Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocks

Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton

American 100 dollars destroyed by bad markets
(Image credit: Getty Images)

The Trump tariff chaos and the broader sense that the world is changing profoundly makes it hard to remain optimistic at times like these. There’s a temptation to retreat to safe assets – such as cash or gold – which may well turn out to be the smart call in the shorter term. Yet there is a bullish way to think about these changes as well. They may end up being part of a long-overdue adjustment – just not quite in the way that the US president and his advisers hope.

America has dominated global markets to an unhealthy extent over the past decade or more. The degree to which it has beaten almost everything else is striking: the MSCI USA index has returned 12.4% per year (in dollar terms) over ten years, while the MSCI World ex USA has returned 6% per year. There have been some solid reasons from this, ranging from America’s superior energy security after the shale revolution in the early 2010s to the greater dynamism of high-growth sectors (helped by capital markets that were willing to fund and scale up new companies in a way that the rest of the world was not). However, this cannot continue forever.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.