Billionaire investor Dalio warns that Trump’s tariffs are just the tip of the iceberg

Billionaire investor Ray Dalio suggested that the global “market meltdown” triggered by President Trump’s sweeping tariff policy last week revealed more than “just short-term volatility and flight to safety.” He argued that tariffs are more than just about tax revenue–they are also a way for countries to prepare their economies for times of conflict and war.

Dalio argued that tariffs are mere “symptoms of five underlying forces reshaping the global order,”
including rapidly mounting debt, domestic politics, a shift in how geopolitical power is wielded, acts of nature, and how technological innovations such as AI impact the world’s economy. 

Dalio argues that Trump’s tariffs are just part of what drives everything 

https://t.co/Xpdl8fYoBg

— Ray Dalio (@RayDalio) April 7, 2025

Dalio started by saying that a huge amount of attention is currently being “justifiably” paid to the announced ‘Trump tariffs’ and their “very big impacts on markets and economies” while very little attention is being paid to the circumstances that caused them and the biggest disruptions that are likely still ahead. He pointed out that people mostly overlooked the more important forces that drove “just about everything,” including the tariffs. 

Bitcoin’s decline below the $75K level less than 24 hours ago, according to on-chain data, coupled with the broader crypto market’s rapid 7% drop over the past weekend since “Liberation Day” point to what Dalio described as a “classic breakdown of the major monetary, political, and geopolitical orders” rather than simply a reaction to trade policy.

Dalio argued that the “interconnectedness” of trade and capital flows means that when the “unsustainable debt” conditions and “breakdown of international order” materialized into concrete policy actions, the resulting flight to safety affected all risk assets simultaneously. Trump threatened on April 7 to raise the tariff on Chinese goods by an additional 50%, to which China–through the Ministry of Commerce–responded that it would “resolutely take countermeasures” to protect its “interests and rights.”

The announcement also set a 49% tariff for Cambodia, 46% for Vietnam, and 44% for Sri Lanka, while the reciprocal goods tariff was 32% for Taiwan and 26% for India. The European Union was hit with a 20% tariff.

“While these tariff announcements are very important developments and we all know that President Trump caused them, most people are losing sight of the underlying circumstances that got him elected president and brought these tariffs about.”

–Ray Dalio

Dalio, however, claimed that tariffs made local companies less efficient because global supply chains were suppressed but more survivable as long as domestic consumers could still buy enough of their goods. 

Trump implies that his tariffs led to the rebirth of America

Trump announced that April 2, 2025, will “forever be remembered as the day American industry was reborn, America’s destiny was reclaimed, and Americans began to make America wealthy again.” However, leaders of multiple countries, including Canada and China, vowed they would take countermeasures, although they did not immediately provide details. 

For instance, Ursula von der Leyen, the president of the European Commission, said that tariffs “make things work worse, not better” and that the EU was ready to take “firm countermeasures if necessary.” She added that the EU’s immediate response to tariffs was “unity and determination” against Trump’s tariffs.

Dalio mentioned that there were “big pressures for these imbalances to be corrected one way or another” and that doing so would change the monetary order in significant ways. He further explained that it was “obviously incongruous” to have both large trade imbalances and large capital imbalances in a “de-globalizing world” in which the major players could not trust that the other major players would not cut them off from the items they needed–which was an American worry.

However, Dalio stressed that it is “helpful to keep in mind that what was happening now was just a ‘modern version’ of what had happened many times throughout history.”

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