The chaotic disruption of oil transportation through the Strait of Hormuz has strangled global energy markets. With Brent crude trading at $114 per barrel and U.S. gasoline prices averaging $4.45 per gallon, consumers, producers, and governments alike find themselves looking for pathways to minimize exposure.

This kind of disruption is severe, but not new, even in recent memory. The Russian invasion of Ukraine triggered a comparable disruption in global energy markets, driving oil prices from roughly $70 per barrel in early 2021 to $120 per barrel by mid-2022. Western economies were forced to draw on strategic reserves and accelerated efforts toward energy diversification.

The market volatility of the past few years, and, in particular, past few months, has reinvigorated political urgency globally surrounding the adoption of renewable energy. Green energy capacity and deployment have reached historically high levels,already accounting for 88% of new power generation in the United States and China both.1

As demand for alternatives to oil in the form of green energy accelerates, it feeds directly into the evolving economic competition between the United States and China. Control over green technology supply chains has become a central axis of the Trade War and presents an important long-term consideration: How do the United States and China currently compare in their green energy capabilities, and what does the balance imply for the next phase of their strategic and economic competition?

At the same time, both countries have deployed industrial policies to shape domestic green industries. Despite harsh cuts enacted by the Trump administration, the Inflation Reduction Act provides subsidies tied to domestic production and allied sourcing, aiming to build resilient supply chains.2 In addition, “friendshoring” strategies such as the 2023 U.S.–Japan critical minerals deal illustrates the intensifying effort to restructure green energy supply chains around trusted partners.3 China, by contrast, has pursued a long-term state-led strategy. By combining subsidies, low-cost financing, and industrial coordination, China now accounts for over 80% of global solar manufacturing capacity and roughly three-quarters of global battery production.4 More importantly, China’s dominance extends upstream. It refines approximately 60% of lithium, 70% of cobalt, and nearly 99% of battery-grade graphite, creating deep dependencies even for diversified supply chains.5 This upstream control ensures that relocation of final assembly does not eliminate reliance on Chinese inputs.

China’s pricing power further reinforces its position. Supported by economies of scale and state backing, Chinese solar and battery products are often 20–30% cheaper than competitors.6 This allows firms to capture global market share while pressuring Western producers. China accounts for more than half of global renewable energy capacity additions.7 Globally, China’s reach extends through exports and infrastructure development. As the largest exporter of solar panels and electric vehicles, it has established a strong presence across developing markets.8 Through the Belt and Road Initiative, China finances and builds energy infrastructure abroad, embedding its technology within long-term development pathways.9

Green energy has rapidly emerged as a core arena of U.S.–China competition, further extending the Trade War into advanced manufacturing and innovative technologies. The United States has increasingly relied on tariffs and trade restrictions to counter China’s position. In 2024, the U.S. imposed tariffs of up to 100% on Chinese electric vehicles, citing unfair subsidies and national security concerns.10 The tariffs escalated further following the Trump administration’s “Liberation Day” announcement, peaking at 135%.11 In tandem, the U.S. has maintained long-standing section 301 anti-dumping and countervailing duties on Chinese solar products through the U.S. Department of Commerce.12 More recently, this approach has broadened beyond finished goods to upstream inputs critical to the green transition, including expanded tariffs on lithium-ion batteries.13 These restrictions follow tightening restrictions on Chinese semiconductors and advanced technology exports used in electrical systems and computing.14

The two economic powerhouse’s positions on green energy expose a clear asymmetry: China dominates green energy manufacturing and upstream supply chains, while the United States is still working to buildout capacity and secure sourcing alternatives. Trump’s Iran policy, by contributing to oil market instability, is accelerating the global shift toward renewables—unintentionally strengthening demand in sectors where China has positioned itself as a leader. Ultimately, the political consequences of clean energy’s ascendance will depend on whether the United States can translate policy and alliances into scalable production before China’s advantage becomes too deeply entrenched.

Law & Geoeconomics (L&G) and the Trade War Lab are bringing together contributors to a forthcoming special issue on economic security agreements.

Thursday, May 14, 2026 @8:00-9:00am CDT (Zoom)

RSVP: https://forms.gle/2md4PFrGiHmdr6VN9

These arrangements have proliferated rapidly in recent years—spanning supply chains, critical technologies, export controls, and investment screening. Yet they resist easy categorization. They often resemble trade agreements in form but operate as security instruments in practice. Understanding them requires crossing disciplinary boundaries, which is exactly what this discussion aims to do.

This webinar brings together a set of perspectives from leading experts who will help map the emerging landscape of economic security cooperation and what this means for the future of global trade governance. Taken together, the discussion will highlight both the promise and the tension at the heart of economic security cooperation: the desire for deeper coordination in an era of geopolitical competition contributing to greater uncertainty about how far existing institutions can accommodate this shift.

The essays in this special issue also reflects the broader mission of Law & Geoeconomics: to serve as a platform for rigorous, double-blind peer-reviewed scholarship at the intersection of law and power politics in the global economy. We hope you’ll join us for what should be a wide-ranging and timely conversation.

Moderators:
Sarah Bauerle Danzman (Co-Editor-In-Chief Law & Geoeconomics and Associate Professor of International Studies, Indiana University, Bloomington)

Jack Zhang (Director of the Trade War Lab and Associate Professor of Political Science, University of Kansas)

Panelists:

Author: Daniel Drezner (Academic Dean and Distinguished Professor of International Politics at The Fletcher School at Tufts University)

Title: The Oxymoron of Economic Security Regimes

Abstract: As the open liberal economic order suffers from senescence, there has been a surge in economic security agreements—which now exceed 300 worldwide—as governments increasingly prioritize national security through policies like supply chain resilience, export controls, and critical mineral stockpiling. The paper considers the international relations theory underlying this shift – and the theoretical reasons for skepticism. While economic security is becoming a central organizing principle for international economic policy, its implementation faces significant obstacles. These include vague legal underpinnings, the risk of an economic security dilemma, and the lack of credible commitment from leading economies. Consequently, the long-term sustainability of economic security regimes remains highly uncertain.

Author(s): Mireya Solis (Philip Knight Chair in Japan Studies at the Brookings Institution) and Saori Katada (Louis G. Lancaster Chair of International Relations at the University of California, Santa Barbara)

Title: New Terms of U.S.-Japan Economic Security Cooperation: A Trump Reset?

Abstract: This commentary discusses how economic security has become a central issue-area in U.S.-Japan relations. The bilateral cooperation between these two large and technologically advanced economies constitutes a vital component of collective resilience. Facing the shifting geopolitical ground under the second Trump administration, Japan is actively retooling its economic security strategies, finding both areas to deepen its relationship with the United States and at the same time grappling with a less reliable partner. On the one hand, Japan’s build-up of strategic indispensability could help address U.S. needs and enhance Japan’s leverage. On the other hand, due to the Trump administration’s unilateral actions, the Japanese government faces greater challenges in building collective resilience amongst the “like- minded.” Japan has to aim for economic security in an ever more anarchic world, where the great powers are not willing to pitch in to provide (and abide by) a global economic order.

Author: Peter Harrell (Nonresident fellow at the Carnegie Endowment for International Peace American Statecraft Program)

Title: The Economic Security Elements Of America’s New Trade Deals: Economic Security With Hegemonic Characteristics

Abstract: In 2025, the United States began incorporating economic security provisions into the so-called trade agreements that President Trump signed with nearly 20 countries. These provisions cover both offensive tools, such as investments to boost U.S. and allied supply of critical materials, and defense provisions, such as export control cooperation and cooperation on tariffs. The deals are still in their early days and have yet to be implemented. This article provides an early assessment of the economic security provisions of the deals and makes policy recommendations as they move towards implementation.

Author: Maria Shagina (Diamond-Brown Senior Fellow for at the International Institute for Strategic Studies (IISS) Geoeconomics and Strategy Programme)

Title: Export Controls in US-led Trade Agreements

Abstract: Economic security trade agreements are emerging as the United States’ newest instrument for extending export-control enforcement beyond US borders. Rather than relying solely on domestic rules, extraterritorial licensing, and ex post interdiction, the second Trump administration is embedding anti-diversion and enforcement obligations directly into bilateral trade deals—explicitly linking tariff treatment and market access to partner action on export controls, customs enforcement, transaction screening, data sharing, end-use checks, and cooperation on investigations. In agreements, third countries are not merely encouraged to align; they are operationally folded into a US- anchored enforcement perimeter, turning trade partners into auxiliary nodes in the export-control ecosystem. That is what makes these agreements qualitatively distinctive: they are not traditional trade liberalisation instruments, nor are they standard export-control cooperation statements—they are trade contracts that condition preferential tariff treatment on measurable enforcement behaviour.

Author: Henry Gao (CIGI Senior Fellow and Law Professor at Singapore Management University)

Title: Decoding Trump’s Economic Security Agreements: It’s All About China

Abstract: This commentary examines the emergence of a new category of US trade agreements, beginning with the US–UK Economic Prosperity Deal and extending to recent arrangements with Southeast Asian and Latin American partners. Although these agreements fall short of traditional free trade agreements and are often dismissed as shallow because they do not liberalize substantially all trade, this paper argues that such assessments miss their strategic significance. Precisely because they depart from the FTA model, these agreements illuminate the evolving priorities of US trade policy: the elevation of economic security over liberalization, alignment over reciprocity, and control over efficiency. The commentary analyzes the structure and function of these arrangements, showing how they are designed to address the “China shock” indirectly through third countries, and assesses their implications for China, US partners, and the future trajectory of the global trading system.

Law & Geoeconomics (L&G) is a new double-blind peer-reviewed journal that aims to be at the forefront of the emerging interdisciplinary field of geoeconomics. The journal provides a platform for scholars to rigorously analyze:

1) The role of economic power politics in shaping the laws and norms that govern the global economy

2) The role of law in conditioning power politics by economic means

This is an excellent outlet for scholars working on topics such as economic statecraft, weaponized interdependence, economic diplomacy, economic security, economic warfare, or geoeconomics broadly, and we warmly invite you to join us for this event!

America’s current political upheaval surrounding free trade has brought trade policy preferences to the fore. While public discourse often focuses on the divide between labor and the C-suite, this debate misses another critical but overlooked cleavage: firms within the same industry are often divided over trade policy

This divide is rooted in firm-level differences. Large firms with greater capital resources and more competitive business models can pay the high fixed costs that offer them access to export markets and the ability to offshore production. Smaller firms, by contrast, tend to face intensified competition from imports without comparable market access.1 Not all industries rely on global trade: in these sectors, large firms do not benefit from lower trade barriers, producing unified preferences for protectionism among all firms within these sectors. However, in industries characterized by intra-industry trade (IIT) or global value chain (GVC) participation, whether firms are large enough to benefit from global integration divides companies, with large firms favoring liberalization and small firms preferring protectionism. As a result, globally integrated industries can be internally fragmented along pro-trade and anti-trade lines.

Existing scholarship has largely explained the policy consequences of these divisions through a collective action framework. Large firms, with greater resources and organization, are better positioned to influence policy. Smaller firms struggle to rally resources and coordinate. As a result, the preferences of large firms are expected to determine policy.

Sujin Cha’s and Ian Osgoods’ 2025 article centers on how special interest institutions (SIIs) — domestic political rules that increase the access or influence of interest groups over policy makers — mediate the relationship between corporate trade policy preferences and policy outcomes. These include campaign finance laws that allow corporate contributions, lobbying regulations, and formal mechanisms for policy feedback. Cha and Osgood hypothesize that the effect of special interest institutions on trade policy depends on the structure of the industry. In industries without intra-industry trade or GVC integration, stronger special interest institutions lead to higher trade barriers. Conversely, in industries with IIT or offshoring, they produce lower barriers. They further expect that the trade-liberalizing effects of IIT and GVCs will be strongest where special interest institutions are most developed.

To test their theory, Cha and Osgood combine extensive data on tariffs and trade flows across millions of product-country-year observations. They draw on the World Integrated Trade Solution and BACI datasets, documenting intra-industry trade and GVC participation as a measure of industry preferences. To capture global value chain participation, they incorporate data from the OECD. Their primary measure of SSIs is based on corporate political contribution rules compiled by the International Institute for Democracy and Electoral Assistance.

The paper’s findings show that the effect of special interest institutions on trade policy are highly contingent on the level of intra-industry trade. In industries with low IIT, where firms are more uniformly threatened by imports, increasing the influence of special interest institutions leads to higher tariffs. In these contexts, organized interests are aligned in favor of protectionism, and institutional access reinforces this outcome.

The impact of high IIT on tariffs is strongest in environments with robust special interest institutions. Where firms have greater political access, increases in IIT are associated with significantly lower trade barriers, reflecting the influence of globally integrated firms. Where such institutions are weak, the liberalizing effect of IIT is more limited.

The analysis of GVC integration yields parallel results. In industries with low GVC participation, increasing the influence of special interest institutions leads to higher tariffs, as firms are more uniformly protectionist. But as GVC integration increases, this effect diminishes and can reverse, with institutions instead facilitating lower trade barriers. At the same time, the trade-liberalizing impact of GVC integration is strongest in contexts where SSIs are well developed. When firms have greater access to policymakers, globally integrated firms are better able to translate their preferences into policy outcomes. Overall, the findings demonstrate that SSI’s play a moderating role: they amplify the preferences of the most powerful firms within an industry.

Cha and Osgood show that special interest institutions allow the most organized and well-resourced actors to exert outsized influence over trade policy. However, this influence does not produce uniform outcomes. Instead, its effects depend on the structure of the industry and the relationship to foreign competition of the industry.

As trade policy continues to shift in response to evolving global supply chains and economic tensions, this framework helps explain why countries and particular industries adopt different levels of protectionism or liberalization. By accounting for variation in both political institutions and industry structure, it shows how similar pressures can produce divergent trade outcomes across countries and sectors.

US China relations are at a precarious moment. The upcoming U.S. China summit may shape the future of this increasingly adversarial bilateral relationship. Against this backdrop, on April 7, 2026, former U.S. deputy secretary of state Stephen Biegun and former deputy chief of mission at the U.S. Embassy in Beijing and senior director for China and Taiwan affairs at the White House National Security Council Sarah Beran, joined the National Committee on U.S.-China Relations to discuss the state of the U.S.-China relationship and its future prospects.

The conversation began with an analysis of rising tensions in Iran and the upcoming Trump-Xi Summit. Biegun predicted that negotiations between the U.S. and Iran will continue before full-fledged escalation occurs. Although China benefits strategically from a distracted United States, the impact of energy disruptions makes this approach unappealing for China in the long-term. Both Biegun and Beran agreed that the collaboration between Trump and Xi is necessary to cool tensions in the Middle East and the Trump-Xi summit is a productive start to this collaboration. They also discussed Trump’s top-down, unpredictable approach to foreign policy, suggesting it keeps Chinese officials off-balance, undercutting their ability to create a long-term strategy.

The speakers also addressed the strategic standstill between China and the United States. They emphasized how the relationship between the two countries resembles a stalemate, with Trump opposing his own administration’s efforts to improve it. Trump aims to form agreements with Xi; however, his administration is focused on deterring Chinese influence. This results in muddled policy outcomes, despite the lofty stated goals of the Trump administration.

Economic competition was another focus of the Town Hall, most notably in areas like trade, EVs, and emerging technology. The speakers discussed the broad impact of tariffs on Chinese goods, noting that they reduced the U.S.-China trade deficit from $300 billionto $200 billion. This major drop was followed by a $1.2 trillion increase in Chinese exports globally, indicating Chinese goods have been redirected through other pathways to the United States. China’s domestic industries, like EVs have received increased media attention for their overproduction and subsidization. Other goods imported from China, like critical minerals, are vital to U.S. supply chains. This creates a national security risk, as dependency provides China with additional economic influence.

To conclude the CHINA Town Hall, both Biegun and Beran discussed their shared opinion that the U.S.-China relationship is stronger and more stable than the public perceives. Although their relationship is rooted in geopolitical tension, there exists an unescapabledegree of interconnectedness between the two economies that keep their relationship intact. They determined that the next few weeks would shape the future of the U.S.-China relationship in the short-term, but it is unlikely that core disagreements will be resolved immediately.

Global Value Chains (GVCs) are an integral part of the modern economy. A GVC is achieved when the production of a single good is broken down across countries before reaching its destination. From the textile mill to the rack at Macy’s, companies up and down these GVCs have a common interest in the entire system running smoothly: disruptions at any point can affect their business, even when the disturbance does not directly involve their own imports or exports. Despite this interdependence, most theories expect firms to organize at the industry level to oppose trade barriers, or, more recently, large firms lobby individually to protect their own products.

A recent article by Hao Zhang (Princeton University) seeks to explore how GVCs have fundamentally changed the way firms form trade coalitions and lobby. The author presents a new theoretical framework where GVC linkages serve as an important determinant of trade preferences and collective political action. This framework starts from the basis that industries and firms do not exist in isolation, instead they are interconnected through various production linkages.

Zhang’s theory begins with the idea that there are “upstream” producers who make input products (ie. textile mills), midstream producers who take those raw good from the upstream producer and shape them (ie. using textiles to manufacture clothes), and finally downstream producers who distribute the product produced by the midstream firm (ie. retailers selling clothes). Using the apparel example, one might assume that an upstream firm producing and selling textiles abroad is unaffected by tariffs downstream firms pay to import clothes. Except in the GVC model, they are. Zhang notes that the whole system is integrated, meaning upstream producers lose business if companies down the line face higher costs, and downstream companies are in trouble if their imports get more expensive. Thus, Zhang theorizes that we should expect to see companies across GVCs lobby for free trade. This is why we see textile manufactures lobby against tariffs on clothing imports. Further, coordination barriers should be lower for firms in integrated supply chains. These companies are already coordinating constantly, making it easier to organize across GVCs than within industries, where firms must cooperate with competitors.

The dataset compiled by the author to support this framework empirically is made up of firm-to-firm supply chain networks for public US firms from 2003 to 2020. This data was compiled using millions of public intercompany relationship records published on FactSet. Connecting this data with over 82,000 lobby reports on trade and tariff issues, Zhang shows that GVC firms tend to lobby together (that is, they lobby at the same times that their GVC partners are lobbying), lobby on the same bills, and hire the same lobbyists. In fact, the probability that a firm with an average number of GVC partners lobbying will also lobby is roughly double that of a firm with no GVC partners actively lobbying. The author also demonstrates that, in industries with high levels of GVC integration among leading firms, the probability of collective industry lobbying increased from almost 0% to 30%.

In addition, the author suggests that GVC linkages extend beyond coordinated lobbying to shaping actual policy. The author uses the case of preferential trade agreements (PTAs) to illustrate this effect. According to the data presented, two countries that exist withinthe top 10% of values in GVC linkages are over 50% more likely to form new PTAs than countries that exist within the bottom 10%. Zhang argues that this shows GVCs play a significant role in driving the demand for trade liberalization during the height of global production.

Companies do not exist in isolation, effected only by trade restrictions on products they buy and sell. Instead, firms are concerned with trade policy up and down their supply chains. Zhang’s evidence suggests that businesses coordinate along GVCs because they share common interests, and existing communication structures between firms on the supply chain makes it easier for them to organize. This theory provides a new way of thinking about coordinated corporate influence that goes beyond an individual firm’s or industry’s influence.

When Viktor Yushchenko was elected President of Ukraine in 2005, his government nationalized firms and sold them to new owners in a process it called “reprivatization.” The targeted companies had few connections to the incoming president but had been closely associated with former President Leonid Kuchma and his chosen successor Viktor Yanukovych. In Turkey, the AKP amended public procurement law over 150 times in a single decade, expanding government discretion over contracts and directing high-value awards to firms whose owners had political ties to the party.

A paper by Timm Betz and Amy Pond (Washington University in St. Louis) argues that episodes like these are extreme examples of a more routine consequence of political turnover. Political connections channel benefits to firm owners through favorable contracts and selective regulatory enforcement. When leadership changes, a new set of individuals gains those connections while the old set loses them. The owners who lose out value their firms less than they did before while newly connected buyers value those same firms more than the current owners do. That gap makes ownership transfers more likely, and Betz and Pond find that it happens frequently across non-OECD countries.

Betz and Pond build a formal model around this logic and use it to generate predictions about where the effect should be strongest. Firms that rely on immobile assets like plants and heavy equipment cannot credibly threaten to relocate when political conditions shift, which makes their owners especially vulnerable to political turnover and attractive to newly connected buyers. Firms with mobile assets can threaten to leave, giving them leverage no matter who holds office. Ownership clarity matters too. Some firms nest their ownership in shell companies based in tax havens, making it harder for governments or connected buyers to figure out who actually owns them, and consequently making it less likely ownership will change hands following a political transition. The strength of property rights in a given country also shapes the dynamic. In countries with impartial courts, owners who lose their political access can seek legal remedies, limiting the advantage that new connections provide. Where courts are unreliable, those advantages grow and ownership changes become more frequent after political transitions.

The authors test these predictions using Bureau van Dijk’s Orbis database to identify direct shareholders of up to the 5,000 largest firms in each of 87 non-OECD countries. They track changes in the identity of each firm’s controlling owner from 2008 to 2018, defining controlling owners as shareholders with at least a 50% stake. Political turnover is measured using the REIGN dataset, which records each instance of a new political leader coming to power. In a given year, 12.3% of firms in their sample experienced an ownership change, and 41% experienced at least one change over the full sample period. In the simplest regression, political turnover is associated with a 2.2 percentage point increase in the probability of ownership change, a 17.2% increase relative to the sample average. That result holds when the model is expanded to control for country-level attributes, as well as firm revenue, size, and industry. Ownership turnover following political change is larger among firms with immobile assets and publicly recorded owners, and in countries with weaker property rights.

Because political and economic disruptions often coincide, the authors run a separate analysis restricting the sample to presidential systems where executive elections follow fixed constitutional schedules and cannot be called early, ensuring that the timing of leadership change is not driven by economic conditions. This model’s estimates track the baseline findings closely. A new political leader produces a 2.5 percentage point increase in ownership turnover. The authors also run a model replacing ownership turnover with managerial turnover as the outcome variable. If general economic disruption were behind the results, managerial turnover should respond to political change in the same way. It shows no such response. Political turnover predicts changes in who owns firms but not changes in who manages them.

Betz and Pond also examine what these ownership changes mean for firm performance. They find evidence suggesting that owners who take control during periods of political turnover earn higher profits and pay lower taxes as a share of profits. The results are exploratory, but they gesture at the practical stakes of politically motivated ownership transfers and suggest that new owners benefit financially from their connections to incoming leadership.

The findings suggest that the consequences of political turnover extend well beyond changes in policy or government personnel. When leadership changes hands, the effects reach into the ownership structures of firms, and especially into firms with immobile assets, transparent ownership, and limited legal protections. Betz and Pond show that this process is not confined to the dramatic episodes of expropriation and reprivatization that make headlines in places like Ukraine and Turkey. Ownership turnover is a routine consequence of the way political connections shape who owns firms and how much those firms are worth to their owners.

In the midst of rising geopolitical tensions, multinational firms are increasingly caught between the government’s interests in national security and protecting their own bottom-line. Recent national security initiatives, like the 2026 Defense Authorization Act, impose restrictions on foreign investment in strategic technological sectors in China. The US is also strengthening its review of foreign direct investment, or FDI, through the Committee on Foreign Investment in the United States (CFIUS). Despite high economic stakes, firms have mounted little visible opposition to policies that appear detrimental to their interests. Why have multinational firms not pushed back against these restrictions on their investment?

Sarah Bauerle Danzman’s (Indiana University) 2025 article suggests securitization may reduce multinational firm’s ability to influence economic regulations. The author’s theory of “securitized political economy” argues this reduced opposition occurs because political securitization carries credibility and reputational risks for firms who choose to lobby, discouraging the act in the first place, and pushing firms toward quieter, more technical forms of influence. These quieter strategies, which often involve lobbying through business associations, are less effective than individual lobbying because they require companies to coordinate in the face of uncertain costs. If current trade politics is truly securitized, the theory implies that firms are unlikely to be able to curb increasingly protectionist trade policy.

Bauerle Danzman’s theory defines a securitized political economy as the process of transforming a policy into a security concern that is widely understood to pose an existential threat. She argues that, when economic policy is framed as a national security matter, firms lose their political influence, or lobbying power, which makes them less able to publicly oppose regulations. The article claims that securitization primarily affects behavior through fear of backlash or a loss of public credibility. Investors and clients of firms opposing national security legislation may believe that they are acting selfishly, unwilling to protect the greater good of the US during a security crisis, and take their business elsewhere. Business’ concerns about public backlash should be more acute in an era where politicians are willing to malign individual firms for political transgressions. The author also references institutional reputational risks. Opposition to security legislation, especially bipartisan initiatives, could alienate congressional allies and, as a result, firms’ influence in the future. Therefore, to avoid these risks, the author suggests that firms rely on backdoor, trade-association, and technical influence strategies that are less public. Although they are more discrete, since securitization can affect firms in dissimilar ways, associational lobbying can present a coordination problem. Some firms are unwilling to invest time and resources into lobbying against policies if the costs to their business are unclear. In sum, fear of lost credibility or backlash should reduce companies’ willingness to attempt policy influence. When they do try to shape policy, they will turn to associational lobbying as a means of mitigating reputational risk. This “quieter” strategy is less effective than direct lobbying because firms with heterogenous interest will struggle to effectively organize.

Danzman utilizes a case study of the US Foreign Investment Risk Review Modernization Act (FIRRMA); a bipartisan law passed in 2018, to articulate her theory. FIRRMA drastically expanded jurisdiction of CFIUS to have broad authority over investment concerns, much like their recent February 2026 initiative mentioned above. The Act allowed the Treasury Committee to review full acquisitions and smaller or indirect investments when national security concerns could be invoked. Her analysis of this process centered around elite interviews, lobbying data, and public comments on rulemaking regarding FIRRMA.

Table 3, ‘Lobbying expenditures by issue and type of lobby group’ in Bauerle Danzman’s Article referenced above. Source: Kim (2018), Industry classification of lobbying entity/client hand-checked for accuracy

Danzman found that business’s lobbying efforts were limited and largely ineffective. Firms spent about $582 million on FIRRMA-related lobbying from 2017-2022, a modest sum relative to other major economic policies during the same period. She also found FIRRMA lobbying relied more heavily on industry or trade associations, rather than direct firm engagement with institutions. To the extent businesses did attempt to shape the policy, they focused on niche technical adjustments to legislation as opposed to all-out opposition. This pattern reflects the credibility and reputational risks firms face when in opposition to legislation framed as pertinent to national security. This evidence supports the theory that securitization further constrains firm-influence by portraying opposition as contrary to national security, culminating in a chilling effect on firm lobbying. This securitized policy framing, amplified by US politicians’ new-found willingness to single-out individual firms that oppose government policies, often deterred firms from engaging in direct lobbying.

Despite FIRRMAs 2018 appearance on a legislative docket, a trigger-happy President and an increasingly national security focused new cycle illustrate that the idea of securitization prevents firms from effectively opposing policies hurting their bottom lines. By framing economic openness as a national security threat, policymakers constrain not only investment flows but also the political space for opposition. Firms accept narrower, less effective forms of influence at the risk of facing backlash resulting in a shift towards greater state control over economic policy. That brings to light a macroeconomic and governance concern regarding the future of democratic participation and eroding economic opposition to state control.

Following World War II, free trade became a foundational pillar in the international economic order. However, beginning in January 2025, the Trump administration has accelerated the more protectionist approach that began in the first Trump administration and continued during Biden’s term. In early 2025, the United States government announced a 25 percent tariff on both Canadian and Mexican goods, coupled with a 10 percent tariff on Chinese goods. Following their first round of tariffs, the White House declared “Liberation Day,” imposing a broad 10 percent tariff on all imports. This abrupt transition has generated a fear that the broader international trade system will collapse in the face of protectionist trade practices.

In their recent publication, authors Andreas Dür (University of Salzburg) and Alessia Invernizzi (ETH Zürich) argue that, contrary to prevailing wisdom, the international trade system is adaptable, resisting harms from shifting trade practices. Historical patterns suggest the United States has always combined free trade and protectionist policies. Consequently, they conclude, a terminal decline in global trade is far from guaranteed.

The authors aim to explain the United States’ trade policy using two core dimensions:

1. The pressure for protection measures versus free trade.

2. The extent of the linkage between trade and national security.

Public opinion, interest groups, and the political preferences of elites combine to push policy towards or away from trade liberalism over time. The authors suggest that when these pressures support free trade, countries tend to completely liberalize trade or trade with allies. When pressures turn protectionist, states will protect key industries or fully isolate themselves from the global economy.

Therefore, according to the author’s theory, liberalizing and protectionist pressures can each produce two distinct policy outcomes; which of the two is realized in each case depends on the trade–security linkage. A high salience of security link indicates a strong connection between national security and trade in the minds of the public and political elites. For example, trade security linkages could appear if a country is over reliant on geopolitical rivals for goods. On the other hand, a low salience on security link indicates there is no inherent view of trade through a geopolitical or security lens, rather, there is an emphasis on economic policy.

The authors suggest that the United States might be in a state of trade isolationism (quadrant 2), as the country is experiencing both protectionist trade pressures and a salient trade-security linkage. However, they also argue that protectionism is currently a far more crucial factor than security concerns, meaning recent US policy sits somewhere in the lower left of Figure 2’s third quadrant.

Based on their theory, the authors argue that there are several reasons to believe this period of restrictive trade policy will pass. First, public opinion is likely to turn against trade restrictions. A March 2026 poll shows that the majority of voters (72%) believe the recent tariffs have resulted in a negative impact. Considering the increasingly large amount of backlash, the isolationist measures have garnered trade protectionism may not remain politically viable for long.

Diminishing corporate support for tariffs may also prevent the US from sustaining near-isolationist policies. Some industries like steel benefit from issue-specific tariffs but are punished by across-the-board policies because it makes their input prices higher. At the point where trade policy no longer serves these specific business interests, support for them is likely to dry up.

The final reason trade policy will likely loosen is that restrictive trade policy creates economic losers, who should mobilize to oppose these policies. Companies that are dependent on foreign intermediate goods suffer from intense tariff policies. Most commonly, these firms respond by lobbying policymakers and supporting campaigns that align with trade liberalization. With increasing resistance, economic losers form organized opposition groups and champion new officials that promote trade liberalization.

Given the expected decrease in public and corporate support for tariffs, and the historical precedent of less-than-liberal trade policy, authors Dür and Invernizzi predict that the United States will eventually walk back most of the current policies. The culmination of decreasing public opinion and sensitive business interests leads them to believe the trade policies will shift back to their eclectic middle ground. The global system has proven resilient in the past, surviving major economic storms before, including COVID, the 2008 global financial crisis, and the protectionist turns of the 1970s and 80s. Further, important players such as the European Union and China continue to adhere to the World Trade Organization’s rules and form their own strategic partnerships to keep trade open. These countries remain dedicated to liberal trade practices, effectively absorbing short-term disruptions in hopes that domestic political pressure in the United States will subside. Despite a sharp turn against free trade, Americans and their allies have reason to hope the US will return to free trade soon.

Can a nation which is authoritarian at home be liberal abroad? This question is at the heart of a long-standing debate between scholars on whether China is a challenger to the liberal international order (LIO), or an insider working to reshape the order according to its interests.1 While many agree that the LIO was created and is largely adhered to by the United States, along with close allies in Europe such as the United Kingdom and France,2 fewer agree on China’s place within it.

Many scholars insist that China’s domestic authoritarianism must be incompatible with international liberalism. They emphasize that because a liberal order enables the US to have influence over China, China will always seek to shift or destroy this kind of international order.3 Other scholars caution against the narrative of China as a rising challenger to the LIO. Instead, they emphasize that China prefers to adopt a pragmatic approach, one which has more to do with selective adherence to the LIO than overall opposition. They argue that China is therefore a nation which is not fully a part of, but not against, the LIO.4

The legal enforcement of the LIO manifests itself most clearly in the United Nations Security Council (UNSC). In the UNSC, nations show their adherence to or antagonism towards the LIO by voting for or against cooperative sanctions on nations which have violated the LIO.5 The UNSC is the most coercive legal instrument available for three of its permanent members: the US, the UK, and France (the P3) to enforce liberal values internationally, yet they must avoid a veto by Russia or China, the two other permanent members, to successfully impose these sanctions. Thus, the P3 must decide either to include China in enforcing the LIO, or to exclude and work around China.

Dr. Jack Zhang and I looked into China’s adherence to the LIO from 1972 to 2024 using UNSC voting data from the Corpus of Resolutions: UN Security Council (CR-UNSC) dataset6 and from the Department of Political and Peacebuilding Affairs Security Council Vetoes (DPPA-SCVETOES) dataset.7 To find how much China’s voting pattern of “yes” votes, “no” votes, or abstentions adhered to the LIO, we used CR-UNSC voting data over imposed sanctions and DPPA-SCVETOES voting data over threatened sanctions, to construct a percentage measure of vote similarity based on that of Magu and Mateos (2017).8 We measured China as adhering to the LIO when it voted in agreement with the US, the UK, or France over sanctions enforcing the LIO. During the period of study, theP3 usually voted for sanctions enforcing the LIO and voted against sanctions going against the LIO.

We found that in general, considering voting over all UNSC sanctions threatened and imposed for a multitude of reasons, China is highly similar to the P3 nations. China votes with the US, the UK, and France 86% of the time, 87% of the time, and 88% of the time, respectively, in support of these sanctions. China votes with Russia 93% of the time in supporting or opposing these sanctions, making it most similar to Russia and least similar to the US. However, the difference is small: only around 7 percentage points.

Somewhat more tension can be found between China and the P3 over sanctions enforcing the LIO. To analyze this in greater detail, we divided the LIO into two main non-economic suborders: the security order, concerned with maintaining national sovereignty while upholding international law, and the human rights order, concerned with maintaining human dignity as outlined in The Universal Declaration of Human Rights adopted by the UN General Assembly. China votes with the US, the UK, and France 83% of the time in support of sanctions enforcing the security order, and 82-83% of the time in support of sanctions enforcing the human rights order. Meanwhile, the P3 are more similar to each other than they are to China, with 99-100% similarity between any pair of the US, the UK, and France over the security order and human rights order. As such, the US, the UK, and France form a closer-knit group of internationally-liberal nations, but China is arguably internationally-liberal as well.

China is undoubtedly authoritarian at home, but abroad, at least within the UNSC, it does not work to undermine international liberalism. It supported the vast majority of UNSC sanctions supported by liberal nations like the US, the UK, and France to protect the international rule of law and the dignity of human persons. There is no reason to conclude that this agreement shows a deep appreciation by China for liberal values. Rather, that China is not as closely aligned with the P3 nations as they are with each other suggests that its international liberalism is pragmatic. China is a nation which the P3 can, and potentially must, work with to further their liberal foreign policies.

Of course, enforcing the liberal international order breaks down regardless of China’s position if the US, the UK, or France become antagonistic to international liberalism. Considering the latest foreign policy pivot of the US away from liberalism, this is by no means an uncertain prospect.

Over the past half century, the United States and China’s relationship has evolved extensively. Beginning with the normalization of relations under Nixon, U.S. policymakers pursued economic engagement with China, believing that integration into global markets would encourage cooperation, stability, and mutual prosperity. Over time, however, engagement produced deep economic entanglements that inflamed anti-Chinese sentiment. In recent years, rising geopolitical tensions have transformed these sentiments into a desire for economic decoupling. Evidence suggests growing distance between the two countries, if not complete independence. China’s share of total U.S. imports fell from 21.6 percent in 2017 to 13.3 percent by 2023.1 China’s share of U.S. exports and investment also declined during the same timeframe.2

Against this backdrop, Ayse Eldes, Jieun Lee, and Iain Osgood’s paper, Allied Import Options Available? Finding Friendly Trade Partners Amidst Decoupling from China, investigates the conditions under which firms reduce reliance on Chinese markets. The authors argue that the feasibility of decoupling depends heavily on market conditions—specifically, the availability of viable alternative suppliers in geopolitically aligned countries. They find that US imports from China in the post-Trade War era decreased among products with alternative suppliers in allied nations, but not those where alternatives were primarily located in hostile states. For products without friendly suppliers, firms were more likely to request exemptions from tariffs.

The authors suggest decoupling presents several major challenges. Firms face substantial costs when switching suppliers or relocating production. More fundamentally, viable alternative suppliers may not exist. For some products, China accounts for the overwhelming majority of supply. Even if there are other producers, political considerations complicate relocation decisions, as moving production from China to another non-allied state may replicate similar geopolitical risks rather than reduce them. These challenges, the authors argue, mean firms will only remove China from their supply chains if there are suppliers who can provide equivalent products in significantly less risky countries.

To test their theory, the authors analyze product-level U.S. import data during the initial years of the trade war (2018–2020) and extend their analysis through the early years of the Biden administration (2021–2023). Their findings show products with numerous alternative markets experienced import declines of roughly 29–34 percent on average following the trade war’s onset, with reductions exceeding 40 percent in the 2021–2023 period. In contrast, imports declined far less for products with limited alternative suppliers.

Crucially, these effects are driven almost entirely by the availability of allied or friendly alternative markets. When the number of allied suppliers doubles, imports from China fall by roughly 11–14 percent more than products with fewer allied suppliers in the early trade war period, and 15–20 percent more in the Biden era. By contrast, the presence of economically viable but non-allied suppliers has no statistically significant effect on import reductions. Firms appear reluctant to substitute China with another potential strategic competitor. Overall, the evidence demonstrates that firms are more likely to exit China when they have access to diverse and politically secure supply options. Where such alternatives are unavailable, firms remain tied to Chinese production networks despite policy pressure.

To complement their trade analysis, the authors examine an alternative firms have to shifting supply chains: requests for products to be exempt from tariffs. The findings mirror the trade results. Products with greater availability of alternative suppliers—especially in allied or friendly markets—received significantly fewer exclusion requests. Conversely, when alternative markets were limited, firms sought regulatory relief in order to maintain existing supply relationships. The magnitude of these effects is substantial, but, as with import adjustments, the presence of non-allied suppliers has little effect. Firms are more likely to resist trade restrictions when allied alternatives are unavailable.

The paper makes several important contributions to the broader literature on international political economy. First, it develops a political theory of decoupling that emphasizes both motive and capacity: rising policy and geopolitical risk creates incentives to exit, but firms can only do so when viable alternatives exist in geopolitically aligned markets. Second, the availability of alternative suppliers reduces firm opposition to trade restrictions, contributing to research showing limited political mobilization among firms during the U.S.–China trade war. More broadly, the findings inform ongoing debates about the feasibility of large-scale economic decoupling. The research suggests that meaningful supply chain restructuring requires not only policy incentives, but also the development of reliable alternative production relationships in politically secure markets.

Conventional wisdom suggests hawkishness on China is a rare point of bipartisan consensus in today’s hyperpolarized America. In an era of Congressional gridlock, bills such as the Hong Kong Autonomy Act, which sanctioned individuals contributing to China’s diminishment of Hong Kong’s autonomy, receive bipartisan support. Yet not all China-related bills are so uniformly endorsed. For example, the Stop China’s IP Theft Act in 2021 only gained support from Republican lawmakers, and the Taiwan International Solidarity Act was cosponsored by primarily Democratic lawmakers.

An article by Guan Wang (University of Maryland) and Weifang Xu (Emory University) attempts to explain this puzzle. Using an original dataset of China-related congressional bills, the authors demonstrate that bipartisan support for anti-China bills depends on whether or not they address domestic political issues, and whether they relate to issues one or both parties identify as important to their brand. When a measure disproportionately benefits one party, bipartisanship gives way to partisan competition, even when national security is threatened. Their findings complicate the traditional argument that external threats remedy partisan division. In today’s hyperpolarized climate, partisanship may compromise the ability to rally around the flag.

The researchers argue that legislation addressing an issue that directly affects American citizens, such as Chinese investment in the U.S., is less likely to be bipartisan, as political elites strategically leverage domestic policy debates to meet their desired political ends. In contrast, a bill condemning Chinese human rights violations is independent of domestic political competition in the United States, making support for this kind of legislation less contentious and more likely to be bipartisan.They found that when a bill is purely about international affairs, it has a 47% chance of being partisan, which they define as having co-sponsors from only one party. On the other hand, if a bill touches on domestic issues, the chance it is partisan reaches 62%.

In addition, the authors suggest that, among domestically oriented anti-China-bills, legislation regarding issues either party (or both parties) “own” is less likely to receive bipartisan support. If an issue is owned by a party, it is considered to betraditionally important to Republicans or Democrats. For example, voters tend to associate Republicans with issues like national defense and border security, while Democrats are associated with healthcare and environmental protection. When legislation targets China, but includes issues that one party “owns,” lawmakers treat it as a bargaining chip. For instance, a bill that advocates for China to enhance its environmental protection initiatives falls into the category of a Democratic bill because it focuses on an issue many Republican lawmakers may not support and is therefore likely to be partisan.

Partisan ownership over domestic issues only covers conventional partisan issues, so the authors explore the impact of nonpartisan issues on China bills. They find that with domestic China bills which neither party owns, like science and technology, the chance it will receive only Republican or only Democratic co-sponsors is approximately 58%.

Bipartisanship falters when there is potential for political ‘wins’ and ‘losses.’ Domestic issues tend to spur political competition. When bills are about divisive issues, like the economy or healthcare, the probability they will be partisan is high, sitting at around 70%. Wang and Xu show that, contrary to what common narratives suggest, China-related bills do not always generate a bipartisan approach. This complicates the theory that foreign threats will necessarily create a unified government, rather, policymakers may prioritize electoral competitiveness over coordinated action.

Last Thursday, the Supreme Court ruled in a 6-3 decision that President Trump is not authorized to issue tariffs under the Interntaional Emergency Economic Powers Act (IEEPA) statute. This ruling blocks many of Trump’s signature tariff policies, including his February 1^st tariffs on Canada and Mexico, and his April 2^nd invocation of IEEPA otherwise known as “Liberation Day.” The latter announcement unleashed a universal flat 10% tariff on all imported goods, and tacked on reciprocal tariff rates topping out at upwards of 50% on some countries such as China, Vietnam, and Cambodia.

The Supreme Court’s ruling has numerous repercussions. First, the ruling raises questions about how to handle the series of trade deals that were negotiated after Liberation Day and rely on the now null IEEPA authority. The highest profile of these deals involves the European Union, which in late August committed to cut or eliminate tariff rates on U.S. seafood, agriculture, and industrial material exports and agreed to purchase a combined $1.3 trillion worth of U.S. energy products, semiconductors, and defense platforms. Japan is another example, pledging a total of $550 billion towards U.S. exports, and cutting tariff rates across the board. These deals are vast for good reason, as they were done in an effort to soften the Liberation Day blow. However, SCOTUS’s ruling leaves firms on the edge of their seats as it is unclear if negotiations will reopen.

It may take time for the future of Trump’s 2025 trade deals to become clear. However, the decision does raise one immediate question for US companies: are they entitled to reimbursement for profits lost to illegal tariffs? While Customs and Border Protection havean outlined protocol regarding refunds, SCOTUS did not weigh in on the potential idea of refunding those affected by the IEEPA framework. In total, experts estimate that close to $150 billion in duties has been collected by the U.S. due to IEEPA alone. This graph from the Cato Institute visualizes the impact IEEPA has had on U.S. importers.

The economic burden of these tariffs largely fell on U.S. firms, with the New York Fed and U.S. Census Bureau calculating that by January-August, 94% of all tariff incidences fell on U.S. importers. If refunds are issued, the importer of record would receive the money. Although the importer of record paid the tariff, these firms are not necessarily those bearing the brunt of increased taxes because they can raise prices and thus pass costs down the supply chain. The National Bureau of Economic Research indicates as much as 20% of IEEPA tariff costs were passed through to buyers, meaning consumers felt much of the pain. Certainly, consumers and buyers cannot count on a drop in prices in the wake of this ruling. Even if refunds are issued, companies will be reluctant to change prices given uncertainty surrounding future trade policy.

Since the early 2010s, multinational corporations operating in China have faced mounting political risk. Notable episodes include anti-Japanese protests erupted in China after the 2012 Senkaku-Diaoyu territorial dispute, a standoff between Japan and China over control of contested islands in the East China Sea, posing a threat to Japanese business in the country. The U.S.-China trade war raised supply chain concerns, and COVID-19 lockdowns disrupted operations across the board. Governments have encouraged companies to reduce their reliance on the Chinese market. But have firms actually followed this advice, and if so, how?

Using Japan as a case study, a recent paper by Timothy Cichanowicz (University of Kansas), Jiakun Jack Zhang (University of Kansas), and Samantha A. Vortherms (University of California, Irvine) finds that 81 percent of Japanese multinationals, a group of companies long exposed to rhetoric and policy incentivizing independence from China, adopted at least one de-risking strategy between 2012 and 2022. However, outright exit from China remained rare. Instead, most firms pursued “diversification,” expanding operations elsewhere while staying put in China. The authors argue that national security concerns, rather than firm-level exposure to China, best explain which companies took the most decisive action.

The researchers introduce a typology to categorize firm responses to geopolitical risk. “Decoupling” means exiting China entirely. “Diversifying” means expanding investment outside China without reducing operations there. “Diverting” (or friend-shoring) involves both leaving China and reinvesting in allied countries. Firms that did none of these were classified as “business as usual.”

To determine what de-risking strategies companies employ, researchers tracked 100 Japanese firms with operations in China using registration data from China’s Ministry of Commerce and the Toyo Keizai Japanese Overseas Investment Yearbook. They observedsubsidiary openings and closures across multiple years spanning two periods of heightened political risk. First, the Senkaku-Diaoyu dispute (2012-2016) and, second, the trade war and pandemic era (2018-2022).

The results show that diversifying was the most common strategy, adopted by 43 percent of firms. Decoupling and friend-shoring each accounted for about 18-20 percent. Only 19 percent of firms did nothing. Among the firms that exited China and subsequently expanded elsewhere, nearly all reinvested in countries aligned with Japan—particularly the United States, Canada, Australia, and several ASEAN nations.

The paper’s most striking finding is that firms designated by the Japanese government as relevant to national security were significantly more likely to pursue all three de-risking strategies. This suggests that for firms in strategic sectors, the flag is clearly being followed, while for most Japanese companies, politics played a secondary role in investment decisions. The authors also did not find evidence that standard firm-level predictors like fixed asset investment in China, years of experience in the country, or dependence on Chinese operations predicted whether a firm chose to decouple, diversify, or friend-shore.

Some firms with particular vulnerabilities may be actively de-risking, but the findings suggest this is far from a general trend. In the case of Japan and China, most companies have hedged their bets by expanding operations elsewhere while maintaining their presence in the Chinese market, and China remains the largest destination for Japanese overseas investment. More broadly, the paper underscores how uneven and uncertain the relationship between political risk and corporate behavior really is, even after a decade of sustained pressure from governments hoping to reshape global supply chains.

In recent years industrial policies, meaning tariffs and subsidies that governments use to shape economic development, have emerged as the predominant tool for major economic powers. For example, China announced a 500-billion-yuan subsidy for their semiconductor industry in late 2025. The United States’ analogue to Chinese chip manufacturing promotion, the Chips and Science Act, likewise uses subsidies to incentivize semiconductor production. These policy initiatives are indicative ofa broader shift from free market to interventionist economic policies. Industrial policy now serves as the backbone of national security strategies, rather than a bulwark of development policies.

A paper by University of Cambridge researchers Jostein Hauge, Bruno Houtzager, and Alessandro Julian Hörmann describes the recent national policy approach as neomercantilism, or the belief that national security depends on independent domestic production, especially in critical sectors such as semiconductors.1 This theory posits that governments should use economic tools such as tariffs, subsidies, or quotas to compete on the global stage. In their paper, the authors primarily analyze how the United States, China, and the European Union employ industrial policies to secure resilient supply chains and technological superiority. Although economic interventions aim to promote domestic interests, the authors found that this may limit opportunities for many poorer countries to enter security-related markets, apart from some “connector” countries, such as Vietnam or Mexico. Rather than being cut out of securitized markets, these countries benefit from the larger international rivalry by serving as a liaison between the superpowers.

The authors argue that the pivot away from unfettered international trade stems from a culmination of factors exposing the fragility of global security and revealing the risks of interconnectedness in global production. The article notes a series of shocks spurred the shift towards increasing domestic production: the 2008 Global Financial Crisis and the subsequent decline in the popularity of neoliberal orthodoxy, deindustrialization leading to lob losses in high-income countries, climate change, COVID-19 supply chain vulnerabilities, and geopolitical tensions coupled with economic nationalism. Moreover, the invasion of Ukraine demonstrated that economic integration does not necessarily produce political stability and can instead be weaponized. Most notably, when Russia leveraged its natural gas exports to Europe as a geopolitical tool, it inspired efforts to rethink supply-chain resilience in energy markets.

To support their arguments about neomercantilism, the researchers examined the growth in manufacturing output. The total manufacturing output of China, United States, and the EU made up approximately 61% of the total global manufacturing output in 2000, but in 2024, they made up 69%. This overall growth in the amount of concentration in manufacturing suggests that major powers have strengthened their economic dominance. This development crowds out other countries, preventing them from participating in global manufacturing output.

Shifting from a macro-analysis, the researchers also evaluate each superpower’s industrial policies individually. Although U.S. share of global manufacturing output has decreased in recent years, the authors still describe the national strategy as “hawkish.” Washington has utilized its economic toolbox to slow down Chinese production and engage in competition over economic dominance. Example of the United States’ policies include the extensive import and export controls and domestic subsidies in strategic sectors (like semiconductors and emerging technology). This “America First” approach is designed to facilitate the United States’ industrial capacity.

China has contributed the new wave of economic nationalism through its long-term persistence in industrial development. Policies such as the Made in China initiative, which supports key industries through subsidies and state-sponsored programs, grows China’s economic dominance. China has shifted from a labor-intensive and export-oriented economy to an innovation-led model. One notable policy that exemplifies their shift is China’s Fifteenth Five-Year Plan, an outline of China’s goals to rely on its own economy, enhance manufacturing, drive internal market growth, strengthen financial development, increase military capabilities, and boost long-term planning.2 These policies have increased China’s global manufacturing output byapproximately 25%.

The European Union has experienced increased competition internationally, with their global share of manufacturing decreasing from 30% to 22%. Instead of opting to restrict trade with China, they have taken a more cautious approach, maintainedtrade openness while also developed domestically. In 2024, EU-China trade has grown to approximately €213 billion, unlike other countries that have seen a significant decrease.3 Simultaneously, they have strengthened industrial policies, like the European Chips Act, an initiative to strengthen the semiconductor markets in the EU.

The authors conclude that national security and industrial policy have converged in recent years, transforming the global political economy. With China on a technological rise, powerful countries are competing for dominance in strategic industries. The increasing concentration of manufacturing power within China, the U.S., and the E.U. raises concerns about the ability for other nations to thrive economically, especially countries in the Global South. Returning to historical patterns, a modern paradigm of economic policy as national security has emerged.

China’s sanctioning practices have been an area of scholarly interest for some time but have taken on greater salience since a series of important policy changes. Following the pivotal creation of the Provisions on the Unreliable Entity List in 2020, the Ministry of Commerce of the People’s Republic of China introduced the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation.1 Also in 2021, China enacted the Anti-Foreign Sanctions Law.2 These policies increased China’s capacity for formal economic coercion.3 Meanwhile, the country’s notorious usage of informal sanctions — sanctions not publicly acknowledged or legally recognized — has drawn the ire of foreign governments and businesses for decades. For example, after the 2021 opening of a Taiwanese (as opposed to Taipei) labeled representative office in Vilnius, Lithuania, a Chinese state-owned rail company indefinitely delayed Lithuanian goods without making any formal announcement explaining the decision.4

In Jiaying Xing’s 2025 paper on the subject, she investigates the conditions under which China opts for formal versus informal sanctions. Xing compares 67 cases where China utilized sanctions from January 2019 to December 2024. Her effort to understand the PRC’s decision-making process centers on four variables, two domestic and two external. The domestic factors are the political significance of the issue and the political cycle, defined by proximity to major events in the political calendar, such as elections. The external factors are China’s economic dependency on the target state and the perceived political backlash of sanctions.

Xing’s comparative analysis identifies issue significance as the necessary condition for determining China’s use of formal sanctions. Formal sanctions consistently appear when disputes involve politically sensitive and non-negotiable core interests, and they do not occur in cases where such issue significance is absent. All formal sanctions in the dataset are linked to challenges involving foreign interference in China’s internal affairs or threats to its sovereignty and territorial integrity, particularly with respect to Hong Kong, Xinjiang, and Taiwan.

At the same time, issue significance alone does not automatically result in formal sanctions. Economic dependency and geopolitical backlash emerge as critical influencing factors. Contrary to expectations that higher economic or strategic risks would discourage formal sanctions, the findings show that China is more likely to impose formal sanctions against large countries with which they are highly economically integrated. The most prevalent pathway to formal sanctions combines issue significance with high economic dependency and high geopolitical backlash. This counterintuitive finding is clarified by Xing’s examination of sanction intensity. Formal sanctions are typically very targeted but limited in severity, allowing China to signal strong resolve without incurring exuberant costs. Conversely, Beijing often employs informal sanctions against weaker countries, on which it can afford to impose higher costs.

Existing scholarship explains China’s sanctions behavior primarily through a rationalist cost–benefit framework, emphasizing tools such as informal consumer boycotts, plausible deniability, avoidance of legal and WTO challenges, and strategic signaling of resolve.5 Building on this work, Xing’s study shows how multiple interacting domestic and international conditions shape China’s choice between formal and informal sanctions.

Xing’s results show that China’s sanctions behavior reflects the formulation of a two-tiered sanctions strategy rather than a shift away from informal coercion. Formal sanctions are consistently associated with disputes involving China’s core interests, but their use is further shaped by China’s relationship with the target. Informal sanctions, by contrast, remain central when Beijing seeks to impose more substantial economic costs, particularly against smaller or less powerful actors. Overall, China’s two-tiered sanctions policy reflects a deliberate balancing strategy that integrates risk management and political necessity. This framework provides a clearer understanding of China’s evolving use of economic statecraft on the global stage.

For decades, scholars have debated whether corporate lobbying actually affects trade policy. While most agree it has an effect, finding a direct link remains difficult. Some historical tests, such as that of Grossman and Helpman (1994)1, suggest that lobbying does work to change policy. In another study, Lee and Baik (2010)2 show that firms that lobby more received higher Byrd Amendment payouts on antidumping duties. Even so, considering the widespread popular assumption that lobbying works, surprisingly little research draws a direct connection between lobbying and specific policy outcomes.

After the Trump Administration imposed steep tariffs on China in 2018, the Office of the U.S. Trade Representative created a process for firms to request tariff exclusions. Facing higher costs, some firms lobbied the USTR to improve their chances of approval. This process afforded scholars a unique opportunity to test whether lobbying works to gain exemptions. So, the question remains, did lobbying help firms secure tariff exclusions?

A recent paper by Ayse Eldes (Princeton University), Jieun Lee (University of New York at Buffalo), and Iain Osgood (University of Michigan) finds that lobbying has a strong correlation to tariff exclusion request approvals, but the effect depends oncorporation size and their ties to China. They argue that lobbying works because it draws overburdened policymakers’ scarce attention the economic costs a proposed tariff would impose. When firms lobby, they can provide information policymakersmay not otherwise have about these costs. A willingness to spend money also signals to policymakers that a policy will cause significant harm. The authors suggest that lobbying may be especially effective for larger firms because their economic footprint makes claims of broad economic harm more credible. In contrast, multinational firms often have a smaller domestic impact, providing a less persuasive case for exclusion and resulting in fewer approvals. Overall, their results suggest that lobbying may effectively create policy change, but the extent to which this is true depends on company characteristics.

In order to investigate lobbying’s effectiveness, the authors first examined whether firms that lobbied on the Section 301 tariff exclusion process, measured using public lobbying reports available through opensecrets.org, were more likely to earn an exclusion from the USTR. Secondly, they accessed whether the positive effect of lobbying on securing desired policy outcomes is less pronounced for companies that own subsidiaries in China. Lastly, they tested whether lobbying is more effective for large companies.

Using data from over 52,746 exclusion requests, the team’s analysis revealed that lobbying on the Section 301 tariffs had a highly robust, positive effect on the likelihood of earning exclusion. On average, firms that lobbied the USTR increased their chance of earning exclusion somewhere between 10% and 16%. Since only 13% of exclusion requests were approved, these are significant relative effects. Even so, the study revealed stark inequalities in lobbying’s effectiveness. It concluded that large firms were much more likely to successfully earn exclusions. In contrast, small and medium-sized firms saw very little success. Also, in line with expectations, the results show that companies with Chinese subsidiaries saw significantly less success in their attempts to gain exclusions. This result was seen even among the largest multinational corporations.

In effect, the tariff exclusion process was tough on business who were outsourcing work to China, but softened the blow for larger, well-resourced, economically significant players. Their findings have implications that reach even beyond the China - America trade war. The link between corporation size and their ability to obtain tariff exclusions is an example of how the American status quo operates: As protectionism increases, we see the biggest beneficiaries are still the largest corporations over smaller firms. This study helps to show a clear link between lobbying and policy outcomes in the United States, demonstrating how lobbying can be used to uphold existing hierarchies.

Since 2016, it seems as though countering China’s rise to prominence has become a rare point of bipartisan consensus among policy makers in the United States. This, however, has not always been the case. Data collected by the Trade War Lab reflects an interesting shift in Washington’s perception of the PRC. To track this shift, researchers at the lab established the “China-related Bills” dataset, which includes all legislation that meaningfully concerns the Chinese government, citizens, and businesses in the United States. Using Congress.gov, the lab collected legislation dating back to the 101^st session of Congress, which began in 1989, through the 118^th Congressional session.

Looking back to the decades before President Trump’s first term, much of the legislation produced on China, was trade centric, save for a response to the Tiananmen Square crackdown in 1989 via the Chinese Student Protection Act of 1992. The act protected Chinese Nationals studying in the United States by broadening permanent resident guidelines and establishing quicker paths to citizenship. Other bills like H.R.4444, passed in 2000 and signed by President Bill Clinton, authorized the President to extend nondiscriminatory trade treatment to the PRC and paved the way for China’s accession to the WTO. Congress also attempted to mitigate the security risks that Beijing posed to Taiwan. In 1999, Congress passed H.R.1838, or the Taiwan Security Enhancement Act, which aimed to strengthen the bonds between Taiwan and the U.S. by admitting Taiwanese military officers to U.S. academy schools like West Point. The legislation also directed the Secretary of Defense to report to relevant congressional committees on the readiness of U.S. forces and their ability to respond to threats in the Sino-Pacific region. The bill passed the house, but never made it out of the Senate, showcasing Congress’s comparative lack of interest in security concerns involving China relative to today.

As seen in the graph above, the data collected paints an interesting picture, one that shows how Congress has elevated China from mere a trade partner to a strategic competitor. From Trump’s first two years to Biden’s first two years in office, the data reflects a remarkable 233% increase in legislation introduced that targets Chinese influence. This increase can likely be credited to President Trump launching a trade war in attempt at a large-scale act of reshoring American industry, and the United States’ increasing efforts at preventing China from gaining a leg up in the development of sensitive technologies.

Major legislation such as The Tax Cuts and Jobs Act and the CHIPS and Science Act embody Congresses attitude towards China, locking the U.S into an era of strategic competition with Beijing. The Tax Cuts and Jobs Act slashed the corporate tax rate from 35% to 21%, and allotted a 100% tax deduction on equipment, materials, and manufacturing facilities used in efforts of economic investment on U.S. soil. Those arguing for the bill suggested that the tax cuts would spur American industry and promote competition with China. Many of these provisions set to expire in 2025 were extended indefinitely under the One Big Beautiful Bill Act.

The CHIPS act provides robust incentives for U.S. based companies to develop and manufacture semiconductors, through $52 billion worth of federal subsidies, along with incentives targeting “advanced Nodes” the most cutting-edge chips that power things like Ai, 5G, and defense platforms. The bill also addresses supply chain security for semiconductor manufacturing, barring companies who receive CHIPS funding from expanding advanced chip manufacturing into China for at least 10 years to counter the risk of technology sharing with the CCP.

The Congressional data collected remains consistent with the ongoing story of U.S.-China relations. Once viewed as an emerging market, Beijing has blossomed into a real competitor in spaces the United States has enjoyed total dominance over for decades. The rush to compete with China has resulted in a rapid, bitter response by lawmakers on Capitol Hill. Altogether, the flood of legislation addressing China’s rise marks a clear shift from cooperation to confrontation.

Smartphones, electric vehicles, and even solar energy are sitting in the center of the greatest economic conflict of our time. Over the past decade, the United States and China have been two rams in the fight to dominate the industries that will shape technology and growth. Recently, strategy has fluctuated from Trumpian tariff battles to planned subsidies and governmental policies in the Biden era. Contrasting ideas on how to manage a trade war with China raise an important question: What combination of strategies is the optimal way for these countries to compete in high-stakes markets?

A recent paper by Jiandong Ju (Tsinghua University), Hong Ma (Tsinghua University), Zi Wang (Hong Kong Baptist University), and Xiaodong Zhu (University of Hong Kong) finds that well designed industrial subsidies and government policies like technology share and education investments produce better outcomes for both the United States and China than strictly tariff based approaches. They argue that, because these high-tech industries become more efficient at scale, subsidizing these sectors will lead both countries to expand production, improving general welfare. By contrast, the authors suggest that tariffs instead raise prices and create only temporary, minimal, benefits, leading to less overall welfare increases.

The research is heavily based on the well documented phenomenon of “economies of scale,” the idea that, as an industry grows, production within the industry becomes cheaper and much more efficient. The researchers note that, if governments do nothing to support these economies of scale, their resources will be misallocated, meaning their resources are being spent inefficiently. Ju and his team argue that industrial subsidies can fix the problem of misallocation by helping a country’s industries reach a size where they can benefit from these economies of scale, meaning a company can produce more of a product at a smaller cost per unit, making the company more efficient. They argue that tariffs, in contrast, work by attempting to block foreign competition, but raise prices domestically and stifle efficiency.

To test the hypothesis that industrial subsidies support industry in a way that maximizes welfare for both countries, the research group built a simulation model based on a framework from an earlier paper by Caliendo and Parro¹. While the Caliendo and Parro model was useful, it failed to incorporate economies of scale. Instead, it assumed efficiency would remain constant as companies grew, which is unrealistic because of the high fixed costs required to become established in high-tech industries. Ju and his team developed a model that considered economies of scale using the 2017 OECD Inter-Country Input-Output database, a large data set that tracks how goods and services flow among countries and their industries. Using this model, they simulated how changes in tariffs and industrial subsidies would affect production, trade, and welfare across seven major economies. This approach allowed them to derive the optimal tariff and subsidy rates for each country and to compare the outcomes of tariff wars against industrial policy competition.

The simulations supported the argument that industrial subsidies perform better than tariffs in high-tech industries when accounting for economies of scale. Results showed that, when China subsidized its advanced manufacturing sectors, both the US and China experienced measurable gains in overall welfare because the price of intermediate goods for consumers went down. When tariffs were included in the simulation, global trade became more expensive and overall welfare fell for nearly everyone. The model showed that a mix of well-designed moderate subsidies and low tariffs produced a better outcome for the U.S. than relying solely on tariffs. In terms of global welfare, results showed that when countries coordinated industrial policy instead of hurling tariffs at each other, total global welfare improved the most.

Overall, the study suggests that trade wars do more harm than good in industries that exhibit economies of scale. Ju and his co-authors show that while tariffs can provide a temporary solution for domestic producers, they raise intermediate costs and reduce global welfare. They affirm that when countries apply well-designed industrial subsidies, production in the industries of scale exhibits much higher growth and can even benefit global welfare. Policy makers can use this research’s key finding that strategic investment in a country’s own industry results in greater welfare gains than protectionist trade policy does as a guide when considering whether to deploy tariffs or industrial policy.

The second Trump administration has accelerated the United States’ shift towards trade protectionism that began in his first term. As of December 2025, the average U.S tariff rate has soared from 1.5% in 2022 to 17%. The Trade War Lab, in conjunction with the researchers at the UT Austin and the University of South Carolina, has collaborated with the World Trade Centers in Kansas City (WTC-KC) and St. Louis (WTC-STL) to better understand how Kansas and Missouri businesses view the current trade environment. This research surveys business managers to ascertain how tariffs have impacted their operations, which tariffs have proven to be especially concerning, how businesses plan to respond, and if firms have taken any political action in opposition to/ support of tariffs.

Preliminary results show that tariff pressure is widespread across industries in Kansas and Missouri. Overall, 73% of firms report being harmed by tariffs, while only 7% say tariffs have been beneficial to their business. On the industry level, 90% of retail trade firms reported moderate or high harm to their business because of tariffs. Firms in agriculture, forestry, fishing, and hunting as well as professional, scientific, and technical services follow closely, with approximately 86% of firms in each industry reporting harm.

Figure 3 shows that import tariffs (in shades of blue) appear to be causing the most disruption for companies in the Kansas City and St Louis areas. A significant percentage of companies across all industries report meaningful concerns about tariffs on imports from China, other Asian countries, and the European Union. Retaliatory tariffs (in shades of gray) pose the most significant concern in the wholesale, agricultural, professional services, and manufacturing industries. Kansas and Missouri’s agricultural industries – the main driver the two state’s economies – are particularly exposed to Chinese retailiations restricting American soybean exports.

Among surveyed firms, planned responses to tariffs lean toward eating costs more than restructuring supply chains. 80% of companies anticipate raising prices and passing higher costs to consumers, while 56% plan to absorb the cost of tariffs internally. Only about 30% plan to pursue alternative foreign suppliers and even fewer intend to find domestic suppliers.

Most of the surveyed firms -- nearly 73% -- report believing in the effectiveness of political action to advance favorable policy, with 57% describing it as “somewhat effective” and 16% describing it as “very effective.” Despite this, very few firms have translated this belief into action towards tariff policy. Just 39% of politically active firms (those who have taken political action in the last 5 years) have acted specifically related to tariffs.

These initial results suggest that recent U.S. trade policy is a cause for concern for many businesses in Kansas and Missouri. U.S. tariffs raising the price of imports were the most concerning development among managers responding to the survey, with retaliatory tariffs creating obstacles for a more confined group of exporting industries. Rather than large-scale restructuring, firms primarily plan to respond with short term adjustments such as cost absorption and price increases. While most firms express confidence in the effectiveness of political action, relatively few have translated this belief into organized opposition or support for tariffs. In future iterations of this project, the Trade War Lab and its partners aim to expand data collection to include more firms from across the United States.

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Recent research on China’s trade strategy suggests the CCP increasingly relies on coercive trade restrictions to achieve foreign policy goals. Data collected by the Trade War Lab confirms a significant uptick in sanctions imposed by China since 2018. Other scholars have also documented the distinctive methods China uses to sanction countries. A prime example of Chinese economic coercion came on October 17^th, 2025, when China announced major sanctions against South Korea’s Hanwha Ocean, the largest shipbuilder in the world, that specializes in Liquified Natural Gas, Crude Oil, and Gas carriers. The sanctions specifically target Hanwha subsidiaries that support U.S shipbuilding efforts, with the goal of muddling Hanwha’s business dealings with the US. Through these undertakings, China is sending a clear message: you have been warned, if you choose to undermine our geopolitical interests, proceed at your own risk. Beijing’s tendency to use sanctions like these makes knowing when, how, and why China uses economic coercion important to understanding US-China relations.

China’s use of economic sanctions is further explored in a new paper and corresponding dataset, by Viking Bohman (Tufts University), Audrye Wong (University of Southern California), and Victor Ferguson (Hitotsubashi University). The authors document over 200 individual sanctions imposed by China between 2010 and 2025. The dataset tracks both “informal” and “formal” sanctions, relying on official Chinese websites to identify formal sanction activity, and aggregating media reporting, timing, and international interpretation of China’s actions to track informal sanction measures.

The authors argue that their dataset captures two key trends. First, despite a long history of informal sanctions, formal sanctions by the CCP have been on the rise as a response to American economic coercion. Second, they claim that China’s new economic weapons are not a replacement for the CCP’s longstanding informal strategy, instead they represent an additional tool to bolster informal sanctions when needed.

Historically, China’s trade strategy has been largely informal. Instead of the CCP taking overt, legal steps to institute sanctions, government officials worked behind the scenes to induce sanction-like behavior. The authors describe how Chinese officials encourageconsumer boycotts of multinational companies, discretely manufacture reasons for customs officials to delay or block imports, and unfairly target foreign businesses with technical violations of domestic regulation. These somewhat deceitful methods gave the CCP plausible deniability and allowed them to maintain their position that economic sanctions are an illegitimate tool of US hegemony without contradicting themselves. The authors note that China has enjoyed the results of being ambiguous and informal on trade decisions, keeping targets guessing, making it difficult for their western counterparts to respond accordingly.

However, Ferguson et al go on to describe the CCP’s shift to a more hybrid model in 2018. Since then, China has developed new formal tools for sanctioning, such as the Unreliable Entity List (a legal tool to impose restrictions on foreign companies, organizations, or individuals, who are deemed a threat to National Security), anti-foreign sanction laws, and an expanded set of export control systems. Figure 1 shows the corresponding increase in formal sanctions. While informal methods are still deployed when China values discretion, such as when the country seeks to minimize reputational costs or backlash from the target, formal methods are used as a statement, especially when it comes to top interests like Taiwan.

The research also finds that China has become increasingly willing to escalate conflict by imposing countersanctions. However, the CCP has also become less proactive, with data reflecting a downturn in the use of primary sanctions, and a distinct uptick in countersanctions.

The authors suggest China’s increasing preoccupation with responding to escalating US economic pressure has left the CCP with less capacity to target others.

In a time of extreme levels of trade coercion and risks of large-scale economic decoupling, it is clear Beijing has begun to recalibrate their approach to trade. The country is shifting from proactive to reactive, and obscure to defined. Beijing knows that their geopolitical leverage has increased dramatically over the years, and now they can draw lines in the sand when desired. The dataset presented by Ferguson et al elucidates China’s shadowy trade strategy, allowing policymakers to better understand and deploy effective responses.