Comments on Tariffs: Private Influence on Trade Policy

• In Event: People, Boards, and Leaders: Individual Backgrounds and Motivations in IPE

Abstract

What makes firms politically influential in trade policy? This paper explores the redistributive function of trade policy that allows government to privilege one group at the expense of others, and examines how policymaker’s domestic political incentives affect firms’ policy influence. With the product-level variation in tariff changes, the case of the U.S.-China trade war provides an ideal setting to investigate the redistributive argument of trade policy. Using a new dataset of public comments on three proposed tariff lists of Chinese imports in 2018, this paper constructs a variable of comment efficacy based on the product codes mentioned in comments and the changes between proposed and final tariff lists. The results show that comments from firms located in districts that swing to Trump in 2016 presidential election is more effective in influencing the final tariff lists, while comments from firms located in districts that swing to Clinton does not have an effect. The results are robust after controlling for special interest influence and coalition lobbying. This paper concludes that trade policy is a politically efficient way to target key voters.

Author

• Zoe Xincheng Ge, New York University