Ray Dalio, the founder of Bridgewater Associates, remarked that President Donald Trump’s recent decision to temporarily reduce reciprocal tariffs is a “step back from a worse way” of managing trade discrepancies. He urged the Trump administration to pursue negotiations that would lead to a mutually beneficial trade agreement with China.
On Wednesday, President Trump announced a 90-day suspension of country-specific tariffs, maintaining only the 104% duties imposed on Chinese imports.
In a post shared on the X social media platform, Dalio expressed that this moment serves as “a great time for all involved to reconsider their approaches” to recalibrating U.S. trade relations, while acknowledging the ongoing challenges posed by trade “problems” in America.
Dalio stated, “There are better and worse ways of handling our problems with unsustainable debt and imbalances. President Trump’s decision to step back from a worse alternative and engage in negotiations to tackle these issues is far more favorable.”
He added, “I hope and expect that he will adopt a similar approach with the Chinese, which I believe entails negotiating terms that would lead to a stronger renminbi against the dollar, achieved through China offloading dollar assets while also easing fiscal and monetary policies to boost their demand. This would represent a win-win scenario.”
During a Tuesday discussion on Finance Newso, Dalio acknowledged that he concurred with Trump on the existing trade issues facing the United States, but expressed concern regarding the administration’s reliance on broad tariffs as a remedy.
He stated, “Ultimately, substantial alterations to debt and monetary strategies are necessary to address the crisis of debt, trade, and capital imbalances.” He emphasized that the administration’s next objective should be to reduce the U.S. deficit to 3% of GDP.
Dalio has been a consistent voice warning about the escalating levels of U.S. debt. In a recent appearance at Finance Newso’s Converge Live, he noted that the country is grappling with a “very severe supply-demand problem” regarding debt, contending that the U.S. must “offer a volume of debt that the global market may be unwilling to purchase.”
Earlier this year, the U.S. budget deficit breached the $1 trillion mark.
‘A great time’ for investors to rethink risk
Following Trump’s announcement to postpone reciprocal tariffs, stocks on Wall Street experienced a significant rally on Wednesday. This temporary shift in policy occurred in the wake of a global sell-off that had unsettled equity and bond markets worldwide.
Dalio, who established Bridgewater Associates, one of the largest hedge funds globally, in 1975, stated in his social media update that the fluctuations in trade policy offer an opportunity for investors to reassess their risk tolerance.
“This is an ideal moment for investors, who may have been shaken by recent events, to reevaluate how they structure their portfolios to mitigate intolerable risks,” he noted.
He cautioned, “I can guarantee that another significant market disturbance will eventually occur, one that could be even more alarming than what has recently transpired.”
