In April, talk of a “Sell America” trade picked up steam on Wall Street following the unveiling of President Trump's "Liberation Day" tariffs. US stocks, Treasurys, and the dollar all tumbled at once — an unusual dislocation that shook confidence in America’s safe-haven status.

But recent data indicates that investors abroad have actually stuck with US stocks in 2025.

From the start of the year to the end of June, foreign investors allocated more than 30% of their US financial assets to equities — near record highs and well above the long-term average of about 19%, according to Ned Davis Research. That means globally, investors aren't rotating away from equities as a share of the pie despite this year's tariff turmoil.

The simplest reason for the absence of a major shift in allocation is that, since the market's rebound from April lows, tariff news hasn't weighed on stocks all that much. The initial panic faded as companies managed the impact better than investors feared. According to Citi, the US effective tariff rate is now closer to 9%, roughly half the 18% theoretical rate, underscoring how carve-outs, transshipments, stockpiling, and thinner margins have helped blunt the impact of higher levies.

At the same time, falling interest rates and renewed optimism about US growth have steadied investor confidence. Still, Trump’s latest wave of tariffs clouds the outlook, raising questions over whether the trade war’s impact will remain minimal.

Read more: The latest news and updates on Trump's tariffs

“From my standpoint, the expectations for the US were extremely high coming into this year, and expectations for the international markets were extremely low,” Keith Lerner, chief investment officer at Truist, said. “So that just means that a little bit of good news [goes] a long way for these other markets. And a little bad news can go a long way for the US market.”

That bad news also included President Trump’s escalating rhetoric against Federal Reserve Chair Jerome Powell, which stoked fears over the Fed’s independence at a time when investors were already questioning the resilience of the US economy.

Instead of turning to Treasurys or the dollar, the traditional havens in times of stress, investors dumped them alongside equities. International equities surged, at one point outperforming US stocks by as much as 17%, according to Winthrop Capital. That gap has since narrowed to closer to 10%.

“What you saw in the spring was a move that just went too far,” said Adam Coons, chief investment officer at Winthrop. “International stocks are still up, but the delta between them and the US has collapsed. The bet that the gap would close is working out.”

Meanwhile, price-to-earnings ratios are making the stocks of US companies more compelling.

“It all comes down to tech,” Truist's Lerner said. “When you look at these developed international markets, they don’t have a lot of tech. And that’s why investors have cooled a little bit there.”

Policy has also played a role. Europe’s stimulus helped drive international markets earlier this year, but the US now has the edge as the Fed cuts interest rates, recession worries ease, and new clarity on fiscal stimulus in Washington adds to "a more supportive backdrop," Lerner said.

The dollar, meanwhile, has steadied after its sharp spring slide. While it remains weaker than at the start of the year, the greenback’s stability has blunted one of the biggest tailwinds for international equities, since currency gains accounted for much of their early 2025 rally.

For now, Lerner said Truist remains “Team USA,” even if the firm has added some international exposure as a hedge. “We don’t want to give up on the underlying trend where we think the fundamental case is still strong — which is still the US,” he said.

Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.

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