White House Chief of Staff Susie Wiles listens as U.S. President Donald Trump speaks with members of the media on board Air Force One en route to Palm Beach, Florida, U.S., January 31, 2026. REUTERS/Nathan Howard
President Donald Trump loves to claim that he proved economic experts wrong with his tariff regime, but one Nobel-winning economist pointed out on Sunday that the president's argument is missing one key point.
Since the beginning of Trump's second term, he has claimed that the tariffs he has unilaterally placed on America's trading partners would not create inflation. In some instances, the president claimed his tariffs would help America beat the inflationary issues that he inherited from the Biden administration, even though some experts have pushed back forcefully against that claim.
Paul Krugman, who won the Nobel Prize in economics in 2008 for his work on trade theory, pointed out in a new Substack essay that Trump's tariffs have, in fact, increased inflation by around 0.8%. That's nowhere near the amount that some experts anticipated, but it is enough to say that Trump's tariffs are having an impact on the price of goods that average Americans need, Krugman noted.
"Lots of wiggle room at the edges, but the basic point is that there isn’t a big puzzle about the limited effect of tariffs on inflation," Krugman wrote. "Some economists may have overhyped that effect, and Trumpists are happy to promote a straw man, but the reality is that the inflationary effect of tariffs has been more or less in line with what we should have expected."
One reason why Trump's tariffs haven't had more of an inflationary impact is that his administration created large carve-outs, like Apple's exemptions from tariffs on India.
"Partly it’s because high tariffs have led firms to take advantage of exemptions that were already on the books but weren’t worth the paperwork when tariffs were lower," Krugman noted.