"Cannot write file '...' because it would overwrite input file" error in tsconfig.json

Hello.

I created a Nuxt app with bunx nuxi@latest init www-nuxt. I added t3-env/nuxt and then I added TailwindCSS following their Nuxt guide.
I went ahead to add a simple route in the server and a page in the client.

tree --gitignore
.
├── app.config.ts
├── app.vue
├── assets
│   └── css
│       └── main.css
├── components
├── env
│   ├── client.ts
│   └── server.ts
├── layouts
├── nuxt.config.ts
├── package.json
├── pages
│   └── index.vue
├── public
│   └── favicon.ico
├── README.md
├── server
│   ├── api
│   │   └── hello.ts
│   └── tsconfig.json
├── tailwind.config.js
└── tsconfig.json

10 directories, 14 files


// server/api/hello.ts
export default defineEventHandler(() => {
  return "Hello";
});


// pages/index.vue
<script setup lang="ts">
const data = await useFetch("/api/hello");
</script>

<template>
  <pre> {{ data }}</pre>
</template>


This runs fine with bun dev, however, I keep getting an error in server/tsconfig.json: Cannot write file '/home/shig07770/Programming/ts-devkit/projects/www-nuxt/tailwind.config.js' because it would overwrite input file.ts. However, this file only contains:
{
  "extends": "../.nuxt/tsconfig.server.json"
}


I tried removing the .nuxt directory and then regenerating the files with bun dev but the error is still there. This is also not a VS Code issue because it didn't go away when I reloaded the window.
image.png
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