In summary, the study reveals that U.S.-China trade war tariffs profoundly impacted the U.S. economy, with stock market reactions serving as a barometer for wider economic health. The significant declines in stock returns following tariff announcements underscore the immediate pessimism surrounding firm profitability and heightened uncertainty. Furthermore, while the overall welfare effect of these tariffs stands at -3 percent, it contrasts sharply with the drastic -11.5 percent drop in stock values, suggesting that existing trade models may miss critical variables affecting economic dynamics.
Assessing the Ripple Effects of Tariffs: The U.S.-China Trade War’s Economic Impact
