Not Another Politics Podcast Can Trade Be A Weapon Of Global Power?
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Oct 2, 2025 In this engaging discussion, David Yang, a Harvard researcher, explores how trade relationships can serve as a tool of power. He explains why countries might prioritize export control over imports for leverage, connecting theoretical models to real-world scenarios like Germany's reliance on Russian oil. David also dives into how the U.S.–China rivalry reflects trade dynamics and how tariffs can influence diplomatic negotiations. Additionally, he warns of potential pitfalls in relying too heavily on trade for leverage, especially when political costs are considered.
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Trade Power Comes From Asymmetric Damage
- Trade leverage derives from asymmetry in the damage one country can inflict on another through disruptions.
- The relative costs, substitution elasticities, and retaliation risk shape a country's bargaining power.
Export Withholding Often Hurts Importers More
- Export withholding often inflicts first-order harm on the importer while causing smaller second-order losses to the exporter.
- Empirically, export dependence better predicts geopolitical engagement than import dependence.
Germany, Russia And The Import-Leverage Mistake
- The Germany–Russia oil relationship illustrates mistaken beliefs about leverage from imports.
- David Yang compares that to China's rare-earth export threats, which hurt importers more.