Political risk: How Trump 2.0 is affecting investment in U.S. assets

February 1, 2026

TL;DR

U.S. political actions in January, including threats of tariffs and military strikes, have strained relationships with key allies.
International stocks in developed and emerging markets outperformed U.S. equities in January.
Uncertainty surrounding U.S. strategic policy is leading money managers to consider assets outside the U.S.
The EU-India free trade agreement is gaining attention, while U.S.-Europe relations are at a low point.
Security arrangements are evolving as countries take more responsibility for their defense.
Capital flows are dispersing beyond U.S. dominance, and the U.S. dollar has weakened.
Danish investors have increased hedging on U.S. dollar investments.
Geopolitical risk is expected to remain elevated, and the dollar may continue to weaken.
Investors are advised to consider a 'buy the rest of the world' trade.
Potential threats to the Federal Reserve's independence add to concerns about U.S. political risk.

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