The phrase “Sell America” stormed into the headlines earlier this year. It seemed as if global investors were finally turning their backs on US markets for good.
The term has been around since the 1980s, but this time, the trigger was President Trump’s “Liberation Day” tariffs in April. When stocks, bonds, and the dollar fall all at once, investors really start worrying.
Commentators warned of capital flight and the end of America’s financial dominance. For a moment, the reaction was real. But just months later the evidence shows the trade never turned into a permanent change.
Foreign money has not left the United States. In fact, it has flowed back in. Even now, as the US government enters another government shutdown, markets look far more resilient than the rhetoric suggests.
What does “Sell America” really mean
The term is shorthand in markets for a broad rotation out of US assets. It usually refers to foreign investors cutting exposure to Treasuries, the dollar, and US equities at the same time.
The logic is that if US looks overvalued or politically unstable, global money moves elsewhere, often into Europe, Asia, or emerging markets. Additional risk can be taken by shorting US assets as well.
This narrative has surfaced before. In the 1980s it came with the Plaza Accord. In the 2000s it came with the “twin deficit” debate. After 2008 it re-emerged whenever investors questioned the credibility of US monetary or fiscal policy during the global financial crisis.
In practice, the trigger is often a mix of three things. First, doubts about policy credibility, such as open talk in Washington about tolerating a weaker dollar.
The second trigger is valuation gaps, when US stocks trade at richer multiples than global peers.
And third, flow dynamics. Since foreign investors hold close to 30% of US Treasuries and nearly 18% of US equities (2024 data), when these flows start to move, the effects are visible across asset classes.
The April shock that revived the phrase
This year’s version of “Sell America” started in April after Trump announced aggressive tariffs in April. Instead of strengthening the dollar, which is the textbook reaction to tariffs, the greenback fell.
Treasuries sold off heavily, with the 30-year yield jumping above 5%. The S&P 500 slumped while Asian and European shares rallied. For a few weeks it looked like a coordinated exit from US assets.
Strategists noted how unusual the correlation was. Safe havens like Treasuries and the dollar, which normally attract inflows during uncertainty, were being dumped alongside equities. Analysts called Treasuries a “tainted product.”
And the narrative caught fire. After years of relying on foreign savings, the US was finally facing resistance.
Two additional factors gave the scare traction. The administration’s economic team questioned the traditional commitment to a strong dollar, undermining investor confidence in the reserve currency.
At the same time Moody’s downgraded US credit, adding to concerns that Washington’s fiscal trajectory was out of control.
Why the trade fizzled almost immediately
By May the data showed the selling had not lasted. Apollo economist Torsten Sløk made the observation that yields rose during New York hours, when US investors were active, but fell outside US hours, when foreigners were buying.
That suggested domestic accounts were lightening up on Treasuries while overseas buyers were taking the other side.
Treasury Department flow data confirmed it. After net selling in April, foreigners turned into net buyers of both Treasuries and US equities in May and June.
US Treasuries were in hot demand in July as well, as the foreign holdings rose to an all-time high that month, and up 9% YoY.
By mid-year, foreign allocations to US equities stood at more than 30% of their financial asset mix. That level is near record highs, far above the long-term average of around 19%. The supposed exit from US equities never materialized.
Part of the reason is that the tariff shock was less damaging than feared. Citi estimates the effective tariff rate settled closer to 9% versus the headline 18% once exemptions, supply-chain workarounds, and margin absorption were factored in.
At the same time, earnings forecasts proved resilient and by June, major US indexes had recovered and made new highs.
The other reason is more fundamental. It’s down to the fact that foreign markets simply lack the same depth in technology stocks. US tech earnings continue to dominate global equity performance, and that remains difficult to replace.
Even at stretched valuations, the growth profile of US companies is stronger than in most developed peers.
Why the shutdown is not a new trigger
The latest government shutdown has raised fresh headlines about dysfunction in the US. But history shows shutdowns rarely alter market direction.
Since 1981 there have been ten episodes. In half of them the S&P 500 suffered a pullback of more than five percent. Yet none triggered a recession or a market crash. During the 35-day standoff in 2018, the S&P 500 actually gained more than 10%.
The economic drag is small in baseline estimates, about 0.1 to 0.2 percentage points of GDP growth per week. That lost activity usually returns once the government reopens.
The larger problem is the data blackout. Investors will not get timely reports on payrolls, jobless claims, or inflation if the standoff drags on, which makes it harder to assess the Fed’s next move. That uncertainty can raise volatility but it does not fundamentally change the growth path.
This time the political theater is sharper, with the Trump administration threatening mass firings instead of temporary furloughs. If carried out, that would lift unemployment and potentially weigh on consumption.
But markets so far are taking it in stride. The three major indexes only dipped slightly on Tuesday, with none down even half a percent. That muted reaction suggests investors see the shutdown as noise rather than a regime-changing event.
The sharper lesson for investors
The real lesson from 2025 is not that global investors are leaving America. It is that the US continues to be the anchor of global capital.
April’s panic was a case of policy risk colliding with crowded positioning. Once investors recalibrated the actual earnings impact and compared US opportunities with the rest of the world, flows returned quickly.
That of course does not mean the US is invulnerable. The drivers of a genuine “Sell America” episode remain. These include fiscal policy that erodes confidence, a disorderly dollar decline, or a sustained relative growth gap.
Those risks should not be dismissed. But the April experience showed that foreign investors still see Treasuries and equities as attractive. Higher yields draw buyers. Tech profits sustain equity allocations. The dollar remains the world’s default reserve.
Shutdowns, tariff battles, and political noise may unsettle markets in the short term. Yet for now the data show the “Sell America” trade was a headline, not a secular trend.
Investors who reacted to the scare by dumping US assets missed a rally to new highs, while those who looked through the noise were rewarded. That may be the real lesson here. America remains noisy, but it is still where global money wants to be.
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