Humanoid Robots and Tariffs: Dr. Doom's Alarms at Davos

Humanoid Revolution

With AI advancements taking center stage at the World Economic Forum in Davos, Dr. Nouriel Roubini warns of the imminent threat posed by humanoid robots. These robots, capable of mimicking human workers in various industries, are poised to displace human jobs.

"The evolution of humanoid robots is a major breakthrough. They can follow workers on factory floors, construction sites, and even serve as chefs or housekeepers," Roubini said on Yahoo Finance's Opening Bid podcast. "It's happening soon, within the next year or two."

Roubini believes that this revolution will particularly impact blue-collar workers, as large language models (LLMs) rapidly learn how to perform tasks currently done by humans. The global humanoid robot market is projected to reach $7 trillion by 2050, potentially leading to job displacement as routine tasks become automated.

Tariff Concerns

Roubini also expressed concerns about the potential impact of tariffs on the US economy. President Trump's proposed tariffs on foreign imports, China, and Mexico/Canada remain a looming threat.

He argues that tariffs could reignite inflation in the US, potentially forcing the Fed to raise interest rates. This uncertainty could tighten financial conditions and weigh on economic growth.

Goldman Sachs estimates that a 10% across-the-board tariff could increase the Fed's PCE index to 3% by 2025. The IMF predicts a 0.4% and 0.6% decline in US GDP by 2025 and 2026, respectively, if a significant portion of global trade is impacted by tariffs.

Market Reactions

Markets are already reacting to the tariff concerns. Following a strong December jobs report, the S&P 500, Dow Jones, and Nasdaq Composite all experienced losses in early January. The 10-year Treasury yield has also been trending upwards as investors anticipate a prolonged period of higher interest rates.

"If investors perceive your policies as inflationary, bond yields will rise, the stock market will correct, and you'll face consequences," Roubini cautioned.

Additional Insights

For more insights on the impact of AI, tariffs, and the global economy, listen to Yahoo Finance's Opening Bid podcast. Find episodes on video and streaming platforms, or subscribe on Apple Podcasts, Spotify, or your preferred podcast provider.