The Consumer Rules the World

The U.S. Advantage: A Consumption-Driven Superpower

The United States retains a powerful edge in the global economy for one simple reason: it consumes. In a world where every country seeks growth, most nations ultimately need access to American consumers to achieve it. If Europe or China aim to reduce dependence on the U.S., they must do more than build; they must spend.

The U.S. consumer has long propped up global demand—acting as the economic engine for exporting nations. Yet Europe and China have historically prioritized production, viewing producers as the lifeblood of growth. Their models rely on external demand, effectively outsourcing consumption. The result? A structural imbalance.

As Adam Smith wrote:

“Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. The maxim is so perfectly self-evident, that it would be absurd to attempt to prove it. But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.”

Smith's insight remains timely. Any nation that seeks to compete with the U.S. economically must first internalize this lesson: build not just for others, but for your own.

There Is No Alternative (TINA)

Ursula von der Leyen’s new talking point highlights that Europe will focus on the 87% of global trade that happens without the United States. But let’s be clear—trade volume does not equal profitability. It’s one thing to move goods, quite another to generate returns. And in that regard, there is still no substitute for the depth, scale, and profitability of U.S. markets.

The rest of the world may trade, but the U.S. is where businesses profit.

Can the Field Be Leveled?

Trade barriers exist everywhere, but the scale and attractiveness of the U.S. market remain unrivaled. With a GDP per capita of nearly $85,000, the U.S. market is both deep and unified. France trails at $44,000, Japan at $33,000—a reflection of fragmented or aging economies with limited consumer punch.

It’s easy for exporting countries to specialize—Germany in autos, Japan in machinery, China in manufacturing, South Korea in ships—and funnel their products to the American market.
Consider China. Foreign firms operating there are often required to form joint ventures with domestic Chinese companies, frequently relinquishing control, access to data, or even intellectual property. Meanwhile, Chinese companies face far fewer constraints when expanding abroad and now enjoy a $1 trillion trade surplus with the rest of the world. They benefit from open access to global markets while tightly restricting access to their own.
But can the U.S. reciprocate by complying with dozens of disparate local regulations across the globe? Not without sacrificing efficiency and scale.

If the goal is fair trade, then other nations must also play by rules that encourage openness.

Selective Outrage and Digital Hypocrisy

Europeans were quick to tax U.S. tech giants—without protest. Yet when the U.S. retaliates, cries of unfairness erupt. Why the double standard? The EU has struggled to produce homegrown tech champions, but instead of nurturing innovation, it focused on regulating foreign success. Would Brussels have taxed Apple or Amazon had they been French or German firms? Highly unlikely.

Margrethe Vestager, often hailed as a European tech figure, is best known not for building but for policing—especially U.S. companies. Protectionism dressed as regulation rarely creates competitive ecosystems. It just delays the inevitable.

The Real Catalyst: Venture Capital, Scale and Alignment

Technology markets are powered by outsized returns from a handful of dominant players—most of them American. Why? Because the U.S. has a robust venture capital engine that funds bold ideas at scale. Over 70% of market returns now stem from a few mega-cap tech companies, born in this high-risk, high-reward environment.

Technology markets are powered by outsized returns from a handful of dominant players—most of them American. Why? Because the U.S. has a robust venture capital engine that funds bold ideas at scale. Over 70% of market returns now stem from a few mega-cap tech companies, born in this high-risk, high-reward environment.

Can Europe replicate that? It remains doubtful. Fragmented capital markets, cultural aversion to failure, and a lack of entrepreneurial infrastructure stand in the way.

And here’s a deeper question: Does the stock market even matter politically outside the U.S.? In America, market performance is front-page news. A U.S. president is often judged by the returns of the S&P 500. A strong stock market is seen as validation of economic leadership, business confidence, and national strength. It shapes headlines, elections, and public sentiment. Now contrast that with Europe. When was the last time a French, German, or Italian leader was held accountable for the performance of the CAC 40, the DAX, or the FTSE MIB? These indices barely register in political discourse. There is no cultural or political link between equity markets and government approval in the same way. In many European countries, the stock market is still viewed as something distant, abstract—benefiting corporations, not citizens.

This disconnect explains why the U.S. consistently attracts global capital: it's not just about performance, it's about alignment. The political system, financial system, and innovation ecosystem all feed into one another. Markets matter in America—culturally, economically, and politically. Until other nations treat their markets with the same strategic importance, the U.S. will remain the unrivaled magnet for growth capital and technological dominance.

No Country is Destiny—But the U.S. Still Leads

Global leadership isn’t a birthright. Confidence in the U.S. isn't absolute—but it's still relatively stronger than in most alternatives. France doesn’t appear poised to take the crown. Germany might, if it can pivot its export-heavy model. China is the most likely challenger, but even that story is still unfolding.

Until another nation combines scale, consumption, innovation, and capital the way the U.S. does, we maintain our conviction: America remains the cornerstone of global growth.

Still Favoring the U.S., Hedged in Local Currency

We still favor U.S. equities (but hedged in local currency). The recent strength in the euro highlights how the dollar may have been overvalued in previous months, making the hedge even more relevant today.

Our conviction in the U.S. market remains firm. In many ways, today’s environment resembles March 2020 during the onset of COVID. The current administration's actions, while aggressive, are not entirely irrational.
If Trump were acting erratically, we would expect him to treat Europe and Japan with the same intensity as China. That’s not what’s happening.
The current trade war appears focused on China. Meanwhile, Southeast Asia is well-positioned to absorb Chinese manufacturing and redirect it to the global market.

The bigger risk would be a sharp slowdown in U.S. consumption, if the trade war began to seriously impact domestic sentiment. However, the pause in tariffs observed on Wednesday, April 9, suggests that Trump—guided by advisors such as Scott Bessent—is exercising more strategic restraint than many assume.

Disclaimer

Please note that Benchmark does not produce investment advice in any form. Our articles are not research reports and are not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Patrick Robert Doyle / Unsplash.