Kleptocracy Inc.

Anne Applebaum, who wrote with Autocracy Inc. one of the best books of 2024, in my view, has written an article in the Atlantic in April, where she claims that the second Trump term is increasingly becoming a Kleptocracy. Whether this is true is up for debate. Still, a new paper has provided direct evidence that, already during Trump’s first term in office, Republican donors received extraordinary favours while Democratic donors were actively punished.

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But what drove the likelihood of a company getting a tariff exemption? Here are some key results from the paper.

Change of likelihood to get a tariff exemption

Source: Fotak et al. (2025)

If a US business actively lobbied for tariff exemptions, it was 1.7% more likely to get one than a company that applied and then waited for a government decision. That is simply what lobbying does: It influences politicians’ decisions. There is nothing extraordinary here.

However, if the company donated to the Republican Party, it increased the probability of getting an exemption by 5.6%. In comparison, companies that donated to the Democratic Party saw the likelihood of approval drop by 17.2%! If a company donated to both parties, it saw the probability of approval drop by 5%.

A 5% increase in the approval probability for Republican donors may not sound like much, but the authors of the research paper state that the average firm made some 20 applications for tariff exemptions. A one standard deviation increase in the money donated to the Republican Party (c.$6m) then increased the company’s total assets (by imports being made cheaper because of tariff exemptions) of c. $39m. Meanwhile, a one standard deviation increase in donations to the Democratic Party (c.$1.8m), resulted in a total asset hit of c.$34m. Given the average total assets of the firms in their sample, they estimate that donating to the Republican Party increased the total firm value of companies by 0.5%.

And that was in 2018, when tariffs were much smaller and more selective. Imagine the possibilities of turning the US into a Kleptocracy today.