Global retaliation against U.S. tariffs cost Trump in Congress, study says

Trade wars may be “easy to win,” according to U. S. President Donald Trump, but congressional seats? Not so much.

Trump’s Republicans lost a handful of seats in last year’s midterm elections due to the retaliatory tariffs issued by Canada, China, the EU and Mexico, a new study found. That means Canada’s response played a small role in wrestling control of the House of Representatives to the Democrats last year.

The study measures the effect at a county- level of U.S. tariffs, the global retaliatory tariffs and government subsidies designed to help those hurt by the retaliation. Along with health care outcomes, which was a major policy issue in the election, the study also controls for a variety of other demographic and economic data to untangle the motivation behind the voting patterns.

“These findings suggest that both the trade war and health care policy contributed meaningfully to the 2018 ‘ Blue Wave,’ in which Republicans lost a total of 40 House seats,” the paper reads. “Republican candidates lost ground in counties that were adversely affected by retaliatory tariffs, but saw no discernible gains in counties where workers were disproportionately protected by new U.S. tariffs.”

Republicans saw some small gains from a $ 12 billion federal program to compensate Americans who were targeted by the global retaliation, but not enough to save or win any seats in Congress. The study did find that the subsidy had a “substantial” effect in the small number of counties that received the largest payments but they didn’t cover large enough area geographically to affect any House races.

In April 2018, China unleashed retaliatory tariffs on U. S. goods like aluminum, pork, and soybeans, in response to Trump’s global tariffs on steel and aluminum. Canada soon followed suit at the end of May with an eclectic list of items, like sleeping bags, maple syrup and bourbon, that would receive a 10 per cent tariff.

The study found that China’s tariffs on U. S. farm exports may have been particularly effective in hammering the Republican voteshare in the election.

The National Bureau of Economic Research paper, which was written by economists Emily J. Blanchard, Chad P. Bown and Davin Chor, estimates that the tariffs were responsible for five Republican losses, while concerns over health care pushed eight seats to the

Democrats. In some districts, the combined effect of the two issues made the difference. While the health care issue was more widely spread across the country, voter concern about the economic effects of the tariffs tended to be highly concentrated in specific areas.

This isn’t the first paper to find the trade war negatively affecting Republican prospects, but it is the first to estimate the amount of seats lost and the effect on vote-share.

The study found the effects of the retaliatory tariffs were amplified in districts pegged as “swing” ridings that the Democrats would likely be targe ting. That means Canadian policy-makers will be pleased to hear the tariffs worked exactly as they intended. The trade measures were designed to hit Republicans hard in battleground districts and in the hometowns of prominent politicians. And, to insulate Canadians from the effects, they were also targeted at items Canadian buyers could easily replace with exporters from another trading partner or from within Canada.

REPUBLICAN CANDIDATES LOST GROUND IN COUNTIES THAT WERE ADVERSELY AFFECTED BY RETALIATORY TARIFFS.