In a scathing critique of President Donald Trump’s trade and tariff policies, Nobel Prize-winning economist Paul Krugman has said that these recent moves mark a significant retreat in his trade war with China.
Trump Has ‘Backed Down’ On China
In his newsletter on Monday, Krugman said, “If this was a trade war, China won,” pointing to Trump's reversal on tariffs and openness to allowing companies like NVIDIA Corp. (NASDAQ:NVDA) to resume selling advanced chips to China as signs of strategic weakness.
“Trump has slashed tariffs on China,” he noted, adding that current tariffs are “now similar to tariffs on other countries, excluding Canada and Mexico.”
This comes amid the trade truce between the U.S. and China, following the summit between Trump and Chinese President Xi Jinping last week.
Trump has since praised the outcome as “a massive victory,” one that puts American families and workers first, while safeguarding the U.S. economy and national security.
The Future ‘Belongs To China’
Krugman also criticized the dismantling of key Biden-era initiatives such as the Inflation Reduction Act and the CHIPS Act. “America is no longer contesting dominance of renewable energy,” he said, adding that Trump and his allies “aren't just canceling the subsidies, they're trying to kill renewable energy in general.”
He said that Trump's approach has damaged both U.S. economic leverage and global influence. “All in all, this whole confrontation has been a demonstration of Chinese strength and American weakness,” he said. “Add in the way that Trump has alienated our allies, and it seems fair to say that America is no longer the world's leading power.”
Krugman concluded by warning that “Unless a future president can engineer a miraculous recovery in our global stature, the future now belongs to China.”
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