Ray Dalio warns that US President Trump's tariff strategy could trigger something much "worse than a recession"

Billionaire investor Ray Dalio has warned that the United States is facing economic risks far greater than a typical recession, arguing that President Donald Trump's aggressive tariff policies and ballooning debt could trigger a breakdown of the global financial system.

Speaking on NBC's Meet the Press on Sunday, the founder of Bridgewater Associates said the world is at a critical juncture, marked by profound changes in the political, economic, and geopolitical order - factors which he says have historically led to severe crises.

"I think that right now we are at a decision-making point and very close to a recession," Dalio said. "And I'm worried about something worse than a recession if this isn't handled well."

Dalio explained that the US economy is confronting several overlapping challenges: rising debt, internal political divisions, growing geopolitical tensions, and shifts in global power.

"Such times are very much like the 1930s," he warned. "If you take tariffs, if you take debt, if you take the rising power challenging the existing power - those changes in the orders, the systems, are very, very disruptive."

Asked about the worst-case scenario, Dalio pointed to a potential breakdown of the dollar's role as a store of wealth, combined with internal conflict beyond the norms of democratic politics and escalating international tensions - potentially even military conflict.

"That could be like the breakdown of the monetary system in '71. It could be like 2008. It's going to be very severe," Dalio said. "I think it could be more severe than those if these other matters simultaneously occur."

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While acknowledging that tariffs could serve as a useful tool to bring back manufacturing and generate revenue, Dalio cautioned that the method of implementation matters deeply.

"How that's done - whether in a practical and stable way, with quality negotiations - or whether that's done in a chaotic and disruptive way that produces great conflict, makes all the difference in the world," he said.

Describing Trump's recent tariff moves as "very disruptive," Dalio said the real test will come after the current 90-day negotiation period ends. "What was put there is like throwing rocks into the production system," he said, warning of "enormous" impacts on global efficiency and costs.

Goldman Sachs raised the odds of a US recession in the next 12 months to 45% last week, following Trump's April 2 announcement of a minimum 10% tariff on all imports - but before he placed a three-month hold on further "reciprocal" duties of 11% to 50% targeting dozens of nations. China, however, was still hit with a 145% tariff hike - and retaliated with a 125% levy of its own.