TARIFFS, SANCTIONS, AND ECONOMIC STATECRAFT: A LAW-AND-ECONOMICS ANALYSIS OF THE NEW WEAPONIZATION OF TRADE

Abstract

International trade law was built upon a paradox that has become impossible to ignore: the legal architecture designed to separate commerce from politics has become the very infrastructure through which states increasingly exercise political power. Tariffs, sanctions, export controls, financial restrictions, and customs measures are no longer exceptional departures from economic governance; they have become central instruments of strategic competition. This Article develops a law-and-economics theory of Strategic Economic Statecraft to explain this transformation. It argues that existing frameworks of trade law, welfare economics, and coercive diplomacy fail to capture a fundamental shift in governmental objectives: states no longer maximize economic efficiency alone but strategic utility, incorporating security, technological dominance, financial influence, and resilience. By reconceptualizing trade regulation as an architecture for governing strategic interdependence, this Article provides a new theoretical account of how law has become a mechanism through which economic power is created, organized, and deployed in the contemporary international order.