Testing US exceptionalism? What markets have learned from Trump’s first 100 days

Following his election victory in November 2024 as the Republican Party romped home with both the White House and Congress in tow, there was a broad belief that people knew what Trump would do – but the scale of change took many, if not all, by surprise. By the 100^th day of his second term, Trump had already signed 142¹ executive orders versus his predecessor Joe Biden’s 42². Clearly, this is an administration in a hurry to get things moving.

The belief in a more measured approach “…proved to be a false sense of confidence because the Trump administration had broader and deeper plans than anyone expected, as evidenced by the countries who have been hit by tariffs that hadn’t been considered as targets,” says Fabiana Fedeli, CIO for Equities, Multi-Asset and Sustainability. “Moreover, the depth of the levels of tariffs caught the world and governments by surprise, and this creates both a short-term and long-term effect.”

When does short-term bleed into the long run?

So far, the main source of volatility has emanated from tariffs with ‘Liberation Day’ on 2 April  as global stock markets reeled in the wake of them. After a week of  market turbulence, Trump announced a 90-day pause on the so-called ‘reciprocal tariffs’ with China the notable exception as tit-for-tat tariffs continued to ramp up between Washington DC and Beijing.

This is becoming a much faster market in its movements – it’s about velocity rather than just about volatility, according to Fedeli. With the prospect of a US recession teetering on a knife-edge, are the calls by corporates and investors being heeded by the administration?

“My sense from conversations is the pressure that the administration is under domestically is bearing fruit,” Fedeli observes from her most recent trip to New York. “There’s an understanding that even if it’s not a 180-degree turn on tariffs, a meaningful shift could still avoid a recession in the US.”

“This is becoming a much faster market in its movements – it’s about velocity rather than just about volatility.”

While the long-term implications of the trade war are yet to be realised, the initial impact of the tariffs and the corresponding global shock has led investors to closely watch US confidence numbers for signs of weakness (given the lag in more concrete datapoints). The realisation? While only one barometer, we’ve seen sharp declines – and it’s a slippery slope to that weakness becoming a reality.

“We monitor consumer and corporate confidence datapoints and their potential spillover on real numbers,” adds Fedeli. “Companies are making statements about low visibility, inability to sign long-term contracts and make long-term plans. This is slowing capex. Longer term, the realisation that supply chains need to move in order to effectively risk manage the business will bring a lasting effect.”

In March, the Institute for Supply Management New Orders were at 45.2 versus 48.6 the previous month, underlying a further decline in corporate confidence. Should confidence continue to dwindle with companies unable or unwilling to make investment decisions and deploy capital, the Trump administration could see growth faltering.

Is US exceptionalism limitless?

The US accounts for just 4% of the world’s population, yet is responsible for 26%³ of global output. Exceptional indeed, but how susceptible is it to erosion – and are we seeing it being undermined?

If we take a step back and reflect on what US exceptionalism means, the answer is two-fold, according to Fedeli. “There’s a corporate exceptionalism and what many think is a market exceptionalism – but the two don’t necessarily always go hand-in-hand,” she says.

“I do believe in corporate exceptionalism. The entrepreneurship, deep capital markets and strong innovation culture in corporate America to me has created some exceptional companies. But exceptional companies don’t always translate into exceptional equity markets because there are valuations, competitors in other areas and many other elements to consider when making an investment. Yes to US exceptionalism from a corporate standpoint, which has also created some level of exceptional returns from the equity market – but this is not the case all the time.”

“Exceptional companies don’t always translate into exceptional equity markets because there are valuations, competitors in other areas and many other elements to consider when making an investment.”

Operation diversification

In this scenario, investors require diversification and while the US is important, it’s not the only game in town.

“I do believe that many companies in the US are run very efficiently, and it’s a market with flexible labour conditions which does help the margin of companies,” says Fedeli. “To some extent, as a reaction to the changing world order, the European Commission could start cutting red tape and implementing some deregulation to support the global competitiveness of EU corporates, which could help close that gap. Asia has that innovation mentality making it a strong contender to US corporates, but not all companies are the same.

“Tariffs will make life difficult for some US companies. In spite of the good first quarter earnings, there’s no visibility of what’s coming ahead, but competitiveness is likely to stay. How do we invest within that context?”

There are increasing signs of diversification away from the US, in part because the concentration in US assets, also from foreign investors, was so extreme.

“The short-term effect is that investors are wanting to diversify,” says Fedeli. “Over the long-term, as Asian companies and others show their ability to innovate and be competitive on a global scale, I do think there’s going to be an increased understanding that diversification is good. Investors have a short-term memory so there will be times that look good in the US, but the need to diversify remains important.”

Ultimately, the US hasn’t behaved as a homogenous market, and being active stock pickers in across the pond – as with any global market – can yield tangible returns.

“When we see an immediate market reaction, that’s our opportunity as active investors to go into markets and create benefits for investors,” reflects Fedeli.

President Donald Trump’s first 100 days in office has seen twists and turns. Naturally then, the next 1,000 plus days will be nothing short of eventful.

¹ The Economist, ‘The first 100 days of Donald Trump’s second term’, (economist.com), 29 April 2025.
² Office of the West Virginia Attorney General, ‘West Virginia Attorney General’s Office analysis of the Biden Administration first 100 days: Executive orders and suits by states’, (ago.wv.gov), [accessed 28 April 2025].
³ Bloomberg, ‘California keeps making the US great – again’, (Bloomberg.com), 4 March 2025.

The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested. Past performance is not a guide to future performance. The views expressed in this document should not be taken as a recommendation, advice or forecast.