As Donald Trump approaches six months into his second presidential term, four foreign markets he vowed to penalize with heavy tariffs have not only withstood the threat, they’ve outpaced the S&P 500 and America’s biggest tech giants by a wide margin.
Since Jan. 20, 2025 — Trump’s inauguration day — exchange-traded funds tracking Mexican, Canadian, eurozone and Chinese stocks have posted significant gains.
Such performance defied Wall Street’s overly pessimistic expectations at the start of the year, especially as these regions were seen as directly damaged by Trump’s protectionist agenda.
The iShares MSCI Mexico ETF EWW surged 28%, the iShares Large-Cap China ETF FXI rose 21%, the iShares MSCI Eurozone ETF EZU gained 20%, and the iShares MSCI Canada ETF EWC is up 11%.
Ironically, these four economies — responsible for the bulk of last year’s trillion-dollar U.S. trade deficit — were key targets in the new administration’s push to rebalance trade.
In contrast, the S&P 500, as tracked by the Vanguard S&P 500 ETF VOO, has remained flat.
Meanwhile, a widely followed basket of tech giants struggled to keep pace. The Roundhill Magnificent Seven ETF MAGS — which tracks the performance of Microsoft Corp. MSFT, Apple Inc. AAPL, NVIDIA Corp. NVDA, Alphabet Inc. GOOGL, Amazon.com Inc. AMZN, Meta Platforms Inc. META and Tesla Inc. TSLA — declined by 3.4% over the same period.
Leading up to Inauguration Day, the trajectory of global markets told a starkly different story. From Election Day on Nov. 5 through Jan. 20, investors moved defensively on regions perceived to be in Trump’s crosshairs.
The Mexican ETF lost 6.5%, China’s declined 5.8%, and eurozone and Canadian stocks treaded water.
Meanwhile, the S&P 500 rose 4.6%, and the tech-heavy Magnificent Seven soared 15%, buoyed by artificial intelligence euphoria.
But the moment Trump reentered the Oval Office, the narrative shifted. Markets began reacting not just to political headlines but to tangible changes in fiscal and trade policy.
The result: U.S. equities stalled, mega-cap tech lost momentum, and capital rotated toward the markets that had initially been expected to struggle under Trump’s second term.
One of the most striking reversals was Tesla.
Shares of the EV-maker had soared more than 70% between the election and inauguration, fueled by speculation that Elon Musk’s collaboration with the Trump administration — via the Department of Government Efficiency — would have given his companies (also including SpaceX) inside access to major federal contracts.
But the alliance quickly soured, and Tesla’s stock began a sharp downward spiral.
Musk exited the DOGE in May and began openly clashing with Trump over fiscal priorities. Tesla shares have since plunged 25%, wiping out post-election gains.
Part of the market reversal that has occurred since January 2025 can be attributed to a sharp weakening in the dollar.
On Jan. 14, just days ahead of Trump’s inauguration, the U.S. dollar index was at 110 — its strongest level since late 2022.
Fast forward six months, and the same index has slumped by 11%, hitting its lowest level in over three years.
This dollar drop is no coincidence. It reflects a growing market rethink around the U.S. relative economic strength, or what analysts call “American exceptionalism.”
Tariff tensions, a first-quarter recession, Moody’s downgrade of the U.S. credit outlook and concerns over Trump’s unfunded spending have eroded trust in the dollar’s safe-haven role.
In aggregate, these dynamics have eroded confidence in the dollar as a safe-haven store of value, especially compared to equities in countries seen as “Trump’s rivals.”
The relative underperformance of U.S. markets and the dollar is forcing investors to reconsider a long-held assumption: that the U.S. economy and its markets would always lead during global uncertainty.
Foreign markets, once seen as fragile in the face of U.S. pressure, have emerged as relative winners, while America’s internal fractures raise doubts about long-term macro stability.
For now, markets have made their judgment: the real trade shock isn’t abroad, it’s at home.
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