Abstract
The trade war between China and the United States has had a significant influence on China's economy, as seen by stock market volatility. The paper uses the ARMA-GARCH model, by selecting the six time-points as the external variables, to analyze the Shanghai and Shenzhen indices in returns and volatility to see whether China can get rid of the negative impact on its economy. The empirical research shows that the impact of the US increased tariffs on China's stock market will be short-term and China's financial market remains resilient. This paper gives predictions about the stock market and reasonable evidence for the conclusion by constructing financial models. It also provides suggestions for investors about how to adjust their investment strategies when major external risks occur.
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