Trump trade war claims more victims: GOP candidates

Voters casting ballots in November 2018 in Carmel, Indiana. While the GOP incumbent, Rep. Susan Brooks, won reelection that day, she is choosing to retire rather than face voters again next year.

Donald Trump’s trade war with China is piling up a quite a list of people who have lost jobs, livelihoods, and sometimes their homes: farmers, autoworkers, and factory employees. Now you can add Republican politicians to the list.

An academic paper from Dartmouth’s Tuck School of Business aims to answer the question, Did Trump’s Trade War Impact the 2018 Election? The authors of the paper, all economists and two of whom are Dartmouth faculty, conclude: No fewer than five Republican House candidates in competitive districts lost races in 2018 specifically because of Trump’s imposition of tariffs and how those tariffs affected the voters in those districts. Even worse for Republicans, concern over health care may have cost the GOP eight House seats. As one of study’s authors told NPR:

“It was all pain and no gain,” said Emily Blanchard, an economist at Dartmouth College’s Tuck School of Business. “And we were sort of surprised by this.”

Blanchard and her fellow researchers found that the hit to Republicans was strongest in the most competitive districts, where opposition to the trade war rivaled health care as a politically powerful issue.

“If you’re in a close district, this is a little note to wake up and smell the coffee and maybe be worried about some of these pocketbook issues,” Blanchard said.

The study’s authors spell out their ideas in the paper’s abstract:

We find that Republican candidates lost support in the 2018 congressional election in counties more exposed to trade retaliation, but saw no commensurate electoral gains from US tariff protection. The electoral losses were driven by retaliatory tariffs on agricultural products, and were only partially mitigated by the US agricultural subsidies announced in summer 2018. Republicans also fared worse in counties that had seen recent gains in health insurance coverage, affirming the importance of health care as an election issue.

Imagine that. Trump screws over some of his base voters by starting a trade war with China. He imposes tariffs on $50 billion in imports from China. China retaliates by imposing their own tariffs of $50 billion on U.S. imports, agricultural products such as soybeans, and those farmers lose — likely permanently — nearly all of their biggest market. The retaliatory tariffs on both sides have only gone up from there. Meanwhile, farm bankruptcies are up 24 percent this year over 2018, and the total farm debt for 2019 is expected to hit a record high of $416 billion, with net farm income projected to be down 29 percent.

Trump still has much support in farm country. Before the midterm elections, an October 2018 poll showed that he was still supported by 62 percent of farmers. Yet by August 2019, Trump’s approval rating was nine points underwater in Iowa.

Farmers tend to vote Republican, and most still will. But for some, it could be the case that personal economics trumps party loyalty.

Even though farmers received $28 billion in agricultural subsidies over the last two years (more than twice the amount of the 2009 auto bailout of Detroit’s Big 3 automakers), the subsidy payments (SOCIALISM!) didn’t match the amount of income lost. Agriculture Dept. officials now say that a third round of agriculture subsidies is inevitable, no doubt to keep courting the farm vote.

As an Illinois farmer told Bloomberg Businessweek in September at a farm show attended by Agriculture Secretary Sonny Perdue:

“The aid package that has come in is a relief, and it softens the landing, but it’s not a solution, it’s a Band-Aid,” says Stan Born, a farmer who attended the event. When asked if the payments make him whole, Born, who grows 500 acres of soybeans near Decatur, responds, “Of course not.” He’d rather have free trade, he says.

They’d rather sell their crops. At least some of those voters decided in 2018 that they didn’t want to vote for Republicans because of Trump’s trade war, and it was enough to tip those races to Democrats.

The swing districts in the Dartmouth study were identified as congressional districts where Trump won between 40 and 60 percent of the vote in 2016. The researchers used two constructs: the “tariff shock,” defined as a county’s average per-worker exposure to the increase in U.S. tariffs on imports, and the “retaliatory tariff shock,” defined as the corresponding per-worker exposure to the retaliatory tariffs against U.S. exports.

Quantitatively, our regression estimates suggest that the trade war can account for roughly one-tenth of the observed nation-wide decline in Republican House candidates’ vote share between 2016 and 2018. In comparison, the role of health care policy accounts for about one-fifth of the decline in Republican support at the national level. Focusing on politically competitive counties, the estimated effect of retaliatory tariffs is substantially stronger and quantitatively commensurate to that of health care, with each force large enough to account for one-quarter of the decline in Republican support in these counties. The trade war and health care thus appear to have hurt Republican candidates where swing voters matter most.

Every time Trump faces a bad news cycle (lately, that’s most days), he tries to change the subject by promising that his team “almost” has a new trade deal with China. The trouble is, he’s been making these claims ever since he started the trade war, and that trade deal is no closer than it was when he and Chinese President Xi Jinping shared their beautiful chocolate cake at Mar-a-Lago in April 2017, or when the first tariffs were announced in January 2018.

Trump recently gave a speech to the Economic Club in New York, and once again he claimed the two sides were “close,” but he had no deal to announce. As the NPR story put it:

“A significant phase-one deal with China could happen — could happen soon,” he said. “But we will only accept a deal if it’s good for the United States and our workers and our great companies.”

Every time Trump offers such a trade tease, the markets react positively. Then, when the bubble bursts when no such deal surfaces, the markets sink again.

The Dartmouth study showed a loss of only five seats because of the trade war and eight over health care, but a loss is a loss, and losses add up to winning or losing control of both Houses of Congress — and the White House. Today’s Democratic candidates, whether running for a House seat, a Senate seat, the presidency, or any state office, would be smart to campaign on Trump’s trade war and health care and not write off voters whom they consider beyond reach. As the Bloomberg Businessweek story points out:

Any waning of rural America’s enthusiasm for Trump could doom the reelection of a president who eked out his 2016 victory with a combined margin of fewer than 80,000 votes in three traditionally Democratic-leaning states.

Because if just enough of those voters change their minds, that could mean a victory for Democrats next November.

Originally posted on Daily Kos on Nov. 17, 2019.

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