European Investors Retreat from US Stocks Amid Trump’s Trade Threats in 2026

• Why Are European Investors Fleeing US Stocks?
• Global Markets Outperform the US: The 2026 Rankings
• The Canada Exception: How Trump’s Threats Backfired
• Will the Exodus Crash US Markets?
• FAQs: Your Burning Questions Answered

European investors are pulling billions from US equities as Trump’s aggressive trade rhetoric escalates, sparking a strategic shift toward diversification. With the S&P 500 lagging behind global peers like South Korea’s Kospi (+80%) and Europe’s Stoxx 600 (+32%), asset managers from Amundi to Tikehau Capital report surging client demand to reduce US exposure. This article unpacks the data, the risks, and why Canada’s market is emerging as an unexpected winner.

Why Are European Investors Fleeing US Stocks?

Vincent Mortier, CIO of Amundi SA (Europe’s largest asset manager overseeing €2.3 trillion), confirms a trend first spotted in April 2025: clients are actively diversifying away from US holdings. "The acceleration this week is unmistakable," Mortier told Bloomberg, citing Trump’s tariffs on eight EU nations as the catalyst. The stakes? A staggering $10.4 trillion in US equities owned by Europeans—half concentrated in those targeted countries. When nearly 49% of all US shares are foreign-owned (per Scotiabank data), even gradual selling can Ripple through markets. The S&P 500’s 2.1% drop post-Trump’s announcement hints at the fragility.

Global Markets Outperform the US: The 2026 Rankings

US stocks are no longer the undisputed champions. Here’s how key indices stacked up last year:

• South Korea’s Kospi: +80% (yes, you read that right)
• Europe’s Stoxx 600: +32%
• Japan’s Topix: +23%
• Canada’s S&P/TSX: +28% (best in 20 years)
• S&P 500: A modest 16%

Weakness in the dollar and resurgent European consumer spending have flipped the script. As Raphael Thuin of Tikehau Capital notes, "Clients from Berlin to Tokyo are asking how to reallocate to Europe—this isn’t just about tariffs, it’s about catching the next wave."

The Canada Exception: How Trump’s Threats Backfired

Canada’s market boom has roots in Trump’s 2025 threat to make it the "51st US state" via "economic warfare." Instead of folding, Canadian pension funds slashed US holdings—a MOVE Prime Minister Mark Carney defended at Davos: "When financial ties become weapons, diversification isn’t optional." The result? A $4.9 trillion buildup of US assets by Europeans since 2023 now faces reversal, with Greenland’s SISA fund (50% US-exposed) even debating sell-offs.

Will the Exodus Crash US Markets?

Unlikely—but it’s a headache the S&P 500 doesn’t need. JPMorgan’s ETF Flow data shows foreign demand hasn’t collapsed yet, but as Mathieu Racheter of Julius Bär warns, "Nobody wants 100% US exposure now, especially not in dollars." The real risk? A slow bleed. Danish pension fund AkademikerPension already dumped US Treasuries, and Trump’s vow of "massive retaliation" against large-scale sales adds geopolitical spice. "Textbook economics says tariffs hurt exporters, but markets are reacting inversely—they’re boosting local investment," observes T. Rowe Price’s Sebastien Page.

FAQs: Your Burning Questions Answered

What’s driving European investors away from US stocks?

Trump’s trade threats against EU nations and stronger performance in non-US markets (like South Korea’s 80% surge) have made diversification appealing.

How much US equity do Europeans actually own?

Scotiabank data shows Europeans hold $10.4 trillion in US stocks—49% of all foreign-owned shares.

Is Canada really benefiting from this shift?

Yes. After Trump’s 2025 "51st state" comments, Canadian funds reduced US exposure, helping propel the S&P/TSX to a 28% gain—its best in two decades.