Political Rhetoric as Trade Barrier: Trump's 'Buy American' Campaign and US Demand for Imports

Abstract

President Trump broke from decades of Republican support for free trade. Specifically, his brand of economic nationalism encourages US citizens to consume fewer imports and, instead, to "buy American." Surveys show that his rhetoric resonates with voters. But do these attitudes actually affect trade? This paper looks for the "tariff equivalent" effect of Trump's nationalist rhetoric. If voters are increasingly wary of free trade, we should see decreased demand for foreign goods. The observable implication should be declining imports. We test this prediction in the automotive industry-—a large, high-profile industry in which the "foreign vs domestic" distinction is clear. Using monthly imports data for each US state, we test whether Trump's campaign success affected automotive trade. Measuring Trump's political influence and electoral success several ways, we find no correlation between his "buy American" message and import flows. Nor is there are an interactive effect with traits of states' economies, including unemployment rates. Our evidence suggests that there's an important difference between sentiment and behavior. Voters claim to be wary of trade, and yet markets appear to be behaving normally. Our evidence is consistent with existing work that casts doubt on the impact of boycotts and nationalist rhetoric.

Keywords: Economic Nationalism, Trade, Buy National, Automotive Industry