115. The Trade War and US Elections

Episode Summary

Executive Summary: The episode examines Emily Blanchard and David Chor’s study of how the 2018 U.S.-China trade war affected voting in the 2018 midterm elections. The discussion finds retaliatory tariffs hurt Republican vote share, tariff protection helped little, and farm subsidies helped Republicans, with the strongest electoral effects in swing counties. The episode also benchmarks trade’s impact against healthcare, which appears to have had a larger political effect overall.

Main Topics: Trade war and 2018 midterm voting (Priority: 5/5): The core question is whether counties exposed to tariffs, retaliatory tariffs, and farm subsidies shifted their vote shares in response to the trade war during the 2018 U.S. midterms. Three trade-policy channels (Priority: 5/5): The analysis separates Trump-era import tariffs, foreign retaliatory tariffs, and USDA farm payouts to see how each affected local voting behavior. Methodological identification and confounders (Priority: 4/5): The speakers emphasize controlling for demographics, local economic structure, unemployment, past voting, and campaign factors to isolate trade-war effects from other influences. Electoral magnitude and swing counties (Priority: 5/5): Effects were strongest in marginal districts, suggesting trade policy mattered most where small shifts could change outcomes and potentially alter House control. Healthcare as a benchmark policy issue (Priority: 4/5): Healthcare coverage gains after the ACA are used as a comparison point and appear to have had a larger electoral effect than the trade war. Implications for future elections (Priority: 3/5): The speakers speculate that larger tariffs, retaliation, and farm bailouts could have stronger future effects, especially since the 2020 election was still farther out from the trade-war shock.

Key Arguments: Retaliatory tariffs appear to have reduced Republican vote share, while farm subsidies moved vote share in the Republican direction. Tariff protection for protected industries had the expected positive sign for Republicans, but the estimate was not statistically distinguishable from zero. The strongest trade-war electoral effects were concentrated in swing counties rather than in the most heavily affected counties overall. Foreign retaliation may have been strategically aimed, but the paper suggests it would have been even more politically effective if concentrated in swing areas rather than heavily Republican districts. Healthcare coverage increases after the Affordable Care Act affected voting more broadly than trade-war exposure and may have cost Republicans more seats overall. The authors are cautious about claiming strict causality, but argue the patterns are hard to explain without the trade war influencing voting behavior. Second-order effects, such as input-cost pressures on steel users or cheaper soybeans for some farmers, may offset or amplify measured effects but are not fully captured in the data.

Data Points: Republican House seats potentially lost to trade war: about 5 seats - Estimated aggregate effect of tariffs, retaliation, and subsidies on the 2018 House election Republican House seats potentially lost to healthcare: about 8 seats - Estimated effect of increased healthcare coverage in the same election Blue wave seat gain overall: about 40 seats - Used as a benchmark showing trade war was meaningful but not the sole driver of the midterm wave Policy channels analyzed: 3 - Trump tariffs, foreign retaliatory tariffs, and farm subsidies Time window for healthcare coverage change: 5 years - County-level increase in coverage following the ACA in 2010 Election studied: 2018 midterm elections - Outcome used to test whether trade policy affected voting behavior Retaliatory tariff focus: China-driven agricultural retaliation - The most important negative electoral effect was attributed especially to Chinese retaliation Economic effect direction on protected industries: positive but not statistically significant - New tariff protection was associated with more Republican support, but the estimate was not different from zero

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 Bowne: Summary of the main empirical findings from the paper "our results would suggest that U.S. trading partners could have done better if they'd focused on hitting the goods that are produced by swing counties." — Emily Blanchard: Discussion of the strategic geography of retaliation and election effects "The trade war may have cost Republicans about five House seats when we add up the votes." — Emily Blanchard: Quantified electoral impact of the tariff conflict "healthcare may have influenced enough votes to cost the Republicans another eighth House seats in the 2018 elections." — Emily Blanchard: Comparison between trade policy and healthcare as electoral forces

Implications: Trade policy can move elections when effects are concentrated in politically competitive places. Retaliation mattered more than protection, and future elections could be more exposed if tariffs and countertariffs remain elevated.