What Trade War? International Stock ETFs See Big Turnaround
- International stock ETFs seem to be ignoring the trade war.
- The German stock ETF recently hit all-time highs.
- International stocks have been outperforming their U.S. counterparts.
Despite all the dire predictions about a global trade war, you wouldn’t know anything was wrong by looking at international stock ETFs.
The Vanguard Total International Stock Index Fund ETF (VXUS) has not only recovered from the losses it suffered after President Trump’s "Liberation Day" tariff announcement, but it’s now up 8.4% year to date.
That’s a big turnaround from early April, when the fund was down 5.5% just a week after the White House introduced sweeping "reciprocal tariffs" on U.S. trading partners. Today, VXUS is trading less than 1% off its highs for the year.
International ETFs Outperform
In fact, international stocks have been outperforming their U.S. counterparts for most of 2025. Even at their lowest point, international stocks were down much less than the S&P 500, which suffered a 15% year-to-date decline at its worst point (it’s down just under 6% currently).
There are several reasons for the resilience abroad. While the U.S. faces trade battles with nearly the entire world, individual countries mostly only have to deal with tariffs from one country: the U.S.
Policy stability in places like Europe and parts of Asia has also been a sharp contrast to the Trump administration’s more erratic approach.
Moreover, stimulus efforts in key foreign markets have given international equities a lift. Germany, for example, recently passed a €500 billion infrastructure package.
Indeed, the iShares MSCI Germany ETF (EWG) has been a standout, soaring 24% year to date and hitting fresh all-time highs in recent days.
Meanwhile, the broader iShares MSCI Eurozone ETF (EZU) is also thriving, sitting near 17-year highs with an 18% year-to-date gain.
Is the Tide Starting to Turn for Europe?
It remains to be seen whether international stocks can maintain this edge over U.S. equities as the year progresses. The Trump administration remains the key wildcard: Will high tariffs stick or be negotiated lower? Will tax cuts and deregulation reignite U.S. growth?
As for Europe, the question is whether rising stock prices can eventually be matched by higher economic growth.
After decades of U.S. dominance in global markets, the recent strength in international stocks could be the first sign that the tide is starting to turn—but it’s much too early to say for sure.
