Economic coercion refers to deliberate actions by a state—or group of states—that impose, or threaten to impose, economic costs on another actor in order to influence its political conduct. Instruments include tariffs, import bans, export controls, sanctions on individuals or sectors, asset freezes, denial of market access, restrictions on tourism or student flows, secondary sanctions on third parties, and weaponization of financial infrastructure such as correspondent banking or payment systems.
The concept overlaps with but is distinct from formal sanctions. Sanctions are usually announced, codified, and tied to stated legal grounds; coercion can also be informal, deniable, or "gray-zone," such as sudden customs delays, regulatory harassment of foreign firms, or unofficial consumer boycotts encouraged by state media. Scholars often trace the modern study of the topic to Albert Hirschman's National Power and the Structure of Foreign Trade (1945) and to David Baldwin's Economic Statecraft (1985).
International law treatment is contested. The UN General Assembly has repeatedly passed resolutions condemning "unilateral coercive measures," and the 1970 Friendly Relations Declaration states that no state may use economic measures to coerce another to subordinate its sovereign rights. However, the WTO regime permits trade restrictions under national-security exceptions (GATT Article XXI), and major powers dispute where legitimate statecraft ends and unlawful coercion begins.
Recent practice has sharpened the debate. China's restrictions on Australian barley, wine, and coal from 2020 onward—following Canberra's call for a COVID-19 origins inquiry—are widely cited as textbook coercion, as are Russia's gas cutoffs to European buyers. In response, the European Union adopted the Anti-Coercion Instrument (Regulation (EU) 2023/2675), entering into force in December 2023, which allows the Commission to propose countermeasures against third countries that use trade or investment to pressure EU member states. The United States, Japan, and the G7 have similarly elevated "economic security" as a policy frame.
Example
In 2020, China imposed tariffs of over 80% on Australian barley and suspended imports of Australian wine, coal, and beef after Canberra publicly backed an independent inquiry into the origins of COVID-19.
Frequently asked questions
Sanctions are a formal subset of economic coercion, typically codified in law with declared objectives. Coercion is a broader category that also covers informal, deniable measures such as customs slowdowns, state-encouraged boycotts, or selective regulatory enforcement.
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