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Help for the heartland? The employment and electoral effects of the Trump tariffs in the United States
Jun 2024

Trade policy, economic outcomes, and political preferences

A new research paper delves into intriguing questions surrounding the economic and political consequences of the 2018-2019 trade war between the United States, China, and other US trade partners. UBS Foundation Professor David Dorn and his colleagues David Autor, Anne Beck, and Gordon Hanson offer insights into the multifaceted relationship between trade policy, economic outcomes, and political preferences in the United States.

The researchers address a series of complex questions: Were the tariffs truly beneficial for the US heartland as intended? Did foreign retaliatory tariffs hurt US employment? And how did the tariff war shape political dynamics?

What they found was that US import tariffs failed to significantly raise employment in the regions whose industries became tariff-protected. The retaliatory tariffs imposed by other countries, especially on agricultural products, modestly reduced employment in exposed regions, and government subsidies that the US introduced in response to these tariffs only partially made up for those losses. Despite this economic fallout, the trade was a political success for the Republican Party. Voters in areas whose industries received tariff protection became less likely to support the Democratic Party and more likely to support Donald Trump in the 2020 election. Even though foreign countries’ tariffs made a dent in this support, it wasn’t enough to change the overall positive effect for Republicans.

With this research, the authors are following up on their famous 'China Syndrome' paper from 2013. In a recent article in the New York Times, Nobel laureate Paul Krugman credits that paper for changing the economic debate on trade’s impact on the labor market: Whereas economists long believed that trade’s impact on the labor market is minimal, David Dorn and coauthors established that a large growth of Chinese import competition during the 1990s and 2000 – which became known as the “China Shock” – severely reduced employment in the most exposed US regions. Krugman argues that China’s current plan to massively raise exports of electric cars and other high-tech goods could create a second China Shock with similarly adverse labor market impacts in the US, a development that the Biden government now seeks to prevent by increasing tariffs on electric cars from China to 100 percent. While the 2018-2019 tariffs of the Trump government were not successful in bringing back jobs to America, the Biden tariffs may prevent the US from losing jobs. And the new research paper shows that voters react favorably to tariffs on Chinese goods, even when their economic benefits are questionable.

For Bloomberg, it is clear that the new paper has the same significance as its predecessor from 2016: “If you read one economic paper this year it should be David Autor, Anne Beck, David Dorn, and Gordon Hanson’s January dive into what Trump’s 2018 tariffs really delivered in the US places hit hardest by the China Shock that Autor et al first documented in 2016.”

A new research paper delves into intriguing questions surrounding the economic and political consequences of the 2018-2019 trade war between the United States, China, and other US trade partners. UBS Foundation Professor David Dorn and his colleagues David Autor, Anne Beck, and Gordon Hanson offer insights into the multifaceted relationship between trade policy, economic outcomes, and political preferences in the United States.

The researchers address a series of complex questions: Were the tariffs truly beneficial for the US heartland as intended? Did foreign retaliatory tariffs hurt US employment? And how did the tariff war shape political dynamics?

What they found was that US import tariffs failed to significantly raise employment in the regions whose industries became tariff-protected. The retaliatory tariffs imposed by other countries, especially on agricultural products, modestly reduced employment in exposed regions, and government subsidies that the US introduced in response to these tariffs only partially made up for those losses. Despite this economic fallout, the trade was a political success for the Republican Party. Voters in areas whose industries received tariff protection became less likely to support the Democratic Party and more likely to support Donald Trump in the 2020 election. Even though foreign countries’ tariffs made a dent in this support, it wasn’t enough to change the overall positive effect for Republicans.

David Dorn, who recently turned 45, has been a professor of economics at the University of Zurich since 2014. He has also worked and continues to work at renowned universities abroad. For example, at Cemfi in Madrid, Spain, and in the USA at Harvard University, the Massachusetts Institute of Technology (MIT) in Boston and the University of California in Berkeley. His research focuses on labor markets, globalization, technological change, inequality, and polarization in society. Together with US economists, he has written studies on the economic, social, and political impact of trade with China, which are highly regarded in both economics and political circles in the United States.
David Dorn, who recently turned 45, has been a professor of economics at the University of Zurich since 2014. He has also worked and continues to work at renowned universities abroad. For example, at Cemfi in Madrid, Spain, and in the USA at Harvard University, the Massachusetts Institute of Technology (MIT) in Boston and the University of California in Berkeley. His research focuses on labor markets, globalization, technological change, inequality, and polarization in society. Together with US economists, he has written studies on the economic, social, and political impact of trade with China, which are highly regarded in both economics and political circles in the United States.
David Dorn on Google Scholarbrowse

Quotes

People were willing to accept economic losses in order to harm the Chinese economy.
The Biden administration has continued Donald Trump's protectionist policies in a much more focused way.

Media coverage

  • EU-Strafzölle gegen chinesische Autohersteller NZZ Kommentar vom 12.6.2024 lesen

  • EU-Kommission droht mit Strafzöllen auf chinesische E-Autos 10vor10 Sendung vom 12.6.2024 schauen

  • US-Wirtschaft wächst überraschend kräftig Echo der Zeit Sendung vom 30.5.2024 hören

  • Biden looks poised to dethrone ‘tariff man’ Trump. Bloomberg, May 13, 2024. read

  • Preparing for the second China Shock. Paul Krugman, New York Times, May 14, 2024. read

  • Handelsstreit mit China: Biden erhöht Strafzölle für Elektroautos aus China auf 100 Prozent. Neue Zürcher Zeitung, 15. Mai 2024. lesen

  • Bidens neuer Handelskrieg ist eine Gefahr für die Welt. Handelszeitung, 15. Mai 2024. lesen

  • Handelskrieg geht in die nächste Runde. Finanz und Wirtschaft, 15. Mai 2024. lesen

  • The world is scarred from China Shock 1.0. They are not about to let 2.0 happen so easily. Business Insider, April 4, 2024. read

  • US Treasury Secretary is in China to talk trade, anti-money laundering and Chinese 'overproduction'. Associated Press, April 4, 2024. read

  • Trump's tariff talk proves bad economics can be good politics. RealClear Markets, March 28, 2024. read

  • The trade war was a political success. UBS Center, March 27, 2024. read

  • The decade of the second China Shock. Noahpinion, March 23, 2024. read

  • Der Handelskrieg war ein politischer Erfolg. Handelszeitung, March 21, 2024. lesen

  • Donald Trump plant bereits den nächsten Handelskrieg mit China. Neue Zürcher Zeitung, February 20, 2024. lesen

  • Trump's tariffs didn't work to boost the economy. Did we learn anything? Daily Bulletin, February 16, 2024. read

  • Punish China, create US jobs: Trade envoy defends Joe Biden's retention of Donald Trump-era tariffs. South China Morning Post, February 13, 2024. read

  • How Trump wins from his damaging trade wars. Yahoo Finance, February 9, 2024. read

  • Trump`s trade war was bad for rural economies, good for his popularity, study finds. Axios, February 7, 2024. read

  • Trump's tariffs hurt U.S. jobs but swayed American voters, study says. New York Times, February 2, 2024. read

  • Out: the China Shock. In: the tariff shock. American Enterprise Institute, January 29, 2024. read

BNSF train transporting North Dakota Bakken shale oil from Western North Dakota to refinery. © Darla Hueske / Unsplash
BNSF train transporting North Dakota Bakken shale oil from Western North Dakota to refinery. © Darla Hueske / Unsplash

References

  • Help for the Heartland? The employment and electoral effects of the Trump tariffs in the US. NBER Working Paper, 2024, with David Autor, Anne Beck and Gordon Hanson. read

  • The China Shock: Learning from labor market adjustment to large changes in trade. Annual Review of Economics, 8: 205-240, 2016, with David Autor and Gordon Hanson. read

  • The China Syndrome: Local labor market effects of import competition in the United States. American Economic Review, 103(6), 2121-2168, 2013, with David Autor and Gordon Hanson. read

Contact

UBS Foundation Professor of Globalization and Labor Markets
Prof. David Dorn

David Dorn is the UBS Foundation Professor of Globalization and Labor Markets at the University of Zurich and the director of the university-wide interdisciplinary research priority program “Equality of Opportunity.” He was previously a tenured associate professor at CEMFI in Madrid, a visiting professor at the University of California in Berkeley, and a visiting professor at Harvard University.

Professor Dorn’s research spans the fields of labor economics, international trade, economic geography, macroeconomics, and political economy. He published influential studies on the impacts of globalization and technological innovation on labor markets and society.

David Dorn is among the 100 most highly cited economists worldwide in the last decade. In 2023, he was awarded the Hermann Heinrich Gossen Prize for the most accomplished economist in German-speaking countries under the age of 45.

UBS Foundation Professor of Globalization and Labor Markets
Prof. David Dorn

David Dorn is the UBS Foundation Professor of Globalization and Labor Markets at the University of Zurich and the director of the university-wide interdisciplinary research priority program “Equality of Opportunity.” He was previously a tenured associate professor at CEMFI in Madrid, a visiting professor at the University of California in Berkeley, and a visiting professor at Harvard University.

Professor Dorn’s research spans the fields of labor economics, international trade, economic geography, macroeconomics, and political economy. He published influential studies on the impacts of globalization and technological innovation on labor markets and society.

David Dorn is among the 100 most highly cited economists worldwide in the last decade. In 2023, he was awarded the Hermann Heinrich Gossen Prize for the most accomplished economist in German-speaking countries under the age of 45.