Import Exposure and the April 2025 Reciprocal-Tariff Shock: A Paired Event Study of the “Liberation Day” Crash and the April 9 Pause

Abstract

On April 2, 2025, the United States announced large new “reciprocal” tariffs, and the stock market fell about 10.7% over the next two trading days. On April 9 the government paused most of the tariffs for 90 days, and the market rebounded 9.7% in a single day. Because these events created opposite movements, they constitute a natural experiment: If tariffs negatively impact companies that rely on imported inputs, those firms should fall more on the shock and rebound more on the pause. To test this, we studied 4,275 U.S. common stocks. We measured each firm’s abnormal return (its move after removing the market’s move) over the shock (April 3-4) and the pause (April 9) and compared it to how import-dependent its industry is, using an industry-level measure from the BEA Summary Import Matrix. After taking into account firm size and market beta, we found that more import-dependent firms did worse on the shock and better during the pause: a one-standard-deviation rise in import intensity was associated with a 0.73 percentage-point lower stock price return during the shock and a 0.60 percentage-point higher return on the pause. Among non-microcap firms the effect was more symmetric (−0.77 and +0.77 points), and the two moves roughly cancelled out over the round-trip. But because this measure is the same for every firm in an industry, it cannot distinguish which firms actually import. To remedy this, we are reviewing 10-K filings to record each firm's level of import reliance, source countries (e.g., China vs. Vietnam), and whether it imports finished goods that the industry measure misses, or just inputs. This firm-level data should improve the findings.