The US Economy Could Thrive in Spite of Trump's Ruinous Policies

America's tech leadership is likely to deliver a boom that'll offset the damage being inflicted today

- NOURIEL ROUBINI

Since United States President Donald Trump's 'Liberation Day' on April 2, when he announced sweeping trade tariffs on friend and foe alike, the conventional wisdom about the US economy's short-term and medium- to long-term prospects has been pessimistic.

Among other things, it has been said that higher tariffs will cause a US and global recession; that American exceptionalism is over; that America's fiscal and current-account deficits will become unsustainable; that the US dollar's status as the main global reserve currency will soon end; and that the dollar will sharply weaken over time.

Certainly, some of the policies that Trump has announced warrant such pessimism. Tariffs, protectionism and trade wars are likely to prove stagflationary (causing higher inflation and lower growth, i.e.). Also worrisome are draconian restrictions on migration, mass deportations of undocumented workers from US shores, large unfunded fiscal deficits and efforts to interfere with the US Federal Reserve's independence. Equally, the US economy would not be well served by a Mara-Lago Accord [along the lines of the 1985 Plaza Accord] to weaken the dollar, further damage to the rule of law at home and abroad, or tighter restrictions on foreign talent—such as scientists and students—coming to the US.

Nonetheless, I have maintained (since last winter) that the US economy will be fine—not because of Trump's policies, but in spite of them.