Tariffs and Exclusions

 I was angered to read that crony capitalism would soon be returning to the United States (Firms Elbowing to Lobby Trump over his Tariffs, New York Times, November 22, 2024: A1, A22). In the first term, the Trump administration excused some firms from having to pay the tariffs on goods imported from China and other countries around the world.

Exclusions from paying the tariff are usually given to firms if a reduction in the quantity of goods they import would harm Americans. However, the Times reports that one study, of 7000 applications for exclusions, found that firms that increased their donations to Republican political entities had a better chance of receiving an exclusion than firms that increased financial support of Democratic entities.

Of course, large firms with a sophisticated lobby staff or consultants, were better able to put forward requests for exemptions, greatly disadvantaging small businesses. I wonder if firms booking into Trump’s hotels had a better chance of getting an exclusion?

We can expect that in the second term, firms will be even better placed to lobby. They have had four years to build up their capacity. Or can we? Trump has always maintained, that it is the Chinese exporter who will pay the tariff not the importer or the American consumer; so shouldn’t the exporter get the exclusion, rather than the lobbying importer?

Krugman made the same point in today's NYT