In this episode of Trumponomics, Stephanie Flanders interviews Dr. Nouriel Roubini about the escalating trade war between the U.S. and China. Roubini explains that while China initially faces a greater economic impact from tariffs, they possess more tools to offset the damage, including fiscal stimulus, monetary easing, and strategic control over resources like rare earth minerals. They discuss China's ability to withstand economic pain due to its political structure and long-term strategic goals, as well as potential retaliatory measures like selling U.S. treasury holdings or even military action against Taiwan. The conversation also covers China's diversification efforts and the U.S.'s attempts to decouple other economies from China, highlighting the potential for a global economic and technological divide. Roubini suggests that despite tensions, U.S. allies will likely remain within its sphere of influence due to security and technological dependencies, but warns that the fundamental differences in economic policies and goals could lead to further escalation and even conflict.
