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Donald Trump may be experiencing only mixed results when it comes to making America great again, but he is encountering total success when it comes to making the rest of the world poorer.

At market close on Friday, the only major national stock market indexes in the world to be showing gains on the year to date were U.S. stalwarts such as the Dow Jones industrial average (up 4.8 per cent) and the S&P 500 (a 7.4-per-cent winner). Every other widely followed gauge of stock market performance around the world has lost ground this year, when performance is measured in U.S. dollars.

In Canada, the S&P/TSX Composite has sunk 5.3 per cent since January in greenback terms. In Europe, France’s CAC 40 has swooned 4.8 per cent, Germany’s DAX has lost 10.8 per cent and Britain’s FTSE 100 has surrendered 9.4 per cent. Meanwhile in Asia, Japan’s Nikkei index has fallen 0.5 per cent while China’s CSI 300 is off 22.7 per cent.

If you were viewing the world purely through a stock market lens, you might be tempted to think that the United States had emerged as the sole island of prosperity. But the underlying story is a bit more complicated than that.

One factor is currencies. The U.S. dollar has risen in recent months, meaning that U.S. market gains look larger than foreign ones when everyone’s results are measured in greenbacks. View markets through the lens of local currencies and the non-U.S. results appear somewhat better. In Canada, for instance, the S&P/TSX’s losses shrink to only 0.7 per cent since January when measured in loonies.

Beyond currencies, however, the stark contrast between strong U.S. stocks and their weak foreign counterparts serves to demonstrate how narrowly focused international investors have become. They’ve chosen to bet on U.S. stocks and, even more so, on a small subset of the U.S. market. The FAANGs (Facebook Inc., Apple Inc., Amazon.com Inc., Netflix Inc. and Google’s parent, Alphabet Inc.) have driven the market for years, and with the exception of Facebook, their share prices have continued to soar this year by double-digit percentages.

It’s anyone’s guess how long this can last, but a reversal seems in order. Single industries, even technology, don’t usually dominate markets for more than a handful of years.

What makes the current situation even more precarious is that investors’ fascination with U.S. stocks has much to do with the tax cuts engineered by Congress last year and the surge of government spending that has followed. U.S. corporate profits have surged as a result. But when the effects of those tax cuts and spending begin to fade, probably by the second half of next year, investors may suddenly see the appeal of putting their money to work elsewhere.

The wild card, of course, is trade. Mr. Trump’s willingness to tear up trade deals and impose tariffs has encouraged global investors to seek haven in the United States. This is good for U.S. stocks in the short run, but the long-run effects may not be so pleasant.

By scaring investors out of foreign markets and encouraging them to pour money into U.S. assets, Mr. Trump’s policies drive up the value of the U.S. dollar. That makes U.S. exports more expensive and, everything being equal, makes the country’s trade deficit worse – exactly the opposite effect the White House would like to see. When investors realize this, the relative strength of U.S. stocks may fade.

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