Ray Dalio Warns of Potential Economic Crisis Beyond a Recession Amid Rising Tariff Tensions

Billionaire investor Ray Dalio has issued a stark warning about the direction of the US economy, cautioning that the country is “very close” to entering a recession—and could be facing something even more severe if current economic and trade policies continue unchecked.

Speaking Sunday on NBC’s Meet the Press, Dalio, the founder of Bridgewater Associates and a veteran of financial forecasting who predicted the 2008 housing crash, pointed to growing instability fueled by former President Donald Trump’s tariff policies, rising federal debt, and broader shifts in the global economic order.

“We are having profound changes in our domestic order, and we’re having profound changes in the world order,” Dalio said, drawing comparisons to the turbulence of the 1930s.

He emphasized that the current economic crossroads is more than just a temporary downturn.

“We are at a decision-making point… and I’m worried about something worse than a recession if this isn’t handled well.”

Dalio was especially critical of the White House’s approach to trade, noting the “disruptive” effects of shifting tariff announcements. Over the past week, the US administration has imposed and then partially rolled back tariffs, including a 145% duty on certain Chinese imports. Some high-tech products were temporarily exempted, but Commerce officials later indicated those exemptions may not last.

While Dalio agreed that revitalizing American industry and protecting economic interests is a worthy goal, he warned that the strategy is key.

“Whether that’s done in a practical way… with quality negotiations versus a chaotic and disruptive way—that makes all the difference in the world,” he said.

Beyond trade, Dalio highlighted another pressing issue: the federal budget deficit and national debt, now exceeding $36 trillion. He warned that the US is approaching a breaking point in its ability to borrow and spend, potentially leading to a “supply-demand problem for debt.”

“We have a breaking down of the monetary order,” Dalio said. “We are going to change the monetary order because we cannot spend the amounts of money [we want].”

Dalio urged lawmakers to commit to what he called a “3% pledge,” encouraging Congress to reduce the budget deficit to 3% of GDP. Without this, he said, fiscal imbalances could compound existing challenges, with consequences “worse than a normal recession.”

The veteran hedge fund manager also warned of a broader shift away from multilateralism. He noted that Trump’s America-first approach to trade is contributing to a move toward a more fragmented global system, with increasing tensions between emerging and established powers.

“We are going from multilateralism… to a unilateral world order in which there’s great conflict,” Dalio said.

He described this as part of a larger pattern shaped by five forces: the economy, internal political strife, international relations, technological change, and natural events.

Dalio’s comments come amid increasing concern on Wall Street following a volatile week for stocks, particularly in sectors sensitive to trade and policy shifts. While some experts see recent measures as positioning for long-term gains, others warn that unpredictability is already harming investor confidence and global economic stability.

Still, Dalio believes the worst outcomes can be avoided if US leaders move decisively.

“This could all be managed very well,” he said.

CNBC, the Guardian, and Independent contributed to this report.