I don't think anyone has written a book on the topic or done the serious in-depth archival research of first-hand accounts, so I can't give you a blow-by-blow report of how it affected everyday life. However, in part, that is because it didn't affect many people's everyday lives very much at all, at least not at first. AIDS was more or less not present in the USSR in the first half of the 1980s, or at least not detected, and certainly not as a topic of public concern the way it was in the United States.

In the second half of the decade, however, AIDS became an immediate reality and a political tool, in multiple ways. The first AIDS cases were officially detected in the USSR in 1985, and for the next two years only a dozen or so more followed. Compared to the thousands and then tens of thousands detected in the US in the early '80s, this was quite a lucky break for the USSR, one might think. Except maybe not.

To be clear, in many respects, the USSR was quite effectively able to prevent the transmission of AIDS, first into the country and later within it. (At first.) The Soviet border was never completely closed, of course, but the relative lack of contact between Western Europe and the Eastern Bloc almost certainly did mean that the disease entered the country later and much less often than it did Europe and the Americas. The USSR also tested aggressively, early, and often… sort of. Sometimes. More on that later.

Of course, it was too good to really be true. Just because the Soviet authorities didn't detect any cases until 1985, and just because they only detected a few hundred for the rest of the decade — that doesn't mean that there were really that few infections. According to virologists, the real numbers may have been much higher, by orders of magnitude, despite the supposedly strong testing regime in place. According to some medical researchers, the USSR may have had more AIDS infections per capita in 1987 than anywhere else in Europe, and simply reported next to none of them. (I don't like drawing facile parallels where I'm not an expert, but in the case of Russia between AIDS and COVID-19, there are some clear ones, and I can't resist.)

And that is where we finally get to the good stuff: the political narratives that developed around AIDS in the USSR — what Susan Sontag calls "AIDS and its metaphors." I've been trying to be sensitive about the fact that AIDS is now believed to have first infected humans in equatorial West Africa, and that it was transmitted to Europe and the Americas soon thereafter. The Soviets, as a general rule, though, were not what you would call sensitive about this fact.

At first, then, AIDS was described as a foreign disease, western, perhaps even bourgeois. Even as the Soviet Ministry of Health admitted that dozens and then hundreds were infected by the end of the decade, it continued to assert that the majority were foreigners, especially US-Americans and Africans. Soviet citizens were advised not to have sex with foreigners, especially Americans, but most of the brunt of the stigma fell on African students (and here's an answer I wrote about them in the USSR more generally). Throughout the late '80s, newspaper opinion columns drew xenophobic links between the AIDS pandemic and Africans, and some African students were thrown out of the country upon testing positive. I don't have access to figures, but extralegal beatings of foreign, often dark-skinned students, already sadly common incidents in cases of interracial relationships, almost certainly increased in frequency. Racist beliefs about interracial sex leading to impurity can only have been strengthened by AIDS.

As much as xenophobia might suggest that Soviet citizens were afraid of AIDS, ironically, the official narrative claimed the exact opposite. Minister of Health Yevgeny Chazov, to take a relatively mainstream example, asserted that AIDS was not spreading in the USSR because Soviet citizens did not have the same loose morals as Americans. (Compare and contrast the famous and only semi-apocryphal story about a woman saying that there was no sex in the USSR, only love.) So when I said that the USSR was aggressive about testing… well, yes, they were, when it suited their narrative that AIDS was a foreign disease spread by loose morality.

The Soviet Union, however, was particularly susceptible to AIDS because of how sex workers often worked. Loose morality had nothing to do with it; people bought and sold sex in the USSR like anywhere else. However, condom usage in sex work was simply not a cultural norm the way it was in the US. Few sex workers asked, and almost certainly even fewer clients would have assented. AIDS had already been stigmatized as a gay disease in the USSR as in the US, so asking a male client to wear a condom might lead to a homophobic outburst as well.

So Chazov was wrong. However, he was wrong not just because people like to have sex in every society. Early on, scientists now argue, AIDS was spread by sharing needles much more than by sexual contact. (And when you consider, between low condom usage and homophobic machismo, how much it must have spread through unprotected sex, that becomes truly horrifying indeed.) Much of the spread occurred through opium usage. The Afghan war and the associated access to Afghan opium, combined with PTSD and other traumatic experiences that needed relief, were hardly the only reasons for opium use in the late USSR — opium goes back to the tsarist period, and we may never get enough data to know if opium use rose in connection with the war. But the war can't have helped.

Nor could the fact that the USSR, despite its claims of excellent healthcare, was deficient in two very important ways: Soviet medicine still relied heavily on reusable rather than disposable hypodermic needles, and even then often ran short of them. So not all of the needle-based transmission of AIDS occurred in drug users, and perhaps not even a majority.

Between a broader cultural xenophobia and the statements of the Ministry of Health, it's not exactly surprising that AIDS was very quickly stigmatized even among the Russian population. At first it was a foreign disease, an American disease, an African disease. Then it became a disease of southerners, Caucasians, Central Asians, because of how they were seen as less than Soviet. (Sadly, it was probably true that they were more likely to become infected, because of greater poverty in those regions forcing them into sex work or causing them to use intravenous drugs.) Then, when it finally became clear that Russians could and did become infected, it became a disease of undesirables, of sex workers, of drug users, of homosexuals. There was a disturbingly common sentiment, as in the US, that AIDS was some kind of justice for those leading "dissolute" lives. In the USSR, this was much less couched in religious terms and much more in moralistic ones, but the shocking callousness towards non-conformers was the same.

All of this was bad enough as it was, with society mostly continuing on intact during perestroika. The end of the USSR in 1991 and the resulting instability, economic upheaval, social dislocation — that can only have made every single factor worse. From drug trade, to palliative drug usage, to shortages of needles. So when I said that AIDS didn't affect people's everyday lives very much, I want to be clear, I did not mean that it was not a serious epidemic. It was. But few cared, and even fewer probably knew they had it, at least not until the Soviet Union was already a thing of the past.

I still haven't touched on your question about how it affected US-Soviet relations, but that's partly because it didn't have a great effect. The only real effect I can think of is Operation Denver, the Soviet disinformation campaign that claimed that AIDS was manufactured in a lab in the US, sometimes with the addendum that it was done intentionally to harm the Black community. Gorbachev, in a 1987 meeting with Secretary of State George Shultz, became indignant about the US's denial of the theory, but Shultz held firm and Gorbachev backed down soon thereafter, promising that the Soviet press would stop claiming it.

And… that was basically it for Operation Denver, at least as far as diplomacy is concerned. Now, yes, that idea has led to untold suffering in the Black community in America, and especially in South Africa, where President Thabo Mbeki's belief in the conspiracy theory led to a delay in the use of retroviral therapy and possibly 300,000 or more preventable infections. But in terms of US-Soviet relations, Operation Denver is a footnote.