**Introduction** Economic coercion weakens the stability of the rules-based multilateral trading system by increasing the use of unilateral trade restrictions, retaliatory measures, and strategic economic policies outside agreed multilateral rules. As governments increasingly use tariffs, export controls, sanctions, and investment restrictions to pursue geopolitical and security objectives, the global trading system becomes less predictable, more fragmented, and more dependent on power relations rather than common rules. **Contextual background** Economic coercion refers to the use of economic tools to pressure another country into changing political, economic, or strategic behavior. These tools include tariffs, export restrictions, sanctions, technology controls, and restrictions on trade or investment. The modern multilateral trading system, centered on the World Trade Organization (WTO), was designed to promote stable and rules-based trade relations through non-discrimination, transparency, and binding dispute settlement. However, growing geopolitical competition, industrial policy expansion, and national security concerns have increased the use of coercive economic measures outside WTO disciplines[1][2]. **How economic coercion affects the multilateral trading system** **1.** **Weakening confidence in multilateral rules** Economic coercion reduces trust in the fairness and enforceability of multilateral trade rules. Governments increasingly impose unilateral tariffs, export restrictions, and strategic controls outside WTO procedures, signaling that geopolitical priorities can override agreed trade commitments. Recent WTO monitoring reports show a continued rise in trade-restrictive measures, including tariffs, subsidies, and export controls introduced by major economies[1]. As these measures expand, countries become less confident that WTO rules can effectively constrain unilateral behavior, especially among larger economies with significant market power. This weakens incentives for compliance and encourages governments to rely more on strategic leverage and retaliation rather than multilateral dispute resolution. **2.** **Fragmentation of trade and supply chains** Economic coercion contributes to the fragmentation of global trade by encouraging countries and firms to diversify supply chains toward politically aligned or lower-risk partners to reduce vulnerability to geopolitical disruptions and coercive trade measures[3]. Governments increasingly pursue friend-shoring, domestic production incentives, strategic stockpiling, and selective trade partnerships to strengthen economic resilience and reduce dependence on geopolitical rivals. These trends are particularly visible in sectors linked to semiconductors, advanced technologies, clean energy systems, and critical minerals. As supply chains reorganize around security and political considerations rather than efficiency alone, global trade becomes more regionally and strategically segmented. This reduces the universality of the multilateral trading system and weakens the role of globally applied trade rules[4]. **3.** **Weakening of dispute settlement and rule enforcement** Economic coercion also undermines the effectiveness of WTO dispute settlement mechanisms. Governments increasingly justify restrictive trade measures on national security grounds, making it more difficult to challenge these actions through multilateral legal procedures. At the same time, the continued paralysis of the WTO Appellate Body has reduced the organization’s ability to enforce binding outcomes[5]. Without a fully functioning dispute settlement system, countries face fewer constraints when implementing unilateral measures or retaliatory policies. This weakens predictability for firms and investors because trade rules become more uncertain and politically influenced. **4.** **Escalation of geopolitical rivalry and retaliation** Economic coercion often triggers retaliation that intensifies geopolitical tensions and destabilizes trade relations. Tariffs, export controls, sanctions, and technology restrictions frequently lead to countermeasures that expand beyond the original dispute[6]. These retaliation cycles make cooperation on multilateral trade reforms more difficult and complicate negotiations on industrial subsidies, digital trade, climate-related trade measures, and emerging technologies. Trade policy increasingly becomes a tool of strategic competition rather than a framework for collective economic governance. The growing overlap between trade policy and national security also increases uncertainty over how security exceptions within WTO rules are interpreted and applied. **Conclusion** Economic coercion destabilizes the rules-based multilateral trading system by weakening confidence in trade rules, fragmenting supply chains, undermining dispute settlement mechanisms, and intensifying geopolitical rivalry. As trade policy becomes more closely linked to strategic and security objectives, the global trading system becomes more fragmented and less predictable. Maintaining the stability of the multilateral system will require stronger dispute settlement mechanisms, clearer rules governing coercive economic measures, and renewed cooperation among major economies.
