The impact of Trump's tariff announcements on the world financial markets

• Autor(a) principal: Ramalho, Miguel Filipe
• Data de Publicação: 2020
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/21791
• topic: Trade wars; Tariffs; Event study; Financial stock indices; Market reaction; Guerras comerciais; Tarifas; Estudo de eventos; Reações de mercados; Índices de ações financeiras

Early in 2017, Donald Trump has one of the most unexpected elections for United States (US) president in history. Since November 2017, President Trump has ruthlessly targeted the economic relationship between the European Union (EU) and China. Consequently, during 2018, 2019 and early 2020, President Trump conducted a series of announcements threatening the EU and China with tariffs and protectionism measures. Following, many scholars studied the macroeconomic impact. However, a clear view of the impact on the main world financial stock markets was lacking. On this study, we measure the total impact caused by all tariff announcements per trade war in the main world financial markets. Using an event study methodology, and assuming the implied overall Cumulative Abnormal Return within the Cumulative Average Abnormal Return, we estimate the total impact in five different scopes: World, North America, South America, Europe and Asia. Results revealed that on both trade wars, as expected, the Asian, European, and North American Indices present significant results for almost all analysed indices. However, on the South American scope, only one index shows statistically significant results.