Rethinking Trade as a Strategic Tool

For years, the conventional wisdom among political and economic leaders has been that expanded global trade leads to peace. This belief, rooted in liberal theory, suggests that countries with strong economic ties are less likely to go to war. However, in an increasingly competitive world, this idea is being challenged. Trade is no longer simply a neutral economic activity; it has become a powerful tool of national strategy.

The Strategic Imperative of Trade Policy

The long-standing economic partnership of the United States (U.S.) with China offers a clear example of this new reality that many established democracies face today. While Americans have enjoyed the benefits of inexpensive goods from China, this engagement has also directly contributed to China’s emergence as a major global power and a military competitor. Since the 1990s, Beijing’s economic growth has funded a significant expansion of its armed forces and a shift toward manufacturing its own advanced military technology. This move from importing weapons to producing them marks a critical strategic development that cannot be ignored.

Beijing's Growing Regional and Global Influence

China’s assertive stance on the international stage presents a direct challenge to global stability. The country’s broad claims over the South China Sea—a vital waterway for nearly a quarter of all global trade—are not only legally questionable but also a source of ongoing tension. This aggression, combined with its long-held ambitions toward Taiwan, creates a potential flashpoint in the Indo-Pacific. U.S. officials have openly warned of the “devastating consequences” of a conflict. Furthermore, China's strengthening relationships with nations like Russia, Iran, and North Korea signal a coordinated effort to undermine Western leadership on a global scale.

National Security Implications

For the U.S., these geopolitical shifts mean that control over critical supply routes could be weaponized by an adversary, posing a genuine national security risk. While the U.S. has built a robust network of security alliances in Asia, the effectiveness of these partnerships depends on a foundation of stable economic relationships. Today, trade policy is not just about a country’s GDP. It is a source of leverage in the geopolitical arena.

A New Framework for Trade

The United States and other established democracies need to redefine their approach to global commerce. Instead of forging deeper economic ties with geopolitical rivals, they should prioritize partnerships with developing democracies that share their values, such as the Philippines, Thailand, and Indonesia. These nations offer strong manufacturing capabilities and political alignment. By reorienting supply chains toward these partners, established democracies, such as the U.S., can enhance both their economic resilience and strategic position.

Past agreements like the US-Mexico-Canada Agreement (USMCA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) show that trade can be a tool for diplomacy and for strengthening political stability. While a full economic separation from China will be a gradual process, current global events make starting this realignment an urgent necessity.

Conclusion

In the modern world, trade policy must be built on the principles of resilience, shared values, and strategic foresight. To protect their democratic institutions and promote global stability, the developed countries must integrate trade and national security into a single, cohesive strategy.

Read the full article I originally published in Diplomatist: 

Integrating Trade with National Security Policy - Diplomatist