Goldman Sachs (GS, Financial) is sounding the alarm. If U.S.-China tensions flare into full-blown financial decoupling, U.S. investors may be forced to offload more than $800 billion worth of Chinese equities—including $250 billion in American-listed ADRs, $522 billion in Hong Kong stocks, and a slice of onshore A shares. Treasury Secretary Scott Bessent recently said “all options are on the table,” reigniting fears of delistings that first surfaced under Trump. Now? They're back, and louder than ever.

The consequences could be swift and painful. Goldman estimates a 9% drawdown in ADR valuations and a 4% dip in the MSCI China Index if forced sales hit. U.S. funds could liquidate A shares within a day, but it would take weeks—119 days for Hong Kong stocks and 97 for ADRs—to unwind the rest. The other side of the coin? Chinese investors, holding $1.7 trillion in U.S. assets, might retaliate—dumping $370 billion in equities and $1.3 trillion in bonds in response.

Some funds are staring straight into the fire. The Kraneshares CSI China Internet Fund, the largest U.S.-listed China tech ETF, holds 33% in ADRs—half of which have no Hong Kong backup listing. And with 72% of its ownership tied to U.S. investors, any delisting scenario could spark a major selloff. JPMorgan (JPM, Financial) estimates that passive outflows from index removals could hit $11 billion. Bottom line? The decoupling cliff is no longer a theory—it's a risk that portfolio managers can't afford to ignore.