Trump risks $10.4 trillion investor exodus from US markets

President Donald Trump’s aggressive stance toward Europe may be pushing away some of the biggest buyers of American stocks, even as he celebrates record market highs and predicts further gains.

Trump said he expects the US stock market to double from its current record levels, which he takes credit for achieving.

But there’s a problem. Foreign investors, particularly from Europe, have been huge buyers of US stocks in recent years. Their money has helped push market indexes to the records Trump likes to talk about. Now, his harsh words and threats toward European nations could drive these investors away.

Vincent Mortier works as chief investment officer at Amundi SA, Europe’s biggest asset manager, handling €2.3 trillion ($2.7 trillion). He told Bloomberg that clients are asking to move money out of 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 explained.

He noted that moving away from US investments will take time and careful planning. Investors need to decide how to shift from major benchmarks and protect themselves from dollar swings.

The S&P 500 fell 2.1% on Tuesday after Trump’s tariff announcement targeting eight European nations. At stake? $10.4 trillion in US stocks owned by Europeans, with over half that total coming from those same eight countries now facing his threats.

Europeans own 49% of all US stocks held by foreign investors, according to Hugo Ste-Marie, a strategist at Scotiabank. That’s enough to impact the market.

To be fair, European countries probably won’t work together to dump US assets all at once. The real concern isn’t government action. But as Trump keeps making threats and insulting comments, money managers from London to Berlin to Madrid are getting more questions from clients about reducing US holdings.

US stocks no longer the only winner

For many years, cutting back on US stocks would have been a mistake. American stocks did much better than other developed markets. But things have changed since Trump took office.

As the dollar weakened and European spending picked up, global markets left US stocks in the dust. Last year’s winners: South Korea’s Kospi up 80%, Europe’s Stoxx 600 up 32%, Japan’s Topix up 23%, and Canada’s benchmark up 28%. The S&P 500? Just 16%. Canada’s margin of victory was the largest seen in 20 years

The past three years saw Europeans expand their US stock positions by $4.9 trillion, a 91% increase. Walking away from that now would signal a major strategic shift. That includes both new buying and gains from rising prices, based on Federal Reserve data from January 9 that covers through September.

Greenland’s SISA Pension manages around 7 billion Danish kroner ($1.1 billion) and has roughly 50% in US investments, mostly stocks. The board has talked about selling. So far, there hasn’t been much stock selling, though some pension funds like Denmark’s AkademikerPension are getting rid of US Treasury holdings.

Trump has warned that large-scale selling would bring “big retaliation,” keeping the threat of financial punishment on the table. For some Europeans, his threats have become too much.

“As investors reposition for a new cycle, we believe allocations to European assets could accelerate this year,” Raphael Thuin, head of capital markets strategies at Paris-based Tikehau Capital SCA, which manages over €50 billion ($59 billion). He said clients in Europe and Asia bring up this topic frequently.

Right now, the threat to American stocks from Europeans pulling back is limited. But it adds another worry for a market already trading at very high values.

“This is really an environment where you don’t want to be all exposed to US equities or US assets, especially not the dollar,” said Mathieu Racheter, head of equity strategy at Julius Baer & Co., which manages 520 billion Swiss francs ($662 billion).

Canada sets a precedent

There’s history here. Last year, Canadians pushed their pension fund managers to reduce US stock holdings after Trump said he would use “economic force” to make Canada the 51st state. At Davos, Prime Minister Mark Carney said countries need to rethink their financial ties with the US since Trump has turned that relationship into a weapon.

“If you asked an economist what the textbooks say happens with tariffs, it’s that it would be difficult for the exporting country, but what we’re seeing right now, at least in financial markets, is kind of the opposite,” said Sebastien Page, chief investment officer at T. Rowe Price, which manages nearly $1.8 trillion. “It motivates domestic investments, and it motivates diversifying trade partners.”

Daily ETF flow data shows there has been “little change” in foreign investor demand for US equity funds so far, JPMorgan Chase & Co. strategists led by Nikolaos Panigirtzoglou wrote on Wednesday.

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