On April 2, 2025, President Donald Trump released a sweeping package of tariffs that were meant to correct trade imbalances and curb the United States鈥� reliance on foreign goods. 鈥淟iberation Day,鈥� as the president declared it, was a shock to the world鈥檚 economic system鈥攁nd to companies everywhere. Tariffs took center stage in the global forum, applied so broadly that the stock market temporarily crashed.
A New Way of Looking at Tariffs
Economists who study the effects of trade uncertainty tend to render market reactions in broad terms: aggregates, statistical indices, and macroeconomic scenarios. But Yue Han, PhD, associate professor of decision sciences and marketing at Adelphi, wanted to take a deeper dive. 鈥淣ot all firms are affected by tariffs in the same way, even if they operate in the same country or industry,鈥� she said.
In classical trade theory, tariffs are tools to protect and promote domestic industry. They affect a country鈥檚 balance of trade, the competition among its producers, and its overall welfare. Today, however, tariffs are also a form of risk, sparking changes to asset prices, credit conditions, and investor sentiment.
Along with Heng Emily Wang, PhD, of Elon University and Wenyao Hu, PhD, of the New York Institute of Technology, Dr. Han co-authored 鈥溾�� (Economics Letters, January 2026), a study proposing a new way to measure, as Dr. Han puts it, 鈥渉ow exposed a firm is to future tariff changes.鈥�
Compiling Data to Measure Tariff Exposure
To develop their measurement, Dr. Han and her colleagues turned to corporate filings. They reviewed 10-Ks鈥攁 mandatory annual report filed with the SEC鈥攆rom more than 3,000 companies nationwide, mining information about business activities and risk factors. For each firm, they identified any mentions of a foreign country, then weighted it by the 鈥淟iberation Day鈥� tariff rate imposed on that country. This became the 鈥渢ariff exposure index.鈥� Next, the team merged the 10-K content with publicly available data on each firm鈥檚 accounting practices and daily stock returns. After running a series of regressions, they confirmed that firms with greater exposure to tariffs were, in fact, hit harder by 鈥淟iberation Day.鈥�
Dr. Han explained, 鈥淥ur study successfully illustrates that investors recognize tariff risk and price it into stocks. Firms with higher tariff exposure saw larger stock price drops after the announcement.鈥� That relationship stayed strong even after controlling for a range of firm characteristics, such as size, valuation, or corporate event (think merger or IPO).
But why might one firm be more vulnerable to tariffs than another? Dr. Han says 鈥渇inancially fragile, future-oriented, or dependent on intangible assets鈥� are the main factors. In other words, small firms with growth plans are more likely to be hurt by tariffs. So are firms that rely on debt or equity to operate.
Calculating Certainty in an Uncertain Global Economy
Dr. Han believes her work can add certainty to an otherwise risky economic landscape. Corporate filings have long been used to forecast risk and outcomes, and her team鈥檚 model may be able to predict how firms will weather future shocks as tariff uncertainty persists. Their model also demonstrates that markets have eyes and ears. In times of global trade turbulence, a firm鈥檚 returns will likely drop if it has telegraphed excessive tariff exposure.
This research stream is a fertile one, according to Dr. Han and her colleagues. Future studies could track the long-term impacts of tariff exposure, incorporating reactions from creditors, employees, customers, and other stakeholders. 鈥淪uch extensions,鈥� they note in the study, 鈥渨ould deepen our understanding of how protectionist policies shape firm behavior, market efficiency and the allocation of capital.鈥�
Anyone with a basic grasp of economics could see how 鈥淟iberation Day鈥� upended the global trade order. But as one of the first systematic examinations of market reactions to the announcement, Dr. Han鈥檚 study shows the true cost of tariff shock. Now, as shifting tariff policies rock the markets at home and abroad, firms should be aware of what information might signify their tariff exposure鈥攁nd who knows it. 鈥淭rade policy uncertainty has become a firm-level financial risk,鈥� Dr. Han said, 鈥渁nd markets respond to it fast, using information previously provided by firms.鈥�