In his 1948 memoirs, Cordell Hull wrote that during his 12 years as former US president Franklin D. Roosevelt’s secretary of state, he was guided by the idea that “unhampered trade dovetailed with peace.”
Tariff walls and battle lines rose together, he believed; tear down the first, and the second would fall.
Hull’s conviction that commerce fosters peace reflected a venerable liberal tradition stretching back to the 18th-century German philosopher Immanuel Kant and the 19th-century British politician Richard Cobden.
In his 1795 book Perpetual Peace, Kant argued that republics bound by trade and law would naturally forswear war, while Cobden, a free-trade evangelist, held that economic interdependence rendered armed conflict materially ruinous and therefore irrational.
Former US president Woodrow Wilson, who had lectured on Kant as a professor at Princeton University, carried this idealist notion into the 20th century.
Faith in the pacifying effects of commerce became political orthodoxy in the US following passage of the Reciprocal Trade Agreements Act of 1934. Drafted by Hull, the bill reversed decades of Republican protectionism dating back to 1890. In the wake of the Smoot-Hawley Tariff Act of 1930 and the retaliatory spiral it provoked, it seemed almost self-evident that tariffs bred wars and that free trade would therefore bring peace.
However, the geopolitical case for free trade rested on little more than wishful thinking. To be sure, Tennesseans like Hull, who decried the harm that manufacturing tariffs inflicted by northern US states on farm exports from the nation’s south, had legitimate economic reasons to champion freer markets, but in reality, the causal arrow points in the opposite direction.
It is peace that makes trade possible — a crucial distinction for understanding globalization and its current retreat.
Consider Britain’s ascent to imperial dominance in the 17th and 18th centuries. Its naval and colonial expansion was accompanied by mercantilist policies designed to draw in bullion to finance wars and suppress foreign competition. The Navigation Act of 1651 restricted trade to English ships and ports; colonial monopolies such as the East India Co consolidated imperial control; and tariffs, together with production “bounties,” like those paid under the Corn Laws of 1815, reinforced the system.
Only after Britain established uncontested control of the seas did mercantilism lose its appeal. By the middle of the 19th century, Britain needed cheap food and raw materials, and it sought new markets for its manufactures. Low tariffs and reciprocal trade agreements complemented new policies, such as the gold standard, that made London the world’s financial center. Its ability to impose “peace” thus paved the way for its embrace of free trade.
The US found itself in a similar position after the end of World War II. As the new global hegemon, it had the power and the incentive to promote free trade and monetary stability, using low tariffs and fixed exchange rates to expand markets for its mass-produced goods.
The result was the creation of the General Agreement on Tariffs and Trade, designed to reduce import barriers, and the IMF, established to stabilize currencies and stop competitive devaluations. The ensuing Pax Americana seemed to validate Hull’s belief that economic nationalism had caused the geopolitical breakdown of the 1930s. In fact, it had been one of its symptoms.
Had the US not provided its trading partners with security guarantees, most notably through NATO, the post-World War II revival of trade and investment would never have been possible. France and the UK had initially resisted US efforts to promote European economic integration through the Marshall Plan, insisting that national self-sufficiency was necessary in the absence of US protection. The so-called liberal order was thus not spontaneous, but deliberately constructed by the US, and sustained by its military and monetary dominance.
HULL DOCTRINE’S DEMISE
The eras of Pax Britannica and Pax Americana revealed that peace does not come from disarmament or treaties prohibiting war, such as the 1928 Kellogg-Briand Pact, but from the presence of a global power willing and able to guarantee security. The European Coal and Steel Community, the precursor to the EU, was founded on the premise that economic interdependence would make another continental war impossible.
However, Europe’s post-war peace rested less on markets than on US deterrence. It was an iron fist, not an invisible hand, that safeguarded the global advance of free trade.
At the end of the Cold War, the US sought to deepen and expand trade flows further regionally and globally. Defending the North American Free Trade Agreement (NAFTA) in 1993, then-US president Bill Clinton argued that it was as much about spreading peace as about spreading prosperity.
“For this new era,” he said, US national security “will be determined as much by our ability to pull down foreign trade barriers as by our ability to breach distant ramparts.”
However, the connection between trade and security proved far weaker than Clinton’s rhetoric implied. Although NAFTA was followed by limited security cooperation between the US, Canada and Mexico, that cooperation was driven largely by shared concerns over law enforcement and migration rather than by trade itself.
The relationship between the US and China is a case in point. Between China’s accession to the WTO in 2001 and the election of US President Donald Trump, an avowed protectionist, in 2016, US-China trade increased fivefold. Yet over the same period, their security relationship deteriorated amid rising tensions over China’s aggressive behavior in the South China Sea, its growing cyberespionage operations and Washington’s “pivot to Asia” defense strategy.
Sino-American ties, of course, soured further when Trump began to impose tariffs and sanctions in 2018, even as bilateral trade rose by 14 percent from 2016 to 2018. Since then, the two countries have become economically intertwined to a degree that deeply worries both governments: China struggles to overcome its dependence on US semiconductors, while the US is scrambling to reduce its reliance on Chinese rare earth metals. Far from easing strategic anxieties, economic interdependence has amplified them, leaving each side increasingly vulnerable to disruptions in strategically important sectors.
In short, the Hull Doctrine is dead — drowned in the South China Sea. While the liberal belief that trade raises the cost of war contains a kernel of truth, it is equally true that interdependence can just as easily breed mistrust and rivalry.
Among Roosevelt’s contemporaries, no one understood the tension between commerce and peace better than Wendell Willkie, his 1940 Republican challenger. After visiting wartime China in 1942, Willkie pointedly asked: “Can we develop enormous trade relations with China ... unless today we are able to develop a joint military strategy with China?”
In other words, could the US hope to expand trade without first building mutual trust? Were not the benefits of trade dependent on cooperation and a shared sense of security?
Willkie also recognized how perilous it would be to integrate market economies with state-directed ones. When global prices fail to reflect supply-and-demand dynamics, they distort production and trade flows, killing off more efficient enterprises, fueling imbalances and breeding resentment.
As he put it in a 1944 New York Times article: “If after the war the industrial and commercial life of most of the countries of the world is either state-owned or controlled, then the whole problem of the survival of a free economic system, even in the United States, will be complicated. Certainly the pattern of our foreign trade policy will have to be fashioned to government supervision, allocations and perhaps even price-fixing. For state-controlled economies can sell without regard to costs. In other words, prices can become political.”
And when anything becomes political, as the Nazi crown jurist Carl Schmitt famously observed, it inevitably becomes adversarial.
TRADE AND SECURITY
What lessons can we draw from this history?
The liberal order — and, in particular, faith in the steady expansion of global trade — was underpinned by US security guarantees. Although the Soviet Union and its satellites remained outside that system during the Cold War, they played only a marginal role in the world economy. The leading industrial powers, especially those of western Europe and Japan, embraced liberalization under the protection of the US security umbrella.
While economic globalization accelerated after the end of the Cold War, China’s trajectory since joining the WTO has vindicated Willkie’s warning that the fusion of markets and state power would distort and politicize global prices. Rather than liberalizing, the Chinese regime used its newfound access to international markets to strengthen its state-industrial complex.
State-owned enterprises’ share of industrial output has risen sharply under Chinese President Xi Jinping (習近平), whose government directs massive amounts of capital into sectors deemed strategically vital through plans such as Made in China 2025 and China Standards 2035.
Meanwhile, subsidized overcapacity in steel, solar panels and electric vehicles has turned trade itself into an instrument of geopolitical ambition.
Willkie’s observation that “prices can become political” perfectly captures the reality of global commerce. In the spirit of Clausewitz, trade has become war by other means.
China’s economy today is roughly 14 times larger than it was when it joined the WTO, and its official defense budget has increased more than 10-fold in nominal dollar terms (the real figure is likely far higher). Its growing military power, together with Russia’s revanchist ambitions and the US’ profound disillusionment with the globalization project, has severely undermined the security foundation on which the liberal order rests. And even though world leaders continue to proclaim their commitment to globalization, it is far from clear that the multilateral trading system can endure without the security guarantees that sustained it.
As that foundation erodes, deglobalization will be anything but smooth. Efforts to decouple the US and Chinese economies will likely drive a surge in transshipments as exporters seek to conceal the origins of targeted products. The detection — or even the suspicion — of such practices will then trigger a cascade of new tariffs and secondary sanctions.
Three developments will further undermine efforts to preserve rules-based trade. The first is the growing use of “national security” exceptions at the WTO, as trade barriers justified on security grounds are treated by the US and others as beyond legal review. The second development is the continued paralysis of the WTO’s appellate body, which has been inquorate since 2019, owing to Washington’s refusal to approve new judges.
Lastly, the most-favored-nation principle is being severely eroded, as more countries are forced to violate it to reach temporary trade truces with the Trump administration.
When the Russian threat receded after 1991, Europeans convinced themselves that the project of economic and political integration championed by the EU’s architects — together with the broader drift toward liberal democracy — had rendered traditional geopolitics obsolete.
However, Russia’s invasion of Ukraine in 2022 revealed how completely peace had depended on the presence of the US as a security guarantor. Its reluctance to continue in this role reflects the growing belief among its electorate that the costs of sustaining a liberal world order now outweigh the benefits. Absent a sharp change in that conviction, and an increase in the capacity of Washington’s post-war allies to buttress the security architecture, that order appears irretrievably lost.
Benn Steil is the director of international economics at the Council on Foreign Relations.
Copyright: Project Syndicate
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