Protectionism, Global Supply Chains, and Domestic Lobbying: Evidence from the U.S.–China Trade War

Abstract

This study examines how firms integrate their corporate political strategy with market strategies of supply chain deployment and market positioning within the context of the U.S.–China trade war by using a novel firm-level panel dataset and a difference-in-differences research design. I find that U.S. multinational firms lobby domestic policymakers and regulators more actively on trade issues when facing greater disruptions to their global supply chains following the launch of the trade war, particularly when firms source more specialized inputs from China and make greater commitments to Chinese markets. I also find that multinationals that lobby not only gain greater access to the policymaking process to “change the rules,” but they also obtain more favorable policy implementation outcomes for themselves by “bending the rules.”