CNBC's Jim Cramer on Tuesday said that "timing couldn't have been worse" for the Trump administration to add dozens more Chinese companies to its blacklist.
The U.S. Commerce Department announced that it placed an additional 28 firms on the so-called Entity List that American enterprises are banned from doing business with. With U.S.-China trade talks scheduled to resume later this week, the major stock market indexes all fell more than 1% during the trading session.
"I can't fault the Commerce Department for cracking down on Chinese companies that enable some horrific human rights violations, but they did kind of pick a worst possible time to do it, right before the big trade talks," the "Mad Money" host said. "So I think you need to be very careful as this market readjusts and recalibrates its expectations."
The White House wants to limit communist China's access to facial recognition technology. The 28 companies aren't that well known, but the announcement shook up a number of semiconductor stocks in the American market, Cramer said.
Cramer warned that the blacklist, along with the visa ban on some Chinese officials, could stall trade talks, which would ensure that the Oct. 15 tariff hike on $250 billion worth of Chinese goods that President Donald Trump has promised will go into effect. That would make it more challenging to invest in retail stocks.
Target, Walmart and Costco are among the few retailers that Cramer said are big enough to be able to offset the damage.
"Don't do anything outrageous, don't try anything fancy and wait. Wait for a better moment when it no longer feels like China's in the balance," the host said. "Or at least when next week's upcoming tariff hikes have been baked into the averages. I don't think we're there yet."
In response to a request for comment earlier Tuesday, the Commerce Department pointed CNBC to a press release announcing the addition of the Chinese companies to the Entity List.
Disclosure: Cramer's charitable trust owns shares of Nvidia.