"It is that he believes we are already in a trade war, one that the Chinese are waging against us. And it's not that he wants to retaliate — it's that he wants to win," the "Mad Money" host said.
Trump believes that the Chinese have had their way with the U.S. endlessly, Cramer said. It's as if the U.S. are "lapdogs" who are willing to let them take away U.S. manufacturing jobs and don't put up a fight.
Cramer expects the positives to U.S. business under Trump — deregulation, repatriation and lower taxes — will be partially offset by the fact that it will be harder to ship jobs to another country. That is the real risk factor to Trump.
However, this doesn't mean investors should sell all stocks with exposure to China.
"You just need to recognize that you can't pay as much for them knowing that Trump is willing to play hardball," Cramer said.