Last week, the American stock market took a hit. The market was reacting to the retaliatory 34 per cent tariff China slammed on US goods in response to the tariff the American president announced on April 3, which he described as Liberation Day. China described the actions of President Donald Trump as “bullying” and a breach of international trade laws. Consequently, in just two days (Thursday and Friday), US stocks lost a whopping $6.6tn, described as the largest two-day loss by shareholders in American stock market history. Since January 17, when Trump was inaugurated for his second term, about $11.1tn has been lost in the stock market. The story was not much different in markets across Europe and Asia, and Oceania. On Friday, the FTSE 100 of the UK fell almost 5 per cent, its lowest fall in five years. In Germany, France, Japan, South Korea, Australia, etc., it was all tales of woes. There is apprehension in North America, Europe, Asia, Oceania and Africa over the tariffs Trump is imposing on different countries. Why are capital markets reacting this way? The reason is simple. The strongest feature of the developed economies of the world is stability. This stability gives the people and investors a sense of certainty, which increases trust in the system. Without being prophets, people could look into the future and say with certainty that some things would remain the same. People could say with certainty that by working for 30 years, they could save a certain amount of money in their personal savings and the pension scheme. It does not matter who the president, prime minister, or chancellor is. The basic business and political policies of the country remain constant. If a drastic policy is to be introduced, it usually goes through the legislature, which takes weeks or months to decide after it has been debated. To get the endorsement of most of the legislators, the bill will usually specify that the policy will be introduced in phases. If it affects the economy or some sections of the population, measures are put in place to cushion the effects of the policy. That is why developed countries do not joke with long-term plans. If a plan is for 10 years, it is specified from the start. It runs for 10 years, no matter which person or party is in power. Agreements and alliances entered into on behalf of the country are honoured by whoever is in power. In developed economies, things that are considered minor in developing countries are taken seriously. For example, in developing economies, people can pull down their houses and build new ones, sometimes without the approval of any agency. It is their house, so they can choose when to pull it down. But that does not happen in developed economies. To make some repairs in their building, they need government approval. To even undertake something as simple as cutting down the tree one planted on one’s premises, one cannot do that without approval from the government. But with the abrupt actions Trump has been taking in the past three months, that element of stability and certainty has evaporated in developed economies. People wake up every day wondering what next action Trump will take that will affect their businesses, investments and plans. For over 100 years, the USA and Europe have worked together as allies. They fought together in World War I and World War II. Similarly, Canada and the USA have been allies for over a century. They share what is known as “the world’s longest undefended border”, a land and water boundary, which stretches almost 9,000 kilometres. Each year, millions of Americans and Canadians cross over this border in safety. Each of these two North American countries is the other’s largest trading partner. Both countries have the biggest bilateral trading relationship in the world, with an integrated supply chain that competes with the rest of the world. Suddenly, the second coming of Trump changed everything. Canada and European countries lost their status as American allies. They became strangers to the US. While Canada and Greenland have received subtle and direct annexation threats, Europe has received verbal lashing from Trump and Vice President JD Vance. When Trump threatened to slam tariffs on Canada and Europe, many initially thought it was a joke. But Trump was not joking. But if the tariffs had come once, it would have been easier to manage. The challenge is that they are coming in batches. Since January, tariffs have been in the news from the United States almost every day. There has been an air of conflict between the US and the rest of the world. Nobody knows what next Trump plans to do. The argument given by Trump that the tariff would cause short-term pain in the US but long-term gain in the long term has been hard to prove with facts. Most financial analyses have shown that the US stands to lose more now and in the future from this unnecessary confrontation. The US economy was never at a dead end that necessitated some drastic measures to save it. It was not in a recession, nor was it heading for a recession. Currently, there are projections that the impact of the tariff may plunge the US and other countries into recession. Already, jobs are being lost. Companies, especially in the auto industry, are sacking their workers. Small businesses, especially those operating close to the US border with Canada, are shutting down because of the sudden change. One striking difference between developed economies and developing economies is that while developed economies have stability and certainty, developing economies have instability and uncertainty. You can never say with certainty what will happen in a developing economy. A coup may occur anytime. An uprising may erupt. An armed struggle may ensue. But even when there is no form of insurrection, the incumbent leader may have a brainwave and change a policy that has been running for years. It may be a fiscal policy or political policy that will negatively affect the huge investments of individuals and organisations. Because political leaders are usually more powerful than institutions in developing economies, a political leader can kick an organisation out without any recourse to the legislature or judiciary. Even when the legislature or judiciary is required to approve such an action, the approval can be secured in one day. The richest person in the country can suddenly tumble down from the financial peak just by falling out of favour with the leader. The national anthem can be changed within a month. The currency can be changed within a month. The name of the country can be changed overnight just by a proclamation. The capital of the country can be changed. The policy on local content can be changed arbitrarily. The percentage of foreign ownership of a company can be changed overnight. That is why many investors are wary of investing in developing countries. Those who do so know that it is a high-risk venture. But the advantage of it is that it can also give high returns on investment. Those who are not risk-averse invest in such economies and sometimes quickly recoup their investments quickly and exit. It is this uncertainty that creates anxiety, which Trump has unleashed on the US and other developed countries. That is why most countries of the world are currently not at ease. If Trump continues with his actions that create anxiety, the economic harm will continue. Even developing countries like Nigeria will be affected. Who can tell Trump to stop? The challenge is that Trump does not listen to anybody. X: @BrandAzuka