America first, markets last? Stock market effects of 2025 U.S. tariffs in middle-income countries

• U.S. tariffs in April 2025 caused sharp equity declines in middle-income countries • Losses peaked by day three; most markets rebounded within ten days • East Asia & Pacific faced the most persistent and severe negative returns • No evidence links abnormal declines to tariff size, GDP, or trade balance • Economic complexity linked to smaller cumulative losses at longer horizons We examine stock market reactions in middle-income countries to the April 2025 U.S. tariff shock. We find significant short-term declines across all regions, with the steepest losses accumulated by the third trading day. Most markets rebounded within ten days, except East Asia & Pacific. Abnormal returns show no evidence of relationship with tariff magnitude, per capita GDP, or bilateral trade balance with the United States. Only economic complexity suggests a significant link, with more complex economies experiencing comparatively smaller cumulative losses at longer horizons. Overall, results highlight heterogeneous spillovers of U.S. protectionism across middle-income equity markets.