Bridgewater Associates founder Ray Dalio late Wednesday called for the U.S. to strike a deal with China as the two superpowers escalate retaliatory tariffs on one another, sending global stocks into uncertainty.
In a post on X, the billionaire said it was now imperative that all involved parties “reconsider their approaches.”
“There are better and worse ways of handling our problems with unsustainable debt and imbalances, and President Trump’s decision to step back from a worse way and negotiate how to deal with these imbalances is a much better way.”
Dalio’s post comes hours after Trump said he was raising tariffs on Chinese goods to 125% over Beijing’s “lack of respect” toward America, while pausing and lowering reciprocal tariffs on other countries that were announced just last week. The move came in response to China announcing it was increasing its reciprocal tariff on U.S. goods from 34% to 84%.
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For other countries, meanwhile, the Trump administration said there would be a 90-day pause on tariffs due to the high volume of more than 75 countries contacting the White House to strike a deal.
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Dalio said he hoped that Trump would strike a deal with China that would appreciate the Yuan against the U.S. dollar, “achieved by the Chinese selling dollar assets while also easing their fiscal and monetary policies to stimulate their demand.”
“This would be a win-win. The Chinese should then restructure and monetize their excessive local government debts to get their debt overhang behind them,” Dalio said. “One way or another, there will be major changes to the debt/monetary orders to deal with the debt, trade, and capital imbalances problem.”
Dalio said the Trump administration’s next move should be to deal with the U.S. deficit by cutting it to only 3% of GDP.
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“This is also a great time for investors who were shocked and terrified by what happened (and what might happen) to reconsider their approaches to structuring their portfolios so they don’t have such intolerable risks,” Dalio said, warning that “another worse case of the market moves that terrified them will come along eventually.”
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