Prediction: Trump's New Tariffs Won't Stand Up in Court. Consider Buying These 2 International ETFs.

In July, President Donald Trump announced a new round of global tariffs on 60 countries, but he's already facing a new legal battle. At least 25 states have sued the Trump administration to block the new tariffs. This state-level legal action follows a separate lawsuit filed by the Liberty Justice Center, a legal nonprofit.

Just like the previous batch of Trump tariffs that were overturned by the Supreme Court, it seems like a safe bet that this new round of tariffs will eventually be struck down by the courts. In its February ruling, the Supreme Court effectively said that the president doesn't have constitutional authority to personally impose sweeping tariffs for any reason of his choosing -- Congress is supposed to be involved with creating new taxes.

Even though Trump says "forced labor" in other countries is the rationale for the new tariffs, the administration doesn't have a strong track record of showing evidence for such claims.

The stock market has taken the new Trump tariffs in stride; unlike the "Liberation Day" tariffs in April 2025, there was no major sell-off. The S&P 500 index is up about 5% since the new tariffs were announced on July 23. That's a sign that many investors are looking past these tariffs and investing in the future of the global economy.

If you want to keep investing in a lower-tariff future of world trade and global economic growth, here are two international stock exchange-traded funds (ETFs) that can fit that strategy.

Image source: Getty Images.

Vanguard FTSE All-World ex-US ETF (VEU): 3,858 stocks, 3 years of 17.3% annualized returns

The Vanguard FTSE All-World ex-US ETF (NYSEMKT: VEU) offers exposure to a broadly diversified portfolio of 3,858 international stocks from developed markets and emerging markets. The "ex-US" in its name means that this fund excludes U.S. stocks -- it only invests outside the U.S. market.

The fund's top 10 stock holdings include fast-growing semiconductor stocks in Asia and the Netherlands, as well as more value-oriented stocks such as international banks and pharmaceutical companies. In the past year, this global ETF has delivered an impressive total return (by net asset value) of about 28.5% and an annualized return of about 17.3% over the past three years.

But the rest of the world's stocks don't always beat the U.S. Over the longer term, this fund's returns have been less stellar. Since the ETF's inception in March 2007, it's delivered annualized returns (by net asset value) of 5.56%. That's a significant underperformance relative to the S&P 500's long-term average return of about 10% per year.

What if you could buy global stocks while keeping some money invested in America? The next ETF can do that.

Vanguard Total World Stock ETF (VT): 10,048 stocks, 3 years of 18% annualized returns

It sounds outlandish, but it's true: You can buy roughly "all the stocks in the world" for one low expense ratio (0.06%) with the Vanguard Total World Stock ETF (NYSEMKT: VT). If you want international exposure without abandoning the U.S. market entirely, this fund can provide both.

The fund's portfolio of 10,048 stocks consists of approximately 62% American stocks and 38% from the rest of the world. Top countries outside the U.S. that are represented in this ETF include Japan (5.9% of the fund), Taiwan (3.5%), the United Kingdom (3.1%), Canada (2.9%) and South Korea (2.8%).

In the past year, this fund has delivered a total return (by net asset value) of about 22.3% and annualized returns of about 18% over the past three years.

Over the longer term, since its inception in June 2008, the Vanguard Total World Stock ETF has delivered average annual returns of about 8.8%. That's slightly lower than the long-term average return of a typical S&P 500 ETF, but better than that of the Vanguard FTSE All-World ex-US ETF.

Why buy VT vs. VEU

I don't own either of these funds, but if I had to choose one, I would go with the Vanguard Total World Stock ETF. It offers a broader range of stocks. More than 10,000 stocks in one ETF is a level of diversification that's tough to beat. Many American investors might prefer to maintain a solid allocation to U.S. stocks in their portfolios, alongside international stocks.

No matter what happens next with Trump's new tariffs, buying a diversified portfolio of international stocks is often a good move for long-term investors.

Ben Gran has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard International Equity Index Funds-Vanguard Ftse All-World ex-US ETF. The Motley Fool has a disclosure policy.