Paul Krugman Explains How Trump's Iran Policy Backfired at Lisbon Conference

LISBON, Portugal — Nobel Memorial Prize in Economic Sciences laureate Dr. Paul Krugman delivered a sharp critique of former U.S. President Donald Trump’s Iran policy during a keynote address in Lisbon on April 21, 2025.

Speaking at the Global Economic Forum, Krugman argued that Trump’s 2018 decision to withdraw the United States from the Joint Comprehensive Plan of Action (JCPOA)—commonly known as the Iran nuclear deal—had the opposite effect of its intended goal. Instead of weakening Iran’s regime, Krugman asserted, the move inadvertently bolstered its economic and political resilience.

How Trump’s Iran Policy Backfired, According to Krugman

Krugman outlined three key ways Trump’s policy failed:

• Economic Isolation Backfired: Trump reimposed sanctions on Iran, aiming to cripple its economy. However, Krugman noted that Iran adapted by deepening ties with China, Russia, and other non-Western partners, reducing its dependence on Western trade.
• Regional Influence Strengthened: The withdrawal emboldened Iran to expand its influence in Iraq, Syria, Lebanon, and Yemen, as regional actors sought to counterbalance U.S. pressure.
• Nuclear Program Accelerated: Despite sanctions, Iran resumed uranium enrichment at higher levels, bringing it closer to weapons-grade material—a direct consequence of the JCPOA’s collapse.

Krugman’s Broader Critique of Trump’s Foreign Policy

Beyond Iran, Krugman criticized Trump’s broader approach to international relations, calling it “transactional and unpredictable”. He argued that such policies eroded U.S. credibility on the global stage, making it harder to negotiate future agreements.

"The idea that maximum pressure would force Iran to capitulate was always a fantasy. What it did was push Iran into the arms of adversaries and accelerate its nuclear ambitions. This was a textbook case of how not to conduct foreign policy."

Reactions and Responses to Krugman’s Remarks

Krugman’s speech drew mixed reactions. Supporters of Trump’s Iran policy dismissed his critique as “academic posturing”, while critics praised his analysis as a “sobering assessment” of the policy’s failures.

Former U.S. Secretary of State Mike Pompeo, a key architect of the Trump administration’s Iran strategy, responded to Krugman’s remarks, stating:

"Economic pressure works. Iran’s economy is in shambles, and its people are suffering. The JCPOA was a flawed deal that delayed—not prevented—Iran from pursuing nuclear weapons. We did the right thing by walking away."

What’s Next for U.S.-Iran Relations?

As of April 2025, the Biden administration has not signaled a return to the JCPOA, though indirect talks with Iran have resumed. Krugman urged policymakers to learn from Trump’s mistakes, advocating for diplomacy over coercion in dealing with Iran.

The Nobel laureate concluded his remarks by emphasizing the need for predictable and consistent U.S. foreign policy, warning that erratic decision-making only serves to embolden adversaries.