Protectionism Makes Everyone Poorer During Global Shocks

Why It Matters

Protectionist spikes raise global commodity costs, hurting especially low‑income nations, and undermine the stability of supply chains that underpin world trade.

Key Takeaways

• 53 WTO measures after Ukraine war, 75% restrictive.
• Current Strait of Hormuz actions: 70% facilitative, 30% restrictive.
• Export bans raise global food, fuel prices during crises.
• Diversifying routes reduces vulnerability of chokepoint‑dependent supply chains.

Pulse Analysis

The pattern of protectionism during crises is not new. When the COVID‑19 pandemic erupted, many nations erected export bans on vaccines and essential inputs, even when domestic capacity exceeded demand. A similar response unfolded after Russia’s invasion of Ukraine, where the WTO recorded 53 trade measures in the first two months, three‑quarters of them restrictive, tightening supplies of fertiliser, food and fuel and pushing global prices upward. These actions illustrate how short‑term domestic shielding can translate into higher inflation and volatility for the broader economy, especially for poorer countries that rely on imported commodities.

The latest disruption in the Strait of Hormuz shows a modest shift in policy tone. Of roughly 78 WTO‑reported measures, just over 70 % are designed to facilitate trade—removing export restrictions, streamlining customs, and supporting oil and gas flows—while the remaining 30 % remain restrictive. Governments are pairing these trade steps with domestic tools such as fuel subsidies, tax adjustments, and targeted cash transfers to cushion households from price shocks. This blended approach demonstrates that coordinated trade liberalisation, coupled with targeted fiscal support, can mitigate inflationary pressure without choking global supply, offering a template for future shock management.

Nevertheless, the structural vulnerability of global trade persists. Critical commodities still flow through a handful of chokepoints—Hormuz, the Suez, Panama, Malacca, and Gibraltar—making the system prone to disruption. Diversifying supply routes, expanding strategic stockpiles, and fostering public‑private partnerships are essential to reduce over‑dependence on narrow corridors. Ongoing collaboration among governments, the WTO, the IMF, and logistics firms can improve transparency, accelerate the removal of unnecessary barriers, and build a more resilient trade architecture capable of withstanding the next geopolitical or environmental shock.