Government support and China’s stock market reactions to Trump’s tariff policy

We study China’s stock market reactions to Trump’s tariff policy in April 2025. Using an event study approach, we find that the tariff policy announcement led to negative stock market reactions. However, state-owned enterprises (SOEs) experienced smaller declines in stock prices than non-SOEs. Among non-SOEs with overseas revenue, those receiving more government subsidies or exhibiting higher corruption were less affected, suggesting that firms with a higher likelihood of government support were more resilient. Our findings highlight the role of government support in mitigating the adverse effects of tariff shocks.