Peter Schiff: Trump Blunders on Trade… Again

On his first post-Thanksgiving podcast, Peter tackles another week of economic illiteracy, focusing mainly on a severe tariff proposal floated by President-elect Trump. He also spends time discussing the origins of Black Friday and comments on the motivations of the American electorate in electing Trump.

Peter starts by noting record Black Friday sales are not necessarily a sign of a healthy economy, especially when said sales are funded by debt:

The engine is the production. It’s the ability to produce all those goods because without the goods, there’s nothing to consume. The fact that Americans are willing to buy isn’t a sign of strength. I mean, anybody is willing to buy. In fact, Americans don’t even have the money to buy. They go into debt. … We’re spending ourselves into a national bankruptcy.

Turning to the bombshell X post Donald Trump posted last week, Peter explains why severing trade ties with the world would be disastrous:

We are going for a ride on a global gravy train and Donald Trump is threatening to jump out of the gravy train. He wants foreigners to say goodbye to the US market. Well, if foreigners say goodbye to the US market, then Americans have to say goodbye to all those goods.

Trump’s policy would make Americans poorer, but it also gets things backwards. If anything, the rest of the world is the “sucker” for tolerating American profligacy for so long:

In order for foreigners to supply us with goods, they have to produce those goods. That means they have to take resources and devote those resources to the production of those goods, meaning those resources are not available for other things. … So the world lives beneath its means so that Americans can live way beyond their means, and somehow we’re the suckers. It’s completely backwards—the rest of the world are the suckers.

Consumers would suffer under the proposed tariff, especially with certain goods, like footwear and pet supplies, primarily being imported:

This one’s a killer. 99% of American footwear is imported. I’m not making this up— 99%. So if foreigners have to say goodbye to America, America has to say goodbye to shoes. That’s it. We’re walking around barefoot. Obviously, we have our old shoes, so we still got those, but we ain’t buying any new shoes. The shoe industry is gone.

Peter also briefly comments on the immigration debates taking place in America, articulating the reasonable and long-held belief in admitting productive immigrants into the country:

If you’re an honest, hardworking person of whatever creed or color or nationality or whatever it is, you want to come in and do an honest hard day’s labor, or you want to come in here and start a business or you have some valuable skills, come on in.

As the weeks go on, it’s becoming clearer that Trump is not an economic libertarian. He was elected to reform the government, not slash its power and scope:

This was not a referendum on dismantling the government. It was a rejection of the status quo. Yes, Americans are frustrated with government because they don’t think their government is doing enough. … They want another government that will do a better job of solving their problems. If Donald Trump had really run a campaign on freedom, on self-reliance, on individual responsibility, he would not have won, because that’s not what the American electorate wants.

Unfortunately, the markets don’t realize that the economy needs to reset and purge malinvestment. Trump’s planned policies may be good for the stock market, but they’re not good for the health of the long-term economy:

We have to free up resources into the real economy, and that means we have to starve the financial economy of those resources. So stock prices have to come way down, and interest rates have to come up. The stock market doesn’t even realize that. It’s rallying because of what they think Trump’s going to do. If he actually did that, the stock market would have to come down.