Graduation Year


Date of Submission


Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Ricardo Fernholz

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As China and the U.S. have escalated trade tensions since January 2018, the world’s two biggest economies have imposed large scale import tariffs on each other at an unprecedented scale. Although the “Phase One” trade deal offers a truce and de-escalates tensions, the trade war has resulted in lower economic output and business confidence for not only the U.S. and Chinese markets, but also the global economy, and its negative consequences will continue to linger. This study explores the trade war’s impact on various sectors of financial markets, including the U.S. equity, China equity, the soybean commodity and rare mineral ETF markets by regressing daily returns on trade war-related news announcements and market benchmarks. The findings suggest that positive news affects the Shanghai SSE Composite Index and REMX ETF positively. The study further shows positive announcements that signal potential mitigation or resolutions of tension instill investors with optimism and stimulate the market to rise the most. Meanwhile, some negative announcements generate opposite reactions from the two countries’ equity markets. When one country imposes increased tariffs on the other, investors from that country adjust their expectations to reflect their government’s propensity to increase tariffs to the point of the other country’s concession; as a result, the equity market of the country imposing the tariff rises while that of the other country falls.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.