Trump tariff announcement, stock market volatility and openness

The aim of the study is two-fold. First, it analyses the effect of the Trump tariffs, announced on 2 April 2025, on market return volatility. Second, it examines the factors that impact the change in volatility. In particular, the study examines how trade and financial openness, as well as export reliance on the US and Chinese markets, contribute to market volatility. To achieve this objective, daily returns from 52 market indices across 52 countries are analysed. Volatility is computed using both realized volatility and intraday price range volatility. The findings from generalized linear model estimates indicate that financial openness and financial market development significantly increase market volatility, whereas trade openness and the degree of reliance on exports to the US and China are not significant.