Firms that donated to Republican party avoided tariffs in Trump first term – study
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President-elect has threatened to levy tariffs on goods from Canada, Mexico and China, which can burden businesses. With Donald Trump threatening to impose steep tariffs upon 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 party.
While the initial stage of the president-elect’s tariff agenda is designed to hit America’s largest trading partners – Canada, Mexico and China – 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.
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 of 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.