Tariffs, agricultural subsidies, and the 2020 US presidential election

Document Type

Article

Publication Date

8-1-2023

Abstract

This paper provides evidence on the effects of US and Chinese trade policies on the 2020 US presidential election. In response to a series of US tariffs imposed on Chinese goods, China imposed retaliatory tariffs, especially on US agricultural products, which largely affected Republican-leaning counties. The US government then subsidized US farmers by providing direct payments through the Market Facilitation Program (MFP) to mitigate the Chinese retaliatory tariffs. Using the universe of actual county-level MFP disbursement data, we document that MFP payments relative to the Chinese retaliatory tariff exposure were higher in solidly Republican counties, implying that the Trump administration allocated rents in exchange for political patronage. We also find that MFP payments outweighed the estimated impact of Chinese retaliatory tariffs and led to an increase in the Republican vote share in the 2020 presidential election. Finally, we uncover evidence that China's retaliatory trade policy and the corresponding US agricultural policy exacerbated political polarization in the US, especially the rural–urban divide.

Publication Source (Journal or Book title)

American Journal of Agricultural Economics

First Page

1149

Last Page

1175

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