Paul Krugman argues that Trump's spin is nonsense — he's losing the trade war

President Donald Trump has declared that he is close to reaching a "Phase One" agreement in negotiations in the trade war with China, a development that would forestall threatened tariff increases and roll back some of the punitive measures already in place. The deal is not yet finished nor released in detail, but Trump and his defenders are already celebrating it as a huge win.

But economist Paul Krugman warned Thursday: not so fast. In general, there are no winners in a trade war, he said. But there are losers, and in Trump's war with China, Krugman argued, the U.S. president is undoubtedly a loser.

"That's certainly how the Chinese see it," Krugman explained on Twitter. "Trump tried to bully them; they hung tough; and are basically ending up where they started, buying agricultural products while selling us increasingly sophisticated manufactured goods."

He continued:

Farmers, Krugman explained, have significantly suffered as a result. Bloomberg reported recently that under the trade war, farm bankruptcies have spiked 24 percent. Even if Trump gets serious concessions from China, he can't undo that impact on Americans.

One way Trump has tried to mitigate that impact, though, is by spending billions of government funds to compensate for the damage to farmers that he caused. And as Krugman pointed out, that bailout is significantly larger than the much-discussed auto bailout under President Barack Obama, which was called for because of the effects of the financial crisis, rather than the White House's recklessness.

"Furthermore, even if we do get a sustained deal — which is still far from certain — the whole episode will have two big long-run costs. First, business uncertainty about capricious policy is here to stay," Krugman continued. "Second, the Chinese have learned the same lesson North Korea's Kim learned: Trump talks loudly but carries a small stick, and can be rolled. Trump has made us weak, neither trusted by our allies nor feared by our enemies."

But for those hoping this major blunder will hurt Trump politically, Krugman has little consolation.

"Now, Trump may not suffer politically. Elections turn not on how good things are, but on whether they're perceived as getting better. This actually gives politicians an incentive to do stupid things for a while, then stop around a year before the election. Sound familiar?" he wrote.