Billionaire Ray Dalio is worried Trump’s tariff war could spark ‘something worse’ than a recession

Ray Dalio is pictured speaking onstage at a festival hosted by The Wall Street Journal in New York City in May 2024. (Dia Dipasupil/Getty Images via CNN Newsource)

Hong Kong/London — Billionaire Ray Dalio says President Donald Trump’s tariff war has helped push America close to a recession — or perhaps even “something worse.”

“Right now, we are at a decision-making point and very close to a recession,” the founder of Bridgewater Associates, one of the world’s largest hedge funds, told NBC’s “Meet the Press” on Sunday. “And I’m worried about something worse than a recession if this isn’t handled well.”

Dalio, who correctly predicted the 2008 financial crisis, is part of a growing chorus, including major Wall Street banks, worried that tariffs could hamstring the US economy, the world’s largest.

“If you take tariffs, if you take debt, if you take the rising power challenging existing power, if you take those factors and look at the factors, those changes in the orders, the systems, are very, very disruptive. How that’s handled could produce something that is much worse than a recession. Or it could be handled well,” he said.

Dalio added that whether tariffs are implemented in a “stable” way or a “chaotic and disruptive way” makes “all the difference in the world.”

But, so far, the way Trump has pursued his tariff plan — designed to reshore manufacturing to the US and boost jobs and tax revenue — has been “very disruptive,” Dalio said, adding the tariffs are “like throwing rocks into the production system.”

Trump’s tariff offensive on the world has triggered global market turmoil in recent weeks, raising fears of an economic downturn. Last week, Trump declared a 90-day pause on all “reciprocal” tariffs, except those imposed on China, which increased to at least 145%.

Yet some Chinese electronic goods, including smartphones and computer monitors, will be exempt from that 145%, according to a US Customs and Border Protection notice posted late Friday. Those goods are still, however, subject to a 20% levy imposed on China.

A recession refers to a sustained decline in economic activity, often measured by two or more consecutive quarters of negative growth.

Goldman Sachs economists expect a 45% chance of a recession in the US over the next 12 months. Before Trump announced the 90-day pause, they had forecast a recession as the “base case,” meaning it was highly likely to occur.

Dalio is worth US$16 billion, according to Bloomberg’s Billionaires Index.