Stock Price Effects of U.S. Trade Policy Responses to Japanese Trading Practices in Semi-Conductors

Abstract

Over much of the last decade, the United States and Japan have been embroiled in a trade dispute over access to Japanese markets for semiconductors and downstream products. This study examines stock price reactions for firms affected by a subset of events commencing with the filing of a Section 301 petition by the U.S. Semiconductor Industry Association alleging unfair practices by the Japanese and culminating in the 1986 Trade Agreement. The evidence suggests that U.S. semiconductor consumers as well as producers benefited from these events.