Billionaire investor warns of economic turmoil due to escalating tariffs, emphasizing impact on global markets
From Yahoo Finance: 2025-04-03 19:30:00
Billionaire investor Ray Dalio warns of economic turmoil due to escalating tariffs, highlighting potential abrupt changes in global markets. He emphasizes the impact of first and second-order effects of tariffs and the role of the U.S. dollar in market instability. Trust in debt quality, productivity, and political systems crucial for long-term stability.
The first-order effects of tariffs create tax revenue but don’t determine the overall economic impact. Retaliatory actions, currency fluctuations, and central bank responses play a significant role. Second-order effects include monetary and fiscal policy adjustments by central banks and governments to mitigate economic impacts.
Dalio stresses the complexity of measuring market impacts of tariffs and the interplay between first and second-order effects. Bill Ackman urges countries to make deals with the U.S. instead of retaliating. Tariffs will likely complicate global negotiations and impact supply chains, economies, and markets.
Read more: Here’s How The ‘Tariff Machine’ Affects Currency, Monetary And Fiscal Policies