McDonough School of Business
News Story

International Trade’s Impact on U.S. Presidential Elections

With the U.S. presidential general election right around the corner, it is anyone’s guess who will be the nation’s next Commander-in-chief. One day polls are predicting Hillary Clinton the victor and the next day Donald Trump is forecasted as the winner. As the country monitors the seesawing poll predictions, a new study offers insights into the presidential election outcome.

Research originally released by the National Bureau of Economic Research, and currently under review at a leading academic journal, examines whether workers across the United States who are affected by international trade impacts who wins the presidency. The study, “Winners and Losers in International Trade: Effects on U.S. Presidential Voting,” is authored by Brad Jensen, an economist and professor of international business and economics at Georgetown University’s McDonough School of Business; Dennis Quinn, professor of international political economy with a focus on public policy at Georgetown’s McDonough School of Business; and Stephen Weymouth, an assistant professor of international business and public policy at Georgetown McDonough. In contrast to other studies, this research examines the electoral implications of the increasing tradability of services and the large U.S. surplus in services trade.

The research shows for the first time on a national scale that increasing imports in the United States is associated with decreasing support for incumbent presidents and their parties. However, when the United States has increasing exports, the incumbent presidents and their parties benefit and receive more votes.

“Our results indicate that voters punish the incumbent party against a backdrop of rising imports, but with increasing exports, the incumbent party will have the advantage,” Weymouth said. “Our study informs the heated debate over trade policy in the United States and sheds light on why presidential candidates have come out in opposition to trade agreements like the Trans-Pacific Partnership (TPP). Many manufacturing workers in swing states are not happy with how trade agreements have exposed their jobs to competition from abroad. ”

The research also shows that variation in trade exposure in individual counties influences how people vote. The authors find an increase in incumbent party votes in counties with concentrations of employment in high-skilled tradable services, such as consulting, as well as skill-intensive goods, such as petrochemicals. In turn, the authors find decreases in counties with concentrations of employment in low-skilled manufacturing. Firms in low-skill, labor-intensive tradable manufacturing industries, such as apparel, tend to face greater import competition, particularly as trade agreements have brought previously trade-isolated countries, especially China, into the global economy.

“Incumbent parties are particularly vulnerable to losing votes in swing states with high concentrations of low-skilled and low-wage manufacturing workers,” Jensen said. “We’ve found the economic effects of international trade can influence who wins the U.S. presidency.”

Importantly, the research finds the estimated negative effects of low-skilled manufacturing are largely found in the swing states. Examining the crucial swing states, the Georgetown McDonough researchers found the negative effect of comparatively disadvantaged manufacturing employment on incumbent vote shares is approximately three times as large as in non-swing states, which is a powerful Electoral College incentive to protect the sector and is politically consequential. In contrast, the estimated effects of the concentrations of both high-skilled services and high-skilled manufacturing are found only in non-swing states.
“We felt it was important to include trade-exposed service workers in our analysis for three reasons,” Jensen said. “First, employment in the manufacturing industry has been in decline for decades and accounts for less than 10 percent of the labor force. Second, trade in services such as software is increasing and now accounts for 30 percent of U.S. exports. Third, the United States is a relatively skill-abundant country, suggesting it should have a comparative advantage in skill-intensive industries and tradable services are skill-intensive.”

“We find an Electoral College incentive to protect the manufacturing sector and to oppose trade agreements,” Quinn said. “Our study conducted over the past four years and examining decades of economic data has found that international trade directly influences presidential elections in the United States. As the economy is just beginning to slow and other countries aren’t buying U.S. manufactured products like they have in the past, swing state voters are very much being impacted. Our research explains the current conditions for Donald Trump support and why the presidential race is so close.”