European investors are starting to pull back from US stocks as a result of President Donald Trump”s confrontational trade policies. Despite the US market reaching record highs, Trump”s predictions for further gains may be overshadowed by a growing reluctance among foreign investors, particularly from Europe, to maintain their investments in American equities.
Vincent Mortier, chief investment officer at Amundi SA, which manages a substantial €2.3 trillion ($2.7 trillion), noted to Bloomberg that there has been an uptick in inquiries from clients wishing to diversify away from US investments. “We are seeing more clients wanting to diversify away from the US. We saw that trend start in April 2025, but it has somewhat accelerated this week,” Mortier stated, indicating a significant shift in investment strategies.
The shift comes in the wake of Trump”s recent tariff announcements that target eight European nations, contributing to a 2.1% drop in the S&P 500. Current statistics reveal that European investors hold $10.4 trillion in US stocks, with over half of that amount concentrated in the eight countries now facing Trump”s threats. According to Hugo Ste-Marie, a strategist at Scotiabank, Europeans account for 49% of all US stocks held by foreign investors, a figure substantial enough to influence market dynamics.
Historically, reducing US stock exposure would have been seen as a poor decision, given the superior performance of American equities compared to their global counterparts. However, since Trump assumed office, the landscape has shifted dramatically. As the US dollar weakened and European economies strengthened, markets outside the US began to outperform. For instance, South Korea”s Kospi surged 80%, Europe”s Stoxx 600 gained 32%, Japan”s Topix rose 23%, and Canada”s benchmark climbed 28%, while the S&P 500 only increased by 16%.
In recent years, European investments in US stocks had expanded by $4.9 trillion, marking a 91% increase. A retraction from such a significant investment would represent a strategic pivot for many investors. For instance, Greenland”s SISA Pension, which manages around 7 billion Danish kroner ($1.1 billion) with 50% allocated to US stocks, is contemplating selling portions of its US holdings. Meanwhile, some pension funds, like Denmark”s AkademikerPension, have begun to divest from US Treasury securities.
Trump has warned that large-scale selling of US assets could lead to “big retaliation,” further complicating the decision for European asset managers. The ongoing threats and derogatory comments from Trump have prompted many money managers across Europe to receive more inquiries from clients about reducing their US stock allocations.
Raphael Thuin, head of capital markets strategies at Tikehau Capital SCA, which oversees over €50 billion ($59 billion), mentioned that clients across Europe and Asia are increasingly discussing the need to rethink their US exposure. Presently, the immediate impact of Europeans withdrawing from US stocks remains limited; however, it adds another layer of concern for a market already trading at elevated valuations.
Reflecting on historical precedents, last year Canadian investors urged pension fund managers to cut back on US stock holdings following Trump”s controversial remarks about Canada. Prime Minister Mark Carney underscored the need for countries to reassess their financial relationships with the US due to Trump”s utilization of economic threats.
Despite the current uncertainty, recent data from JPMorgan Chase & Co. indicates that foreign investor demand for US equity funds has remained relatively stable, suggesting that while sentiment may be shifting, dramatic changes are not yet evident.
