Billionaire investor and founder of Bridgewater Associates, the world's largest hedge fund, Ray Dalio recently stated that the tariff policies of US President Donald Trump could trigger an economic recession. The US is on the brink of an economic downturn, and the situation could worsen.
"We are now at a decision point, very close to a recession," Dalio said on a program on Sunday. "If not handled properly, I fear the consequences could be worse than a recession."
He expressed greater concern about trade disruptions, the increasing US debt, and emerging world powers undermining the international economic and geopolitical order that has existed since the end of World War II.
He pointed out, "We are shifting from multilateralism to unilateralism, and under this order, there is significant conflict."
Dalio stated that five forces drive historical processes: economics, domestic political conflict, international order, technology, and natural events such as floods and pandemics. Trump's tariff goals are understandable, but their implementation is "extremely destructive" and could lead to global conflict.
The erratic tariff policies of US President Donald Trump have disrupted international trade. Earlier this month, he signed two executive orders on "reciprocal tariffs" at the White House, announcing that the US would establish a 10% "minimum benchmark tariff" for trading partners and impose higher tariffs on certain partners. Last Wednesday, he announced that the US would suspend high "reciprocal tariffs" on dozens of countries for 90 days, but the 10% base tariff would remain in effect.
The US Customs and Border Protection (CBP) announced late Friday that the federal government had agreed to exempt so-called "reciprocal tariffs" on electronic products such as smartphones, computers, and chips. However, US Commerce Secretary Lutnick changed his stance on Sunday, stating that the exemptions are not permanent.
Call to Reduce Federal Deficit
Dalio also said on Sunday that the US Congress should reduce the federal deficit to 3% of GDP , echoing his remarks at an event in March.
"If they (legislators) do not do this, we will face a supply and demand issue with debt alongside other problems, and the consequences will be worse than a normal economic recession," Dalio said.
He stated that the value of currency is under threat. A bond market collapse, combined with events such as domestic and international conflicts, could impact the monetary system more severely than President Nixon's abandonment of the gold standard in 1971 and the 2008 global financial crisis.
He also mentioned that if legislators work together to cut the deficit, and the US avoids conflicts on the global stage while abandoning inefficient policies, such a change could be avoided.
As Dalio made these calls, data released by the US Treasury on Friday showed that the US budget deficit for the first half of the 2025 fiscal year exceeded $1.3 trillion, the second-highest half-year budget deficit on record.