Nobel Prize-winning economist Paul Krugman told MSNBC that the U.S. has effectively lost the trade war with China. He described it as a contest of will and leverage – one in which the U.S. appears to have backed down, trading away its international reputation, global influence and technological edge for short-term political gains.

Krugman also noted that while China has alternatives and can pivot to other markets, the U.S. faces structural constraints, such as the inability to quickly develop a rare-earths industry. He criticized President Trump for lacking clear objectives and alienating allies, citing as an example the imposition of tariffs on Canada over trivial matters – moves that ultimately damaged U.S. credibility on the world stage.