Trading down or cutting back? US household consumption responses to the US-China trade war

This article examines whether lower household consumption growth in US counties more exposed to the 2018–19 US-China trade war reflected lower quantity growth or ‘trading down’ to cheaper goods. Using barcode-level scanner data, we measure purchase quality and find a national shift towards lower-quality products, but no evidence that more tariff-exposed counties traded down more intensively. This conclusion is robust to alternative quality rankings and split samples by baseline income and quality. We also find some evidence of lower quantity growth in more tariff-exposed counties. These findings imply future policy should not assume households will offset tariff shocks by trading down.