Trading Stories

Kevin Lewis

February 14, 2024

Help for the Heartland? The Employment and Electoral Effects of the Trump Tariffs in the United States
David Autor et al.
NBER Working Paper, January 2024 


We study the economic and political consequences of the 2018-2019 trade war between the United States, China and other US trade partners at the detailed geographic level, exploiting measures of local exposure to US import tariffs, foreign retaliatory tariffs, and US compensation programs. The trade-war has not to date provided economic help to the US heartland: import tariffs on foreign goods neither raised nor lowered US employment in newly-protected sectors; retaliatory tariffs had clear negative employment impacts, primarily in agriculture; and these harms were only partly mitigated by compensatory US agricultural subsidies. Consistent with expressive views of politics, the tariff war appears nevertheless 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.

Chinese Foreign Real Estate Investment and Local Voting in US Presidential Elections
Steven Liao
International Studies Quarterly, December 2023 


Despite the increasing globalization of housing markets, little is known about its political implications. This study investigates whether rising Chinese investments in US homes influenced local voting in recent US presidential elections. Building on pocketbook/sociotropic voting and nativism theories, I develop hypotheses on the electoral consequences of foreign real estate investment through greater home demand and equity, improved local economies, and changing neighborhoods. Using difference-in-differences designs that combine a unique shock to Chinese capital outflows in 2013 with county-level measures of local attractiveness to Chinese investments, I find that greater exposure reduced Democratic vote shares in both the 2016 and 2020 presidential elections. Furthermore, an initially larger white population strengthened this effect, while a larger college-educated population weakened it. In contrast, local equity gains, housing competition, or economic strength did not systematically influence the effect. Together, the results appear more consistent with the pro-conservative effects of nativism.

Chinese investment and elite sentiment in Southeast Asia: An event study of influence along the belt and road
Yining Sun, Ethan Kapstein & Jake Shapiro
Research & Politics, January 2024 


Recent years have seen growing concerns expressed by political leaders throughout the west about rising Chinese “influence” around the world. Yet, measuring political influence remains a challenge to social science. In this paper, we seek to advance our understanding of influence by comparing the expressed attitudes towards China of politicians within three Southeast Asian states (the Philippines, Malaysia, and Indonesia) whose electoral districts have received Chinese Belt and Road investments versus those who have not. Specifically, we adopt the difference-in-difference design, interacting China-related foreign policy “shocks” with sentiment analysis based on Twitter and Facebook posts. We find little support for the assertion that Chinese investments are leading to increased political influence in these countries, at least in terms of influencing the sentiments expressed by local politicians.

Discrimination in the Patent System: Evidence from Standard-Essential Patents
Gaétan de Rassenfosse, Emilio Raiteri & Rudi Bekkers
Journal of Law and Economics, November 2023, Pages 739–763 


This paper tests for discrimination against foreigners in the patent system. It focuses on patent applications filed in China for which the owner publicly discloses that the patents are or may become essential to the implementation of a technical standard. Such standard-essential patents are of particularly high importance to the owner. We use the timing of disclosure to a leading standard-setting organization as a source of econometric identification and carry out extensive tests to ensure the exogeneity of timing. We find that foreign patent applications are significantly less likely to be granted by the Chinese patent office if their owners disclose them to be essential to a standard before the substantive examination starts. Furthermore, the patent office spends, on average, 1 more year on the examination of such patents, and the scope of the patents is more extensively reduced. Our findings contribute to the emerging discussion on technology protectionism.

Where Have All the IPOs Gone? Trade Liberalization and the Changing Nature of U.S. Public Corporations
Thomas Griffin
Journal of Financial and Quantitative Analysis, forthcoming 


I show that a tariff policy change that increased trade with China led to a decline in U.S. public listing rates and elevated industry concentration. Consistent with heterogeneous firm models of trade, the shock impeded the entry and performance of small domestic manufacturers but did not adversely impact large multinationals. In addition, stock price reactions to the tariff policy change and threat of reversal imply that trade liberalization creates or destroys value depending on firm size. These findings suggest that recent trends in the U.S. public equity market are driven, in part, by fundamental changes in the global competitive landscape.

A Deepening/Widening Tradeoff? Evidence from the GATT and WTO
David Bearce & Cody Eldredge
Political Research Quarterly, forthcoming 


This paper proposes that the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), experienced a deepening/widening tradeoff: as their membership increased (greater width), their effectiveness in promoting trade between members/participants declined (lesser de facto depth). This proposition is tested using gravity models of bilateral trade, first separating the GATT and WTO, which are usually combined into a single variable, and then adding a width variable corresponding to each institution. The results show that (1) both regimes were the deepest, or the most trade effective, when they had the fewest member-states and (2) their trade effectiveness declined, eventually becoming statistically insignificant, as more countries joined. As a quantitative case study, this paper provides some of the first evidence consistent with a tradeoff between depth and width within international institutions.

War on Aisle 5: Casualties, National Identity, and Consumer Behavior
Benjamin Helms, Sonal Pandya & Rajkumar Venkatesan
Journal of Conflict Resolution, forthcoming 


A growing body of research argues that external threats from the international system strengthen ethnocentrism and authoritarianism, personal values anchored in national identity. We evaluate a necessary implication of this argument, that these shifting values drive change in broader social behaviors. Our focus is revealed value change in a non-political setting: American consumers’ choice of supermarket brands that symbolize national identity. Our empirical analyses leverage US counties’ quasi-random exposure to US Iraq War casualties to identify the effects of local casualties on the weekly market share growth of “American” supermarket brands. We analyze weekly supermarket scanner data for a representative sample of over 1,100 US supermarkets and 8,000 brands. During 2003-2006, the weekly market share of American brands grew relative to non-American brands in casualty-exposed supermarkets. Variation in share growth across customer demographics is consistent with reactions to external threat. We rule out alternative mechanisms including partisan cues, other product characteristics, and animosity towards other countries. These findings strengthen IR’s theoretical microfoundations by showing that international politics can reshape values enough to change broader social behaviors.


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