Trade Protection along Supply Chains

We study the effects of trade protection along supply chains. We focus on temporary trade barriers against China, which has been the main target of US trade protection during the last decades. To deal with endogeneity concerns, we use an instrumental variable strategy, exploiting changes in the identity of swing states across presidential terms and heterogeneous exposure to these political shocks across industries. We find that politically motivated trade protection generates winners and losers: It fosters employment growth in protected industries but hampers employment growth in downstream industries. Our estimates imply a negative overall impact on US jobs. (JEL D72, F13, F14, L14, O19, P33)