Trade lobbying works (for big firms): Evidence from the China trade war

Is trade lobbying effective and does its effectiveness vary across firms? Using requests for relief from China trade war tariffs, we demonstrate that lobbying for specific trade policies contributed to securing those exact policies, an elusive target in the long-running trade lobbying literature. We further argue that lobbying should be most impactful for big companies because policymakers prioritize jobs and growth when allocating a limited number of policy favors. In line with this, we find that lobbying for tariff reductions by large firms was hugely more effective than for small firms, though with one major exception: requests from firms that owned foreign subsidiaries in China were overwhelmingly rejected. Large firms are powerful, especially when their interests align with policymakers’ economic policy objectives.