Economist Nouriel Roubini says President Donald Trump's tariff barrage will sting in the short run but can't derail America's growth engines.
What Happened: In a new Project Syndicate column, the 2008-crisis oracle, also often called ‘Dr. Doom’, argues that market pushback, an independent Federal Reserve, and thin GOP majorities have already forced Trump to dial down "reciprocal" duties and retreat from threats against Fed Chair Jerome Powell.
Roubini notes bond traders and equity investors effectively "vetoed" a blanket tariff plan, while Congress is mulling laws to curb the White House's trade powers. Inside the administration, moderates such as Treasury Secretary Scott Bessent steered policy toward negotiation after early hard-line wins by adviser Peter Navarro.
Tech Will Eventually Reign Supreme, Says Roubini
Roubini contends that technology is more powerful than political guardrails. He projects U.S. potential growth will double to roughly 4 percent by 2030 as artificial-intelligence spending fuels a capital-expenditure boom. America leads in ten of the 12 industries that will define the next decade, from cloud chips to biotech, and those gains, he says, outweigh tariff drag four-to-one.
See also: Trump Blames GDP Contraction On Biden ‘Overhang’: ‘Nothing To Do With The Tariffs’
The economist concedes inflation could top 4 percent this year, and a mild, two-quarter recession may hit when real incomes absorb higher import costs. But he expects the Fed to cut rates once activity stalls, setting up a rebound by mid-2026. "Even Mickey Mouse in the Oval Office couldn't stop the AI wave," he writes, predicting sustained foreign equity inflows and only a gradual dollar slide.
Europe, by contrast, faces aging demographics and a widening innovation gap, leaving the U.S. poised to exit any Trump-induced turbulence stronger than before.
What To Know: America’s first-quarter GDP unexpectedly shrank by 0.3% annualized on Wednesday, down from 2.4% growth in the prior quarter and well below the 0.4% expansion analysts forecast, marking the U.S. economy's first quarterly contraction since mid-2022.
That surprise pullback has pushed recession odds for 2025 to a record 74%, according to bets on CFTC-regulated platform Kalshi. President Donald Trump seized on the data to blame his predecessor, posting, "This is Biden's stock market, not Trump's," and insisted the downturn "has nothing to do with the tariffs.
Roubini, meanwhile, has blasted Trump's tariffs from the outset, branding the phrase "Liberation Day" as Orwellian doublespeak. He argued that the levies would slash growth and ignite inflation.
He repeatedly warned that investors misread the Fed's resolve, describing a three-way game of chicken among Trump, Fed Chair Jerome Powell and China's Xi Jinping. In that showdown, he predicts, Trump will blink first.
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