The investing mogul Ray Dalio said tariffs aren’t just a matter of tax revenue — they’re also a way for countries to prepare their economies for times of conflict and war. As the Trump administration announced reciprocal tariffs on China, the European Union, and dozens of other regions on Wednesday, Dalio wrote in a LinkedIn post that import taxes are “necessary in times of an international great power conflict.” The billionaire’s reason? They tend to lower reliance on foreign supply chains. Dalio, who founded 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 local companies less efficient, because global supply chains are stifled, but more survivable as long as domestic consumers can still buy enough of their goods. Dalio’s post wasn’t specifically dissecting the Trump administration’s tariffs, so he’s not necessarily saying the White House introduced these taxes in expectation of war. Rather, he wrote about tariffs in general, highlighting their typical effects and the motivations for governments to introduce such measures. For example, the billionaire wrote that tariffs tend to bring inflation to the countries that introduce them and stagflation to the world. But Dalio’s point about an “international great power conflict” aligns with the billionaire’s regular warnings that the world is moving toward a period of great strife and a high risk of war. The billionaire published a book about this belief in 2021, in which he predicted that US-China competition would bring fundamental, messy changes to how the world is run.
Either way, US debt must be tackled, Dalio says
In his post on Wednesday about tariffs, Dalio recalled another of his usual points about the state of the world: He believes the US government’s debt crisis must 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 cause a “heart attack” for the US financial system if left to accumulate. “You’re in a high risk of this heart attack, essentially, and now what are you going to do about it?” he said. He said at the time that while Elon Musk’s DOGE office would seek to slash the government budget, those efforts alone wouldn’t be enough to fix the debt crisis. Bridgewater Associates and Principles, Dalio’s book brand, didn’t respond to comment requests for Dalio sent outside regular business hours.
