Will AI transform the economy? The jury is still out on that one: So far there is little evidence for either the massive job losses or the soaring productivity growth industry leaders threatened/promised, but it’s still early days.

But AI does seem to be transforming U.S. politics. I can’t think of a technology that has inspired so much hate across such a wide political spectrum. Even the leading AI companies are warning about the dangers of their technology and pleading for government regulation to slow it down.

Which makes it more than puzzling that Donald Trump is going all in on AI, claiming that concerns about its dangers are a “hoax” and opposing any kind of regulation.

In so doing, he’s taking a wildly unpopular position. Here’s recent polling from UMass Amherst:

Notice that even a large part of Trump’s base is deserting him on this issue, with a quarter of Republicans disapproving.

So why is Trump posting stuff like this?

Robert Reich has a good post on the subject, urging us to follow the money: As he notes, members of the Trump family have personal financial stakes in the industry. And one motive one should never, ever dismiss in current U.S. affairs is Trump’s personal greed.

I would, however, add two more points.

First, I think Reich is too glib in dismissing the idea that Trump imagines that he knows what he’s doing. “It can’t be,” Reich writes, “that he knows very much about AI.” But does he know that he doesn’t know? That Truth Social post above, in which Trump declares himself perfectly able to manage this wild new technology because he is a “STRONG AND SMART (High IQ!) PRESIDENT”, is like a textbook illustration of the Dunning-Kruger effect, in which incompetent people are highly confident in their own judgment because they’re too incompetent to realize that they’re incompetent.

Second, it’s important to realize how much Trump needs an AI boom.

Trump came into office believing that his tariffs would produce a huge boom in “manly” jobs. In fact, job growth has been weak — and more than all the job gains have gone to women. Meanwhile, tariffs have driven up consumer prices.

And then there’s the Iran war, which has been an economic as well as a strategic disaster. Diesel prices are now well above $6 a gallon. Trump officials love to say that gasoline was over $5 a gallon under Biden, which was true — for one week.

Yet one thing did seem to be going right under Trump II. Enthusiasm for AI was generating a huge investment boom and supporting stock prices. Trump officials, notably Scott Bessent, the Treasury Secretary — who Edward Luce of the Financial Times now dubs “the Pete Hegseth of the Treasury” (ouch) — had taken to claiming that AI will solve all their problems, ending inflation by reducing costs and curing the budget deficit by generating huge economic growth.

The backlash against AI, then, is taking away the one thing the Trumpists thought they had going for them. So in a way it’s understandable that Trump is trying desperately to hold on to the magic (and possibly endangering the future of humanity, but he doesn’t care about that.)

But of course it won’t work. The AI boom, once Trump’s last remaining political asset, is now a huge liability.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.

Reprinted with permission from Paul Krugman.