Semih Uslu
@semihuslu.bsky.social
Associate Professor of Finance at Johns Hopkins Carey
Our findings highlight the limits of attributing all market movements to trade policy, and demonstrate the value of a flexible, event-driven empirical strategy.
Link to the paper: papers.ssrn.com/sol3/papers....
Link to the paper: papers.ssrn.com/sol3/papers....
Market Whiplash After the 2025 Tariff Shock: An Event-Targeted VAR Approach
On 2 April 2025, the U.S. President announced one of the largest tariff packages in history, triggering sharp financial market reactions. Yet within six weeks,
papers.ssrn.com
June 20, 2025 at 12:12 PM
Our findings highlight the limits of attributing all market movements to trade policy, and demonstrate the value of a flexible, event-driven empirical strategy.
Link to the paper: papers.ssrn.com/sol3/papers....
Link to the paper: papers.ssrn.com/sol3/papers....
📊 Main findings from our decomposition:
-Over 60% of SP500 recovery came from tariff news.
-Under 40% reflected other macro surprises.
-In contrast, most dollar and yield moves stem from nontariff shocks tied to April 10–11 stress echoing concerns abt Treasury market functioning (Kashyap-Stein, 25).
-Over 60% of SP500 recovery came from tariff news.
-Under 40% reflected other macro surprises.
-In contrast, most dollar and yield moves stem from nontariff shocks tied to April 10–11 stress echoing concerns abt Treasury market functioning (Kashyap-Stein, 25).
June 20, 2025 at 12:12 PM
📊 Main findings from our decomposition:
-Over 60% of SP500 recovery came from tariff news.
-Under 40% reflected other macro surprises.
-In contrast, most dollar and yield moves stem from nontariff shocks tied to April 10–11 stress echoing concerns abt Treasury market functioning (Kashyap-Stein, 25).
-Over 60% of SP500 recovery came from tariff news.
-Under 40% reflected other macro surprises.
-In contrast, most dollar and yield moves stem from nontariff shocks tied to April 10–11 stress echoing concerns abt Treasury market functioning (Kashyap-Stein, 25).
Our method decomposes the rebound into three components (see selected charts above):
(1) The initial tariff shock,
(2) Subsequent realizations from the same shock distribution (e.g., the 90-day pause),
(3) Other orthogonal shocks (e.g., positive labour/CPI data surprises)
(1) The initial tariff shock,
(2) Subsequent realizations from the same shock distribution (e.g., the 90-day pause),
(3) Other orthogonal shocks (e.g., positive labour/CPI data surprises)
June 20, 2025 at 12:12 PM
Our method decomposes the rebound into three components (see selected charts above):
(1) The initial tariff shock,
(2) Subsequent realizations from the same shock distribution (e.g., the 90-day pause),
(3) Other orthogonal shocks (e.g., positive labour/CPI data surprises)
(1) The initial tariff shock,
(2) Subsequent realizations from the same shock distribution (e.g., the 90-day pause),
(3) Other orthogonal shocks (e.g., positive labour/CPI data surprises)