You're missing the fact that owning US companies doesn't equate with owning USD. It's just that US companies measure in USD.
What happens when the USD goes up? US companies have a hard time exporting. And/or multinationals that report in USD get lower income from their non-US operations.
Just go global, possibly with a little Home Country Bias.
Yes, there are more things at a play, as always.
To narrow the focus. US holder of VTI vs Canadian holder of VTI. The Canadian one gets the benefit here (ignoring eg the American export, applies to both cases) for the mentioned case (bad times, CAD down).
The are 4 cases in general (stock market and economy):
1. US doing good, CA doing good. This is good for everyone.
2. US doing good, CA doing bad. This is a reasonable case. For instance, fossil energy out of favor, or Biden kills the auto sector in CA (BBB). In this scenario, the CAD should be worse than USD. Benefit of the currency EX.
3. US doing bad, CA doing good. This is not a likely scenario since CA relies too much on export to the US. In this case we have a negative EX benefit, but being in CA, life should be easier to survive e.g. good CA job market and social support.
4. US bad, CA bad. No value, zero sum game.
It seems to me that this is quite unique feature between Canada and US. I would not claim that this is much applicable to US vs Europe or Asia. Just Canada is so dependant on USA, maybe would apply to Mexico too. Maybe similar patter is Germany vs its small neighbours (mute since Euro).