Journal of Financial and Quantitative Analysis Vol. 60 No. 6 2025

The Political Economy of Tariff Exemption Grants

Veljko Fotak¹; Hye Seung Lee²; William L. Megginson³; Jesus M. Salas⁴

¹ University at Buffalo School of Management and Bocconi University Sovereign Investment Lab · ² Fordham University Gabelli School of Business · ³ The University of Oklahoma Michael F. Price College of Business and University of International Business and Economics · ⁴ Lehigh University Perella Department of Finance

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.

DOI

10.1017/s0022109024000437

Volume

60

Issue

6

Pages

2678-2717

Language

en

Sources

openalex crossref bibtex:phds-export.bib

Cite

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