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The Political Economy of Tariff Exemption Grants

Author

Listed:
  • Fotak, Veljko
  • Lee, Hye Seung (Grace)
  • Megginson, William L.
  • Salas, Jesus M.

Abstract

We investigate whether firm-level political connections affect the allocation of exemptions from tariffs imposed on $US 550 billion of Chinese goods imported to the United States annually beginning in 2018. Evidence points to politicians not only rewarding supporters but also punishing opponents: Past campaign contributions to the party controlling (in opposition to) the executive branch increase (decrease) approval likelihood. Our findings point to quid pro quo arrangements between politicians and firms, as opposed to the “information” channel linking political access to regulatory outcomes.

Suggested Citation

  • Fotak, Veljko & Lee, Hye Seung (Grace) & Megginson, William L. & Salas, Jesus M., 2025. "The Political Economy of Tariff Exemption Grants," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 60(6), pages 2678-2717, September.
    • Handle: RePEc:cup:jfinqa:v:60:y:2025:i:6:p:2678-2717_4
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