The Impact of Tariffs on the Stock Market and the Economy: A Study of the US-China Trade War and its Impact on East Asian and Vietnamese Stock Market

Objectives The event study on the US – China trade war aims to examine how and why barriers to international trade affect the stock market through the analysis of secondary and quantitative data. Firstly, the study aims to understand theoretical reasons behind disruptions caused by trade restrictions on international trade and the effect on the economies of countries involved and, subsequently, the stock market. From then, the next aim is to know why non-directly involved parties are affected by the trade war. Most importantly, the study will evaluate the scale of impact the trade war caused on non-directly involved nations’ stock markets. Summary The event study would use the combination of secondary data and quantitative data to examine the extent to which Japan, South Korea, Taiwan, Vietnam, and ASEAN countries were affected by the trade war. Moreover, the study would provide a discussion of existing literature to investigate the reason why a trade war between two nations can have a considerable impact on other nations. The research primarily focuses on the impact on the stock market, but other metrics such as the trade volumes, i.e., export figures, welfare (well-being of households), and gross domestic product (GDP) are also considered. Conclusions Overall, quantitative data suggests that the trade war has a negative impact on neighboring countries. And from analysis, the rationale behind this phenomenon is that companies and economies in the world have a high degree of reliance on each other. Therefore, as the US imposed tariffs on China and impacted companies and economies’ ability to create revenue, the stock market reflected those impacts changed accordingly