Picture a firm that finds out which of its imports are about to get hit with a new tariff, weeks before that tariff list becomes public. Is that just good instinct, or is the firm lobbying specifically to find out that information? Lobbying is usually framed as a tool for influencing policy outcomes, and most of what happens behind closed doors stays invisible to the public. Firms don’t only lobby to sway policy decisions. They also lobby to learn things, and if that means gaining access to nonpublic information, it can raise real ethical or even corruption concerns. During a trade war, that kind of early intelligence can be just as valuable as a tariff exemption, since it lets a firm adjust its supply chain before the rest of the market catches up.
A recent paper and policy by Bo Yang (University of Hong Kong) sets out to answer whether firms lobby specifically to gain early insight into pending trade policy and then use that insight to move faster than everyone else. Yang finds that lobbying firms increased their imports of products that would later be tariffed, before those tariffs were even announced. He argues this happened because lobbying gave these firms early insight into which products were likely to be targeted, letting them stockpile strategically instead of scrambling once tariffs took effect. That early advantage paid off twice. It let firms adjust their supply chains ahead of time, and it reduced how often they later needed to lobby again to request costly tariff exemptions. These effects have implications for the regulation of lobbying activities, and align with growing public demand for more clarity on corporate political influence
Accordingly, Yang builds the analysis around the theory of information-seeking lobbying. The argument is that information gained through information-seeking lobbying gives firms a strategic market advantage. If that’s true, lobbying firms should stockpile selectively rather than broadly. They should be more likely to stockpile non-List 1 products that would soon be added to a tariff list, since they’d know those products were coming, and less likely to stockpile products that would remain untargeted or only be tariffed much later, since there’d be no reason to rush on those.
Yang focuses on 2018 Q2, the window bookended by the United States Trade Representative’s announcement and rollout of three lists of tariffed Chinese products between April and September. To gather the data, he analyzed bills of lading records from the FactSet Shipping Transactions database, tracking Chinese imports for 717 US companies from January 2017 to September 2018. Cross-referencing this against all four USTR tariff lists showed which products were tariffed and when. Lobbying activity came from the LobbyView database, where firms’ public disclosures made it possible to separate trade-related lobbying from everything else. That distinction turned out to be important. Trade-related lobbying jumped from 3.9% of all lobbying issues at the end of 2017 to 5.0% once the trade war began in Q3 2018, and lobbying specifically about China rose even more sharply within that, from 7.7% in Q4 2017 to 27.6% by Q3 2018. Yang also drew on voluntarily disclosed trade association memberships and data from the Center for Political Accountability to gauge how effective collective lobbying was compared to firms acting alone.
Yang’s firm-product-month data shows that in 2018 Q2, lobbying firms imported 93%-161% more non-List 1 products than firms that didn’t lobby. That gap disappeared the moment tariff lists were publicly announced, which rules out the possibility that lobbying and non-lobbying firms simply had different stockpiling habits to begin with. The pre-trade-war data backs this up too. There was no meaningful difference in import volume between the two groups before the war, and lobbying firms weren’t already importing more List 2 or List 3 products before March. This suggests that firms lobbying for policy information during that pre-announcement window had a real edge in deciding what to stockpile. That edge paid off again later: lobbying firms went on to file fewer tariff exclusion requests for the exact products they’d already stockpiled, sparing them a second round of costly engagement with the government. However, lobbying through trade organizations wasn’t nearly as effective at producing this stockpiling advantage as lobbying done by individual firms.
Beyond the legal and ethical questions this raises, and the public’s general distaste for backroom dealings between corporations and politicians, this pattern also threatens market competition. Larger firms invest more heavily in lobbying than smaller ones do, which hands them an information edge their smaller competitors simply don’t have. Yang’s proposed fix is to tighten lobbying disclosure rules, specifically requiring firms to report the actual purpose of their lobbying activities, not just that it happened.