Abstract
This research investigates the impact of United States tariff shocks on South African financial markets, focusing on the rand–dollar exchange rate and the FTSE/JSE Top 40 equity index. The study evaluates whether international trade policy uncertainty improves the predicta-bility of domestic financial market movements. Daily data from 2015 to 2023 were analysed using a mixed empirical strategy combining an event-study framework with econometric fore-casting models. ARIMA and ARIMAX models were used to test whether tariff events enhance mean-return predictability, while volatility dynamics were examined using GARCH (1,1) and GARCH-X specifications. Event-study results show that tariff announcements triggered signif-icant short-term abnormal returns and cumulative abnormal returns in the USD/ZAR exchange rate, consistent with the rand’s role as a high-beta emerging-market currency sensitive to global risk repricing. By contrast, responses in the JSE equity market were muted and statistically in-significant. Econometric results reveal no meaningful improvement in forecast accuracy when tariff dummy variables were added to ARIMA or GARCH models, indicating that tariff shocks affect markets contemporaneously but offer little predictive value. These findings demonstrate a clear asymmetry between currency and equity responses and highlight the difficulty of forecast-ing emerging-market volatility under geopolitical uncertainty. The research contributes new ev-idence on how global protectionist policies translate into South African markets, enriching cur-rent debates on external vulnerability and predictive modelling in emerging economies.