Krugman: Everything suggests that Trump is using his office to enrich himself. But I think it’s a lot cruder than that — more about extortion (don’t expect any favors unless you book my hotels) than stock market manipulation. It’s a sort of corruption Occam’s razor: never assume sophistication when crude thuggery is sufficient.
Jan Saver, Brussels: Is it possible to put a value on certainty — or uncertainty?
Additionally, I think there is a significant cost attached to giving up the rules-based trading system, which the United States should try to factor in. The General Agreement on Tariffs and Trade and World Trade Organization rules have kept trade conflicts from escalating (tit-for-tat tariffs or, worse, wars). The brakes now seem to be off.
Krugman: Really hard to put a number on it, but given what has happened to business investment despite huge tax cuts, it looks as if the costs are pretty big. As I said in the column, the costs of the trade war have surprised even those of us who opposed Trump’s policies.
Rickard Waern, Göteborg, Sweden: What are the ramifications of Trump’s trade war on the global economy? Is there a risk of recession?
Krugman: The trade war is hurting, but nothing I see is big enough to produce a global recession, at least so far. At worst, it’s a contributing factor to a bunch of other things that may be weakening the world economy — nothing remotely on the scale of, say, the late 2000s housing bust.
Those other things, by the way, include a Chinese slowdown that some of us have been predicting for years and finally seems to be happening; the troubles of Europe, which have a lot to do with a drastic slowdown of population growth; and, maybe, shifts in United States business that have moved us toward technology companies that don’t need to do a lot of physical investment. Again, on their own, none of these things are huge, but collectively they add up.