Roubini Says Trump Foreign Policies to Hurt Markets, Help China

Jonas Cho Walsgard

(Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.

U.S. President Donald Trump’s approach to foreign policy will ultimately strengthen China’s clout and hurt America, according to Nouriel Roubini.

Speaking in an interview in Oslo, Roubini suggested that the government in Beijing wants Trump to be re-elected because such an outcome would leave the U.S. more isolated on the global political stage.

“He’s going to damage the U.S. alliances in the world and U.S. soft power over time,” said Roubini, who is a professor at New York University’s Stern School of Business and the chairman of Roubini Macro Associates. “Trump is going to make China great again.”

The U.S. is set to sign a deal with China that leaves significant tariffs in place and would, for the first time, punish Beijing if it fails to live up to pledges related to its currency, intellectual property and the trade balance. But the phase one agreement doesn’t address China’s industrial subsidies and state-owned companies, leaving such matters to future phases.

“Eventually, Trump is going to damage the market economy and the markets,” Roubini said.

Roubini also warned that markets are under-estimating the risk of a conflict between the U.S. and Iran.

Iran has to “escalate to get rid of Trump -- that’s why the risk of war is increasing,” he said. “Iran cannot live with another year of sanctions destroying its economy. Therefore they have to provoke.”

“If there’s full-scale war, there’s regime change not in Iran but in the U.S.,” because then “you have oil at $150, recession, stock market down 40% and Trump is out of power.”

To contact the reporter on this story: Jonas Cho Walsgard in Oslo at jchowalsgard@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Zoe Schneeweiss, Alaa Shahine

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.