When the Trump post reelection stock market rally collapsed in February, financial commentors proclaimed the end of American Exceptionalism — an end to superior U.S. equities performance that accelerated after the Global Financial Crisis.

During the Bush-Obama years, the U.S. economy grew 1.9% annually — in line with economists’ expectations for sustainable growth without excessive inflation.

In 2016, the federal budget deficit was 3.1% of GDP.

Then President Trump cut taxes and increased defense spending, President Biden spent on infrastructure, semiconductors and clean energy and expanded Medicaid, and the deficit jumped to 6.4% last year.

Those Keynesian stimuluses drove unemployment to about 4% and economic growth averaged 2.5% — a record no other major western industrialized country could rival.

Since 2008, U.S. equities have dominated.

Those recovered well from the GFC, primarily driven by powerhouse technology stocks and most recently by the Magnificent 7 — Alphabet, Amazon, Apple, Meta, Nvidia, Microsoft and Tesla.

U.S. stocks have outperformed their peers abroad by wide margins.

The value of U.S. equities tracked by the MSCI World Index jumped from 47% in 2008 to 72% in June, as foreign pension funds, sovereign wealth funds and ordinary folks poured into American stocks, corporate bonds and government securities.

Trump’s reelection ignited new optimism.

Businesses expected pro-growth tax cuts, deregulation and a tougher posture on trade toward China to unlock continued strong growth.

Breakthroughs in Artificial Intelligence (AI) promised a significant boost to productivity and profits by creating and deploying AI agents.

Instead, Trump is seeking to more fundamentally realign international trade agreements that promote globalization. In turn that impels realigned supply chains for automobiles and other industries.

And DeepSeek and China’s AI agents burst onto the scene, challenging American AI dominance.

After stocks powered to a record high on February 19, those fell into a 10% correction by March 13. The fact that 22 of the last 34 corrections have preceded bear markets was disquieting.

Investors began looking for other places to invest. For example, European equities owing to optimism about the continent’s defense buildup and fixed income investments with interest rates expected to remain high.

The critical question is: If Trump stabilizes his tariffs and accomplishes durable arrangements with North America, Asian and European trading partners, will the tax cuts and additional spending just signed into law lift the economy to new heights and extend American leadership among global equities?

In 2023 and 2024, the Magnificent 7 stocks gained 156% but the overall S&P 500 was up only 58%, because U.S. competitive advantages are increasingly focused in high-tech (including aerospace), finance and petroleum. China is gaining technological parity in a widening array of industries.

Future presidents are not likely to reverse the tariff arrangements that Trump finally establishes — President Biden added to Trump’s first term tariffs.

Going forward, power will likely alternate between similarly progressive and populist politicians, and those will seek to insulate American manufacturing from foreign subsidized competition.

And like Trump, seek better market access abroad for U.S. high-tech, finance and energy.

Returning to 19^th Century protectionism to live in isolated splendor is not an option. It’s economic suicide, and we are not headed there.

Global investors may be overweighted in U.S. equities but investment options among other advanced economies are not overwhelming attractive.

They will continue to come here but not to the point of further significantly increasing the U.S. shares of their portfolios.

From 2020 to 2024, 5 million legal and illegal immigrants were added to the labor force, enabling Biden’s big spending to power above trend growth.

Going forward, curbs on legal immigration, tougher border enforcement, deportations and slower indigenous population growth will constrain U.S. workforce and economic growth.

Effective border enforcement is vital to national security, sovereign and public safety, but we’ll need to accept that economic growth will be somewhat slower with a more limited supply of imported workers. However, the burdens on state and local public education and social services will be eased too.

As with tariffs, I don’t expect future presidents to revert to Biden era open border policies.

All those considerations will limit, not eliminate, the additional investment Trump is attracting to build new factories and create jobs that will enable a larger American manufacturing sector.

If Republicans in Congress or the fear of another stock market route don’t temper more radical impulses among White House trade advisers, voters will.

Midterm elections or special elections to fill vacant GOP seats could flip the House, end the party’s monopoly on power and force a course moderation.

Over the next several years, the economy will grow well but not at the torrid pace of the first Trump and Biden Administrations. U.S. stocks will prosper, but those will be posting larger but not overwhelmingly larger gains than foreign stocks.

America will remain the most attractive large advanced industrialized country for investors.

Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.