The U.S.-Chinese Trade War: An Event Study of Stock-Market Responses

Peter Egger and Jiaqing Zhu

No 14164, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: At the beginning of 2018, President Trump started taking protective tariff measures against products from China in a sequence of events which started a “trade war†between the United States (U.S.) and China. As the value of trade flows affected on both sides rose to a significant amount, this episode will become an interesting research object in the future. A thorough analysis of many outcomes of interest is at this point in time -- and even will be in the next few years -- impossible due to a lack of data which will only become available at a later point. However, as is customary with historical preferential liberalizations in trade agreements and potentially the opposite of it through Brexit, it is possible to gauge consequences of this “trade war†or “trade dispute†when focusing on the stocks of listed companies around related tariff-change announcements or implementations by the U.S. and China in the relevant time span. This paper proposes such an analysis and finds, very much consistent with the rumors from business, that the associated protectionist tariffs appear to have done to a large extent the opposite of what was intended: they hurt domestic firms in targeted and also other, untargeted sectors of an acting country, and they affect third countries and territories which are not even party to the “trade war†or “dispute†.

Keywords: U.s.-china “trade warâ€; Event study; stock market (search for similar items in EconPapers)
JEL-codes: F15 F23 G14 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-fmk and nep-int
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Citations: View citations in EconPapers (4)

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Journal Article: The US–Chinese trade war: an event study of stock-market responses (2020)
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