Belgrade. Trade policy is increasingly driven by geopolitical rivalry rather than economic efficiency, putting decades of gains from globalization at risk, Harvard University Professor Elhanan Helpman told a gathering of international economists on Tuesday.

“The broader lesson is that trade policy today cannot be understood solely through the lens of economics. It must also be viewed as part of a wider strategic and geopolitical competition,” Helpman said at the International Economic Association (IEA) World Congress in Belgrade.

He said intensifying competition between the United States and China has shifted trade policy away from traditional economic objectives toward concerns such as national security, technological leadership, and geopolitical influence.

The change has coincided with a sharp rise in protectionist measures worldwide. According to Helpman, tariffs imposed during recent US-China trade disputes reached levels not seen in decades. By late 2025, average US tariffs on Chinese imports had climbed above 47%, while Chinese tariffs on US goods stood at about 32%.

Despite mounting political resistance to globalization, Helpman argued that international economic integration has produced historic benefits. He highlighted three major achievements: stronger economic growth through trade, declining inequality between countries, and a dramatic reduction in extreme poverty.

Nearly 60% of the world’s population lived in extreme poverty in 1981. By 2019, that figure had fallen to around 10%, enabling roughly 1.3 billion people to escape extreme deprivation.

“There are, of course, multiple causes of this achievement. Domestic institutions matter, education matters, technological progress matters, and policies matter. But it is difficult to imagine this transformation without the integration of developing countries into the world economy,” he said.

Helpman also pointed to evidence showing that countries that opened their economies to trade after World War II generally achieved faster growth in income per capita, as cross-border commerce accelerated the spread of ideas, technology, and innovation.

At the same time, he acknowledged that globalization has fueled political backlash in many advanced economies. While trade is often blamed for widening income inequality, Helpman said research suggests it accounted for no more than 20% of the increase in wage disparities, with technological change and automation playing a far larger role.

“Our task is neither to celebrate globalization uncritically nor condemn it reflexively,” Helpman said. “Our task is to understand it.”

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