Foreign stocks are outperforming US shares due to tariff threats and global economic trends

From Yahoo Finance: 2025-06-27 11:57:00

American investors are celebrating a new record high in the S&P 500 stock index, but gains in foreign stocks far surpass US gains. South Korean stocks are up 37%, German stocks up 28%, and Mexican stocks up 27%. US stocks have only gained 5% in 2025.

President Trump’s tariff threats caused a 16% drop in US stocks earlier this year. While he postponed some tariffs, the average tariff is now around 15%. The US stock market has recovered, but uncertainty remains about future policy moves.

Trump falsely claims foreign countries pay his tariffs. US importers pay the tariffs, raising costs for American businesses and consumers. Tariffs have brought in $46 billion in import taxes from March to May, 283% more than in 2024.

Long-term trends are driving global investors away from the US market. America’s $36 trillion national debt is a concern, with Republicans planning more tax cuts that could add $4 trillion. Ratings agencies have downgraded the US credit rating, signaling financial instability.

Interest rates are rising, triggering a sell-off of American assets and weakening the US dollar. Countries targeted by Trump’s tariffs are outperforming US stocks, reflecting investor belief that US profits will be hit harder. Foreign stocks are catching up with the previously favored US market.

Foreign stocks could continue to outperform the US market due to Trump’s tariffs. America’s standing as investors’ favorite market may be changing. Rick Newman is a senior columnist for Yahoo Finance. Follow him for more insights on the market and political news shaping stock prices.



Read more at Yahoo Finance: Foreign stocks are crushing US shares, even with the new record high