President Trump’s Tariff Pause Fails to Calm Markets as Bond Sell-Off Sparks Recession Fears – Ray Dalio Warns of Global Monetary Breakdown

Last week, President Donald Trump announced a 90-day grace period on his controversial tariff plans—a temporary retreat from his aggressive trade stance. The move came just after a dramatic sell-off in the bond market, but instead of easing fears, investors are still dumping bonds.

Why? Because the usual rules are no longer working.

Bonds No Longer a Safe Haven?

Traditionally, when markets get rocky, investors flee to the safety of government bonds. But now, they’re dumping those too. The bond market has been particularly affected.

The yield on the 10-year U.S. Treasury note has surged, a signal that confidence is eroding in what has long been considered the financial world’s equivalent of a warm blanket, indicating a sell-off as investors seek more stable assets. This shift has raised concerns about the reliability of U.S. government bonds as a secure investment.

Despite the temporary relief, markets remain volatile, and experts warn of deeper systemic issues. As Bank of America analysts quipped, 

We found the strike price of the Trump put.

Suggesting that it wasn’t stocks, but surging Treasury yields that finally made Trump flinch. But that flinch might have come too late.

Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, has expressed concerns that the current focus on tariffs overlooks a potential breakdown of the global monetary order. 

It’s Bigger Than Just a Recession.

He is sounding the alarm—and not just about a possible recession. 

I think it’s likely that we’re going to be in a recession.

He said on Bloomberg Television, a day after Trump announced the 90-day grace period to negotiate trade deals via his social media platform. But more worrying, Dalio argues, is the potential breakdown of the monetary order.

In plain terms? The global financial system—built on trust, stability, and cooperation—is under siege.

Dalio’s concerns go far beyond GDP. He’s watching a dangerous of unsustainable debt levels, geopolitical friction, and political extremism as indicators of a once-in-a-lifetime shift in economic structures.

"There are big pressures for these imbalances to be corrected one way or another,” he warned. “Doing so will change the monetary order in major ways."

“This is not a normal recession kind of situation, we are changing the monetary order.” Dalio reiterated.

That’s a big claim. But it’s backed by the facts: Global debt is at historic highs. Trust between economic superpowers is at historic lows. And investors are increasingly acting like there’s nowhere safe to put their money.

Dalio believes we’re witnessing not just an economic shift, but a societal one. 

“Gaps in people’s education, opportunity, productivity levels, as well as income, wealth and values are manifesting in a breakdown of the democratic system,” he wrote on X (formerly Twitter).

That breakdown, he warns, is creating fertile ground for the rise of autocratic leaders.

Global markets have reacted with heightened volatility.

The announcement led to a temporary rally in U.S. stock markets. The Dow Jones Industrial Average gained nearly 5%, the S&P 500 rose 5.7%, and the Nasdaq surged 7.3%, marking one of the strongest weekly performances in years. 

However, the optimism was short-lived. Concerns about the sustainability of the pause and the broader trade policy led to renewed selling. The S&P 500 and Nasdaq experienced significant declines, with the S&P 500 dropping 3.6% and the Nasdaq falling 4.31% on April 10.

While U.S. stock indices experienced a brief rally following the tariff pause, the bond market did not see similar relief. Investors remain cautious, with many turning to assets like gold and foreign currencies.

Economists have downgraded growth forecasts for the U.S. economy, citing the uncertainty caused by tariff policies. Projections for GDP growth have been reduced, and the risk of a recession has increased. Inflation concerns are also rising, complicating potential actions by the Federal Reserve. 

Trade War or Economic Reset?

Despite the pause on tariffs for most countries, the U.S. increased tariffs on Chinese imports to 125%. China retaliated with a 125% tariff on U.S. goods. This escalation has led some Chinese businesses to halt shipments and consider alternative markets, signaling a potential decoupling of the two economies. 

Economists like Moody’s Mark Zandi predict that trade between the world’s two largest economies could grind to a halt. 

“Trade between the U.S. and China threatens to all but shut down,” he told Fortune.

In short, this isn’t just a war on trade—it’s a war on globalization itself.

Countries like Australia, despite existing free-trade agreements with the U.S., faced new tariffs. Australia's caretaker government and unpredictable U.S. policies have complicated negotiations, affecting bilateral trade relations.

Impact of Tariff Policies on Electronics

Initially, the Trump administration exempted consumer electronics such as smartphones, laptops, and semiconductor-related products from the proposed 145% reciprocal tariff on Chinese imports. This move provided temporary relief to major tech companies like Apple and Nvidia, which have significant manufacturing ties to China.

However, the exemption was short-lived. Commerce Secretary Howard Lutnick later clarified that while these items were removed from the general tariff list, they might soon be subjected to new semiconductor-specific tariffs aimed at reviving domestic chip manufacturing.

The administration's inconsistent messaging has led to confusion in the business and investment communities. While initial reports suggested exemptions for electronics, President Trump later stated that no real exemptions had been granted, suggesting a reclassification rather than a removal of tariffs. This ambiguity has made it challenging for companies to plan their supply chains and operations, with many bracing for potential new tariffs in the near future. 

The uncertainty surrounding U.S. tariff policies has prompted electronics manufacturers to reconsider their supply chain strategies. Companies heavily reliant on Chinese manufacturing are exploring alternative production hubs in countries like India and Vietnam, which currently enjoy a tariff advantage over China.​ Stakeholders are closely monitoring developments, with the hope that forthcoming policies will provide a more stable environment for global electronics trade.

What It Means for the Rest of Us

From Wall Street to Main Street, these tremors are being felt. Supply chains are strained. Prices are rising. Jobs are at risk. And the political divide is growing wider. And in the background, the global cooperative order that sustained decades of peace and prosperity is giving way to a more fragmented, suspicious, and conflict-prone world.

Trump’s 90-day pause may have been intended as a breather, but in reality, it’s a red flag waving furiously in the wind. The markets know it. The economists know it. And Dalio, one of the world’s most trusted financial voices, is screaming it from the rooftops.

This is more than a trade war. It’s a global realignment.

Investors, policymakers, and ordinary citizens should take note—not just of what’s being said, but of what’s being revealed: A once-in-a-generation transformation of the world order is underway.

And this time, there may be no safe haven.