Economist Warns 20%-40% Tariffs Could Trigger 50% Selloff in US Dollar, Treasuries, Stocks

Economist Peter Schiff has issued a warning about the potential for a sharp selloff in the U.S. dollar, Treasuries, and stocks. Schiff's concerns are rooted in the resurgence of trade tensions and inflationary risks, which he believes could trigger a significant economic fallout. According to Schiff, investors are likely to realize that "reciprocal" tariffs are returning, leading to a repeat of the sharp selloff experienced in these assets.

Schiff's warnings come at a time when global markets are already grappling with uncertainty. The reimposition of tariffs, particularly those targeting multiple countries, has raised fears of retaliatory measures that could further destabilize the global economy. Critics have expressed concern that such actions could provoke a cycle of retaliatory tariffs, exacerbating existing trade tensions and adding to the economic strain.

The potential impact of these developments on the U.S. dollar, Treasuries, and stocks is significant. A sharp selloff in these assets could have far-reaching consequences, affecting not only domestic markets but also global financial stability. Schiff's predictions highlight the interconnected nature of the global economy and the potential for trade policies to have ripple effects across various asset classes.

Investors are closely monitoring these developments, as the return of tariffs could lead to a shift in market sentiment. The uncertainty surrounding trade policies and their potential impact on inflation and economic growth has created a challenging environment for investors. Schiff's warnings serve as a reminder of the need for vigilance and preparedness in the face of potential market volatility.

Schiff also challenged the narrative surrounding President Donald Trump’s recent claims about a trade agreement with Vietnam. Trump stated the deal would impose tariffs of 20%–40% on Vietnamese goods. Schiff refuted that logic, explaining: “Vietnam won’t pay us anything. Americans will pay the U.S. government 20%–40% if they buy goods made in Vietnam, while the Vietnamese will pay their government nothing to buy goods from us.” His remarks spotlight the economic burden on U.S. consumers, not foreign exporters.

On fiscal policy, Schiff argued that Trump’s tax cuts are structurally flawed, as they do not address the supply side of the economy. The economist warned that such measures will ultimately strain the economy: “Instead they’ll result in higher long-term interest rates and inflation.” Schiff emphasized that sustainable growth requires incentives for savings and capital investment, not merely short-term consumer stimulus. His perspective diverges from those who advocate for demand-side interventions, but it underscores a deepening divide in views over how to navigate economic headwinds.

In addition to the economic implications, Schiff's comments also touch on the broader debate surrounding Bitcoin and its role as a safe haven asset. While some investors view Bitcoin as a digital gold, Schiff's skepticism about its potential as a safe haven highlights the ongoing debate about its true value and utility. The potential for a market meltdown, as warned by Schiff, raises questions about how Bitcoin and other cryptocurrencies might perform in such an environment.

Schiff's warnings underscore the importance of staying informed and adaptable in the face of changing market conditions. As trade tensions and inflationary risks continue to evolve, investors will need to navigate these challenges with caution and a clear understanding of the potential risks and opportunities. Schiff's insights provide a valuable perspective on the current state of the market and the potential for significant shifts in the coming months.