Remember when the United States was the center of the global trade universe? Nobel Prize-winning economist Paul Krugman thinks those days might be fading fast, and he's pointing fingers directly at President Donald Trump's approach to international commerce.

The Great Trade Breakup

Writing in his Thursday newsletter, Krugman highlighted the recent EU-India trade pact as exhibit A in what he's calling an "economic divorce from America." European Commission President Ursula von der Leyen dubbed it "the mother of all deals," and while that might be laying it on thick, Krugman sees something significant happening here.

The agreement isn't just symbolic posturing. It includes enforceable tariff reductions and comprehensive rules governing services—what Krugman calls "a real trade deal" with "all the i's dotted and t's crossed." He contrasts this sharply with what he describes as Trump's "fantasy international deals," suggesting there's a fundamental difference between actual trade agreements and whatever it is we've been doing lately.

Europe and India both recognize this is "a very good deal for both parties," Krugman notes. That's kind of how trade is supposed to work, which brings us to the bigger problem.

Overestimating Our Leverage

Here's the uncomfortable truth Krugman lays out: U.S. economic leverage isn't what Trump seems to think it is. American imports account for "less than 5 percent" of the rest of the world's GDP, while access to the EU market is "almost twice as large." So when we're picking fights with everyone, other countries have options.

The result? A global trading system that's slowly organizing itself around a U.S. that's no longer seen as a "reliable, trustworthy partner." And that shift, Krugman warns, will leave Americans "measurably poorer" down the line.

It's Cooperation, Not Combat

Economist Justin Wolfers has been making similar points, particularly after Canada's recent trade deal with China. He argues that Trump has trade backward—it's "not fundamentally about competition," but rather "about cooperation" instead. When the U.S. fails to "reliably cooperate with Canada," our closest neighbor naturally looks for "new friends" to cooperate with.

The consequences are already showing up in financial markets. Global central banks now hold more gold than U.S. Treasuries for the first time in 30 years—a remarkable shift away from U.S. assets that would have seemed unthinkable just a few years ago.

The world, it seems, is learning to do business without us. Whether that's temporary or permanent remains to be seen, but the economic bill is starting to come due.