Geopolitical Risk and Equity Markets: Supply-Chain Exposure and Stock-Market Reactions to the 2019 US–China Tariffs

Abstract Geopolitical developments, including trade restrictions and tariffs, can disrupt international supply chains and influence financial markets. However, companies may experience different stock-market reactions depending on their exposure to affected countries and suppliers. This study investigates the extent to which supply-chain exposure predicts stock-market reactions among publicly listed textile and apparel companies following the 2019 increase in United States tariffs on Chinese imports. Historical share-price data, market-index returns, and corporate disclosures will be collected to measure companies' financial performance and dependence on affected supply chains. An event-study methodology will be used to calculate abnormal returns and cumulative abnormal returns (CAR) around the selected event. A cross-sectional regression will then examine the relationship between supply-chain exposure and CAR, controlling for relevant company characteristics where data permit. The study aims to assess whether differences in supply-chain exposure help explain variations in stock-market reactions to geopolitical trade actions. Its findings may contribute to understanding how international supply-chain structures influence firms' financial vulnerability. However, the analysis will recognise limitations arising from incomplete corporate disclosures, anticipated policy changes, and other market developments occurring around the event.