The Blubber

Billionaire hedge fund manager Ray Dalio has warned that the United States could face “something worse than a recession” as a result of President Donald Trump’s trade policies, including steep new tariffs.

In an interview on NBC’s Meet the Press on Sunday, the 75-year-old investor said, “I think that right now we are at a decision-making point and very close to a recession. And I’m worried about something worse than a recession if this isn’t handled well.”

“A recession is two negative quarters of GDP — and we always have those,” he continued. “But what we’re dealing with now is more profound. We’re seeing a breakdown of the monetary order. The system has to change because we cannot keep spending the way we are.”

Dalio’s remarks followed a volatile week in global financial markets, triggered by Trump’s trade decisions, including a 145% tariff hike on Chinese goods. He described the moment as one of historic upheaval, saying the U.S. and world order were undergoing “profound changes,” drawing comparisons to the 1930s.

“I’ve studied history, and these patterns repeat. Tariffs, debt levels, and a rising power challenging an existing power — these forces create major disruptions,” Dalio said. “How these changes are managed will determine whether we see something more severe than a recession, or whether we come through it successfully.”

Dalio, who was among the first to foresee the 2008 financial crisis, also said the U.S. economy is “at a juncture.” He pointed to the federal budget deficit, warning that it’s headed toward 7% of GDP unless there are serious adjustments. He called for lawmakers to commit to a “3% pledge” — keeping the deficit around 3% of GDP.

“If they don’t, there will be a supply and demand problem for debt,” he said, “and the result could be worse than a normal recession.”