Do Political Conflicts Influence Daily Consumption Choices? Evidence from US-China Relations

Does political conflict with a foreign country influence domestic consumers' daily consumption choices? This study exploits the volatile US-China relations in 2018 and 2019 to analyze whether US consumers reduce their visits to Chinese restaurants when bilateral relations deteriorate. We measure the degree of political conflict through negativity in media reports and rely on smartphone location data to measure daily visits to over 190,000 US restaurants. A deterioration in US-China relations induces a significant decline in visits to Chinese restaurants, while visits to American restaurants increase. We identify consumers' age, race, and cultural openness to mediate the strength of this effect