Some investors accustomed to US stocks and dominating other parts of the world are making a spectacular pivot on international stocks, fearing that US assets may be taking more risks amid the escalation of trade tensions launched by President Donald Trump.
The S&P 500 has sunk more than 6% since Trump first announced tariff plans, but the Dow and Nasdaq each fell more than 7%.
Christine Benz, director of personal finance and retirement planning at Morningstar, said there is a strong debate about dialing back US stockholdings and adopting a more global portfolio.
“However, I think the case of international diversification is even greater. 1744915656given the recent developments,” she said.
Jacob Manoukian, head of US investment strategy at JP Morgan Private Bank, provided a similar rating. “Global diversification seems like a wise strategy,” he wrote in his research notes on Monday.
We beat the world with “a fair margin”
However, some experts don’t think investors should be that quick to chase after we throw away our stocks and go back abroad.
Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, said the US remains a “quality market that looks like a bargain.”
US stocks surpassed the world for many years in 2025.
According to analysts at JP Morgan Private Bank, the S&P 500 Index had an average annual return rate of 11.9% from mid-2008 to 2024, breaking the return of developed countries by a “slight margin.”
The MSCI EAFE index, which tracks stock returns in developed markets outside the US and Canada, rose on average by 3.6% per year over the same period, they write.
But this year’s story is different, experts say.
“With an incredible twist, the US stock market has just given investors timely reminders about why diversification is important,” analysts at JP Morgan Private Bank wrote. “US outperformance has been a familiar feature of the global equity market since mid-2008, but it is possible to change.”
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The Trump administration’s tariff policies and the escalating trade war with China raised concerns about US economic growth.
The US market has been under pressure since the White House first announced its country-specific tariffs on April 2nd. Trump has imposed tariffs on many countries, including a 145% collection on imports from China.
As of Thursday morning, the S&P 500 had fallen by about 10% since the start of the year, but Nasdaq Composite was pulled back by more than 16% in 2025. The Dow Jones industrial average fell nearly 8%. Alternatively, EAFE rose by about 7%.
Is American exceptionalism dead?
The sharp sale in the US market raises questions about whether US assets are “as attractive to foreigners as before, and perhaps as a result, whether we are. [equity] A market analyst at Capital Economics wrote Thursday.
At the same time, the rising tensions in global trade have hit the bond market and threatened to shake the trust of US debt holders. The US dollar has also weakened, approaching its highest low in a year on Thursday morning.
Analysts say it’s rare for US stocks, bonds and dollars to fall simultaneously.
Former Treasury Secretary Janet Yellen said Monday that President Donald Trump’s tariffs made it more difficult for Americans to find comfort in the US financial system.
“This actually creates an environment in which families and businesses feel paralyzed by the uncertainty about what will happen,” Yellen told CNBC in an interview with “Squawk Box.” “It makes planning almost impossible.”
The US fire is already burning
The trader works on the floor of the New York Stock Exchange at Opening Bell in New York City on April 17, 2025.
Timothy A. Clary | AFP | Getty Images
That said, international and US stock earnings tend to decline and flow in cycles, each showing a multi-year period of relative strength and debilitating.
U.S. stock returns have averaged over eight years of international stock, according to an analysis by the Hartford Fund since 1975 and up to 2024. The US stocks then handed over the mantle to international stocks.
Based on history, non-US stocks have expired to regain the top spot, according to Hartford Funds Analysis.
According to analysts at Capital Economics, the US market had already shown to be weaker that year amid concerns about the health of the economy and concerns associated with “the air valuation of ‘big technology’ stocks.”
“In that respect, the “Day of Liberation” highlighting these moves simply added fuel to the already burning fire,” they wrote.
Advisor: “Stick carefully here.”
A good starting point for investors is to reflect global equity funds like the Vanguard Total World Stock Index Fund ETF (VT), says Benz of MonoringStar. The fund holds approximately 63% of its US stock assets and 37% in non-US stocks.
She said that it may make sense for individual investors to reduce their exposure to international stocks as individual investors approach retirement in order to reduce volatility due to fluctuations in the foreign exchange rate.
“Some of our core models for clients have always had international exposure. It’s traditionally part of a risk-adjusted portfolio,” said Douglas Boneparth, president of Bone Fide Wealth in New York, about his conversations with his clients.
A financial advisor or businessman meets with a discussion about financial individuals. They discuss financial charts and graphs on laptop computers. Rear view of sitting in the office discussing performance
Courtneyk | E+ | Getty Images
Boneparth, a member of the CNBC Financial Advisor Council, said that while these asset classes have not been working very well in recent years, “we did a pretty good job here in reducing the brunt of this tariff volatility.”
Still, Boneparth warns investors against a sudden move to add non-US stocks to their portfolio.
“If you’re thinking about making changes now, be careful,” he said. “Would you lock in losses in US stocks to gain international exposure? I want to step on carefully here,” he said. “Are you chasing or timing? You don’t usually want to do those things.”
However, this may be a good time to check your investments and make sure you are still properly allocated and there is rebalance if necessary, he added. “Rebalancing allows you to rotate from low-risk assets to stocks and strategically buy DIPs.”
“We are pleased to announce that CFP Barry Glassman, Founder and President of Glassman Wealth Services,” said:
“It’s no wonder there’s a great deal of interest in foreign stocks today given that both stocks and currencies are better than US indexes,” said Glassman, who is also a member of the CNBC Advisor Council.
“Even in the past, when US stocks fell, dollar profits helped offset some of the losses. In the past two weeks, that wasn’t the case,” he said.
Glassman said he maintains a two-third to a third of U.S. stock ratio to foreign equity capital in the portfolio he manages.
“We’re not moving right now,” he said. “The movement for us was created over time to maintain what we consider to be an appropriate foreign allocation.”
