S9 Ep42: The Safety Paradox

Recorded at the PSE-CEPR Policy Forum, Paris School of Economics, June 2026.

In 1941 the United States banned oil exports to Japan, to punish aggression without fighting a war. Historians now argue the embargo did the opposite, and hastened Japan's entry into the war.

Isabelle Méjean (Sciences Po, CEPR) calls this "The safety paradox". Trade between rivals makes war more expensive. Cut that trade to protect your interests, and you make conflict cheaper, for your rival as well as for you. In a new VoxTalk she talks to Tim Phillips about economic coercion, decoupling, and why Europe should treat its trade agreements as insurance.

Méjean and her co-authors simulated the US decoupling from China. Raising tariffs by 20 percentage points, roughly what the first Trump administration did, raises the probability of war by 2%, she estimates. That sounds small until you consider what a war between the US and China would mean.

The research behind this episode:

Mayer, Thierry, Isabelle Méjean, and Mathias Thoenig. 2025. "The Fragmentation Paradox: De-risking Trade and Global Safety." CEPR Discussion Paper 20564 (gated).

To cite this episode:

Phillips, Tim, and Isabelle Méjean. 2026. "The Safety Paradox." VoxTalks Economics (podcast).

About the guest

Isabelle Méjean is Professor of Economics at Sciences Po and a Research Fellow of the Centre for Economic Policy Research, where she directs the International Trade and Regional Economics programme and is a member of the Research Policy Network on Geoeconomics and Security. She is a scientific advisor at CEPII and a member of the French Conseil d'Analyse Économique, with research spanning international trade, firm-to-firm networks, and how shocks to individual firms move whole economies. In 2020 she was named Best Young Economist of France.

Research cited in this episode

Make Trade Not War? Philippe Martin, Thierry Mayer, and Mathias Thoenig's 2008 paper in the Review of Economic Studies (75(3): 865-900) provided the first quantitative evidence that bilateral trade integration reduces the probability of interstate conflict; the diplomatic game in the new paper builds directly on it.

Montesquieu, De l'esprit des lois (1748). The earliest statement of the idea, Méjean notes, that interdependence between nations raises the cost of conflict and strengthens the hand of diplomacy; what was trade dependence in the 18th century now includes finance and technology.

The US oil embargo on Japan, 1941. Méjean's historical example of the safety paradox in action; a policy designed to impose costs on Japan is widely credited by historians with accelerating its entry into the Second World War.

China's trade ban on Lithuania. After Lithuania allowed a Taiwanese representative office to open in Vilnius in 2021, China blocked Lithuanian products from its market; the episode's example of open economic coercion, and one that prompted the EU's Anti-Coercion Instrument, in force since 2023.

Liberation Day tariffs. The US tariffs announced in April 2025; Méjean points to the tariff on Brazil, justified by the treatment of former president Jair Bolsonaro, as a tariff with an explicitly geopolitical rather than economic purpose.

Rare earths. China holds a near monopoly across mining, refining, and magnet production; Méjean's example of where future trade agreements could act as insurance, because deposits outside China offer more scope for diversification than mining in Europe.

More VoxTalks Economics episodes

Europe in the Middle. Pol Antras and Beata Javorcik, recorded at the same forum, on what the US-China realignment means for European producers and consumers.

World War Trade. Richard Baldwin on how world trade was weaponised, and where the trading order goes from here.

Trading Around Geopolitics. Giancarlo Corsetti, Banu Demir, and Beata Javorcik on why trade sanctions can be like squeezing a balloon.

Related reading on VoxEU

Why 'de-risking' may not deliver a large peace dividend, a VoxEU column estimating that a doubling of bilateral trade reduces the probability of militarised conflict by roughly 30%.

How geopolitics is changing trade, a VoxEU column documenting the fragmentation of trade flows along geopolitical lines.

Geopolitical risk and supply chain diversification, a VoxEU column on how firms respond to geopolitical risk in their sourcing decisions.