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America first, markets last? Stock market effects of 2025 U.S. tariffs in middle-income countries

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  • Biktimirov, Ernest N.
  • Afego, Pyemo N.

Abstract

We examine stock market reactions in middle-income countries to the April 2025 U.S. tariff shock. We find significant short-term declines across all regions, with the steepest losses accumulated by the third trading day. Most markets rebounded within ten days, except East Asia & Pacific. Abnormal returns show no evidence of relationship with tariff magnitude, per capita GDP, or bilateral trade balance with the United States. Only economic complexity suggests a significant link, with more complex economies experiencing comparatively smaller cumulative losses at longer horizons. Overall, results highlight heterogeneous spillovers of U.S. protectionism across middle-income equity markets.

Suggested Citation

  • Biktimirov, Ernest N. & Afego, Pyemo N., 2026. "America first, markets last? Stock market effects of 2025 U.S. tariffs in middle-income countries," Finance Research Letters, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:finlet:v:87:y:2026:i:c:s1544612325021956
    DOI: 10.1016/j.frl.2025.108942
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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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