Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Goods Tariff vs Digital Services Tax: Transatlantic Financial Market Reactions

Goods Tariff vs Digital Services Tax: Transatlantic Financial Market Reactions During the Trump administration period, a new wave of business con- flicts broke out and escalated between the US and a wide variety of other economies. I employ event-study methodologies to examine the abnormal return patterns in both equity and currency markets, surrounding a series of recent announcements asso- ciated with the EU-US economic conflict escalations and occasional reconciliations. Such investigated announcement events focus not only on transatlantic tariff impositions and retaliations upon imported goods, but also on the digital services tax (DST) legislations developed by the EU against international (e.g., US) digital ser- vices business giants. I find some evidence for these two comparable economic powers: a) The announcements of US tariff impositions and EU tariff counter- measures caused some resembling price reactions (in terms of signs and significance levels) on the broad-based stock markets of both sides, suggesting neither side was able to gain upon the counterpart’s wealth loss; b) The EU measures of DST legislation also carried some significant valuation impact on EU and/or US broad stock indices; c) Compared with American and European equity markets, the Euro-to-USD currency spot seemed to be even more responsive to transatlantic economic conflict events. I finally discuss about some implications of such findings. JEL codes: F13; G14; G15 Keywords: trade war; tariff; digital services tax; Trump administration; abnormal return http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economics, Management, and Financial Markets Addleton Academic Publishers

Goods Tariff vs Digital Services Tax: Transatlantic Financial Market Reactions

Economics, Management, and Financial Markets , Volume 17 (1): 22 – Jan 1, 2022

Loading next page...
 
/lp/addleton-academic-publishers/goods-tariff-vs-digital-services-tax-transatlantic-financial-market-9OEpOWNSfC
Publisher
Addleton Academic Publishers
Copyright
© 2009 Addleton Academic Publishers
ISSN
1842-3191
eISSN
1938-212X
Publisher site
See Article on Publisher Site

Abstract

During the Trump administration period, a new wave of business con- flicts broke out and escalated between the US and a wide variety of other economies. I employ event-study methodologies to examine the abnormal return patterns in both equity and currency markets, surrounding a series of recent announcements asso- ciated with the EU-US economic conflict escalations and occasional reconciliations. Such investigated announcement events focus not only on transatlantic tariff impositions and retaliations upon imported goods, but also on the digital services tax (DST) legislations developed by the EU against international (e.g., US) digital ser- vices business giants. I find some evidence for these two comparable economic powers: a) The announcements of US tariff impositions and EU tariff counter- measures caused some resembling price reactions (in terms of signs and significance levels) on the broad-based stock markets of both sides, suggesting neither side was able to gain upon the counterpart’s wealth loss; b) The EU measures of DST legislation also carried some significant valuation impact on EU and/or US broad stock indices; c) Compared with American and European equity markets, the Euro-to-USD currency spot seemed to be even more responsive to transatlantic economic conflict events. I finally discuss about some implications of such findings. JEL codes: F13; G14; G15 Keywords: trade war; tariff; digital services tax; Trump administration; abnormal return

Journal

Economics, Management, and Financial MarketsAddleton Academic Publishers

Published: Jan 1, 2022

There are no references for this article.