Peter Schiff: We Can’t Rely on Trade Barriers

On Tuesday’s episode of the Peter Schiff Show, Peter Schiff tackles the chaotic state of the markets following another round of tariff increases from President Trump. Peter critiques the logic behind tariffs, examines the unraveling of consensus trades like the AI investment frenzy, and highlights potential pitfalls facing American investors who have placed misguided faith in dollar strength. He also reflects on the recent turbulence in the stock market, warning listeners about the dangers of overlooking fundamental economics in favor of politically-driven narratives.

Opening with an overview of the recent turmoil in the stock market, Peter puts the market drop into historical context, underscoring how perception can overshadow reality when analyzing market moves:

But anyway, so the stock market yesterday was a big drop. The Dow at one point was down over 1,000 points, which I know is not that much when you’re talking about a Dow above 40,000. So a 1,000 point drop in the Dow is not what it used to be a couple of decades ago. Remember, the ’87 stock market crash, the big crash, was 508 points because the Dow was 2,800 or something like that. But we’ve had a lot of 1,000 point drops in the Dow, but they always grab the headline because it still sounds like a lot. It’s a big number.

The volatility was largely triggered by new tariff announcements. Peter voices concern over Trump’s latest tariff hike on Canadian aluminum and steel, outlining the downstream consequences for American businesses and consumers:

But we got some negative positive news on tariffs. First Trump is going to double the tariffs on Canadian aluminum and steel from 25% to 50%, which is a big problem for every company that needs steel and aluminum to make something. Those are important parts of automobiles, housing, appliances, aircraft. We use a lot of those metals, and now they’re going to be a lot more expensive. Trump announced that. The markets didn’t like that.

Peter argues that the widespread optimism around tariffs inflating the U.S. dollar was fundamentally flawed from the start. He reiterates his earlier warnings, now proven accurate, that protectionist tariffs would ultimately weaken, rather than strengthen, the dollar:

I said that as the dollar was rallying, and everybody was saying, ‘Oh, the dollar is going to go up because Trump’s going to impose tariffs, and the tariffs are good for the dollar.’ I kept saying, ‘No, they’re not.’ They’re not good for the dollar. Now that we actually have the tariffs and they’ve started, the dollar is tanking. Part of the reason that people thought that foreigners will pay the tariffs is they said, ‘Well, the dollar is going to go up, and so those imports are going to be cheaper because of the currency, and that will offset the tariff because the dollar will be so much stronger that we’ll get these products cheaper.’

Continuing his critique of misguided investment narratives, Peter takes aim at the crypto craze, ridiculing the notion that countries competing to amass Bitcoin constitutes sound economic policy:

The other nonsense they were saying is it’s going to be like a race, like an arms race. Once the U.S. starts buying Bitcoin, well, then every country is going to want to buy it. It’s going to be a race to see which country can get the most Bitcoin. That’s the race that you want to lose, right? Because whatever country has the least Bitcoin wins, right? Whoever has the most loses because you blow money buying nothing.

Peter emphasizes that the tide is turning in the marketplace, claiming vindication for his long-held view favoring foreign markets, commodities, gold, and gold mining stocks over U.S. domestic equities:

The entire Trump trade is reversing, and it’s playing out the way I believed it would in favor of foreign markets, commodities, gold, gold mining stocks, the opposite of what people expected. … People said, you know, I’m not worried now, Trump’s going to pay down the debt, the problems are solved, Trump’s going to make America great again, I don’t want to invest abroad. I don’t think I’m going to buy US stocks, and the absolute worst thing you could have done, because not only did you buy into the peak of an overvalued US market, and you’re already down considerably, but you’ve missed out on the rise in the foreign stocks, in gold stocks, and it’s just getting started.

Further illustrating the illogic of punitive trade barriers, Peter scrutinizes Trump’s hostile rhetoric against Canada, highlighting the inefficacy of such retaliations:

Donald Trump earlier today said that he was going to destroy– because he got really pissed off at Canada because they retaliated with some tariffs and then they threatened some export tariffs on energy, electricity, which comes from Canada down here. He got particularly offended and he said something like, ‘I’m going to destroy Canada. It’s going to be biblical. It’ll be in the history books. I’m going to destroy Canadian manufacturing.’ Well, how is he going to do that? Assuming that Trump made it impossible for Americans to buy anything coming out of Canada, it wouldn’t destroy Canadian manufacturing.

Finally, Peter reiterates his call to action, urging the U.S. to reject isolationist tariffs and instead focus on fostering genuine economic competitiveness rooted in sound fiscal policy, deregulation, and free markets:

What we need to do is to make America a more competitive place to manufacture without the tariffs. Then people will make the investments if it’s not artificial. We can’t be dependent on a barrier to competition. Of course, again, those barriers end up making a lot of our companies less competitive globally because now they have to buy their imported parts at a higher price and now they have to export it, and they’re not as competitive as foreign producers. We have to make America attractive on its own.

Peter goes into more depth on the crypto crash in his X Spaces. Be sure to check them out.