Howard Marks knows the market. The billionaire co-founder of Oaktree Capital Management has a track record that speaks for itself. He saw the Dot-com Bubble coming in 2000, warned of the Great Recession before it hit in 2008, and flagged the COVID-induced market froth in 2021. When this man talks, investors listen. And in a recent Bloomberg interview, Marks dropped a bombshell: “Tariffs are changing everything.”
Speaking on April 4, 2025, Marks didn’t mince words. He described the current shift in global trade dynamics as “the biggest change in the environment that I’ve seen probably in my career.” For a man who’s navigated markets for over five decades, that’s no small statement. His latest warning centers on the seismic impact of tariffs, the unraveling of globalization, and the precarious position of the U.S. dollar as the world’s reserve currency. Here’s what he’s seeing—and why it matters.
The End of an Era: Globalization in Retreat
Marks traces the roots of modern prosperity back to the post-World War II era, when nations deliberately wove their economies together to prevent another catastrophic conflict. This system—globalization—became the engine of growth for the last 80 years. “It was a wave that lifted all boats,” Marks said, pointing to how trade turned the U.S. from a manufacturing powerhouse into a service-driven economy. Cheap goods flowed in, innovation flourished, and living standards soared.
But tariffs, like those recently announced by the Trump administration, signal a step back from this regime. Marks sees it as a reversal of the interdependence that kept the global economy humming. “We’ve gone from free trade and globalization to a system that implies significant restrictions on trade in every direction,” he told Bloomberg. The implications are profound—and not just for the U.S.
The Cost of Isolation: Inflation and Economic Pain
One of Marks’ starkest warnings is about inflation. For decades, global trade kept prices in check. He highlighted a 25-year period where the cost of durable goods in the U.S. dropped 40% in inflation-adjusted terms, even as the dollar lost 75% of its purchasing power since World War II. Cheap manufacturing from abroad—think iPhones assembled for pennies on the dollar—made this possible. Tariffs threaten to undo that.
“If we stop world trade,” Marks explained, “the Swiss have to make their own pasta and the Italians have to make their own watches.” The result? Higher costs, lower efficiency, and a world where goods get pricier. Economists are already slashing U.S. growth forecasts and predicting a return to pandemic-level inflation as tariffs bite. Marks agrees: “We know much less today than usual,” he said, noting the uncertainty makes financial forecasting a nightmare.
The Dollar’s Throne at Risk
Perhaps the most chilling part of Marks’ warning is about the U.S. dollar’s status as the world’s reserve currency. For decades, the dollar’s dominance has been a golden goose, letting the U.S. borrow cheaply and wield unmatched economic power. But tariffs could jeopardize that.
“If people don’t like the dollar, don’t like investing in the United States, don’t want to hold an unlimited number of treasuries, the fiscal situation will be very complicated.”
The logic is simple: if America’s trade policies alienate the world, nations might rethink their reliance on the dollar. A weaker dollar, coupled with higher borrowing costs, could spiral into a fiscal mess. Marks isn’t predicting doom outright—he’s too measured for that—but he’s clear the risks are real.
Investing in a Shaky World
So, what’s an investor to do? Marks isn’t hitting the panic button, but he’s urging caution. “The probability that we know what the future is going to look like is lower than ever,” he said. Stocks might not be the safe bet they once were—especially with tariffs rocking the boat—but credit markets still offer “very healthy” yields. High-yield bonds, for instance, have climbed from 7.2% to nearly 8% in weeks. For Marks, that’s where the opportunity lies: steady returns in a storm.
He’s not abandoning equities entirely, though. “It doesn’t make sense to boycott something just because the price dropped,” he noted. But the rules of the game have changed, and investors need to adapt.
A Voice Worth Heeding
Howard Marks has been right before—time and again. His Bloomberg warning isn’t a cry of despair but a call to rethink assumptions. Tariffs are shaking the global economy “like a snow globe,” as he put it, and the fallout could reshape markets, inflation, and the dollar’s role in the world. For now, he’s watching closely—and so should you. Because if history’s any guide, when Howard Marks speaks, the market listens.
Be First to Comment