I Object! The Political Economy of Tariff Exclusion Lobbying
Governments possess a variety of policy tools to manage the economic, social, and political consequences of greater trade liberalization. One means is through broad trade restrictions enacted via policy or legislation. When governments do so, they often implement a procedure through which individual firms can obtain exemptions from the tariff or quota. While a considerable literature examines the political influence of import-competing firms on the tariff-setting process, influence leveraged through costly signals such as lobbying, we know much less about how these firms shape administrative agency-level decisions to grant or deny tariff exemptions to product consumers. This paper begins to fill this gap, by examining the exclusion process implemented in the wake of the 2018 American steel tariffs. We analyze the decisions made by the Bureau of Industry and Security to accept, deny or delay exclusion requests from importers and find that objections filed by domestic steel manufacturers play a central role in shaping the process. We then turn to evaluating the determinants of steel industry objections, finding that objectors tend to focus on product categories that exhibit low product heterogeneity, in particular non-alloy steel products. We find within this category of products substantial variation by firm type: among manufacturers of final goods those that source in part from a foreign parent company are less likely to receive an objection. We also find residual effects of country-of-origin: requests sourcing from the EU or Japan are less likely to receive objections. Overall, the results highlight substantial heterogeneity in importers' ability to access tariff relief.