The Impact Of The Damage to Brand America
When Donald J. Trump took the oath of office for a second time on 20 January 2025, the global reaction was swift. Within ten weeks, Morning Consult’s 42-country U.S. Reputation Tracker logged a 20-point collapse in net favourability toward the United States – the steepest fall it has observed outside wartime shocks. In parallel, the Trump administration’s ‘Liberation Day’ tariff regime (a blanket 10 % levy plus higher ‘reciprocal’ rates for deficit partners) triggered retaliatory moves from allies and rivals alike, feeding the perception that the White House is willing to weaponise trade for domestic gain.
Virgin Group founder Sir Richard Branson put it bluntly when on the new administration’s tariff policy, he said, “erratic and unpredictable … If he continues, he’s in such danger of doing so much damage in this world.”
Even U.S. executives are sounding alarms. On IBM’s Q1 call, CEO Arvind Krishna listed ‘anti-American sentiment’ as a potential headwind if it ‘becomes louder than it is today.’ Wall Street peers from JPMorgan to P&G have issued similar caveats in recent weeks.
How far, and where, has sentiment fallen?
Morning Consult’s survey recorded a 20-point global drop in the U.S. net favourability score during the first quarter of 2025, highlighting how the perception of the US is being damaged. What is concerning is not just the fact that negative perceptions of the US are growing amongst allies, but the steep drop in the net favourability scores, which risks establishing a view point that might be difficult to repair in the medium to long term..
Looking at the data from between Oct 2024 and Mar 2025, the most significant drops in net-favourability are in:
Canada: −54.9 pp
Mexico: −41.3 pp
Japan: −40.0 pp
Netherlands: −38.3 pp
France: −38.6 pp
EU-27 (average of six majors): −34 pp
United Kingdom: −34.3 pp
Pew Research’s Global Attitudes spring soundings (fieldwork February–March) echos the Morning Consult data, noting that unfavourability toward the U.S. now exceeds 60% in Germany and 55% in South Korea.
And where a drop in reputation occurs, China moves in quickly to establish itself as a trustworthy partner, a message that was echoed by recent meetings between China, South Korea, and Japan, as well as visits by China’s Xi Jinping to Vietnam and Malaysia.
Tariffs and politics: the narrative drivers
Three forces now dominate the global conversation about the United States, and each is amplified by the way the new administration handles the press.
Reciprocal tariff regime. The blanket 10 % duty on all imports, plus 25 % on cars from the EU and Japan, has produced tit-for-tat measures. Because tariffs are headline numbers, such as the over 140% tariffs levied on imports from China make tariffs an instant barometer of Washington’s mood; each new announcement fuels market volatility and invites a fresh round of hostile editorials overseas. The FT’s Katie Martin, in her opinion column - The Long View, highlights how ‘Fund managers will have no rest for as long as he is in office with policy predictability in short supply.’
Perceived unilateralism. Washington’s hints at reducing NATO funding and pausing military aid to Kyiv feed accusations of unreliability. French senator Claude Malhuret labelled the U.S. “a source of instability and betrayal” in a viral Senate speech. The reputational hit is not abstract: polling shows a 34-point fall in average U.S. favourability across the EU-27 since October, and European countries are opting to look to non-US defence companies for security, something that will be of concern to American defence contractors, which do a lot of business with European countries.
Social-media amplification. Campaigns such as #DropUS in Scandinavia and ‘Buy Canadian’ trend whenever a new tariff headline lands, giving consumers a low-cost protest outlet. Fitch Solutions documents the visible shelf removal of U.S. snack brands in Denmark. What begins as digital outrage is now visibly reshaping retail inventories in countries outside of the U.S.
Mapping sentiment to economic exposure
When you look at the sentiment and trade data together, what you see is a convergence of reputational risk and economic exposure that could materially weaken the United States’ trade position and fiscal resilience.
The data is clear and increasingly urgent picture: the United States is facing a growing reputational backlash from some of its most economically significant partners. Countries such as Canada, Mexico, Japan, the UK and the EU-27 are not only seeing a steep decline in public sentiment toward the U.S., but they also happen to be among the country’s biggest trading partners and largest holders of U.S. Treasury debt. And this matters. A lot.
Take Japan and the EU, for example. Together, they hold over $2.5 trillion in U.S. Treasuries. That gives them considerable influence over America’s fiscal health. If either were to slow their purchases—or even begin quietly offloading holdings—it wouldn’t take much to really spook bond markets. Yields would rise, borrowing would get more expensive, and the ripple effect would be felt across everything from mortgage rates to federal budgets.
At the same time, public sentiment is continuing to shift dramatically in places that matter most for trade. Canada (–54.9 points) and Mexico (–41.3 points)—America’s neighbours and critical partners in the USMCA framework—are already seeing signs of consumer backlash. From social media campaigns like #BuyCanadian to retailers removing U.S. products from shelves, the reaction is real, and it’s already affecting sales.
What’s emerging is a dangerous combination: economic reliance meets political discontent. Allies with significant financial exposure to the U.S. are facing public pressure to act, and that gives them leverage. If that pressure continues, the U.S. could find itself navigating not only a more hostile geopolitical environment but one where its trading partners begin using debt, demand, and public opinion as tools of influence.
The countries that have soured most sharply on the U.S. still buy about half of all American exports and hold three-quarters of foreign-owned Treasuries. The overlap between sentiment and economic leverage is uncomfortably tight.
This isn’t just about reputation—it’s about resilience. And right now, both are under strain.
Real-economy tremors
If you want an example of how perception matters in trade then look no further than the new administration’s policy decisions, particularly around tariffs and political alignment, is reshaping and influencing how countries, businesses and citizens engage with the American economy.
In Europe, consumer and corporate responses are already visible. As an example, Tesla’s deliveries in the EU and UK dropped 50% year-on-year in Q1 2025, despite electric vehicle demand rising by 20%, highlighting how Elon Musk’s perceived closeness to controversial U.S. policies is now directly impacting brand appeal and sales to such an extent that he only recently said that he would be pulling back from DOGE to spend more time at Tesla, the firm that gives him the greater value to his wealth. Yet, his reputation is damaged.
On the industrial side, German and Italian auto suppliers are pausing planned investments in the U.S., citing the unpredictability of tariff regimes as a key reason. This hesitancy among supply-chain partners signals a shift away from the U.S. as a dependable hub for manufacturing and trade.
Meanwhile, the broader economic knock-on effects are surfacing: Germany has cut its 2025 GDP forecast to zero, blaming U.S. policy shocks. As demand weakens in these export-heavy economies, American firms will inevitably feel the impact in lost orders and reduced growth.
Capital-flow channels
The perception of U.S. policy unpredictability is beginning to shape the global flow of investment, and not in Washington’s favour.
Inbound foreign direct investment (FDI) into the U.S. fell sharply from $206 billion in 2022 to $149 billion in 2023, marking a 28% decline. While the U.S. still tops the 2025 Kearney FDI Confidence Index, that ranking is increasingly built on legacy strength, not current sentiment. In fact, respondents now cite ‘policy unpredictability’ as their single biggest concern when considering U.S. investment.
This erosion of confidence is already changing the investment behaviour of America’s closest allies. Large-scale, subsidy-backed projects, especially in semiconductors and clean energy, are still proceeding, buoyed by incentives from the Inflation Reduction Act and CHIPS Act. However, mid-sized European manufacturers and suppliers are taking a step back, with many pressing pause or cancelling expansion plans entirely. These are often the firms that form the backbone of advanced supply chains, and their hesitancy is a warning sign.
As the perception of the U.S. as a stable, rules-based economy continues to shift, businesses and governments abroad are reevaluating their exposure and, in many cases, beginning to diversify. This trend reflects a deeper unease, not just with individual policies, but with a broader sense that the U.S. may no longer be the predictable partner it once was.
Outbound VC and CVC
Recent data from PitchBook shows a noticeable decline in U.S. investor participation in European venture rounds. In Q1 2025, U.S. VCs and corporate VCs were involved in just 47% of European deals, down from 51% in Q4 2024. While this may seem like a modest dip, it marks the sharpest quarterly drop since the pandemic, and it’s gaining attention as more than just a cyclical blip, especially when you look at South East Asia, where between 2021 and 2024 U.S. CVC deal saw a 14 point drop from 35% to 21%.
The shift reflects growing caution from both sides of the Atlantic. On one hand, U.S. investors are becoming more risk-averse, particularly in geopolitically sensitive sectors. On the other hand, European founders are starting to factor in U.S. political volatility when deciding who to raise money from. As Sifted magazine reported, ‘a growing number of European founders are now adding ‘political-risk slides’ to their pitch decks’ and are seeking valuation buffers and contingency clauses when negotiating with American investors.
This change signals a deeper structural shift in founder sentiment and dealmaking dynamics. U.S. capital, once viewed as the gold standard, is now being weighed more critically, not for its size, but for the strategic baggage it might bring. If the trend continues, America’s role in global innovation ecosystems may become increasingly contested, especially if leading Ivy League institutions continue to be challenged by the new administration.
Strategic Communications and Policy Playbook
So what can US companies do to separate themselves from the negative sentiment and perceptions that are establishing themselves in international markets, an issue that affects US brands that secure more of their revenue from trading in markets outside of the US.
Above all, companies and US brands need to be able to localise and become relevant. Signal national and local collaboration in nations in which they have an established presence. Branding, engagement and communications need to be more localised and empathetic. A strategic communications approach needs to be adopted.
Additionally, they need to:
Decouple the brand from the flag: Businesses should highlight local R&D investments, manufacturing sites, and partnerships. Labelling products with regionally resonant tags like ‘Made in Brandenburg’ helps counter consumer boycotts rooted in national identity.
Mitigate tariff optics: Companies can ring-fence a portion of their margin to absorb tariff costs and clearly communicate that decision to customers. This signals empathy and shows a proactive commitment to protecting local buyers, softening reputational blowback.
Prioritise local spokespeople: Using regional general managers, rather than U.S. executives, for media and stakeholder engagement lends authenticity and reduces the risk of being seen as politically charged.
US companies need to be prepared with pre-approved communications. Develop ‘rebuttal kits' with FAQs, social copy, and response content in local languages to address misinformation and pushback swiftly and sensitively.
Ultimately, businesses must be able to leverage coalition advocacy effectively. Collaborating with peer companies and lobbying via trade chambers provides a stronger, unified voice. This collective effort helps neutralise accusations of unilateralism and ensures that businesses are not isolated when policy headwinds hit.
From tech to consumer goods and automotive to finance, these strategies offer a roadmap for U.S. companies to safeguard global reputation, strengthen stakeholder trust, and remain competitive amid growing geopolitical risk.
For investors (VC & CVC)
As anti-American sentiment rises in key innovation hubs, particularly across Europe and Asia, U.S. venture capital (VC) and corporate venture capital (CVC) investors must adapt their strategies to continue securing high-quality deals. Start-up founders in these regions are increasingly cautious, not just about financial terms, but about the political and reputational implications of accepting U.S. capital.
VC and CVC investors need to engage with strategic communicators who can advise them on how best to navigate this growing, difficult geopolitical environment.
Three general top-line options exist. They include:
Co-investing with trusted local funds (co-GP structures) offers a powerful way to build confidence. Local general partners offer cultural fluency, market access, and a layer of reassurance that can help mitigate concerns about regulatory risk or geopolitical blowback. These partnerships also offer visibility into local deal flow that U.S. investors may otherwise miss.
Second, offering valuation buffers or step-in clauses is now a smart move, not a concession. Founders are factoring in the cost of geopolitical uncertainty—tariffs, sanctions, or sudden policy shifts. Step-in clauses or conditional terms that allow founders to unwind or restructure exposure if political tensions escalate demonstrate foresight and trust.
Finally, U.S. investors must proactively structure deals to be compliant with CFIUS (Committee on Foreign Investment in the United States) guidance, especially in sectors like AI, defence tech, or health data. Taking non-controlling stakes, avoiding board seats, and being transparent about governance can reduce friction and open the door to more cross-border opportunities.
Risk, risk, everywhere
Business leaders, investors and their strategic advisers need to keep an eye on the following four clear indicators in the months ahead. Each of these is a forward-looking risk that is tied to the growing policy volatility and anti-American sentiment.
Trade is first. The upcoming USTR tariff-review deadline in July 2025 carries material economic risk. Should the administration reinstate the full suite of tariffs—especially those targeting allies—a 0.3 percentage point reduction in U.S. GDP could follow. This would signal real-world consequences for protectionist rhetoric and generate renewed global backlash.
Treasury markets offer another key signal. Watch the foreign ‘allotment’ share in U.S. long-bond auctions in May and August. A 5% pull-back in foreign participation would be enough to push 10-year Treasury yields up by ~4 basis points, increasing borrowing costs across government, corporate, and consumer credit channels.
Inbound FDI remains a barometer of global confidence. If the BEA’s June release shows new investment falling below $140 billion, it will indicate persistent caution from international firms, especially mid-sized European and Asian manufacturers who are vital to the U.S. supply chain ecosystem and are impacted by the Tariffs placed on them, which US companies will need to pay, or not.
Finally, VC flows offer a pulse on innovation partnerships. If PitchBook’s Q2 data shows U.S. participation in European rounds dropping another 3–4 percentage points, it will mark the start of a structural disengagement in transatlantic capital and collaboration.
These signals aren’t just economic—they’re reputational. Each one tells a story about how global partners perceive U.S. reliability.
Softer power, hard costs
Anti-American sentiment has shifted from a soft-power headache to a balance-sheet issue. It is hitting export orders, delaying incremental capital expenditure and making founders think twice before taking U.S. money. The irony is that the countries most affected, America’s traditional allies, are also the very ones that finance its deficits and host its forward military deployments.
The damage is reversible. Reputation curves have rebounded before, post-Vietnam, post-Iraq. However, history shows that recovery starts only once the economic pain is acknowledged and concrete actions follow. Tariff relief for allies, locally rooted brand narratives, and transparent investment rules are the fastest levers.
For boardrooms and governments, the task is immediate: localise value, communicate empathy, hedge exposures, and keep an exit ramp open for Washington when politics cools.
The alternative is a slow erosion of the United States’ privileged position at the centre of the global trading, funding and innovation system.
