Tariffs can be powerful political weapons, and Donald Trump is about to give himself plenty of ammunition.
The administration has listed about $50 billion in Chinese goods it plans to tax, and it announced plans to impose tariffs on an additional $100 billion in the near future. Assuming the tariffs go forward, we can use research and trade data to consider where they could be deployed for maximum political gain.
Where trade policy meets politics
Trump is already raising money and holding rallies for the 2020 election, and he seems willing to use trade policy to bolster his reelection chances and salvage Republican control of the Senate in the 2018 midterms. After all, he reportedly timed the announcement of steel tariffs to influence a special House election in Pennsylvania.
It is to be expected, especially in a contested state such as Pennsylvania. Researchers have found that in past trade negotiations, presidents typically made an extra effort to protect swing states from foreign competition.
Trade economists Xiangjun Ma of the University of International Business and Economics in Beijing and John McLaren of the University of Virginia even put a number on it, estimating that past presidents valued the welfare of swing-state voters about 1.3 times as much as those in solidly partisan regions.
To estimate the effect of such tactics and understand how China might retaliate with its own trade measures aimed at exerting maximum leverage over U.S. politicians, we compared trade numbers with the industries where employment is most concentrated in swing states.
We started with the eight states that have switched sides at least once since 2008. To account for the midterms, we added seven additional states with a 2018 Senate race rated as close (“toss-up” or “lean”) by the Cook Political Report. Together, these states account for about 35 percent of the workforce.
Some industries top the list because they’re concentrated in one state that is up for grabs in 2018 or 2020, such as anthracite coal mining in Pennsylvania, tobacco farming and fabric-making in North Carolina and orange growing in Florida.
Other industries — iron foundries, mop, broom and brush factories, and car-part suppliers — are spread across a region, such as Michigan, Ohio and Pennsylvania, that has had an outsize effect on recent elections.
Where tariff protection might swing some states
Of course, for tariffs to be effective, they must apply to industries where China has a large share of the import market. To identify those industries, we’ll expand the simple chart above to include almost 400 industries, and add a second variable: how much of each industry’s import competition comes from China.
The industries in red are both vulnerable to China and concentrated in swing states. If a politician cared only about scoring points in swing states or only about protecting industries from Chinese competitors, the curve could swing in either direction.
Where Chinese retaliation would have maximum effect
President Xi Jinping doesn’t have to worry about reelection. Instead, he can direct China’s retaliatory trade measures toward exerting maximum impact on U.S. domestic politics — within limits. But unlike the United States, where an array of industries are dependent on Chinese imports, China has relatively low demand for U.S.-made products.
Consider the spread in the first plot — the United States brings in so many Chinese goods that myriad industries face at least some competition from China. Contrast it with the second chart, where U.S. exports to China are so tightly packed at the bottom that China has few targets for retaliation.
Two thirds of travel-trailer manufacturing jobs are in swing states, but you won’t hear much whining from trailermakers if China uncorks massive tariffs on American campers — they didn’t sell to the Chinese market to begin with. That places them toward the right side of the cluster of indistinguishable gray bubbles in the chart below.
Likewise, tariffs won’t sting if they’re applied to products the United States can easily get elsewhere. Here’s the same chart, but with a focus on what China buys from the United States rather than what the United States buys from China.
China just doesn’t have as much leverage in the swing states — which is potentially good news for Trump as the 2018 midterms approach. China has begun flexing its muscles over the U.S. imports where it has the most leverage, such as soybeans, pork and sorghum, but such opportunities are thin on the ground.
On the surface, tariffs look like an easy short-term win for U.S. politicians. They’re a tax on people who don’t vote on behalf of people who do. To update the 1996 words of an anonymous Clinton official, the math is simple: Florida has 29 electoral votes, Pennsylvania has 20, and China has zero.
But in economics, math isn’t that simple. Tariffs aren’t just a tax on foreigners. They’re a tax on American manufacturers who depend on global supply chains. They’re a tax on American retailers who sell foreign goods, and they’re a tax on American consumers who buy them. And that’s even before China takes widely anticipated retaliatory measures.
A tariff may delight some special interests and workers in the industries being protected. It may generate helpful headlines in regional newspapers. But in the end, consumers catch on that together they’re footing the bill for a tax that disproportionately benefits a handful of industries in a handful of (swing) states.
Small print on methodology
By the methodology described above, the swing states are Arizona, Florida, Indiana, Iowa, Michigan, Minnesota, Missouri, Nevada, North Carolina, North Dakota, Ohio, Pennsylvania, Tennessee, West Virginia and Wisconsin.
State-by-state private-industry employment figures are based on 2016 averages from the Labor Department’s Quarterly Census of Employment and Wages. Because the QCEW must suppress data for certain states where few businesses are reporting, totals may be incomplete. That will result in conservative estimates of the “swinginess” of an industry. To compensate, we excluded about 40 industries in which the majority of workers weren’t reported at the state level.
All trade figures are from the U.S. International Trade Commission and are based on 2015-2017 averages. In the cases where the industries reported by USITC didn’t perfectly line up with the industries reported by the Labor Department, we redistributed the employees for the missing industry proportionally among other industries in the same narrow sector.