In the picture
Cover of Ken Keydon's book 'The Trade Weapon. How Weaponizing Trade Threatens Growth, Public Health and the Climate Transition' (Cambridge: Polity Press, 2025) 204 pp.
At a time of tension in the world due to the general raising of tariffs by the United States, Ken Heydon's book is particularly timely. For its subject matter, and also for its stance: in the face of those who fawn over Donald Trump and believe that the US president is a business genius and that his protectionism will bring wealth to us all, Heydon warns that "there is solid evidence that open economies are generally richer and more productive than closed economies."
An Australian trade official and member of the OECD secretariat, Heydon is not writing in response to Trump's re-election, but in reaction to the protectionist tendencies that have been on the rise in the world - especially since the great recession of 2008 - of which Trump is the epitome and certainly a major accelerator. Since 2009, import restrictions have increased tenfold in the G-20 countries, often out of the media spotlight, more concentrated on another aspect of the use of trade as a weapon: economic or financial sanctions.
In his book, easy to follow but at the same time very specific on the mechanisms of the World Trade Organization (WTO), Heydon warns that weaponizing trade between countries is an internship as old as trade itself. However, the globalizing drive that the world has seen since the end of the 20th century has made it possible to implement a multitude of multilateral and bi-national free trade agreements. Without having achieved a universal zero tariff or completely banished subsidies or taxes on certain products, due to their characteristics or origin (something that Trump uses to argue that free trade was a lie), in recent decades there has been a substantial commitment to facilitate the movement of goods and services across the planet. And in general it has been a positive thing.
It is true, as the author acknowledges, that the generalization of open markets has not treated everyone equally, and that there have been winners and losers. Trade has tended to favor skill- and capital-intensive activities in developed countries, and activities that require abundant and unskilled labor in development countries. However, Heydon argues that trade is not the main cause of income inequality within countries, but that it is due to national dynamics. At the same time, protectionist measures provide "large benefits to a small issue of people" (who live off a finished product) and cause "a small loss to a large issue of consumers.
For this reason, he believes that countries "shoot themselves in the foot" when they use trade as a weapon; "by restricting and distorting the international flow of goods and services, they deny themselves the benefits of trade". Against those who demonize imports, Heydon turns to David Ricardo's maxim, one of the pillars of economic liberalism: "A country will gain by exporting the product in which it has a comparative advantage and - crucially - by importing the product in which it has a comparative disadvantage". agreement to this dynamic, imports help to combat rising inflation.
One aspect of the great globalization we have experienced is that of value chains: more than half of world trade now takes place in intra-industry intermediate goods and services, rather than in the exchange finished goods. It is here that a reversal is being perceived: since 2012, supply chains have become more domestic.
Still, in the trade war against Beijing by the United States and other Western allies, Heydon advises keeping in mind that China's presence in value chains is "a fact of economic life, with its vast domestic market and labor force, deep supplier networks and reliable infrastructure."
At the same time, he points out that China will remain a wayward member of the WTO: as its Economics growth slows substantially and its population ages, it will become a "more biased" economic partner .
Still, Heydon prefers an optimistic bet. "As long as companies seek to satisfy customers with the highest quality products at the lowest possible prices, globalization will remain a fact of economic life," he concludes, quoting a senior British official.