U.S. President Donald Trump delivers remarks on the U.S. economy and affordability at the Mount Airy Casino Resort in Mount Pocono, Pennsylvania, U.S. December 9, 2025. REUTERS/Jonathan Ernst
Nobel laureate Paul Krugman is swapping “TACO” — “Trump Always Chickens Out” — for “NACHO” — “Not a Chance Hormuz Opens.” The prominent economist argues that there are three reasons the Strait of Hormuz, critical for global shipping, including of oil, remains closed and does not appear to be close to reopening any time soon.
“Hormuz won’t open until the economic damage from its closure becomes much more severe,” Krugman warns. Both Iran and America — meaning, President Donald Trump — need to stand down, and all that means is both sides need to simply stop what they are doing right now. Iran must end its embargo, and the U.S. must end its blockade.
What’s stopping this from happening? Largely, Krugman says, Trump’s “ego” and “ignorance,” coupled with the Iranians not having a reason to trust that Trump will do as he says.
“Trump’s ego is so fragile that he can never admit losing,” Krugman writes. “He cannot bear to face up to the reality that he, more or less single-handedly, led America to the greatest strategic defeat in its history. So he desperately wants to extract concessions from Iran that would lend him a fig leaf and allow him to claim victory.”
It’s unlikely Trump will be able to extract concessions.
He “deludes himself into believing” that he can, because “those delusions are reinforced by the people that Trump has surrounded himself with.” Krugman concludes that “Trump is clearly the worst informed president in modern history about the actual state of America at war.”
Precisely what Trump wants isn’t clear, but “in any case he won’t get it.” Regardless of how the closure of the Strait of Hormuz is harming them, the Iranians recognize it is harming the U.S. and the world economy more. For instance, “they know that Trump is facing what is clearly shaping up to be a major electoral defeat in November due to Americans’ anger over the war, its effect on the economy and Trump’s constant stream of lies.”
Ultimately, Krugman says, “Iran won’t make any concessions that weaken its strategic position — which means that it won’t offer Trump anything that he can use to declare victory.”
What does the end look like? It will end with the “non-deal” that was already on the table.
“Iran will emerge poorer but strategically stronger,” Krugman posits. “And America will have suffered its worst strategic defeat in history as a result of a completely gratuitous misadventure to please Trump’s ego.”