Economist Paul Krugman warned that the United States is increasingly losing its standing in global trade, as other countries increasingly pivot away from the “erratic, abusive” policies under President Donald Trump.

World’s ‘Economic Divorce’ From America

In his newsletter on Thursday, Krugman pointed to the recent EU-India trade pact, which European Commission President Ursula von der Leyen called “the mother of all deals,” as evidence that “the world is becoming ever more estranged from an erratic, abusive United States.”

While the description may be overstated, Krugman said the agreement is historic because it signals an accelerating “economic divorce from America.”

The Nobel Prize-winning economist contrasted the deal with Trump's approach to trade, saying that Europe and India recognize that the agreement is “a very good deal for both parties.”

He noted that the pact includes enforceable tariff reductions and rules governing services, calling it a “real trade deal” with “all the i's dotted and t's crossed.” That, he said, stands in sharp contrast to Trump's “fantasy international deals.”

Krugman warned that U.S. economic leverage is weaker than Trump assumes, noting that imports by the U.S. account for “less than 5 percent” of the rest of the world's GDP, while access to the EU market is “almost twice as large.”

The outcome, he warned, is a global system that is increasingly moving away from a U.S. that was once a “reliable, trustworthy partner,” a shift that will leave Americans “measurably poorer” in the days to come.

Trade Isn’t About ‘Competition’

Economist Justin Wolfers has expressed similar concerns recently, following Canada’s recent trade deal with China, calling it the result of Trump’s combative approach to allies over the past year.

Trump’s policy moves over the past year have also sparked a shift away from U.S. assets, with global central banks now owning more gold than U.S. Treasuries for the first time in 30 years.

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