Boliang Zhu (Penn State), Aubrey Waddick (Penn State), Yilang Feng (Illinois, Urbana–Champaign), and Angel Villegas-Cruz (Penn State)
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Abstract
There has been a rise of protectionism and a move toward de-globalization across the globe. It is puzzling why businesses have not been more vocal opponents of protectionist policies. We examine U.S. firms’ public position taking in the U.S.-China trade war. After collecting a comprehensive dataset of firms’ public positions on the trade war, we show only 1.73% of large and very large U.S. firms have openly voiced opposition. One the one hand, we find larger and more productive firms, multinationals, and those more integrated in global supply chains are significantly more likely to openly oppose the imposition of tariffs. On the other hand, firms located in Republican districts are significantly less likely to do so. Our study is among the first to document firms’ positioning in a high-profile trade war. We demonstrate a critical role of domestic politics in silencing firms’ public opposition, which has important implications for globalization.