Dario Qiaosui analyzes the deep causes of tariff policy: the collapse of the old order

The Zhitong Finance App learned that Qiaoshui Fund founder Ray Dalio (Ray Dalio) warned that investors paid too narrowly attention to tariffs and did not pay enough attention to the collapse of the major monetary, political, and geopolitical orders that “may only occur once in a lifetime”. The monetary/economic order is collapsing because there is too much debt, new debt is being added too fast, and the existing capital market and economy are supported by this huge unsustainable debt. The reason debt is unsustainable is because of huge imbalances.

As to the reason for the imbalance, Dalio wrote that debtor-borrowers (such as the US) owe too much debt and continue to incur excessive debt because they rely on debt to finance excessive consumption; creditor-lenders (such as China) already hold too much debt and rely on selling goods to borrowers and debtors (such as the US) to maintain their economy.

Dalio said that behind the tariffs, we are witnessing a typical collapse of major monetary, political, and geopolitical orders, and we need to focus on five deep-seated issues, because they are the real driving forces of overall large-scale cyclical changes. The five major factors mentioned by Dalio include the collapse of the monetary and economic order, the collapse of America's domestic political and economic order, the collapse of the international geopolitical order, the increasing destructive power of natural forces, and the transformative impact of artificial intelligence and other technologies.

At the time of his remarks, the global market is in a turbulent period, and US President Trump's tariff policy is likely to disrupt the global economy. The billionaire founder wrote in a previous social media post that investors could turn a blind eye to the biggest disruption to come if they don't pay attention to these potential conditions.

Dalio added, “These imbalances are under great pressure and must be corrected in one way or another. Doing so will change the monetary order to a large extent. In a deglobalized world, huge trade imbalances and huge capital imbalances are clearly out of balance, and key players can't trust that other major players won't cut off the supplies they need (this is America's concern) or won't pay what they deserve (this is China's concern).”

Dalio said that people's gaps in education, opportunities, productivity levels, and income, wealth, and values are showing up in the collapse of democratic systems and the rise of authoritarian leaders. He added that in the field of geopolitics, the multilateral cooperative world order led by the only dominant power, the United States, is being replaced by a “America First” unilateral approach. We are now seeing this reflected in US-led trade wars, geopolitical wars, technological wars, and in some cases military wars.