Billionaire investor Ray Dalio, the founder of Bridgewater Associates, has expressed concerns about the current economic landscape, suggesting that it may be “too late” to reverse the adverse effects of tariffs imposed by former US President Donald Trump. He believes that the existing global economic framework, which has traditionally positioned the US as a central player, is on the verge of collapse due to deteriorating fundamentals.
In a recent post, Dalio highlighted various indicators signalling that crucial monetary and political orders might be breaking down. He noted that many exporters trading with the US are recognising the need to prepare for diminishing interdependencies with the nation, acknowledging that the US’s role as the largest consumer of manufactured goods and its reliance on debt to finance consumption is becoming untenable.
His remarks come at a time when investors, business leaders, and governments are seeking clarity regarding Trump’s tariff strategy, amidst a growing withdrawal of foreign investors from dollar-denominated assets and US Treasuries due to stability concerns surrounding the American economy.
Dalio’s outlook extends to the possibility that the US dollar could lose its status as the world’s reserve currency, a notion increasingly pondered by market participants and academics. He cautioned that investors may be “naive” to assume continued lending to the US will yield returns in stable currency, given the risks of devaluation.
Moreover, Dalio warned that the US risks being sidelined by other nations that adapt to these economic changes and establish alternative global connections. His opinion echoes sentiments shared by other financial titans, including JPMorgan Chase’s Jamie Dimon and hedge fund manager Bill Ackman, who have also raised alarms about the potential repercussions of Trump’s trade policies on the US economy.
Dalio’s insights reflect a growing recognition of the shift in global economic dynamics that may reshape relationships between nations, as governments respond to the changing winds of international trade.