Trump’s wall and gourmet coffee sales: The effect of a consumer boycott in Mexico

Abstract

AbstractWhen President Trump announced a threat to impose a 20% tariff on Mexican imports to pay for a wall at the Southern border, social media users in Mexico called for a boycott of American brands. Based on a difference‐in‐differences approach, we estimate the effect of the boycott on the sales of 633 gourmet coffee establishments of American and domestic brands in Mexico. We use credit and debit card transactions from Mexico's largest bank within a ±8‐week window around the presidential announcement and contrast them with similar windows the year before and the year after. Our estimates indicate that the boycott reduced the sales of American‐brand establishments by 19% during its first week. Its effect decayed but remained significant for at least 8 weeks. The effects are mostly observed at the extensive margin (number of transactions) rather than at the intensive margin (average ticket). The sales of domestic‐brand establishments increased from the second week on, and the increase peaked at 26% in the fourth week. We found some heterogeneity in the effects across genders and age groups.