As the United States gears up for a full-on trade war with key allies, economist Paul Krugman has a stark warning for President Donald Trump: It's not going to go well.
In a column posted Thursday evening, Krugman argues that Trump's trade war — which he once said should be "easy to win" — will be bad for many Americans, including many that see the president as their defenders.
"So, the trade war is on," Krugman begins. "And what a stupid trade war it is."
"[T]it-for-tat trade retaliation will hurt a lot of American workers (and especially farmers), quite a few of whom voted for Trump and will now find themselves feeling betrayed," he notes.
He also argues that Trump's view of international trade is overly simplistic. Slapping tariffs on a few industries isn't an isolated action, and it will have ripple effects across the economy. This is because, as Krugman explains, "it’s a matter of complex value chains, which the Trump trade war will disrupt. This will produce a lot of American losers, even if they aren’t directly employed producing exported goods."
Even more worrying for Trump is that prices across the board could rise if the trade war "spirals" further. The Republicans sold their giant tax giveaway to corporations based on minor, temporary cuts for individual payers, but even these measly gains could evaporate if prices rise. That could be disastrous for the GOP heading into the midterms.
And in international political terms, Krugman argues, Trump may be underestimating the downsides of his actions. Many people in other countries really hate Trump, which means they will likely push their leaders to stand up to him. Don't expect Canadian Prime Minister Justin Trudeau to back down easily.
One thing Krugman doesn't mention, though it is implied by this last point, is that the non-economic consequences of the trade war could also be disastrous. Trump currently needs allies desperately for many of his foreign policy efforts: putting pressure on North Korea, constraining Iran, and countering China. By engaging in a trade war with our allies, Trump weakens the relationships that are crucial to pursuing these objectives.