Newsmax guest: “Trump doesn't understand who pays the tariffs. ... They're paid for by the middle class and the poor.”
Peter Schiff: “China doesn't pay our tariffs. Canada and Mexico don't pay our tariffs. Americans, hard working middle class Americans pay 100% of those tariffs.”
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Citation
From the April 23, 2025, edition of Newsmax's Rob Schmitt Tonight
ROB SCHMITT (HOST): I don't think Peter agrees that we should re-industrialize this country. Last time I talked to you, Peter, you said that that's an impossibility. Is that is that still, you —
PETER SCHIFF (GUEST): No, we need to do it. We're going to have to do it eventually. So we might as well start.
But the problem is, in order to do that, the entire phony consumer based credit bubble economy that we've built needs to come crashing down. If we're going to rebuild factories, where does the money going to come from to do that? We're talking about trillions of dollars that have to be invested. And how are we going to do that if we have to finance two to three trillion dollar a year government deficits? Because part of the trade off that we've gotten, not only has China given us cheap goods, but they've loaned us trillions of dollars because they recycle their trade surpluses. So if we're going to attack these imbalances, not only are we going to have to finance our own industrial rebuilding, but we're going to have to finance our own government deficits. So how is that going to happen?
We're going to have to have a substantial decline in our standard of living. Americans are going to have to completely change the way they live. We're going to have to tear up our credit cards, live within our means, save a lot of money. And it means a lot of companies, unfortunately, are going to have to go bankrupt. They're going to have to be a lot of debt defaults. We're going to need much higher interest rates. You know, Trump keeps talking about lower interest rates. Well, one of the reasons we have such low interest rates is because foreigners are financing our trade deficits. So if we have to build what we now import, we're going to need much higher interest rates to encourage the savings to make the capital investments possible. So this is a huge transformation that's going to take many, many years, maybe decades to unfold. And it's going to be very expensive. It's worth it.
...
SCHMITT: Understood. Batya, I want to give you the final word.
BATYA UNGAR SARGON (GUEST): He just described why it is so important, why President Trump is doing this. He is actually doing this without spending any money. He is getting industry to spend its own money with the tariffs, because the tariffs make it more expensive to import from China.
SCHMITT: Peter — but she she has a good point. There's a lot of companies that are dumping money back in. They've already gotten trillions in reinvestment right now.
SCHIFF: More money is being yanked out of the country. They focus on these investments, but money is being pulled out of the US market right now. That's why —
SCHMITT: You see dollar yields going up —
SCHIFF: And that's why our treasuries — see, Trump doesn't understand who pays the tariffs. He thinks it's external revenue. The reason we have an income tax is because the government made a deal with the middle class by saying, if you allow the income tax and you let us amend the Constitution, we will eliminate the tariffs that are paid for by the middle class and the poor, and we will replace tariffs with an income tax that will be paid exclusively by the rich. So tariffs are a direct — are an indirect tax, but they're paid for by the middle class and the poor. China doesn't pay our tariffs. Canada and Mexico don't pay our tariffs. Americans, hard working middle class Americans pay 100% of those tariffs.
SCHMITT: Gotta leave it there.