Ray Dalio’s comments come after rocky week across stock markets after policies including 145% tariff raise on China
Billionaire investor Ray Dalio said that he is worried the US will experience “something worse than a recession” as a result of Donald Trump’s trade policies.
Speaking to NBC’s Meet the Press on Sunday, the 75-year-old hedge fund manager said: “I think that right now we are at a decision-making point and very close to a recession. And I’m worried about something worse than a recession if this isn’t handled well.”
He went on to add: “A recession is two negative quarters of GDP and whether it goes slightly there. We always have those things. We have something that’s much more profound. We have a breaking down of the monetary order. We are going to change the monetary order because we cannot spend the amounts of money.”
Dalio’s comments come in response to a tumultuous week across the global stock markets following the US president’s tariffs policies that include a 145% tariff raise on China. The billionaire also said there are “profound changes in our domestic order … and world order”, comparing current times with the 1930s.
“I’ve studied history and this repeats over and over again. So if you take tariffs, if you take debt, if you take the rising power challenging existing power, if you take those factors and look at the factors, those changes in the orders, the systems, are very, very disruptive. How that’s handled could produce something that is much worse than a recession. Or it could be handled well,” he said.
Dalio, who correctly predicted the 2008 recession, also said the current economic state of the US is “at a juncture”.
“Let’s take the budget. If the budget deficit can be reduced to 3% of GDP, it will be about 7% if things are not changed. If it could be reduced to about 3% of GDP, and these trade deficits and so on are managed in the right way, this could all be managed very well,” he said.
He went on to urge congressional members to take what he calls the “3% pledge”, adding that if they don’t, there will be a supply and demand problem for debt with results that will be “worse than a normal recession.”
In response to whether he believes Trump’s tariffs are worsening the “complicated mix of challenges” the world is facing, Dalio said there is a reality to build manufacturing and expand jobs across the US.
However, he added that how that is done, “whether that’s done in a practical way, whether that’s done in a stable way”, or in a way with “quality negotiations” versus a “chaotic and disruptive way … makes all the difference in the world”.
Despite Trump’s freezing of tariffs at 10% on all US imports except Chinese imports for 90 days, financial experts have warned that the “damage has been done,” particularly in regards to what many are calling a “rapid de-dollarisation”.
Reprinted from The Guardian
