Stanford Professor Matteo Maggiori Unpacks the New Geopolitics of Global Trade
Stanford Professor Matteo Maggiori Unpacks the New Geopolitics of Global Trade
Professor Maggiori joined SCCEI and Stanford Libraries to discuss how the U.S. and China apply economic pressure to achieve their political and economic goals, and the economic costs and benefits that this competition is imposing on the world.
In a timely and insightful lecture, Stanford professor Matteo Maggiori, Moghadam Family Professor of Finance at the Stanford Graduate School of Business, delivered the 2025 Hsieh Lecture on “Geoeconomics and the U.S.–China Great Power Competition,” exploring the increasing use of economic tools to exert geopolitical influence in an era of rising global fragmentation.
Geoeconomics, as defined by Maggiori, is the use of existing economic relationships—such as trade networks and financial systems—by powerful states to advance strategic political goals. Maggiori explained that this isn’t just about tariffs or headlines, it’s about shaping long-term global dependencies and controlling the choke points that others can’t easily escape. Maggiori went on to say that, “as economists, we have reduced the notion of power too much to be a synonym with market power, the idea that you can sell your goods at a markup compared to cost. Now, that's certainly a form of power, but when we say that a large country or a corporation is powerful, we really mean something much broader than the ability to charge a markup.”
Throughout the talk, he illustrated how threats to withhold trade or access to financial networks can be more effective than traditional military power, particularly when concentrated choke points—like control over critical technologies or payment systems—leave countries with few alternatives.
Maggiori outlined three major insights for optimal international economic policy:
- Power-building, not just trade manipulation: Traditional economic tools like tariffs are increasingly used to create dependency, not just manage trade balances.
- Security vs. Efficiency: Countries are enacting “economic security policies” that reduce dependence on foreign suppliers—even at the cost of efficiency—leading to a more fragmented global economy.
- Limits of Coercion: Hegemons must commit to multilateral norms to maintain influence; otherwise, overreach could prompt countries to decouple entirely.
The talk culminated in a preview of Maggiori’s new research using large language models (LLMs) to analyze earnings calls and analyst reports at scale. His team leveraged AI to detect when companies reacted to government pressure—offering real-time visibility into geoeconomic tensions. Maggiori goes on to explain how tools like these allow us to capture threats that never appear in policy, in fact, “some of the most powerful threats never occur because the target complies.”
Maggiori’s talk emphasizes the need for economists and policymakers to develop and use better tools to measure power, model interdependence, and design policy that balances trade gains with national security; Because this is not just theory, these dynamics are shaping the world we live in today.
