Politics And The Trade War : Planet Money Did President Trump's trade policies cost Republican votes last year? We talk to economist Chad Bown to find out.
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Politics And The Trade War

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Politics And The Trade War

Politics And The Trade War

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UNIDENTIFIED PERSON: NPR.

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CARDIFF GARCIA, HOST:

Hey, everyone. This is THE INDICATOR FROM PLANET MONEY. I'm Cardiff Garcia. We are now less than a year away from the 2020 election, which means that silly season has begun. Politics coverage of what you might call widely varying quality is going to be everywhere for the next year. And we at THE INDICATOR also acknowledge that politics does matter for what we cover - for the economy and business and finance and money stuff because who gets elected can determine which economic policies end up being enacted, obviously.

So we are not going to shy away from covering politics during the election cycle, and there's maybe no better guest to start doing this with than our old friend, the economist Chad Bown at the Peterson Institute. Chad and his co-authors Emily Blanchard and Davin Chor have just finished a study trying to assess the potential effects of the trade war on last year's elections in the House of Representatives - the 2018 elections. That was when Democrats flipped 40 seats that were previously held by Republicans. And so we're going to speak with him about what that might tell us about the politics of trade.

Chad, welcome.

CHAD BOWN: Thanks for having me.

GARCIA: The silly season never really starts and stops, actually, now that I think about it, right? It's just kind of there.

BOWN: It is never-ending. It's going on all the time. That's absolutely right.

GARCIA: So, Chad, before the break, why don't you actually just set up this paper for us? What were you trying to analyze?

BOWN: Well, back in 2018, we had two really big things that took place. The first, obviously, at least from my perspective, was President Trump's trade war, so we had lots of American tariffs, lots of retaliatory tariffs. We had the Trump administration doling out tens of billions of dollars in subsidies to the agricultural sector that was hurt by those tariffs. And then, of course, we had the 2018 midterm elections. So the big question that we wanted to try to ask and answer is, was there any relationship between the two? Did the trade war have any impact whatsoever on the flip from Republicans to Democrats in the House of Representatives?

GARCIA: Yeah. And specifically, those three parts of the trade war - so first off, the tariffs that the U.S. put on goods that were being bought by Americans and American companies that came in from abroad. Second, you said retaliatory tariffs - so, like, when China saw, hey, the U.S. is putting on tariffs, so we'll put some of our own on American products that are being bought by Chinese people. And then third, the U.S. government gave subsidies to the agricultural sector to try to offset the damage of the trade war - those three things, right?

BOWN: That's exactly right. President Trump did tariffs on steel, aluminum, solar panels, washing machines and then $250 billion worth of imports from China. China, Europe, Mexico, Canada - a number of countries retaliated against American exports; a lot of soybeans but other farm products and other manufacturing exports as well. And so lots of Americans - workers were potentially hurt by that. And then the Trump administration rolled out $12 billion of subsidies to American farmers that it was concerned were being hurt by all that retaliation. That's what we're going to look at to see if we can trace an impact of those sorts of policies on the voting outcomes in the 2018 election.

GARCIA: Let's take a quick break. And then when we're back, we're going to discuss what you and your co-authors actually found.

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GARCIA: OK, everybody. We've got Chad Bown. He's joining us from Washington, D.C. Chad, let's start with this, OK? You wanted to start by studying the effects of U.S. tariffs on goods that are imported from abroad into the U.S. How did that affect voting behavior?

BOWN: So there's a number of ways in which tariffs, which are these taxes that are imposed on things that are produced in other countries, can impact the U.S. economy. But the most direct way is through your job. And so in principle, if you are a worker and you're employed by a company out there that competes with stuff coming in from another country and, all of a sudden, President Trump imposes tariffs on that thing, whether it's steel or aluminum or washing machines or just something else we import from China, now you face less competition from those products coming in. And if you're a worker, you potentially benefit from that reduction in competition. You may see wage increases. And so in those particular instances, you might be more likely to vote for, you know, the Republican candidate in your county or in your district in that 2018 election.

When we did our study, though, we really didn't see any of that showing up in the data. There's really no discernable evidence that the workers that stood to benefit from President Trump's tariffs were more likely to vote for Republicans in the 2018 election.

GARCIA: They were not more likely to vote for a Republican because of those tariffs.

BOWN: Exactly. There was no influence on their voting behavior.

GARCIA: OK. And what about the retaliatory tariffs? So other countries then see the American tariffs and say, no. Hang on a second. We're going to put in tariffs of our own. So presumably, that might hurt American companies, right?

BOWN: Exactly. So if you're an American working at Harley-Davidson - so the Europeans retaliated against them or, you know, you're a soybean farmer or a pork farmer or you work for Levi's. There were lots of products that trading partners retaliated over. We matched those up with local employment across the United States, and we did find evidence that if you were more likely to work in one of those industries that was exposed to the trading partner retaliation, you were actually less likely to vote for the Republican candidate in your county or your district in the 2018 midterm election.

GARCIA: OK. So that's sort of Part II of the three things that you studied. Part III was interesting because it involved the U.S. government giving subsidies to farmers and to the agricultural sector in response to the retaliatory tariffs by, mainly, China against U.S. farmers. Did those subsidies from the U.S. government end up affecting voter behavior that we know of?

BOWN: There is, in fact, some evidence that voters that were receiving those subsidy payments from the Trump administration that were rolled out beginning in the summer of 2018 - they were, actually, more likely to vote for Republicans in the 2018 election. The effect was small, but it did have a bit of an offsetting effect on the fact that those also tended to be the counties and areas that were going to be the ones hurt by the foreign retaliation.

GARCIA: When you say that the effect was small, do you mean that it was not enough to offset the potential loss of votes from the people who worked in counties that suffered from the retaliatory tariffs?

BOWN: That's exactly right. And partially, that's because those subsidies were so geographically concentrated in terms of how they were dispersed. And they also tended to be dispersed in counties that were already very Republican in terms of how they traditionally voted. And so at the margin - was really unlikely that was going to flip any votes in any sort of significant manner.

GARCIA: OK. So, Chad, why don't you wrap all this up for us then? I mean, when you look at these three findings, what would be a good takeaway from this study?

BOWN: While the results that we found are relatively small and modest on average across the United States, they're particularly important in the most competitive counties and districts where the votes are close. So we looked at, in particular, the counties that had been very close in the 2016 election, and we see even bigger effects in those counties. And then when you add it all up - and we kind of do an exercise there to see how much of this swing of, you know, say, 40 votes in the 2018 election toward the Democrats and away from the Republicans - how much of those can be accounted for by the trade war? We found that a pretty reasonable-sized share of those - so about 14% of the flip can be attributed to the trade war.

GARCIA: Chad Bown, thanks for being back on the show, man.

BOWN: Thanks for having me.

GARCIA: This episode of THE INDICATOR was produced by Leena Sanzgiri, fact-checked by Nadia Lewis. Our editor is Paddy Hirsch. And THE INDICATOR is a production of NPR.

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