According to Nouriel Roubini, Trump's second term might lead to a trade conflict with China and damage markets

"A global trade war isn't going to go to be good for the stock markets" , Roubini said.

According to Nouriel Roubini, protectionism would cause the US inflation rate to gradually rise, which is concerning.

Renowned economist Nouriel Roubini told Bloomberg in an interview on July 2 that Donald Trump's announced proposal to impose a "universal baseline tariff" on most imports should he return to power has the ability to wreck both the bond and stock markets.

"A global trade war has the potential to be good for the stock markets," Nouriel Roubini stated, adding that "an escalation of trade friction or a generalized trade war alongside the rest of the world, because our trading partners could additionally impose tariffs regarding the United States, is also a threat to the stock market."

"I would say nationalism is going to lead to a gradual increase in inflation and that will be an outcome that will be of concern, certainly to the bond market," he said.

Dubbed "Dr. Doom," Roubini referred to all tariffs as "regressive forms of taxation" and said that it is unclear whether Trump would follow through on his pledges to impose a 10 percent tariff on all imports and an additional 60 percent or more on products from China. The self-styled "Tariff Man," Donald Trump, is advocating for lowering income taxes and switching to tariffs as a source of income.

Roubini said that the outcome of the trade war will depend on whether Donald Trump or any other Republican wins the presidency, seeing it as a global danger.

Stock market traders are positioning themselves for increased chances of Trump winning a second term and are placing bets that the trade policies may encourage a stronger currency. "Inflationary if Trump proceeds with some of his massive tariffs," Jane Foley, head of currency strategy at Rabobank London, said to Bloomberg. She said, "That might mean that the Federal Reserve's cycle of rate cuts ends very quickly, which would be supportive of the dollar."

The possibility of a geopolitical shock is one of the other main worries for the economy, according to Roubini. "If there was a worsening of conflicts, there could be a spike in oil prices" , he said. He said that the Chinese economy is moving more slowly.

Nonetheless, with elections taking place in France and the UK, the results of the European elections might result in radically different policy changes. In reference to the French elections, he said, "There is a risk that if Le Pen reaches full the age of majority her plans could be dangerous for Europe". Roubini notes, however, that some populist parties initially have a populist platform before beginning to flex under the demands of "market discipline."