Ray Dalio: Trade war with China would be a 'tragedy'

  • Bridgewater Associates founder Ray Dalio says in a LinkedIn blog post he believes an acceptable trade deal between the U.S. and China is possible.
  • "It seems to me that good deals are to be had for both countries, while a trade war has the risk of tit-for-tat escalations that could have very harmful trade and capital flow implications for both countries and for the world," Dalio writes.
  • Dalio's firm manages about $160 billion, according to its website.
President Donald Trump and China's President Xi Jinping (not shown) make a joint statement at the Great Hall of the People on November 9, 2017 in Beijing, China.
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President Donald Trump and China's President Xi Jinping (not shown) make a joint statement at the Great Hall of the People on November 9, 2017 in Beijing, China.

Bridgewater Associates founder Ray Dalio said Monday that a trade war between the U.S. and China is avoidable.

"It seems to me that good deals are to be had for both countries, while a trade war has the risk of tit-for-tat escalations that could have very harmful trade and capital flow implications for both countries and for the world," Dalio wrote in a LinkedIn blog post entitled "A US-China Trade War Would Be a Tragedy." "I think and hope that both sides know this, and I believe that what is happening now is more for political show than for real threatening."

President Donald Trump announced on Thursday plans for tariffs of 25 percent on imported steel and 10 percent on aluminum, sparking fears of a trade war and spurring a sell-off in the stock market.

The hedge fund manager said the size of the tariffs announced thus far will have a "very small" impact on U.S.-China trade balances.

"If tariffs are imposed as indicated, I would hope and expect the Chinese response to be small and symbolic so that both sides will have rattled their sabers without actually inflicting much harm," he wrote. "What will come after that will be more important. I wouldn't expect it to amount to much anytime soon. If on the other hand we see an escalating series of tit for tats, then we should worry."

Dalio founded Bridgewater Associates in 1975. The hedge fund now manages about $160 billion, according to its website.