Despite Trump's tariffs, U.S. stocks with high international sales are beating domestic-focused names

Despite ongoing tariff concerns, U.S. S&P 500 companies with significant international revenue exposure have notably outperformed domestic-focused peers, primarily driven by a weakening U.S. dollar, which declined over 10% in the first half of 2025. Goldman Sachs analysis shows international-facing stocks advanced 11% year-to-date, besting domestic names by 7 percentage points. This trend particularly benefits sectors like information technology and semiconductors, which derive over half their sales internationally, with executives from companies like Emerson Electric and McDonald's confirming the dollar's tailwind and minimal current tariff impact, though some future tariff risks are acknowledged.

Analysis

Despite U.S. tariff policies, S&P 500 companies with significant international revenue are markedly outperforming domestic-focused peers. A Goldman Sachs analysis quantifies this trend, showing international-facing stocks advanced 11% year-to-date in 2025, a full 7 percentage points higher than the 4% gain for domestic names. The primary driver is the sharp depreciation of the U.S. dollar, which declined over 10% in the first half of the year, its weakest performance for that period since 1973. This currency movement has transformed a previous headwind into a tailwind for U.S. exporters. The information technology sector, deriving 56% of its revenue from overseas versus the S&P 500 average of 28%, is a key beneficiary. This is reflected in the 19% rally of the VanEck Semiconductor ETF (SMH) and standout performance from firms like Lam Research (LRCX) and Monolithic Power Systems (MPWR), which are up approximately 40% and 20% respectively, also benefiting from strong AI-related demand. Other multinationals like Emerson Electric (EMR) and McDonald's (MCD) have affirmed that currency translation is a positive factor for 2025 earnings, with executives downplaying the current impact of tariffs. However, a degree of risk remains, as signaled by Estee Lauder's (EL) CFO, who noted that while fiscal 2025 profitability is unlikely to be materially affected, a high tariff scenario could pose a 'material impact' in fiscal 2026, suggesting investor complacency could be a vulnerability.

Key Decisions for Investors

• Consider overweighting U.S. multinationals with high international sales exposure, particularly in the technology and semiconductor sectors, to leverage the direct earnings benefit from the weak U.S. dollar.
• Investors should closely monitor the U.S. dollar's trajectory, as a reversal from its current weakness would remove the primary catalyst driving the outperformance of these international-facing equities.
• While immediate tariff risks appear discounted by the market, it is prudent to track forward-looking corporate guidance and trade policy developments for signs of escalating risk, especially concerning fiscal 2026 outlooks.