Economist Paul Krugman: Trump’s 'signature policy' may drown in a 'puddle of humiliation'

Wednesday, November 5 was a major day for the U.S. Supreme Court, which listened to oral arguments on President Donald Trump's trade policy in Learning Resources v. Trump.

At issue is whether or not Trump, under the Emergency Powers Act of 1977, can unilaterally impose steep tariffs by executive order without the input of Congress. The justices listened to arguments, both pro and con, and attorney Neal Katyal — known for his liberal/conservative legal alliance with Never Trump conservative attorney George Conway — offered anti-Trump trade policy arguments.

Liberal economist Paul Krugman analyzes the hearing in a November 7 column posted on his Substack page. And he emphasizes that Trump, thanks to the conservative-dominated High Court, may be in for a major "humiliation."

"How is it going for Trump's tariffs before the Supreme Court?" Krugman asks. "I'm not an enthusiast for prediction markets because they basically just summarize conventional wisdom. But tracking conventional wisdom is sometimes useful. And the prediction markets verdict on Wednesday's hearing, shown at the top of this post, was clear: it was a disaster for the (Trump) Administration's case."

Krugman adds, "So, Trump's signature economic policy may soon melt down into a puddle of incompetence and humiliation. If that should happen, I will celebrate both the end of an extraordinarily bad policy and the Supreme Court's willingness to (finally!) check Trump's authoritarian behavior. Yet I am somewhat disappointed with the specific grounds upon which the Supremes appear to be resting their arguments against the Trump tariffs."

The former New York Times columnist goes on to argue that the High Court's 6-3 right-wing supermajority may reach the right decision for the wrong reasons.

"They have so far focused on the fact that tariffs are taxes, and that the Constitution specifically gives taxing authority to Congress and not the president," Krugman explains. "Fair point. But the Court for International Trade, in their ruling against the Trump tariffs, made a different argument. The Emergency Powers Act only empowers the president to act in response to economic emergencies. And while the White House has declared two such emergencies — trade deficits and fentanyl — the CIT found that neither declaration provided a plausible rationale for the actual tariffs Trump imposed."

Krugman continues, "More broadly, supporting Trump's tariffs requires engaging in doublethink. You have to believe Trump's assertions that everything is wonderful, that this is the best economy ever. But you also have to believe that we’re facing an economic emergency that justifies massive tariff increases, hitting almost every nation and abrogating generations’ worth of international agreements."

Paul Krugman's full Substack column is available at this link.