Working Paper: Examining the Role of Consumer Preferences on U.S. Individuals' Trade Policy Views

Abstract

This paper analyzes the role of U.S. consumers’ preferences, along with other potential determinants indicated by international trade theories, on citizens’ trade policy views in 2016. Specifically, it examines the association between U.S. individual- and household-level consumption and citizens’ perception of trade policy, in particular, whether additional import restrictions should be placed by the United States on foreign products. I hypothesize that individuals whose consumption bundles largely consist of globally-imported goods are less likely to favor additional import restrictions. I construct two expenditure-weighted consumer exposures to trade measures, which are expenditure-weighted import penetration ratio and expenditure-weighted applied tariff rate. Using a logistic model, I find that the consumer exposures to trade measures calculated using global trade data are not significant predictors of trade policy views. Furthermore, regression results with expenditure-weighted import penetration ratio calculated using Mexican versus Chinese import data show mixed patterns. While a higher expenditure-weighted import penetration ratio for imported consumption goods from Mexico is associated with a lower likelihood of support for protectionism, the same measure calculated using Chinese import data is not significantly associated with U.S. individuals’ trade policy preferences.