The effects of trade wars between us and china on the financial performances of the companies

Abstract

Tariffs that the USA has implemented in some products toward China have recently caused trade wars. Trump, who was elected US president in 2016, triggered trade wars due to his protectionist attitude towards China. That’s why trade wars officially started in 2018. This attitude of Trump influenced also the stock exchanges of the two countries as well as the trade relations of the two major economies. While our study provides information about the US-China trade wars, it empirically tested the relationship of this war with the stock markets of both countries. The relationship between exports made mutually by the USA and China and the stock exchange is analyzed using the Engle-Granger cointegration method. In this study, which was used monthly data for the period 2016–2019, a long-term relationship between exports and stock market is detected for both countries. Considering the global economy within the framework of this relationship, it is seen important that the two countries withdraw commercial wars and go for an agreement.