I explore what determines media slant towards foreign nations using the 2018-2019 Sino-U.S. trade negotiation as a testing ground. Using an event study design and coverage by local U.S. newspapers, I analyze how stories about China respond to shifts of U.S. policy towards China, and how this media reaction is determined by owners’ partisan affinity, controlling for readers’ characteristics.
I find that local newspapers with Republican-leaning owners increase the intensity of negative coverage following a shift towards hostile trade policies relative to papers of nonpartisan owners, and they decrease this slant following a conciliatory shift; the opposite is true for Democratic leaning media owners.
To address the potential endogeneity of diplomatic events, I select events that induced significant abnormal price fluctuations of trade-war-related financial securities. I further establish a causal effect of owners’ preferences by exploiting mergers and acquisitions among national conglomerates as a source of variation in political orientation of owners. These findings imply a spillover from domestic policy in the formation of citizens’ sentiment towards other nations: the media, as their lens to view the world, is colored by domestic political polarization.
