More American financial institutions are likely to reconsider their operations in China, with many potentially divesting local units or pausing expansion plans due to heightened geopolitical tensions anticipated under a Donald Trump presidency, according to industry executives and analysts.
In the years leading up to the pandemic, mainland China presented a lucrative opportunity for Wall Street investment banks and major U.S. asset managers, driven by the country’s double-digit economic growth. However, these firms now face the prospect of escalating trade tensions between Beijing and Washington under Trump’s renewed administration. Their Chinese operations are already grappling with sluggish economic growth and regulatory changes that have negatively impacted revenues.
Following his decisive victory, Trump has proposed imposing tariffs exceeding 60% on Chinese imports and terminating China’s most-favored-nation trading status. Analysts express concerns that these policies could complicate U.S. capital inflows into China, making it more challenging for American financial firms to engage with certain Chinese companies.
Joe Jelinek, research director at Singapore-based consulting firm Kapronasia, noted that Trump is likely to adopt a tougher stance on China, which would increase regulatory risks for U.S. financial firms operating there. He emphasized that new or increased tariffs and capital restrictions could deter Wall Street from pursuing expansion in China due to heightened scrutiny and compliance challenges.
“Rather than Beijing shutting its doors, it’s probable that American companies will reassess their strategies in China to mitigate these risks,” Jelinek remarked, suggesting this could lead to reduced or postponed investments.
An executive from a major U.S. financial firm’s China-licensed entity revealed that the company had conducted several rounds of “risk management meetings” in the lead-up to the election. In light of Trump’s return to office, the firm now aims to transform its China operations into a “self-sustained” independent unit, as stated by the executive, who requested anonymity due to the sensitive nature of the discussions.
“The road ahead will be challenging for U.S. financial firms operating in China with Trump back in the White House,” the executive stated. “‘De-Americanise’ has become a guiding principle.”
Many Wall Street firms have already scaled back their Chinese operations as a slowing economy and increased regulatory scrutiny have diminished revenue prospects over recent years.
According to Dealogic data, the five leading U.S. investment banks—Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and JPMorgan Chase—generated $454 million in Chinese investment banking revenue in 2024. While this marks an increase from $276 million in 2023, it remains significantly lower than the peak of $1.6 billion achieved in 2020. Even during Joe Biden’s presidency, geopolitical tensions prompted some firms to reevaluate their strategies regarding China.
U.S. asset manager Van Eck abandoned plans for a presence in China in 2023 amid rising tensions between the two nations, while Vanguard exited its joint venture operations within the same timeframe. Furthermore, over ten U.S. law firms have closed or reduced their offices in China since last year.
As uncertainty looms over U.S.-China relations under Trump’s leadership, many analysts predict that American financial firms will need to navigate a complex landscape filled with potential risks and regulatory challenges.
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