility. Meanwhile, multinational corporations with heavy China exposure, like Apple (AAPL) or Caterpillar (CAT), face heightened risks.

Conclusion: Timing the Trade War’s Endgame

Ackman’s analysis offers a sobering roadmap: the U.S. may weather the storm, but the cost to global stability is immense. With $6 trillion already lost and small businesses collapsing, investors must prioritize defensive strategies.

Historical parallels suggest that trade wars rarely end quickly. The Smoot-Hawley tariffs of 1930 prolonged the Great Depression, and today’s stakes are even higher, given China’s centrality to global supply chains.

For now, the data favors caution. Investors should favor U.S. equities with domestic tailwinds, avoid over-leveraged firms, and monitor tariff developments closely. Time may be on the U.S.’s side, but patience—and prudent portfolio management—will be critical.

The chart reveals a sharp escalation in tariffs, with no sign of retreat—a stark reminder of the risks ahead.