Disentangling trade policy uncertainty and equity market performance

Cristiana Gigina

Despite headlines dominated by threats and implementations of US and retaliatory tariffs since President Trump’s inauguration, it was not until his “Liberation Day” announcement on 2 April that equity prices fell significantly. This column asks why equity prices reacted so slowly to the elevated trade policy uncertainty that followed immediately after Trump’s election. Historical evidence shows that such a delayed reaction is not unusual, because the overall economic consequences of trade