IDEAS home Printed from https://ideas.repec.org/a/oup/ecpoli/v35y2020i103p519-559..html

The US–Chinese trade war: an event study of stock-market responses

Author

Listed:
  • Peter H Egger
  • Jiaqing Zhu

Abstract

SUMMARYAt 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 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 United States and China in the relevant time span. This paper proposes such an analysis and finds, very much consistent with the rumours 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’.

Suggested Citation

  • Peter H Egger & Jiaqing Zhu, 2020. "The US–Chinese trade war: an event study of stock-market responses," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 35(103), pages 519-559.
    • Handle: RePEc:oup:ecpoli:v:35:y:2020:i:103:p:519-559.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/epolic/eiaa016
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kazunobu Hayakawa & Sasatra Sudsawasd, 2025. "Trade Effects of the US–China Trade War on a Third Country: Preventing Trade Rerouting From China," The World Economy, Wiley Blackwell, vol. 48(10), pages 2333-2343, October.
    2. Kong, Dongmin & Zhao, Zhao, 2024. "Overseas exposures, global events, and mutual fund performance," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 848-863.
    3. Gu, Minhao & Wang, Hui & Zhang, Yanming & Wang, Ziyue, 2025. "The impact of operational leanness and resilience on managing geopolitical risks: The moderating role of demand uncertainty and betweenness centrality," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 201(C).
    4. Metiu, Norbert, 2021. "Anticipation effects of protectionist U.S. trade policies," Journal of International Economics, Elsevier, vol. 133(C).
    5. Hayakawa,Kazunobu & Keola,Souknilanh, 2025. "Trade Diversion in the US Market during the US–China Trade War: Firm-level Evidence from Thailand," IDE Discussion Papers 971, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    6. Wengerek, Sascha Tobias & Uhde, André & Hippert, Benjamin, 2025. "Share price reactions to tariff imposition announcements during the first Trump administration," Finance Research Letters, Elsevier, vol. 80(C).
    7. Chih‐Hai Yang & Kazunobu Hayakawa, 2023. "The Substitution Effect of US‐China Trade War on Taiwanese Trade," The Developing Economies, Institute of Developing Economies, vol. 61(4), pages 324-341, December.
    8. Xu, Jin & Huang, Shoujun & Shi, Lu & Sharma, Susan Sunila, 2021. "Trade conflicts and energy firms' market values: Evidence from China," Energy Economics, Elsevier, vol. 101(C).
    9. Peter H. Egger & Jie Li & Yu Zhao, 2024. "Chinese regions' participation in global value chains and the associated global transmission of export price and quantity shocks," Review of International Economics, Wiley Blackwell, vol. 32(2), pages 371-393, May.
    10. He, Chuan & Mau, Karsten & Xu, Mingzhi, 2021. "Trade Shocks and Firms Hiring Decisions: Evidence from Vacancy Postings of Chinese Firms in the Trade War," Labour Economics, Elsevier, vol. 71(C).
    11. Sascha Tobias Wengerek, 2020. "Share price reactions to tariff imposition announcements in the Trump era - An event study of the trade conflict," Working Papers Dissertations 59, Paderborn University, Faculty of Business Administration and Economics.
    12. Chen, Yong & Fang, Jing & Liu, Dingming, 2023. "The effects of Trump’s trade war on U.S. financial markets," Journal of International Money and Finance, Elsevier, vol. 134(C).
    13. Li, Yabo & Zhang, Zhen & Teng, Rui & Fan, Shuo, 2025. "Dose tariff exposure stimulate city crimes? Evidence from China-US trade war," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1563-1579.
    14. Bonk, Alica Ida & Larkou, Chloe, 2025. "The macroeconomic impact of trade policy: a new identification approach," Working Paper Series 3102, European Central Bank.
    15. Dhingra, Barkha & Saini, Mohit & Yadav, Mahender & Kumar, Gaurav & Kumar, Pankaj, 2025. "Exploring global financial interdependencies among ASEAN-5, major developed and developing markets," The Journal of Economic Asymmetries, Elsevier, vol. 31(C).
    16. Gu, Xin & Zhang, Weiqiang & Cheng, Sang, 2021. "How do investors in Chinese stock market react to external uncertainty? An event study to the Sino-US disputes," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ecpoli:v:35:y:2020:i:103:p:519-559.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/cebruuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.