MARKET REACTION TO THE U.S. IMPORT TARIFF ANNOUNCEMENT: EVIDENCE FROM INDONESIA’S TEXTILE AND GARMENT SECTOR

Abstract

This study examines the reaction of the Indonesian capital market to the announcement of United States import tariffs in 2025, focusing on the textile and garment sector. Using an event study approach, this research analyzes abnormal returns to evaluate whether the market exhibits semi-strong form efficiency. The sample consists of six textile and garment companies listed on the Indonesia Stock Exchange. To capture different speeds of market adjustment, the event window is divided into three observation periods: daily (t−5 to t+5), weekly (t−4 to t+4), and monthly (t−3 to t+3). The results indicate that abnormal returns occur both before and after the announcement across all observation periods, suggesting the presence of information leakage and delayed market reaction. These findings imply that the Indonesian capital market does not fully reflect semi-strong form efficiency, as stock prices do not adjust immediately to public information. This study contributes to the literature on market efficiency in emerging markets and provides insights for investors and policymakers regarding market behavior in response to global trade policy shocks.