Your standing up against racism is a right way to help minimize the practice of people being racist. Your SO feels the same way about it as you, but he also doesn’t want drama and to feel bad about his family. So your dropping it is good for your relationship.

Do you see these relatives often in person? I hope it doesn’t get into an argument and sever your family relationship. Maybe one day you can calmly educate them? If that’s not possible, maybe you can quickly change the subject saying something like, “That’s racist and I won’t tolerate it spoken around me”, and IDK what would happen.

Not long ago, people would sometimes make a politically incorrect comment (not to minimize those comments at all), but mostly they would be ignored or told to knock it off, not encouraged. Right now, an issue like racism, is not blatantly exhibited among good people in any way at all. You may want to question what kind of people your SO’s family is and question if you want to be associated. Is he really like them? Why isn’t he setting them straight?