Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, has weighed in on the escalating tariff tensions, urging the US to strike a trade agreement with China and shift focus toward fiscal consolidation, according to reports.
In a post on social media platform X, Dalio praised President Donald Trump’s decision to reconsider his earlier tariff escalation, calling the move “a much better way” to address global trade imbalances.
“Trump’s decision to step back from a worse way and negotiate how to deal with these imbalances is a much better way,” Dalio wrote, referring to the administration’s sudden pivot on Wednesday to temporarily ease newly imposed tariffs targeting dozens of countries, while increasing tariffs on China.
Dalio said he hoped that Trump would strike a deal with China that would appreciate the Yuan against the US 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 monetise 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’s comments come as macro-focused hedge funds continue to navigate a volatile geopolitical and economic environment. Bridgewater, which manages over $120bn in assets and is known for its global macro strategies, has long advocated for a measured and systems-based approach to trade and monetary policy.
Alongside his trade commentary, Dalio also urged policymakers to turn their attention to the US budget deficit, which has widened significantly in recent years amid elevated spending and tax cuts.
Speaking in an interview on CNBC, Dalio said: “So as we look ahead in the months ahead, we have to get the budget deficit down to 3% of gross domestic product.”
The call for fiscal restraint aligns with growing concern among institutional investors about long-term US debt sustainability and the potential crowding-out effects of continued deficit financing.
