U.S. may have reached ‘high water mark’ in China tensions

CNBC’s Jim Cramer on Tuesday addressed the many unknowns regarding Donald Trump’s trade policies and wondered if the president-elect may be more amiable towards China than many think — perhaps in part because of his close relationship with Tesla CEO Elon Musk.

“All I can tell you is with Elon Musk’s involvement in the new administration, it’s very possible that we’ve indeed seen the high-water mark in our tensions with China,” he said. “I know it’s hard to believe, but then again, [President Richard] Nixon went to China, and he was the last person you would ever expect that from.”

Trump has threatened massive tariffs on imports from China and other countries. But Musk is a “wild card” in Trump’s dealings with China, Cramer suggested, referencing a recent piece from the Financial Times. The outlet said Shanghai accounts for 40% of Tesla’s manufacturing capacity, and the company has received billions in loans, subsidies and tax breaks from the Chinese government.

Cramer unpacked recent market action after the U.S. announced a third export sanction on high-tech goods to China. Yet semiconductor stocks were largely unscathed by the development, with some even climbing in Tuesday’s session. China also announced a ban on certain key rare minerals to the U.S. But Cramer questioned the severity and truly punitive nature of these moves. He suggested that both countries’ actions were targeted and specific, adding that they were not so heavy-handed.

He named a few stocks that could benefit from a better trade relationship with China, including Apple, Nike, Starbucks, Lam Research, Applied Materials, Micron, Walt Disney and Lululemon.

 “As we get closer to the change in Washington, I think we have to start thinking on a dual track” toward China, Cramer said. “One track punitive, but the other track gloriously benign, at least if you own stocks.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Apple, Walt Disney and Starbucks.