International Economic Law and Policy Blog

Trade Complaints and the Stock Market

Apparently, the mere threat of a trade complaint is enough to affect a company's share price.  Reuters reports:

Shares in Elpida Memory Inc (6665.T) hit a two-month low on Thursday on fears stoked by a report that the U.S. would bring up government subsidies received by Japan's biggest PC chip maker at the World Trade Organisation.

Shares in Elpida -- Japan's sole maker of dynamic random access memory (DRAM) -- tumbled 8.2 percent to 1,080 yen after falling as much as 14 percent, against a 1.4 percent fall in the Nikkei average.

I'm so intrigued by the relationship of trade disputes and the stock market that I created a category for this topic: http://worldtradelaw.typepad.com/ielpblog/trade-and-the-stock-market/  I am convinced I've done many past blog posts on this, but I can only find one other so far.

The Tires Tariffs: The Impact of Trade Policy on Stock Market Prices

Because of the Chinese tire tariffs, the share price of U.S. producers is up:

Goodyear Tire & Rubber Co. and Cooper Tire & Rubber Co., the largest U.S. tiremakers, rose the most since at least July in New York trading after President Barack Obama placed tariffs on tires from China.

While the share price of producers in China is down:

Hankook Tire Co., the largest overseas tiremaker in China, fell the most in almost eight months in Seoul trading after the U.S. slapped a 35 percent tariff on Chinese-made tires.

These results are not surprising, but nevertheless provide a good illustration of how trade policy can affect the real world (well, the stock market, anyway).

ADDED:

As for the real, real world, Reuters reports:

A developing U.S.-China trade dispute will drive tire prices higher for American consumers ...