World Street | Trump plans ‘reciprocal tariffs’, Nissan-Honda merger off, Ray Dalio warns of economic shock, and more

World Street

The Trump administration is making bold economic and policy moves, from federal workforce layoffs to trade tariffs, while financial experts warn of a looming debt crisis. Fund manager Ray Dalio cautions that the U.S. must rein in its deficit before bond markets react negatively. Meanwhile, a high-profile merger between Nissan and Honda has collapsed, and the State Department has clarified that no contract exists for armored Teslas. All this and more on the February 14 edition of World Street.

Ray Dalio Warns of U.S. Debt Crisis

Hedge fund billionaire Ray Dalio cautions that the U.S. has less than three years to significantly reduce its fiscal deficit before bond markets trigger a severe financial crisis. According to Dalio, if the Trump administration fails to convince investors to accept lower returns in line with fiscal sustainability, the country could face an “economic heart attack.” He predicts that if Trump’s tax cuts remain in place, the deficit will reach approximately 7.5 percent of GDP.

Trump Administration Begins Federal Layoffs

Just one day after ending deferred resignation offers for two million federal employees, the Trump administration initiated large-scale layoffs across multiple agencies. Sources told ABC News that the move, in line with Trump’s campaign promise to shrink the federal workforce, primarily affects probationary employees—those hired within the past one to two years who have fewer job protections. The cuts are expected to impact thousands of workers.

State Department Clarifies No Tesla Deal

A $400 million procurement listing for armored Teslas at the U.S. State Department sparked speculation about a government contract. However, both Tesla CEO Elon Musk and a State Department spokesperson denied any deal had been made. The department later revised the listing, removing Tesla’s name and instead referring to “armored electric vehicles” without specifying a manufacturer.

Nissan-Honda Merger Fails

A proposed $50 billion merger between Nissan and Honda has been scrapped, the automakers announced. Originally revealed in December, the deal aimed to create one of the world’s largest car manufacturers. However, both companies cited the need for faster decision-making amid market uncertainty. Nissan CEO Makoto Uchida also pointed to Honda’s push to make Nissan a subsidiary rather than an equal partner as a key reason for abandoning the plan.

Trump Announces 'Reciprocal Tariffs'

President Donald Trump has introduced a plan to impose “reciprocal tariffs” on countries that tax U.S. goods. Speaking from the Oval Office, Trump explained that if another country imposes tariffs or taxes on American products, the U.S. will respond with similar charges. The policy targets foreign value-added taxes (VATs) and other trade barriers deemed unfair by the U.S. Trade Representative’s office. Trump also warned that goods rerouted through third countries to avoid tariffs will not be exempt.