- Ray Dalio says your takeaway from Trump’s tariffs shouldn’t be about the tariffs themselves.
- The billionaire said people should instead focus on the factors that led to Trump’s rise and actions.
- Dalio identified several factors, including the US debt crisis and wealth gaps hurting democracy.
Dalio has a new message for people: Don’t think the tariffs are just about tariffs.
For several years, the Bridgewater Associates founder has been vocal about his assessment that the rules of the world economy and geopolitical arena are systematically disintegrating. He published a book on the subject in 2021.
In a Tuesday social media post, Dalio wrote people should also focus on the underlying factors that led to President Donald Trump’s election and his new import taxes.
“The far bigger, far more important thing to keep in mind is that we are seeing a classic breakdown of the major monetary, political, and geopolitical orders,” he wrote. “This sort of breakdown occurs only about once in a lifetime, but they have happened many times in history when similar unsustainable conditions were in place.”
The billionaire highlighted three major forces at play: America’s unsustainable debt relationships, widening wealth and education gaps undermining democracy in the US, and Washington’s “America First” approach.
Dalio on debt
The first point relates to how US markets are built on debt by buying and borrowing from countries that can manufacture cheaper goods, like China. But many industries have gone too far and become "hooked on debt," Dalio wrote, a phenomenon that he previously warned would eventually induce a "heart attack" on the US economy.
The US debt-to-GDP ratio was 121% in the last quarter of 2024, compared to 64% in 2008.
"Clearly, the monetary order will have to change in big disruptive ways to reduce all these imbalances and excesses, and we are in the early part of the process of it changing," Dalio wrote in his post.
The hedge funder added that declining trust between the US and manufacturing countries like China was increasing the pressure for radical change in the system.
"Anyone who has studied history knows that such risks under such circumstances have repeatedly led to the same sorts of problems we're seeing now," Dalio wrote.
Dalio on democracy at home
Dalio also warned that democracies are breaking down due to "huge gaps" in education, opportunity, productivity, and wealth. This trend includes the US, he wrote.
"These conditions are manifest in win-at-all-cost fights between populists of the right and populists of the left over which side will have the power and control to run things," he wrote.
The billionaire also warned that these conditions have historically led to the rise of strong autocratic leaders and the decline of the rule of law.
Dalio on the global order
"The era of the dominant power (the US) that dictates the order that other countries follow is over," Dalio wrote.
That's part of the billionaire's longtime description of the US as an "empire" that's held great influence over the rest of the world since the end of World War II.
Dalio has often said that this relationship with the world is part of a big cycle that naturally has to end.
Trump's "America First" approach is marking that transition, he wrote in his post.
"The multilateral, cooperative world order the US led is being replaced by a unilateral, power-rules approach," he continued.
Dalio also wrote that artificial intelligence and natural disasters like floods and pandemics stand to be game-changing elements in the world's future.
The billionaire urged people to study how countries have acted at similar times in history, including by imposing tariffs and suspending debt payments to other countries.
"Many of these things would've been unimaginable not long ago, so we should also study how these policies work," he wrote.
A representative for Dalio did not respond to a request for comment sent outside regular business hours by Business Insider.