When Growth Stumbles, Pollute? Trade War, Environmental Enforcement, and Pollution

Xinming Du () and Lei Li ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: This paper studies how perceived risks of economic downturns affect pollution from the perspective of political incentives and environmental enforcement. In the context of the U.S.-China trade war, we find a 1% increase in the U.S. tariff leads to 0.9% and 0.7% increases in SO2 and PM2.5 in Chinese cities. Hourly data suggests the pollution increases are concentrated at night. The surprising findings can be largely attributed to lenient environmental policies enforced by local government officials who are politically motivated. Cities more exposed to tariffs place less emphasis on environmental issues in local government reports and impose fewer fines on firms violating environmental regulations.

Keywords: Air pollution; environmental enforcement; political incentive; trade war (search for similar items in EconPapers)
JEL-codes: F18 Q53 Q56 (search for similar items in EconPapers)
Pages: 65
Date: 2025-02
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