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

Author

Listed:
  • Xinming Du
  • Lei Li

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.

Suggested Citation

  • Xinming Du & Lei Li, 2025. "When Growth Stumbles, Pollute? Trade War, Environmental Enforcement, and Pollution," CRC TR 224 Discussion Paper Series crctr224_2025_658, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2025_658
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp658
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    More about this item

    Keywords

    Air pollution; environmental enforcement; political incentive; trade war;
    All these keywords.

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • F18 - International Economics - - Trade - - - Trade and Environment

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