Tariffs, Trust, and Transition: How Trade Barriers on Chinese Electric Vehicles Reshape the Global Market via Western Investor Behaviour

Abstract

European Union tariffs on Chinese electric vehicles (EVs) set geopolitical protectionism against the momentum of sustainable finance. This thesis investigates how those duties reshape the global EV market by steering Western investor behaviour. A daily event-study of eleven listed EV manufacturers—situated in China, Europe, the United States, Japan and South Korea— tracks abnormal stock returns over five tariff milestones between October 2023 and November 2024. Abnormal returns are regressed on Chinese supply-chain dependence, firm-specific tariff rates, ESG scores and market controls within a fixed-effects panel. Results show that companies most reliant on Chinese components earn roughly a one-percentage-point premium during the provisional-duty window, suggesting investors expect these firms to lobby regulators or reroute production efficiently. Conversely, superior ESG ratings provide no statistically significant cushion, implying sustainability credentials do not offset geopolitically driven trade risk. The findings refine Global Value Chain and Social Identity perspectives and warn policymakers that product-level tariffs may leave highly integrated firms relatively unscathed.