According to most economic experts, including those on the Right and Left, President Donald Trump’s tariffs are wrecking the global economy because he is some combination of stupid and delusional.
“What does Donald Trump actually know?” Nobel Prize-winning economist Paul Krugman told The New York Times’ Ezra Klein over the weekend. “I mean, here's a guy who goes out around saying that his approval rating is in the seventies. So yes, I mean, I'm sure that Scott Bessent, the Treasury Secretary, knows that those indicators are all flashing yellow or red. Does Trump know it? Is there anybody brave enough to go in and say, ‘Mr. President, this is really working out badly.’”
Klein gently pushed back on Krugman. “But he knows the markets,” said Klein. “He can see the stock market.”
Replied Krugman, “Well, he may think that they just don't understand the brilliance of his policy.”
“Okay,” said Klein. “So what do you think he thinks they don't understand? What is to him the brilliance of his policy?”
“I think he's got this very crude view that whenever somebody sells more to us than we buy from them, they're taking advantage,” said Krugman. “There's no indication that there's any deeper agenda.”
But the claim is absurd. The Trump tariffs are clearly the opening volley in a negotiating strategy. Last November, the Chair of Trump’s Council of Economic Advisors, Steven Miran, published a "User’s Guide to Restructuring the Global Trading System,” in which he said, “President Trump views tariffs as generating negotiating leverage for making deals.”
Lest there be any doubt, Miran writes that “tariffs are a negotiating tool” and “tariffs create negotiating leverage for incentivizing better terms from the rest of the world on both trade and security terms. America would encourage other nations to move to lower tariff tiers, improving burden sharing…. Tariffs are a tool for negotiating leverage as much as for revenue and fairness.”
Said Rob Atkinson, whom I interviewed this morning, “The fact that Krugman could say that [there’s no indication of a deeper agenda] just shows the hubris of these people.”
Atkinson is an influential trade expert, the author of several books on technology innovation and economic growth, and the founder of the Information Technology and Innovation Foundation think tank in Washington, D.C.
Trump is right about something big, which Krugman doesn’t understand and may not want to understand, says Atkinson.
