Global material sector reactions to Trump's tariff postponement: multi-country evidence from an event study

Abstract:
Purpose
This study aims to investigate the market reactions of material firms to Trump's tariff postponement announcement on April 9, 2025, emphasizing variations across market types, industries, firm size, growth and tariff levels.

Design/methodology/approach
Applying an event study methodology, the research measures market reactions using Cumulative Abnormal Returns (CAR) for a sample of 1,174 firms from 47 countries. The analysis is conducted across market types, industries and firm characteristics, with cross-sectional regressions employed to assess the influence of tariff exposure on market behavior.

Findings
The findings reveal heterogeneous market reactions to the US tariff postponement announcement, with negative abnormal returns before the event turning significantly positive afterward across markets, industries and firm characteristics. The strongest post-event gains are concentrated in developed markets and highly trade-exposed industries such as Metals and Mining, Chemicals and Containers and Packaging, as well as among small-cap and high-growth firms. Cross-sectional results show that higher tariff exposure amplifies pre-event losses but leads to stronger positive cumulative abnormal returns after the announcement, reflecting investor optimism toward policy relief.

Originality/value
This study is the first to examine tariff postponements, rather than direct tariff impositions, across all US trade partners, offering new insights into how reduced policy uncertainty shapes global market sentiment. It also introduces the Material sector as a novel context, demonstrating how tariff shocks and their deferrals reverberate through industries that are central to global supply chains yet previously overlooked in the literature.