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FIRMS THAT DONATED TO REPUBLICAN PARTY AVOIDED TARIFFS IN TRUMP FIRST
TERM – STUDY  
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Callum Jones
January 6, 2025
The Guardian
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_ President-elect has threatened to levy tariffs on goods from
Canada, Mexico and China, which can burden businesses and boost
consumer prices _

Trump throws rolls of paper towels into a crowd of local residents
affected by Hurricane Maria as he visits Calgary Chapel in San Juan.
In his first term companies that donated to the Republican Party
avoided tariffs., (Reuters: Jonathan Ernst)

 

With Donald Trump
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impose steep tariffs
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his return to office this month, US firms are bracing for impact. But
an analysis of Trump’s last presidency identified one way to boost
their chances of avoiding the levies: donating to the Republican
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While the initial stage of the president-elect’s tariff agenda is
designed to hit America’s largest trading partners – Canada,
Mexico and China
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it is US firms that pick up the bill, paying duties imposed on the
goods they buy from these markets. Such additional costs can
prove devastating
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The federal government typically allows a carefully selected group of
businesses from paying such levies. Thousands of companies applied
for exemptions, and permission to import items without paying a new
tariff, during Trump’s first presidency.

An academic study
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which applications were, and were not, successful found that firms
were more likely to win approval if they had significantly donated to
GOP campaigns. Firms that had significantly donated to Democratic
campaigns were meanwhile less likely to win approval, the analysis
found.

“A process that should have been ‘arm’s length’ has been
distorted by politics,” said Veljko Fotak, associate professor at
the University at Buffalo, and one of the report’s co-authors.

Tariff exemptions can provide “years of benefits” worth “a lot
of money” to companies that win them, noted Jesus Salas, associate
professor of finance at Lehigh University, and another co-author. He
described it as “shocking” that companies had been found to be
less likely to obtain support after backing the Democratic party.

There are “many reasons to think some of this behavior is going to
continue” following Trump’s return, said Salas. He cited the
appointment of Jamieson Greer – who served as chief of staff to US
trade representative Robert Lighthizer during Trump’s first term –
to be his new US trade representative. “It’s going to be the same
staff, probably the same ideas, so we’d assume it’s going to be
the same behavior.”

Trump, who has described “tariff” as “the most beautiful word in
the dictionary”, argued on the campaign trail that imposing steep
tariffs on foreign goods would boost the US economy – a claim
disputed by many economists. After pledging to impose universal
tariffs on all imports from overseas, following his election victory
the president-elect threatened to introduce duties specifically on
Mexico, Canada and China.

Any US firm hit by the incoming Trump administration’s
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should not expect support if it has donated to a Democrat, according
to Salas, after what happened last time around. “The problem is that
politicians are getting involved in the process.”

The study examined applications for exemptions from $550bn worth of
tariffs imposed by Trump on China in 2018. Of the 7,015 applications,
14.6% were approved.

For firms that had made significant Republican
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chances of approval were markedly higher – about 18.5% – according
to the analysis. For firms that made significant Democratic donations,
the chances of approval stood at about 11.2%.

The findings underline how the process of winning an exemption is
“subject to political distortions”, said Fotak, who stressed he
was not a political scientist. “If the incoming administration
wishes to use the exemption process to reward supporters, punish
opponents and eventually incentivize contributions, they certainly are
in a position to do so.”

_Callum Jones is deputy business editor for Guardian US_

 

* Tariffs
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* Donald Trump
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* corruption
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