As U.S. trade policies grow more unpredictable under President Donald Trump’s leadership, Europe is emerging as a safer, more stable alternative. More than $100 billion has flowed into European equity funds this year — a threefold increase from the same period in 2024 — while U.S. equity funds have suffered nearly $87 billion in outflows.
Peter Roessner, CEO of Luxembourg-based hydrogen firm H2Apex, illustrates the growing divergence. “Investors in the hydrogen sector are now focusing more on the European market due to the absolute uncertainty and planning insecurity in the USA,” he said, referring to a €200 million project in Lubmin, Germany. “The framework conditions in Europe are not ideal, but they are stable.”
Trump’s Trade Threats Fuel Flight to Safety
Much of the shift is attributed to President Trump’s volatile approach to trade. The looming July 9 deadline for a new EU-U.S. trade deal has rattled investors, especially after Trump threatened 50% tariffs on all EU goods if no agreement is reached. His record of issuing sweeping executive orders, many of which are later revised or delayed, has only deepened the sense of instability.
FILE PHOTO: U.S. President Donald Trump holds a chart next to U.S. Secretary of Commerce Howard Lutnick as Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, D.C., U.S., April 2, 2025. REUTERS/Carlos Barria/File Photo
“The U.S. used to be seen as stable and market-friendly,” said Christoph Witzke, head of Deka’s CIO office as reported in Reuters. “Now there’s a real risk of political interference, and that’s causing investors to reassess.”
The result: European markets have taken center stage at recent investor conferences, with a steady pattern of inflows over the past 12 months, contrasting the outflows from the U.S.
U.S. President Donald Trump shakes hands with U.S. Ambassador to the United Kingdom Warren Stephens after announcing a trade deal with the U.K., in the Oval Office at the White House in Washington, D.C., U.S., May 8, 2025. REUTERS/Leah Millis
Corporate Performance Reflects Investor Sentiment
The trend is reflected in stock market performances. Holcim’s European-focused parent company saw its share price soar by 15% this year, while the U.S.-focused spin-off, Amrize, had a weak market debut in late June — despite high expectations.
Siemens Energy, which still earns over a fifth of its revenue from the U.S., also noted a rise in European investor sentiment. Its shares are up 84% year-to-date, supported by positive feedback during a recent U.S. roadshow, finance chief Maria Ferraro said.
Capital Inflows Boost Germany, but Warning Signs Remain
FILE PHOTO: EU flags flutter in front of European Central Bank (ECB) headquarters in Frankfurt, Germany July 18, 2024. REUTERS/Jana Rodenbusch///File Photo
Germany, the EU’s largest economy, is seeing foreign direct investment rebound. In the first four months of 2025, FDI into the country more than doubled to €46 billion, the highest level since 2022. Meanwhile, German firms have been pulling capital out of the U.S., with a negative investment balance of €2.38 billion recorded in April.
Still, experts caution against complacency. “This sentiment can quickly turn again,” warned Stefan Wintels, head of state-owned KfW bank. “This should be both a warning and an incentive to use the momentum now and consistently implement the planned agenda.”
Private equity partner Hajo Kroesche echoed this concern: “The window of opportunity will not stay open forever.”
Global Eyes on Europe — For Now
Interest in Europe is growing far beyond the continent. Deutsche Bank CEO Christian Sewing recently visited investors in Qatar, Abu Dhabi, and Saudi Arabia. “Investor interest in Europe and Germany is huge,” he said, while stressing the need for long-term stability. “These are not people who invest within two days. But of course they see what is happening in the world right now.”
