From Yahoo Finance: 2025-06-10 08:00:00

President Trump faces criticism for backing down on trade tariffs, sparking the “Trump always chickens out” jibe. Slow progress on trade deals has weakened the dollar by 9% this year, signaling investor concerns. Global fund managers are pessimistic about the dollar, with many underweight on U.S. stocks, favoring European equities.

Despite investor sentiment, the S&P 500 has rebounded post-Trump’s policy announcements. Analysts predict a shift of €1.2 trillion into European equities over the next five years. Passive strategies are driving reallocations towards larger European stocks, impacting ETF assets in Europe positively.

Trump’s policies are causing a shift of capital to European equity markets, as U.S. fiscal outlook deteriorates. Large international investors may replace U.S. bond holdings with European fixed-income exposures. BlackRock’s Investment Institute underweights U.S. Treasurys, watching for rising long-term yields and tax implications for foreign investors.

Trump plans to increase taxes on U.S. financial holdings for countries with “hostile” tax regimes. Legal ambiguity around the impact on the U.S. Treasury market concerns investors. Tax proposals could deter foreign investment in U.S. assets, potentially reshaping dollar-asset allocations. Senate review of the bill is anticipated.

Investors are uneasy about the proposed tax increase on U.S. financial holdings, fearing reduced dividends and interest payments. Trump’s budget plan could prompt a structural reconsideration of dollar-asset allocations. Officials and investors await Senate decisions on the tax bill, hoping for a resolution to the ongoing trade tensions.

Read more: Trump’s Trade Tactics Could Spark Big Shift Toward Europe