Why did many Americans wish to insulate themselves from Europe in the 1920s and 30s?

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There had been anti-foreign sentiment in the USA long before the decades that you mentioned, but one of the key factors that were new during the 20s and 30s was the threat of communism

Since the success of the bolsheviks in the Russian revolution the US business community was very afraid of the spread of the radical socialist ideas of Marx and Engels, since they of course had the most to lose if a socialist system were to be implemented in the US.  Previous waves of immigrants from northern and western Europe had already assimilated to a large degree (the good ol melting pot, erasing racial distinctions between white Europeans) and the new waves of immigrants from southern and eastern Europe were painted by US government and business interests as dangerous and communistic.

The movement for the rights of laborers had been gaining steam during the progressive era of the first decades of the 1900s and the new immigration quotas of 1921 and 1924 can be seen as a backlash against this momentum because of the fact that the socialist leaning immigrants from eastern and southern Europe tended to support labor unions.

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Many Americans wanted to insulate themselves from Europe during this time period because they did not want to be dragged into another war like World War I.  For this reason, they did things like passing the Neutrality Acts of the 1930s.

Many Americans felt that World War I had not been any of the US's business.  They felt that the US got pulled into that war because it had too many ties (particularly economic ones) to European countries.  Americans wanted to remain isolated from Europe so that there would be less chance of getting entangled in another European war.

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