Ray Dalio Says Tariffs Can Prepare US for Great Conflict or War

The investing mogul Ray Dalio mentioned tariffs aren’t only a matter of tax income — they’re additionally a means for nations to organize their economies for instances of battle and warfare.

Because the Trump administration introduced reciprocal tariffs on China, the European Union, and dozens of different areas on Wednesday, Dalio wrote in a LinkedIn submit that import taxes are “necessary in times of an international great power conflict.”

The billionaire’s purpose? They have an inclination to decrease reliance on international provide chains.

Dalio, who based the hedge fund Bridgewater Associates, wrote that the tariffs “can reduce both current account and capital account imbalances.”

“Which in plain English means reducing the dependencies on foreign production and foreign capital which is especially valued in times of global geopolitical conflicts/wars,” the billionaire added.

He wrote that tariffs make native firms much less environment friendly, as a result of world provide chains are stifled, however extra survivable so long as home shoppers can nonetheless purchase sufficient of their items.

Dalio’s submit wasn’t particularly dissecting the Trump administration’s tariffs, so he isn’t essentially saying the White Home launched these taxes in expectation of warfare.

Quite, he wrote about tariffs on the whole, highlighting their typical results and the motivations for governments to introduce such measures.

For instance, the billionaire wrote that tariffs are likely to carry inflation to the nations that introduce them and stagflation to the world.

However Dalio’s level about an “international great power conflict” aligns with the billionaire’s common warnings that the world is shifting towards a interval of nice strife and a excessive threat of warfare.

The billionaire revealed a guide about this perception in 2021, through which he predicted that US-China competitors would carry basic, messy adjustments to how the world is run.

Both means, US debt should be tackled, Dalio says

In his submit on Wednesday about tariffs, Dalio recalled one other of his traditional factors concerning the state of the world: He believes the US authorities’s debt disaster should be solved. The federal debt-to-GDP ratio is about 120%.

“The production, trade, and capital imbalances (most importantly the debts) must come down one way or another, because they are dangerously unsustainable for monetary, economic, and geopolitical reasons,” he wrote.

Dalio warned in February that debt would trigger a “heart attack” for the US monetary system if left to build up.

“You’re in a high risk of this heart attack, essentially, and now what are you going to do about it?” he mentioned.

He mentioned on the time that whereas Elon Musk’s DOGE workplace would search to slash the federal government finances, these efforts alone would not be sufficient to repair the debt disaster.

Bridgewater Associates and Rules, Dalio’s guide model, did not reply to remark requests for Dalio despatched exterior common enterprise hours.