DP18202 Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States
We study the economic and political consequences of the 2018-2019 trade war between the United States, China and other U.S. trade partners at the detailed geographic level, exploiting measures of local exposure to U.S. import tariffs, foreign retaliatory tariffs, and U.S. compensation programs. So far, the trade-war has not provided economic help to the U.S. heartland: import tariffs on foreign goods neither raised nor lowered U.S. employment in newly-protected sectors; retaliatory tariffs had clear negative employment impacts, primarily in agriculture; and these harms were only partly mitigated by compensatory U.S. agricultural subsidies. Nevertheless, consistent with expressive views of politics, the tariff war appears to have been a political success for the governing Republican party. Residents of regions more exposed to import tariffs became less likely to identify as Democrats, more likely to vote to reelect Donald Trump in 2020, and more likely to elect Republicans to Congress. Foreign retaliatory tariffs only modestly weakened that support.