Key Points
- The “Sell America” trade from April has fizzled out, with foreign investors remaining invested in U.S. stocks.
- Foreign investors have maintained a near-record high allocation to U.S. equities this year.
- The impact of tariffs has been less severe than initially feared, and a supportive Federal Reserve has boosted confidence.
- The U.S. tech sector is a major draw for investors, which international markets lack.
The “Sell America” trade that spooked Wall Street earlier this year has fizzled out. Despite fears over President Trump’s tariffs, new data show that foreign investors have actually remained committed to U.S. stocks in 2025, maintaining their allocation to American equities near record highs.
Back in April, Trump’s “Liberation Day” tariffs sent U.S. stocks, bonds, and the dollar tumbling simultaneously, eroding confidence in the country’s status as a haven. But that panic was short-lived. Foreign investors have since maintained an allocation of over 30% of their U.S. financial assets to stocks—well above the long-term average of 19%.
Why the change of heart? The simplest reason is that the tariff turmoil hasn’t hurt as much as initially feared. Companies have found ways to blunt the impact, and the effective tariff rate is much lower than the headline numbers suggest. At the same time, falling interest rates from the Federal Reserve and renewed optimism about U.S. economic growth have helped steady investor nerves.
For a brief period in the spring, international stocks did outperform their U.S. counterparts. But that trend has since reversed. Analysts say a key reason investors are returning to the U.S. is its powerful tech sector, which most international markets can’t compete with.
With a more supportive policy backdrop from the Fed and a stabilizing dollar, the fundamental case for American stocks remains strong. While some investors are adding international exposure as a hedge, the message from Wall Street is clear: they’re still betting on “Team USA.”
