A Nobel Prize-winning economist has condemned the use of tariffs by President Donald Trump as a “self-inflicted disaster.” The economist said this after a federal appeals court ruled that most of Trump’s tariffs were illegally imposed, fueling serious questions regarding Trump’s trade policy.
The ruling
On Friday, a federal appeals court upheld an earlier decision by the Court of International Trade. The court held that Trump’s method of imposing tariffs was unlawful. Trump had used the 1977 International Emergency Economic Powers Act (IEEPA) to declare an “economic emergency.” Trump then set tariffs without congressional approval. Tariffs, per se, are legal, the court said, but Trump’s method of doing so was not.
This leaves future presidents without the same shortcut Trump took.
Krugman’s criticism
Nobel laureate Paul Krugman, awarded the Nobel Prize in Economic Sciences in 2008, outlined why Trump’s approach was incorrect. In a blog post, he stated:
One thing to note is that Trump is working with an entirely self-made catastrophe here. He probably could have gotten Congress Republicans to vote on an insane trade policy. But he had no patience and wanted to start ruling like a dictator as soon as possible.
Krugman went on to say that Trump hurt his own cause by constantly boasting of how strong the U.S. economy was while at the same time declaring an “emergency” in order to fund the tariffs.
Why tariffs matter
Tariffs are taxes on imported foreign goods. Governments employ them to protect domestic industries, but they could also come back to haunt them.
Trump prioritized tariffs in his trade policy. He asserted that they would bring in billions of dollars to the U.S. Treasury and pressure countries like China, Japan, and the European Union to negotiate more pro-American trade agreements.
The critics argue that tariffs actually raise American consumers’ costs, challenge alliances with friends, and slow down economic growth.
Impact on the economy
Economists supplement that Trump’s absence of a well-defined tariff policy unsettled the markets globally. Firms and investors struggled with confusion, and it was increasingly hard for them to plan for the future.
The tariffs also posed the risk of raising prices for US consumers, as foreign products became more expensive. At the same time, US exporters faced retaliatory tariffs from other countries, and it was becoming harder to export American products abroad.
Krugman and others argue that the combination of lost trade opportunities and higher prices hurt the very people Trump claimed to protect: American workers and consumers.
Trump’s response
After the appeals court ruling, Trump responded on Truth Social. Trump claimed the tariffs were still in place and warned that their removal would be disastrous to the country.
He had written in part:
“All tariffs are STILL IN PLACE! Yesterday, a very partisan appeals court got it wrong when they said that our tariffs must be removed, but they understand that the United States of America is going to WIN in the end. If these tariffs were ever taken away, it would be a total disaster for the country. It would make us economically weak, and we have to remain strong.”
A conflict of narratives
Trump’s tariff argument is the exact reverse of Krugman’s thesis. Trump introduces tariffs as a badge of strength, while Krugman finds them economically detrimental and legally dubious.
The Nobel laureate added that the economy was actually stable, not troubled, prior to the tariffs going into effect on April 1. This negates Trump’s claim that tariffs were needed to address an “emergency.”
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Final thoughts
The Trump tariffs controversy demonstrates the enormous gap in how Americans view trade policy. Supporters argue that tariffs are a tool to preserve American jobs and force better deals. Detractors warn they are costly and legally questionable and threaten to isolate the U.S. from allies and foreign markets.
For Krugman, the more egregious issue isn’t the tariffs themselves, but the way Trump has tried to impose them—illegitimately and based on a phony emergency. As the courts push back, the future of U.S. trade policy is at stake.
