Nouriel Roubini Talks Tariffs, Dollar, and Global Relations
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Bloomberg Audio Studios. Podcasts. Radio. News. All right, here for more is Noriel Rubini, chairman and CEO of Rubini Macro Associates, who's also not psyching himself out. Noriel, are you on the positive camp here? And if so, how?

Well, I mean, in a positive camp in the following sense. I've been arguing for weeks now that tech trumps tariff because there is a revolution coming from AI and other those in the industry of the future. It's AI, robotic automation, semiconductor, fintech, defense tech, green tech, agtech.

you name it, space exploration, quantum. These things are going to increase U.S. potential growth from the current 2% to a level I expect by the end of this decade closer to 4%. So 200 basis points increase in productivity growth.

Instead, even in the worst scenario on trade and restriction to migration, and we're going to de-escalate, the potential hit to potential growth could be maybe 50 basis points. So the ratio between 200 basis points up because of technology and negative 50 basis points is a 4 to 1. So

TAKE TRUMP'S TARIFS AND THEREFORE THE U.S. AMERICAN EXCEPTIONALISTS IS GOING TO REMAIN IN SPITE OF BAD TRADE POLICIES, IN SPITE OF BAD MIGRATION POLICIES. SO IN THAT SENSE, NOT JUST IN THE SHORT RUN, BUT ALSO IN THE MEDIUM TERM, WE'RE GOING TO AVOID A SEVERE RECESSION AND YOU'LL HAVE

And that, you know, so tech trumps tariffs. And then at the same time, like for Harold Hamm, it was deregulation trumping tariffs as well at this point. What about the issues with the dollar and the back end of the curve? So higher yields and a weaker dollar. And if we move out of dollar as a reserve currency, even on the margin, how do you factor that in? Well, regarding the dollar, there are different types of investors. There are those that are

Fixed income investors, foreign reserve asset managers, sovereign wealth funds were in fixed income. Some of them are worried about the dollar because, of course, we have undermined the credibility of the U.S. dollar. But if I'm right, we're going to go from a 2% to 4% growth. In the U.S., there will be a massive capex and investment boom. That's already occurring right now.

It's a Mach 7, hyperscalers, firms in the Nasdaq. But even non-tech firms, they have to have an AI strategy. And are they going to do less investment because of trade restriction? No way. So we have massive tailwinds. We imply larger investment as a share of GDP and capital inflows that are going to be FDI, Greenfield and Brownfield, and portfolio investment into the equity market. So

The dollar can weaken because fixed income folks are nervous about us meddling with the reserve currency role of the dollar. But that massive inflow of capital to finance this investment boom is going to imply that any weakening of the dollar is going to be very gradual. I don't think there will be a collapse in the value of the dollar. And I don't think that the U.S. dollar is going to be undermined to any significant extent.

as a global reserve currency. Yes, the Chinese and our enemies are going to try to create alternative payment rails that are not based on the U.S. dollar, substitute for Swiss and so on. But that will be a very, very gradual process.

I am curious, though, as we go through this process, Dr. Rubini, there's been a lot of talk, because not just with the dollar, but when you talk about the technological advancements or the potential there, these two aren't necessarily divorced from one another. And someone was bringing up, kind of, you go back, you look at the other big sort of the industrial revolution, obviously the digital revolution a few decades ago, and this idea that it wasn't just about one country leading the charge.

In fact, a lot of the countries that led the charge ended up not being the primary beneficiaries down the road. Great Britain, for example, with the Industrial Revolution, of course, most of the benefit ended up being to what was then a burgeoning United States of America. Is there a chance that we could see that play out again, where China and Deep Seek and everything else affiliated with that becomes the real beneficiary?

I don't think so for the following reason. In these 12 indices of the future, U.S. currently is number one. China is number two in all of them but green tech and electric vehicles, the mobility revolution. Secondly, in the past innovations were logarithmic. They were spurred of growth, say after the first internet revolution

In the 90s, U.S. growth goes from one to three, then it flattens down and goes back to two. Instead, the nature of this revolution in technology led by AI is exponential. U.S. growth today, 2 percent, 4 percent by the end of this decade, 6 percent by the end of the next decade. When it's exponential, you have a first mover advantage, and whoever is first wins.

because of economy of scale and network remains first, and whoever is second remains a second. China's going to do well, but the idea they're going to catch up with us I think is totally far-fetched. And everybody else is not even number three or four. There are some pockets of excellence in Europe, in Israel, in India, in Japan,

in Taiwan, in South Korea, and so on and so on. So in this game about the technology of the future, U.S. remains number one, China's going to be number two, and everybody else is going to be adopting this new technology. And by the way, you don't need to be innovating. Even if you adopt

the technology will have some productivity growth. After all, in sub-Saharan Africa, there has never been any iPhone or smartphone produced, but even a poor farmer using a smartphone can do lots of business, transaction, selling the crop, insuring, financial, and so on. So the point, the U.S. is going to remain number one, China is number two, and everybody's going to be behind but adopting either the technology of the U.S.,

or those of China and innovating either with US or with China. But you're going to get first mover advantage. The second ones are not going to catch up. In terms of global economic conditions and whatever structural changes are taking place, Norell, do you get a sense here that the lack of international cooperation, at least as it stands right now, vis-a-vis what we saw over the last few decades, that that might actually be a benefit to the United States or could it actually hamper us?

Well, the reality is that the global system is going to be divided in two areas, one with U.S., its friends and allies, and some of the countries in the global south, say the Indias of the world, they're going to be following the economic, monetary, trading, financial, technological, and I would say even the military and security system of the United States. Instead, China, Russia,

North Korea, Iran, Cambodia, Pakistan, and a few others are going to be in the technological and economic and trading area of China. Now, if we reach an agreement on China to partially de-escalate, we de-risk the relationship on what's strategic.

high-tech and related critical things like rare earth metals and things that are critical to us and to them. But we still do business on the stuff is low value added or medium value added. After all, we don't need to produce in U.S. T-shirts or cheap toys, right? That doesn't make any sense. So we could have a grand bargain in which we decouple fully on technology, and that's the risking, and still we do some trade

And then everybody else, Europe, Asia, the global south, can do business with the U.S., with China, apart from technology, in which they have to choose either American AI or Chinese AI. That's going to be a full decoupling.

And you're already starting to see those choices being made. Dr. Rubini, really appreciate you taking time for us. Norio Rubini, of course, the chairman and CEO over at Rubini Macro Associates. Switch to Verizon Business and get more from your internet without paying more for your internet. Get LTE Business Internet starting at $39 a month when paired with select business mobile plans. That's unlimited data.

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