Sino-US trade conflict and fluctuation of American stock market

Abstract

At the beginning of 2018, President Trump started the US-China trade war to protect the US companies and solve the huge trade deficit by taking tariff measures, then China also imposed tariffs to fight back. The imposed tariff on both sides increased by a significant amount and affects the stock market on both sides. This paper studies behavior of US market indices, DJI, S&P 500, and NASDAQ, in the US-China trade war. Test the stationariness of stock index and rate of return by unit root test, also, apply PACF, ACF, ARMA-GARCH model to three indices to check the effect of US-China war on the stock market. Our results show that the influence of the US-China trade war on the US stock market is insignificant in all three indices, no matter statistical significance or economic significance. Most people are concerned about the impact of the US-China trade war on the Chinese stock market, but the global stock market is more closely related, and this essay analyzes the influence of the trade war on three stock indices, DJI, S&P 500, and NASDAQ.