Chapter 5 reviews the tensions that arise between the Liberal ideology’s broader goal of establishing and enforcing the rule of law, including sovereign equality, and states’ perennial interest in using trade as an instrument of influence. The multilateral system is founded upon a bedrock principle of non-discrimination, and yet statesmen have a natural desire to treat allies better than adversaries. The chapter explores how philosophers and statesmen manage these tensions in theory and in practice, distinguishing first between the ideas on the left and the right and then between the strategies of the British and American hegemons. This introduction to the two leaders’ differing objectives and styles sets up the detailed histories that follow.

Chapter 10 places China’s rise in context, showing that in important respects it has followed a similar pattern to that of the United States. Exports were key to the early growth of both countries, but each of them later turned more to internal development. The archetypal implications were similar: Even while each grew as a player in the global economy, by the time the state achieved great-power status its orientation was more political than commercial. The chapter chronicles that transition for China, presenting data on its evolving levels of market power and market exposure both globally and in its bilateral relationship with the United States.

Chapter 7 covers the first German challenge to Anglo-American hegemony, culminating in World War I. Germany rose rapidly from unification to confront the United Kingdom, its ascent partly attributable to an imperfect replication of the British model of commerce and colonies. Yet while the English hesitated to practice cold economic warfare, when the shooting finally started they were quicker than the Germans to blockade the adversary and bring commercial pressure on neutrals. London took only half-steps after the war to restore the trading system, making numerous discriminatory compromises that multiplied with the onset of the Great Depression.

Chapter 13 reviews where the US-China trade war fits in the larger competition between these two states, with special emphasis on national security as a justification for trade restrictions. These issues are explored at both at the strategic (economy-wide) and tactical (sectoral) levels, starting with a review of where the trade war fits in current thinking on law, military science, and technological innovation. The analysis turns to a more detailed review of the rationales for, and impact of, specific actions that the Trump and Biden administrations have taken to control trade. The sectors reviewed include agriculture, rare earths, energy, steel and other metals, arms and dual-use goods, and goods and services in the communications sector.

In early twentieth century, there were widespread demands for increased tariffs and other barriers. However, by 1906, a relatively open trading system had stabilised. The victory of the Liberals in the British election in 1906 and their commitment to free trade, as well as to the German government’s management of its trade policy, culminating in trade treaties from 1904, shaped this outcome. The defeat of proposals for higher trade barriers resulted not only from economic considerations, but also geopolitical ones. British Liberals argued that a free trade empire was more secure than one surrounded by tariff barriers, while German leaders recognised that trade was an essential element of German power. Debates about trade were transnational. The outcomes reduced trade as a source of political tension and weakened the argument that securing markets required military and naval force. Austria-Hungary tried to use commercial pressure to influence Serbia, but the subsequent ‘Pig War’ saw Serbia diversify its commercial partners, an achievement that was partly possible because of the defeat of those calling for trade barriers in Britain and Germany.

This chapter examines the role of tariffs and quotas in international trade law, focusing on their regulation within the General Agreement on Tariffs and Trade and the World Trade Organization. While often associated with free trade, these legal frameworks primarily discipline rather than prohibit protectionism, favouring tariffs as the more acceptable instrument. The chapter traces the evolution of tariffs as the preferred trade barrier, contrasting them with the general prohibition on quotas. It also discusses the complexities of tariff application, including classification, valuation, and origin determination. Finally, it considers the future of tariffs and quotas, and the challenges of achieving full trade liberalisation without regulatory harmonisation to prevent regulatory arbitrage.

Abraham Lincoln's political writings were the works of a practical politician, not a political philosopher. Yet, his understanding of American politics was deeply informed by wide and penetrating reading in 19th century liberal political economy. This reading convinced him to be a determined opponent of slavery, and a vigorous promoter of henry clay's 'American system.' both of these programs retained their hold on Lincoln, and when, after his election to the presidency of the United States in 1860, the republic was plunged into civil war over slavery, Lincoln guided the nation toward the erasure of legalized slavery and to an economy favourable to commerce and manufacturing. His victory in the civil war, cut short by his assassination in 1865, nevertheless changed the political culture of the nation for the next sixty years, and set the country on the slow but inexorable path of civil equality for the freed slaves.

Chapter 3 develops a theory of the domestic politics of intra-industry trade. It argues that changes in the nature of trade away from endowments-based trade to two-way trade within industries change the structure of preferences over trade policy and the way that actors mobilize politically in order to influence trade policy. This, in turn, affects trade policy outcomes and the ease with which trade agreements are concluded. First, I argue that the distributional effects of intra-industry trade drive a wedge through industry preferences over trade policy. As intra-industry trade increases, globalized firms support openness, and smaller, domestic-oriented firms within the same industry support protection. Second, these heterogeneous firm preferences change the ability of industries to overcome collective action problems and organize politically to influence trade policy. I argue that industry associations are hamstrung in their ability to lobby while individual firms have a greater incentive to lobby alone for their preferred policies. Third, exporters will overwhelm domestic-oriented firms in their ability to lobby, and as a result, tariffs will be lower in industries with higher intra-industry trade, though this may not be the case with non-tariff barriers to trade.

This chapter examines the relationship between intra-industry trade and trade policy outcomes. Through a cross-national time-series analysis of trade liberalization in developed economies, the chapter shows that industries with higher IIT enjoy lower tariff levels, controlling for leading alternative explanations from the literature. This tests the hypothesis that intra-industry trade is less politically controversial and easier to liberalize than classic, endowments-based trade. However, this chapter also shows that IIT is associated with higher non-tariff measures, a new and significant finding, which is discussed as it pertains to the book's arguments about intra-industry trade’s winners and losers.

Multinational enterprises do not pay their fair share of taxes to market countries where profits are generated because market countries are only allowed to tax companies with a physical presence. Recently, a global tax deal (BEPS 2.0) was reached to tackle these issues. Proposed by the OECD/G20 Inclusive Framework and endorsed by nearly 140 countries, BEPS 2.0 sets forth two Pillars: Pillar One addresses digital taxation while Pillar Two addresses a global minimum tax. However, Pillar One’s success is doubtful, as its details have become increasingly complex and degraded by political compromises and carve-outs. Also, countries are unlikely to repeal digital services taxes (DSTs), which is an adamant requirement of the United States in adopting Pillar One. This chapter presents the treaty overrides problem that will occur if the United States implements Pillar One by executive agreement to bypass the treaty ratification and suggests separating the two Pillars to preserve the global minimum tax. Regarding DSTs, it provides empirical studies that demonstrate the harm retaliatory tariffs cause. Finally, it endorses the UN’s digital taxation proposal and proposes a new data excise tax.

With the rise of strategic rivalry and geopolitical competition, governments turned to economic policy to gain influence, power, and resources. The defining feature became the pursuit of national interest, which was invoked to introduce investment screening policies, increase tariffs, prevent cross-border M&A deals, expropriate assets, restrict technology transfer, provide preferential subsidies, and create national champions. To respond effectively, global companies must recognize the systemic changes underway and develop capabilities to address them. Companies need to acknowledge that they will come to be defined by their nationality and innovation is an important battlefield. Government policies to contain the influence of foreign firms from adversarial countries cluster around four levers: market access, level playing field, investment security, and institutional alignment. To actively manage geopolitical tensions, companies need to assess how geopolitics will share their resources, competitive advantage, and firm organization. They need to develop skills to scan the global landscape, personalize the information, plan the response, and pivot if there are headwinds. Impact on employees, who works, how work is performed, and where it takes place need to be evaluated. Managing policymakers becomes a crucial part of managing a global business.