Tariffs and Politics: Evidence from Trump’s Trade Wars | Zendy

Thiemo Fetzer | Zendy; Carlo Schwarz | Zendy

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Tariffs and Politics: Evidence from Trump’s Trade Wars

Author(s) -

Thiemo Fetzer,

Carlo Schwarz

Publication year - 2020

Publication title -

the economic journal

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 4.683

H-Index - 160

eISSN - 1468-0297

pISSN - 0013-0133

DOI - 10.1093/ej/ueaa122

Subject(s) - counterfactual thinking , politics , voting , economics , construct (python library) , china , counterfactual conditional , international trade , international economics , political economy , public economics , political science , philosophy , epistemology , computer science , law , programming language

We use the recent trade escalation between the USA and its trade partners to study whether retaliatory tariffs are politically targeted. We find comprehensive evidence using individual and aggregate voting data suggesting that retaliation is carefully targeted to hurt Trump. We develop a simulation approach to construct counterfactual retaliation responses allowing us to quantify the extent of political targeting while also studying potential trade-offs. China appears to place great emphasis on achieving maximal political targeting. The EU seems to have been successful in maximising political targeting while at the same time minimising the potential damage to its economy.

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