A Field Experiment on Business Opposition to the U.S.-China Trade War

The United States's trade war with China proved to be detrimental to a wide swath of U.S. companies, but only a handful of well-connected firms pursued vigorous political action to oppose it. To better understand the constraints to corporate political action, we implemented a field experiment targeted at managers of U.S.-based firms in which we randomly provided original estimates of the costs of the trade war to their industry and company and then measured their willingness to take actions either opposing or supporting the trade war. We find that on the whole, U.S. companies that receive information about the rise in input costs from tariffs are less likely to take political action opposing the trade war, though this effect is highly conditional on respondents' pre-existing beliefs and on the number of tariffs affecting their industries. The information treatment caused the greatest opposition to the trade war among subjects who believed the trade war was harmful and whose companies' industries were affected by the largest array of tariffs. On the other side, subjects who previously believed they were helped by the trade war, and thus for whom the treatment provided contrasting evidence of trade-war harm from many tariffs, grew significantly less likely to support the trade war. Subjects with intermediate beliefs about the benefits or costs of the trade war showed the strongest negative effects from treatment. Finally, we find that partisan affiliation of the company's managers was as strong a predictor of support for or against the trade war as was the company's own vulnerability to tariff-related cost increases, suggesting that partisanship strongly shaped pre-existing beliefs.