The founder of Bridgewater Associates, Ray Dalio, sharing his ideas on the implications of the reciprocal prices that US President Donald Trump imposed on April 2, added that if they can be an attractive tax option, they reduce the global efficiency of production and have stagflationary effects worldwide.
Sharing his article on X, Dalio explained that prices, mainly taxes, generate income for the imposing country, affecting both foreign producers and national consumers. The impact on each depends on their relative elasticities. During international conflicts, prices become necessary to ensure domestic production capacities. They can also help reduce the imbalances in current accounts and capital, reducing dependence on foreign production and capital, which is crucial during geopolitical conflicts.
“So there are a lot of mobile parts and there is much to measure in order to judge the impacts of the market for major prices,” he said.
Dalio stressed that the production, trade and capital imbalances, in particular debts, must be treated because they have significant risks. He warned of sudden potential changes in monetary, economic and geopolitical orders. The long-term effects will largely depend on confidence in debt and capital markets, productivity levels and political systems, he said.
In addition, Dalio also talked about the status of the US dollar as the main global reserve currency. Although beneficial in the creation of the demand for American debt, this also leads to a surplus, contributing to current economic challenges. He suggested that an assessment of the Chinese RMB could be part of a trade and capital agreement between the United States and China, potentially when leaders meet, which could cause significant economic adjustments.
Trump prices
President Donald Trump announced a reciprocal tariff of 26% on India, which represents half of the 52% of the samples imposed by India on American goods. He described India as “very, very difficult” by speaking to the Garden pink of the White House.
Trump declared on April 2, 2025 as “Liberation Day”, the marking as an important moment for the American industry. He stressed that this day would be recalled as when America began to recover its economic strength.
Trump has provided examples of prices, noting that the United States only charges 2.4% on motorcycles, while countries like Thailand and India have much higher rates. He stressed that the United States has long billed a 2.5%rate on foreign manufacturing cars, while India has 70%, and the European Union has more than 10%.
He presented a graph showing countries prices such as India, China and the levy of the European Union on American products, alongside the reciprocal rates that these countries will now face. For India, the graph indicated a rate of 52% on American products, the United States now imposing a tariff of 26% on Indian products.
Trump mentioned his conversation with Prime Minister Narendra Modi, declaring that although Modi is a friend, current commercial practices are unfair to the United States. He remembers called India the “tariff king” and noted that the American trade deficit with India was nearly 100 billion USD.
Trump expressed that the United States was “very kind” by invoicing about half of what other countries impose on American goods. He concluded by saying that this decision would be an important step in American history, marking a day of economic release.
