'Completely crazy': Paul Krugman delivers scathing verdict on Trump threat against ally

Nobel-winning economist Paul Krugman offered a scathing review of Trump's recent threat against a key American ally.

In March, Trump warned of a complete trade cutoff with Spain after the country refused to allow U.S. military bases for operations against Iran. Even though Spanish Prime Minister Pedro Sanchez was unfazed, Trump again threatened to ignite a trade war with Spain during an outburst at the NATO summit in Turkey.

"It was completely crazy," Krugman said in a Substack post on Wednesday. "This is not something that is real, except that the President of the United States did say this."

Even though Krugman added that Trump's threat is "completely insane," he dismissed it as a "non-event," saying that although Trump ordered Treasury Secretary Scott Bessent to cut off trade with Spain, "this is not going to happen." He explained that a trade war with Spain isn't possible.

"Presidents have a lot of discretionary authority on tariffs and trade, more than they should, but you do not have the right as president to impose tariffs on a country just because you don't like their defense spending or you think that they haven't been nice enough to you," Krugman said. "It's not really at this point about economics. It doesn't even make sense to talk about Trump administration policies, let alone ideology."

Trump would have trouble stopping trade with Spain because it's part of the European Union, Krugman pointed out. "So this is like Europe declaring 'we're cutting off all trade with Florida': they can't do that," Krugman said.

"Also, there's a lot of U.S. business with Spain," Krugman continued. "In fact, Spain is one of those countries with which we run a trade surplus. So U.S. business would be howling."