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How trade affects U.S. elections

- May 13, 2015

Teamsters protest the granting of fast-track trade authority for President Obama (source: teamsters.org)
Patrick Egan showed earlier this week that most Americans have thought little about trade policy. One might be tempted to conclude from this that the current controversy over granting President Obama “fast track” authority doesn’t really matter for U.S. elections. Yet there are some good reasons to think otherwise.
The most obvious point is that while most people lack strong views on trade, some groups have a lot to win or lose from trade deals, such as the proposed Trans-Pacific Partnership (TPP). For example, the tea party and labor unions have teamed up to oppose the deal. Well-organized and intense opposition or support can affect campaign funding or deliver specific constituencies. Still, Alexandra Guisinger has shown that trade policy remains a low salience issue even among highly affected groups.
Less well understood is that the economic and social effects of trade itself affect elections. Yotam Margalit showed in an article (temporarily ungated) in the American Political Science Review that job losses that resulted from foreign competition (such as offshoring) negatively affected the incumbent’s vote share in recent U.S. presidential elections to a greater extent than job losses caused by other factors. This effect was smaller in geographic areas where more workers received special job training and income assistance for those harmed by foreign competition. Margalit also offers evidence in this article and elsewhere that people fear not just the economic consequences of free trade but also what they perceive to be its social and cultural consequences. This may explain why job losses to foreign sources have larger electoral consequences than other job losses.
A new working paper by Bradford Jensen, Stephen Weymouth, and Dennis Quinn shows that the incumbent party in U.S. presidential elections is rewarded electorally when exports increase but punished when imports increase. If the trade balance moves in a favorable direction from the U.S. perspective, the incumbent party candidate does better in the elections. The trade balance is thus part of the economic fundamentals that are so important in U.S. elections.
Like Margalit, they also look at county level election results. During a period of increasing free trade (1992-2012) incumbents have performed better in geographical areas with concentrations of high skilled tradable goods (winners of free trade) and worse in areas characterized by concentrations of low-skilled tradable goods (the losers of free trade). Understanding where the winners and losers of globalization reside may thus help us grasp where the Democratic (or Republican) candidate does better or worse than we would otherwise expect in the upcoming election.
Moreover, trade flows are correlated with public support for liberal or conservative policies. Scholars such as David Cameron and Dani Rodrik have shown that countries with economies that are more open to free trade on average also have larger public sectors that compensate workers for the losses and risks associated with free trade. Erica Owen and Dennis Quinn find in an article in the British Journal of Political Science that U.S. employees of import-competing, export-oriented, and multinational firms increase their support for more government intervention when imports increase and decrease their support for such policies when exports increase. So, a change in the trade balance could affect partisanship.
Trade may thus affect elections not because large majorities of Americans have strong views on trade policy but because sizable numbers of Americans observe the way trade affects their personal or their community’s economic and social well being. This may not necessarily translate into immediate gains or losses for a candidate who supports or opposes a trade treaty. Yet, we should not think that trade policy has no electoral consequences simply because few Americans have strong policy views about it.