Researcher ORCID Identifier

0009-0000-7221-0646

Graduation Year

2025

Date of Submission

4-2025

Document Type

Open Access Senior Thesis

Award

Robert Day School Prize for Best Senior Thesis in Economics and Finance

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Serkan Ozbeklik

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2025 Eddie Z. Wei

Abstract

This paper examines the consumption response to the 2018 US-China trade war. While prior research has largely focused on economic outcomes such as export values, income, and employment, trade policies may also have salient distributional consequences for consumption. On one hand, import tariffs may boost well-being in regions with greater employment in protected sectors, such as manufacturing. On the other hand, retaliatory tariffs may raise prices overall and depress consumption in areas more reliant on the Chinese market, such as agriculture. To explore these dynamics, I construct a novel dataset of county-level taxable sales, capturing both household and business spending. Using a fixed effects model, I find that greater exposure to import tariffs did not significantly increase consumption. In contrast, a one-unit increase in retaliatory tariff exposure is associated with a 0.157 percent decline in real taxable sales per capita. These results, however, disappear once I analyze retail sales data across five sectors, which consist of transactions to the final consumer. Overall, my findings suggest that household spending in counties highly exposed to the trade war did not meaningfully differ in the short run compared to less affected areas.

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