Tariffs, Agricultural Subsidies, and the 2020 US Presidential Election

52 Pages Posted: 18 Feb 2021 Last revised: 2 Sep 2022

See all articles by Jaerim Choi

Jaerim Choi

University of Hawaii at Manoa - Department of Economics

Sunghun Lim

Louisiana State University, Department of Agricultural Economics and Agribusiness

Date Written: September 1, 2022

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.

Keywords: Agricultural Subsidy, Trade War, Trade Policy, Presidential Election, Market Facilitation Program, Tariffs, Political Polarization, Political Budget Cycle

JEL Classification: D72, F13, F14, Q17, Q18, I18

Suggested Citation

Choi, Jaerim and Lim, Sunghun, Tariffs, Agricultural Subsidies, and the 2020 US Presidential Election (September 1, 2022). Available at SSRN: https://ssrn.com/abstract=3773952 or http://dx.doi.org/10.2139/ssrn.3773952

Jaerim Choi (Contact Author)

University of Hawaii at Manoa - Department of Economics ( email )

Honolulu, HI
United States

HOME PAGE: http://www.jaerimchoi.com/

Sunghun Lim

Louisiana State University, Department of Agricultural Economics and Agribusiness ( email )

273 Martin D. Woodin Hall Louisiana State Universi
Baton Rouge, LA 70803
United States
225-578-2766 (Phone)

HOME PAGE: http://sites.google.com/view/limsunghun

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