The World Files for Economic Divorce from America
In a provocative new commentary published on his Substack on January 29, 2026, Nobel Prize-winning economist Paul Krugman warns that the global economy is undergoing a profound shift: a gradual but accelerating “economic divorce” from the United States. Krugman uses the metaphor of a failing marriage to describe how America’s erratic and aggressive trade policies have transformed it from a reliable partner into an “abusive” one, prompting other major economies to seek greater independence and new alliances.
The catalyst for Krugman’s analysis is the recent conclusion of negotiations on a landmark free trade agreement between the European Union and India. Announced on January 27, 2026, the deal—hailed by European Commission President Ursula von der Leyen as “the mother of all deals”—creates a vast free-trade zone encompassing roughly two billion people and a significant portion of global GDP. After more than two decades of talks, the agreement promises substantial economic benefits: reduced tariffs, expanded market access, and billions in annual savings. For India, it opens doors to European goods and services; for the EU, it secures supply chains and export opportunities in one of the world’s fastest-growing economies.
Yet Krugman argues that the pact’s true significance lies beyond immediate commercial gains. It represents a strategic pivot by major global players toward alternative trade networks that diminish reliance on the United States. In the post-World War II era, the international economic order was largely rules-based, with the U.S. serving as a stable anchor—providing open markets, security guarantees, and predictable leadership. Countries trusted America as a dependable partner in a system that benefited all.
That trust, Krugman contends, has eroded under recent U.S. policies characterized by unpredictability, unilateral tariffs, and threats against allies and partners alike. Actions such as broad import duties, even on friendly nations, have signaled that the U.S. is willing to weaponize its economic leverage for short-term political gains. The result is a world increasingly estranged from Washington, moving “step by step” toward separation.
Krugman points to broader trends reinforcing this shift. Discussions of de-dollarization, supply-chain diversification away from U.S.-centric models, and new bilateral or multilateral arrangements among non-U.S. powers are gaining momentum. Europe, for instance, has explored reducing dependence on American financial instruments, while other regions pursue deals that bypass traditional U.S. dominance. The EU-India agreement fits into this pattern: it is not merely about economics but about building resilience against an unreliable superpower.
The consequences for the United States, Krugman warns, will be painful. As global markets and supply chains reorganize without heavy U.S. involvement, American businesses will face reduced access, higher costs, and lost competitiveness. Over time, this fragmentation will make ordinary Americans “measurably poorer,” with diminished export opportunities, pricier imports, and slower growth.
The piece has resonated quickly across social media and online forums, where users share Krugman’s link and debate its implications amid ongoing trade tensions. Some highlight specific flashpoints, such as U.S. tariffs affecting allies or rival powers forging new ties. Others frame it as a wake-up call: America’s “America First” approach risks turning into “America Alone.”
Krugman’s metaphor is stark but deliberate. In a troubled relationship, he suggests, the rational response is not endless confrontation but separation—protecting one’s interests while leaving the door open for limited future engagement. The world, it seems, is choosing that path. Whether the U.S. can reverse course and rebuild trust remains an open question, but the momentum toward economic divorce appears to be building.
About The Author
