Ray Dalio Warns: Tariffs Accelerate Deglobalization, Threaten Global Monetary Order
1min read Legendary investor Ray Dalio has warned that the global monetary order is on the brink of collapse, driven by trade disruptions caused by the Trump administration's tariffs. Dalio, the former CEO of hedge fund bridgewater Associates, highlighted that these tariffs are accelerating deglobalization and creating unsustainable trade imbalances, which are fracturing the monetary, political, and international world orders.
Dalio emphasized that the trade tensions, particularly between the US and China, are leading to a significant reduction in interdependencies between importers and exporters. This shift is prompting countries to make alternative plans, recognizing that the issues caused by tariffs are not temporary but rather a new reality that must be planned for. Dalio believes that the idea of trade partners continuing to sell to the US and receive dollars in return is a naive perspective, given the increasing unsustainability of America's role as the world's largest consumer of manufactured goods and the largest debt issuer.
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The billionaire investor warns that more countries may bypass the US by forming new trade networks that rely on alternative currencies. While Dalio does not specify which monetary alternatives could challenge the dollar's dominance, he has previously advocated for "hard money" assets like Bitcoin and gold during times of global uncertainty. This shift could lead to a significant realignment of global trade dynamics, with countries seeking more stable and reliable monetary systems.
Dalio calls for a more coordinated and calm approach from the US to address these trade imbalances and become more self-sufficient. He believes that dealing with the US government debt problem head-on would yield better results than the current path, which he describes as marked by "disturbing fighting and volatility" that are leading to irreversible negative consequences. Dalio advises investors and policymakers to focus on these fundamental changes in the world order rather than getting caught up in day-to-day market moves and policy announcements.
The impact of the Trump administration's tariffs has been particularly severe on China, with a 145% duty on all imports. The US' neighbors, Canada and Mexico, have also been affected, with a 25% tariff on most goods. Several key Bitcoin mining manufacturing countries, such as Thailand, Indonesia, and Malaysia, have also faced significant tariffs, which have already impacted machine imports into the US. These disruptions highlight the broader implications of the trade tensions on global supply chains and economic stability.
