Ray Dalio: The United States and the world order will undergo profound changes under Trump's leadership, reshaping the United States' global role and its internal governance foundation
Ray Dalio published an article titled "What Will Happen: Changes in Domestic and World Order Under the Trump Administration", outlining his views on the possible changes in domestic and international dynamics under the Trump administration, emphasizing similarities with periods of change such as the 1930s. His analysis focuses on major government reforms, foreign policy shifts, and the impact on economic and geopolitical stability.
The main points are as follows:
1. Domestic policy and government reform:
• The government plans to reorganize the federal government in a corporate style, prioritizing efficiency and cost cutting over social or environmental issues;
• High-profile appointments include Elon Musk and Vivek Ramaswamy to lead the Department of Government Efficiency, RFK Jr. to oversee health care reform, and other loyalists to top defense and intelligence positions;
• "Deep State" purges aim to replace opposition with loyalists, affecting all government departments and agencies;
• Deregulation and tax cuts are expected to benefit businesses, especially those in the technology and financial sectors, while there will be little regulation of artificial intelligence and industrial growth.
2. Economic impact:
• Policies are likely to benefit Wall Street, banks, and deregulated industries while encouraging onshoring and “friendly shore” of key supply chains (such as advanced semiconductors);
• Easy monetary policy and relaxed capital controls are likely to have a stimulatory effect on capital markets.
3. Foreign policy: America first
• The “America first” strategy will redefine alliances and adversaries, including China, Russia, North Korea, and Iran;
• The United States will pressure allies and neutral countries to align with its leadership, which has significant implications for global trade and geopolitics;
• The international order will shift from a post-World War II cooperative framework to a decentralized power-driven system.
4. Geopolitical and military priorities:
• Preparing for economic and potential military conflicts with other adversaries will drive policies, including domestic production missions and national security priorities;
• Allied support, especially from Japan and Australia, will be critical, although Europe and the global South may resist aligning with U.S. goals.
5. Challenges and risks:
• Achieving the administration’s ambitious goals may face internal resistance and have a limited time frame (first 100 days, two years). • Shifts in the global order could put pressure on U.S. resources and influence, with China outpacing the U.S. in its bid for neutral countries.
6. Policy priorities:
• Reforms will emphasize deregulation, industrial policy, trade reform, immigration enforcement, and health care reform;
• Lower corporate taxes and a focus on national economic security are expected to drive short-term market growth, but may face long-term sustainability challenges;
Dalio stressed that the outcome will depend on the U.S. government’s ability to overcome entrenched institutions and opposition. He predicts that both the U.S. domestic and world order will undergo profound changes, reshaping the U.S. role in the world and the foundations of its internal governance.
