Tariffs, Agricultural Subsidies, and the 2020 US Presidential Election

45 Pages Posted: 18 Feb 2021 Last revised: 19 Oct 2021

See all articles by Jaerim Choi

Jaerim Choi

University of Hawaii at Manoa - Department of Economics

Sunghun Lim

Texas Tech University - Department of Agricultural and Applied Economics

Date Written: July 13, 2021

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 first document that US agricultural subsidies relative to the Chinese retaliatory tariff exposure were especially higher in solidly Republican counties, implying that Trump allocated rents in exchange for political patronage. Then, we find that US agricultural subsidies outweighed 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 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 (July 13, 2021). 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

Texas Tech University - Department of Agricultural and Applied Economics ( email )

TX
United States

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

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