Honors Theses and Capstones

Date of Award

Spring 2019

Project Type

Senior Honors Thesis

College or School




Program or Major

Business Administration/Options in Finance and International Business

Degree Name

Bachelor of Science

First Advisor

Steve Ciccone


This event study looks at the market reaction to the global trade tensions that began in the first half of 2018. The events regarding new developments around the use of tariffs are organized in chronological order, and the stocks of certain impacted companies are looked at to see if they were positively or negatively affected by the news. To summarize the market reaction to tariffs, I use a zero cost portfolio consisting of long positions in those expected to be positively impacted and short positions in those expected to be negatively impacted. If this portfolio sees a larger return on the day of a given event, it is considered that the market reacted more severely to the news. For a further breakdown, the events are grouped together by the countries involved with the event and by the type of event. I look at tariffs imposed by the United States, the European Union, Canada, Mexico, and China. The event types include announcements of plans for new tariffs, announcements of exemptions from tariffs, and the formal implementation of tariffs. I find that the most significant market reaction took place in the early months of the trade war, which is evident in that there appears to be the widest spread in returns between those positively and those negatively impacted during this time. As the trade war dragged on in 2018, tariffs were imposed on a broader range of products, and the market reaction became less severe. This information could be useful to traders and asset managers going forward as it appears much of the impact of these tariffs is already reflected in stock prices.