Lee Schafer: With Trump as president, it's difficult for businesses to feel at ease

The election of Donald Trump apparently means we should count on a lot more volatility and more uncertainty, too.

Those words were sprinkled throughout financial commentary that appeared just after the election. A firm called Capital Economics, in language that seemed fairly typical, noted that Trump "has repeatedly proven to be a volatile character with a very thin skin. In addition, neither Trump nor many of his inner circle have any experience in government. Those factors suggest to us that uncertainty and market volatility will remain elevated for months, if not years."

That isn't the way the stock market seemed to react the day after the election, of course, with the Dow Jones average surging more than 250 points. Stock investors apparently concluded, at least through one trading session, that Trump's ideas about boosting infrastructure spending and cutting taxes could mean faster economic growth. This same message, on the other hand, spooked the bond market.

Stocks up (today), bonds down. That's volatility. It doesn't cause much sleeplessness here; what does is risk, and it's not the same thing. Unfortunately, sometimes even experienced business writers can't seem to keep from confusing the two.

Volatility is a roller-coaster ride up and down. Risk means the chance of permanently losing your money. Taking a risk that doesn't work out is when one of those roller-coaster cars leaves the tracks and ends up going through the roof of the food truck parked below.

What a lot of these financial analysts and economists probably meant to say is that with a Trump administration about to start running things in Washington, the risks for a lot of businesses have increased.

They have certainly gone up for the owners and managers of businesses with operations, customers or even suppliers outside the United States. In these days, that can mean manufacturers not much bigger than a mom-and-pop operation.

It's no surprise that Trump's blueprint for the first 100 days in office includes renegotiating or pulling out of the North American Free Trade Agreement, quitting the Trans-Pacific Partnership and labeling China a currency manipulator. These are some of the specific measures apparently designed to recover, through a tougher stand on trade, some of the jobs making things that now get made by workers in China and other places.

Yet it's also true that I've yet to read a plausible explanation about how those manufacturing jobs come back no matter what trade policy levers the administration throws. A great example of the challenge comes from the results Wal-Mart has gotten since it volunteered in 2013 to help boost domestic manufacturing by spending an extra $250 billion over 10 years on products made at home.

The maker of a plastic garden owl accepted Wal-Mart's offer to buy a lot more if the owls were built here, an example described by Bloomberg. The company had several dozen people hand-painting and assembling them in China. When production geared up here, its line was so highly automated just two new American jobs were created.

Wal-Mart hoped this program would create 250,000 American jobs. As of last summer, it's created just 7,000.

But if Trump still wants to pursue that elusive goal of returning manufacturing jobs by putting up greater trade barriers, business managers looking ahead at where to invest need to bake some of that additional risk into their plans.

So halfway into Cargill's multiyear plan a new U.S. president gets elected who wants to redo, if not kill, the basic trade agreements in the region, potentially disrupting the flow of agricultural products and food through long and well-established supply chains. So what does Cargill now spend of what's left of the plan's $170 million?

Well, maybe nothing. In business there's always risk, of course, but the threat of the Trump administration tossing sand into the gearbox of trade with Mexico really does create the possibility of more ways to lose money in Mexico. That means Cargill has to raise the return expectations before it green lights investing any more capital, to compensate for the additional risk.

Just making up numbers here, but if a project looks like it could generate a 12-percent return, last month that may have been just fine. Now that the risk is higher, Cargill is going to have to earn a lot more on the capital invested to compensate for it. Any project at a 12-percent expected return now won't get built.

It's far too soon to say for sure that the Trump administration will go ahead with additional barriers to trade, of course, and that's one reason financial writers are talking about uncertainty nearly as much as they are about volatility.

Perhaps uncertainty is just another way of saying that the risks have increased, yet it's another word that probably should be kept out of a financial analysis. It's only stating the obvious. After all, when have we ever been absolutely certain about what's going to happen next month or next year?

We will find out soon if that's who we will have in Washington next January.