More than 800 million people have been lifted out of extreme poverty over recent decades – not through wealth redistribution, but through access. Access to trade, to capital, to technology and to opportunity. That’s what open markets enabled. Imperfect, yes – but transformational nonetheless. And Britain – as the birthplace of modern free trade – played a pivotal role in that transformation.
Yet as we enter 2025, the very architecture that enabled this success is beginning to crumble. Not because trade has failed, but because the West has stopped treating it as a form of power. While authoritarian regimes use commerce as leverage, too many democracies remain in denial. We are not in a simple ‘trade war’ – we are in the midst of a geoeconomic power shift. Unless Britain and its allies confront this reality, they risk sleepwalking into economic subordination.
The end of naïve globalism
For decades, Western policymakers assumed that expanding commerce would foster peace. This ‘naïve globalism’ held that interdependence would bring stability. Yet China and Russia reaped the gains without liberal reform, becoming more assertive instead. Globalisation’s golden age, paradoxically, empowered its adversaries.
The consequences are now clear. The world is fracturing into rival blocs. The era of frictionless globalisation is over. ‘Friend-shoring’ – relocating supply chains to trusted partners – may now be the West’s best option. Trade can no longer be seen as neutral or solely economic. It has become a strategic instrument.
Albert O. Hirschman warned us as early as 1945 that trade creates dependency, and dependency creates leverage. A dominant trading partner can exert subtle but potent geopolitical pressure. For decades, this insight was dismissed. Today, it is daily reality.
Western leaders are responding. Donald Trump’s tariff threats baffled economists but reflected strategic thinking. His approach was crude, but it understood one truth: trade equals power.
Authoritarian regimes go further. Russia has weaponised energy and food. China punishes political dissent with tariffs and import bans. Australia and Lithuania have both been targets. The UK’s own security review highlights how China uses ‘all the levers of state power,’ trade included.
We are witnessing a shift to what is now called geoeconomics – the use of trade, investment, and tech as instruments of political power. Classic liberal trade theory assumed mutual gain. Today’s reality is zero-sum competition. Britain must adapt without abandoning its liberal values. As early as the 1920s, Ludwig von Mises warned that abandoning free exchange in favour of state intervention would erode both prosperity and liberty. While Hirschman exposed how trade can be manipulated as leverage, Mises reminded us why trade matters in the first place: because voluntary exchange is the foundation of peaceful cooperation and individual freedom. To preserve free trade, we must understand the forces that distort it – and few have explained this better than Albert Hirschman. His lessons are no longer theoretical; they are strategic imperatives for any liberal democracy. This is not a call for retreat, but for strategic realism – the kind that recognises that openness without resilience is vulnerability.
A sovereign trade policy for a new era
Brexit has given the UK full control of its trade policy for the first time in nearly half a century. This sovereignty comes at a critical time. Britain must now craft a policy that marries free enterprise with national resilience.
Encouragingly, the UK has moved with purpose. Trade Secretary Anne-Marie Trevelyan channelled Margaret Thatcher when she said: ‘Protectionism does not solve problems, it creates them.’ Rather than retreating behind tariffs, Britain has pursued new alliances.
In just over a year, the UK rolled over or signed deals with around 70 countries, representing over £760 billion in annual trade. Free from Brussels’s ‘Computer Says No’ culture, we can strike deals at our own pace. While the EU regulates plastic straws, Britain is securing access to the markets that will define the 21st century.
The government’s 2021 Integrated Review announced an ‘Indo-Pacific tilt’. That strategy bore fruit in 2023 when the UK joined the CPTPP – a high-standard, fast-growing trade bloc. The CPTPP proves that sovereignty and cooperation are not contradictions. Unlike the EU, it has no supranational court or bureaucracy. Every member holds a veto. This is free trade on British terms.
Further negotiations are underway with India, the Gulf states and others. These deals are about more than economics. They build interdependence with democratic partners and reduce reliance on autocracies. The pandemic and Ukraine war revealed the danger of depending on hostile powers. The UK’s Supply Chains and Import Strategy aims to build economic security through diversification.
Free trade, but not free-for-all
Britain is not naïve about the trade landscape. It supports liberalisation – but also fairness and reciprocity. In 2021, the UK created an independent Trade Remedies Authority to address dumping and unfair subsidies.
National security is paramount. In 2020, the government banned Huawei from 5G infrastructure. The National Security and Investment Act now allows ministers to intervene in sensitive acquisitions. In today’s climate, economic security is national security.
This realism extends to supply chains. Britain is friend-shoring critical industries. The G7 is coordinating on export controls and resilience. The UK supports this agenda and has aligned its trade policy with what some call ‘economic NATOism’.
Aligning with allies for resilient prosperity
The UK’s trade strategy reflects a deeper principle: we trade most freely with those who share our values. Deals with democracies carry lower strategic risk than dependence on autocracies.
London has focused on trade with the US, Australia, Japan, Canada and others. Simultaneously, it has taken a more cautious stance toward China and Russia. Whitehall’s 2023 review labelled China a ‘systemic competitor.’ Britain has opposed Beijing’s CPTPP bid – a far cry from the old mantra that ‘more trade is always better’.
Trade is also a tool of diplomacy. The UK is leveraging initiatives like AUKUS and the Global Combat Air Programme to deepen economic and defence ties with allies. Economic and security cooperation are increasingly intertwined.
Britain is also supporting WTO reform and EU anti-coercion measures. The response to China’s trade bullying of Lithuania showed that democracies can and must respond collectively to economic aggression.
A confident trade strategy for Britain
All of this adds up to a new strategic vision. Trade is no longer just about efficiency – it is a pillar of statecraft. Britain can lead if it combines economic liberalism with hard-headed strategy.
As the nation that pioneered free trade in the 19th century, the UK now has the opportunity to redefine it for the 21st. As a mid-sized democracy with global reach, Britain can build prosperity through commerce without being naïve about geopolitical threats.
There is cause for optimism. From CPTPP accession to global deal-making, the UK is on the right path. We are embracing the world, not retreating from it – but doing so on our terms.
In a world where trade is power, Britain must not merely adapt – it must lead. Staying true to our free-market ideals while building resilience is not a contradiction; it is a necessity. As Mises argued, a truly free society cannot exist without free markets. Defending open trade is not just about economics – it is about preserving the institutional fabric of liberal democracy itself.
The choice is the UK’s: shape the future of global trade – or be shaped by it. With clarity, confidence and courage, Britain can lead the free world into a new era of principled prosperity.
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