Is the US' economic exceptionalism truly over?

Historians have described the era since the end of World War II as Pax Americana — a period defined by US dominance in geopolitics, innovation and finance.

- Tan Min Lan

For investors, this translated into fertile ground for wealth accumulation on an unprecedented scale, underwritten by the US' economic primacy, technological leadership, and respect for the rule of law.

Indeed, over the past 30 years, the US economy grew nearly three times faster than Japan and twice as fast as Europe. The S&P 500 delivered a compounded return of over 2,100 per cent, a performance unmatched by all major indexes with a US$100,000 investment in 1995 worth nearly US$2.3 million (S$2.97 million) today.

But with rising government debt, growing political risks and a shifting geo-economic order, investors are asking: is it time to "Sell America"? The Trump administration's proposed trade and capital control agenda — particularly Section 899 of the so-called "One Big Beautiful Bill" currently in Congress — has perturbed global asset allocators, raising the spectre of broad-based tariffs and taxation of portfolio flows.

Still, we remain circumspect about claims that US exceptionalism has ended. America retains structural advantages — its innovative capacity, favourable demographics, deep capital markets and importantly, the absence of credible dollar substitutes. While the outlook should be bumpy, US foundational strengths remain a force to reckon with.

For investors, this environment calls for caution, flexibility and better diversification rather than outright divestment. Key watch points include tariff policy, US dollar dynamics and portfolio positioning.

GROWTH HIT, BUT U.S. RECESSION UNLIKELY

Tariffs remain central to US President Donald Trump's agenda. Although a US trade court ruled that about half the tariffs imposed under the International Emergency Economic Powers Act were illegal, the administration is pressing ahead with new Section 232 investigations targeting semiconductors, pharmaceuticals and critical minerals.