Ray Dalio Warns: Trump’s Tariffs Already Inflicted Economic Pain—No Escape Now

Billionaire investor Ray Dalio drops the hammer: The damage from Trump-era tariffs is baked in. Markets wobble, supply chains groan—and Wall Street’s usual ’buy the dip’ brigade looks increasingly naive.

Key takeaways:

- Tariff fallout now irreversible, says Bridgewater founder

- Global trade still tangled in political posturing

- ’Economic pain’ spreads beyond original targets

Meanwhile, hedge funds keep pretending they can algorithm their way out of a trade war. Spoiler: They can’t.

US economic fractures caused by tariffs

The founder of the Wall Street hedge fund, Bridgewater Associates, argued that countries have lost faith in the US dollar because of America’s hostility towards its trading partners. He claims that the West is the largest consumer of imported manufactured goods, and broken relationships will hurt American consumers.

“The United States’ role as the world’s biggest consumer of manufactured goods and greatest producer of debt assets to finance its over-consumption is unsustainable,” he stated.

@elonmusk, I’m glad we can have exchanges like this to find out what’s true. I asked Grok which country consumes the most manufactured goods and got the below. Even if there are different ways of measuring consumption of manufactured goods, it is indisputable that the U.S. is the… pic.twitter.com/5v2TI5CSt4

— Ray Dalio (@RayDalio) April 29, 2025

Dalio surmised that the process of de-dollarisation has already begun. A weakening dollar, combined with waning international trust, could erode the foundation of America’s post-war economic dominance.

“The progression of events leading to these increasing disorders is similar to those that have progressed many times throughout history,” he continued, “so this one looks like a contemporary version of the old story of how monetary, domestic political, social, and international geopolitical orders change.”

Some economists, like JPMorgan, see a 60% chance of a US recession happening this year, more than double the level when Trump took office. Nearly two-thirds of US vegetable imports come from Mexico, and 61% of oil imports originate from Canada, both of which are affected by trade restrictions. Higher tariffs on Chinese goods could stifle domestic spending.

“Without trust, negotiation itself becomes an impossibility, and when trust erodes, even those predisposed toward cooperation will be deterred.”

Dalio predicted that a debt crisis reminiscent of the 1980s Latin American default period would become inevitable if faith in US debt continues tanking. Already strained bond markets could buckle under the weight of increased borrowing costs, while America’s reliance on being the issuer of the world’s reserve currency is on the precipice of tumbling over.

“Assuming that one can sell and lend to the US and get paid back with hard (i.e., not devalued) dollars on their debt holdings is naive thinking, so other plans have to be made,” the billionaire propounded.

The US government steps back from enforcing tariffs

Reports since the start of this business week show that the Trump administration has softened its language on tariffs, saying they may be reduced “substantially” for several countries, including trade rival China. 

The change of heart came after last week’s meetings with retail executives, including Walmart, who cautioned President Trump’s camp that higher tariffs would raise consumer prices. 

The US-China trade standoff has almost completely ruined supply chains. Industry analysts estimate that, even under a best-case scenario where tariffs are lifted immediately, normal operations would take at least 30 days to resume at the Port of Los Angeles and nearly 50 days at the Ports of New York and New Jersey.

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