Top American economist warns: Trump's tariffs could expose US consumer as a paper tiger

Peter Schiff, Chief Economist & Global Strategist at Europac, has raised alarm over the impact of US President Donald Trump's decision to double tariffs on Indian imports to 50%. "Imports from India now face 50% tariffs. Trump may end up exposing the US consumer as a paper tiger," he wrote on Wednesday. "A dollar crash will impoverish Americans but enrich foreign consumers, particularly the BRICs. The death of the US consumer means the birth of the emerging market consumer."

The economist's comments reflect growing concerns about the American economy's dependency on cheap imports and the strength of the dollar, which could soon face a severe crisis. As tariffs make imported goods more expensive for American consumers, the purchasing power of US citizens could be severely eroded. Schiff suggests that this policy shift exposes the underlying fragility of the US economy, particularly for consumers who depend on affordable imports.

He elaborated further, noting that "Trump's move will not only raise prices but could set in motion a catastrophic crash of the U.S. dollar." According to Schiff, this would lead to widespread impoverishment of the American middle class while benefiting emerging market economies, notably the BRICS nations, whose consumer base would rise as the US consumer market falters.

Reacting to Schiff's remarks, Justin Bechler, a well-known crypto influencer, warned that tariffs like the ones imposed on Indian goods could accelerate deglobalisation. He suggested, "Tariffs on imports like those from India accelerate deglobalization but what you’re ignoring is that as BRICS shifts to Bitcoin for trade settlement, the balance of global consumption and monetary power begins to tilt in their favor. If BRICS adopts Bitcoin, they win." 

However, Schiff remained unconvinced by Bechler's prediction, arguing, "They won't use Bitcoin. They will use their own currencies or gold. Bitcoin will have no role."

In response to Trump's moves, Schiff further criticized the administration, saying, "Trump insists the US is the hottest country in the world now. If it's hot, it's only because he's helping to burn it down. The US dollar is on the verge of collapse, which will impoverish the vast majority of Americans whose living standards depend on the overvalued dollar."

The latest escalation in US-India trade tensions is part of Trump's broader tariff offensive, which includes a 50% duty on Indian goods due to New Delhi's continued imports of Russian oil. This move has been widely criticized by India, which decried the tariffs as "unfair, unjustified and unreasonable," signaling a significant strain on bilateral relations. The tariffs are set to severely impact several sectors in India, including textiles, leather, and marine exports.

The US has singled out India for this heavy penalty while other nations, including China and Turkey, have escaped similar tariffs despite also importing Russian oil. India's External Affairs Ministry has responded by reaffirming that these imports are based on market factors and are crucial to ensuring the energy security of over 1.4 billion people.

According to experts, these tariffs are likely to have a profound effect on India's $86 billion worth of exports to the US, potentially cutting off most Indian goods from the American market, while competitors such as Bangladesh, Myanmar, and Malaysia will face lower duties.