115. The Trade War and US Elections

Episode Summary

Executive Summary: The episode discusses a paper by Chad Bown, Emily Blanchard, and David Chor on whether the 2018 U.S.-China trade war affected voting in the 2018 midterms. The study finds retaliatory tariffs and farm subsidies moved votes, especially in swing counties, while tariff protection itself was weaker and not statistically significant. It also shows healthcare had a larger electoral effect than trade.

Main Topics: Trade war and midterm voting (Priority: 5/5): The core question is whether counties exposed to Trump tariffs, foreign retaliation, or farm aid shifted their 2018 House vote behavior. Retaliatory tariffs as the strongest political effect (Priority: 5/5): Foreign retaliation—especially China’s agricultural retaliation—appears to have reduced Republican vote share, with the clearest effects in marginal districts. Tariff protection and farm subsidies (Priority: 4/5): Trump’s tariff protection appears to have helped Republicans in the expected direction, while farm subsidies also helped, but the tariff-protection estimate was not statistically significant. Healthcare as a benchmark policy issue (Priority: 5/5): The authors include ACA-related coverage gains to compare trade politics with a broader, more salient policy domain that also shifted votes away from Republicans. Methodological challenge of causal inference (Priority: 4/5): The discussion emphasizes controlling for demographics, prior voting, local economics, and campaign factors to avoid spurious correlations. Electoral consequences and seat estimates (Priority: 5/5): The paper suggests the trade war may have mattered enough to affect House control, though less than healthcare and not enough to explain the blue wave on its own.

Key Arguments: Trade policy can influence voting, but mainly when its effects are concentrated geographically and politically salient enough to matter in marginal districts. Retaliatory tariffs had the clearest negative electoral effect for Republicans; the impact was strongest in swing counties and driven largely by agricultural retaliation, especially from China. Trump’s tariff protection produced the expected pro-Republican direction, but the estimate was too imprecise to rule out no effect. Farm subsidies to affected farmers likely helped Republicans, but the effect was smaller than the retaliatory-tariff effect. Healthcare coverage gains after the ACA had a larger and more widespread electoral effect than the trade war, making it a useful benchmark. The paper is cautious about strong causal claims: it uses an event-study style design and rules out many confounders, but cannot claim perfect identification. The authors note that unmeasured second-order effects could offset or amplify observed impacts, such as higher input costs for steel users or cheaper soybeans for pig farmers.

Data Points: Estimated House seats affected by trade war: about 5 seats - Combined vote impacts suggest the trade war may have cost Republicans roughly five House seats in 2018. Estimated House seats affected by healthcare: about 8 seats - ACA-related coverage gains appear to have cost Republicans roughly eight House seats, a larger effect than trade. 2018 Blue Wave margin: about 40 seats - The authors stress trade was meaningful but not the main driver of the Democratic gain in the House. Policy exposure windows: five years following the ACA (2010) - Healthcare analysis uses county-level coverage increases over the five years after ACA passage. Policy categories studied: 3 trade-related policy changes + healthcare benchmark - The paper examines Trump tariffs, foreign retaliation, farm subsidies, and healthcare coverage changes. Electoral geography: swing counties / marginal districts - Effects were largest where Republicans had just barely lost the 2016 vote, meaning small shifts could matter most.

Pivotal Quotes: "people seem to like getting import protection. From President Trump's tariffs. They did not like getting hit with the retaliatory tariffs. And the farmers did like the subsidies that they received." — Chad Bown: Summary of the paper’s main trade-policy findings. "it takes a combination of factors for trade policy to matter in an election. There has to be a big enough economic effect. But then it has to be targeted in a place where it can actually make a difference." — Emily Blanchard: Explaining why some trade shocks move votes while others do not. "we think that the trade war may have cost Republicans about five House seats when we add up the votes." — Chad Bown: Quantifying the aggregate electoral effect of the trade war.

Implications: Trade policy can affect elections, but only when economic pain is concentrated in competitive places. The findings suggest retaliation is politically potent, healthcare was even more powerful in 2018, and future tariff escalation could matter more if effects continue to spread.