Schiff warns of 50% market crash

Economist Peter Schiff has issued a stark warning about the potential economic consequences of President Donald Trump's tariff policies, predicting a devastating impact on the U.S. retail sector and a severe market downturn.  

Schiff, known for his critical views on U.S. economic policies, believes that if Trump's tariffs remain in place, they will trigger a wave of retail bankruptcies, widespread job losses, and a significant increase in commercial loan defaults.  

This scenario could lead to a market crash of up to 50%, which he argues would be insufficient to reflect the severity of the impending recession.

Schiff emphasised that tariffs act as a tax on American consumers, leading to higher prices and reduced purchasing power.

He noted that while the tariffs might reduce the U.S. trade deficit by decreasing imports, this would come at the cost of weakened consumer spending and economic activity.

The economist also highlighted that financial markets are underestimating the risk of a deep recession, which he believes could be the worst since the Great Depression.

"The stock market hasn’t come close to pricing in the recession that awaits if tariffs stay in place. Even with the drop, the market is still expensive assuming recession is avoided," Schiff stated.

Schiff's warnings come as JPMorgan has raised the likelihood of a U.S. recession to 60% following Trump's tariff announcements.

His predictions are part of a broader concern about the economic implications of ongoing trade tensions between the U.S. and other countries.

In response to these economic challenges, Schiff has suggested that companies like Nike should focus on international markets to mitigate the impact of tariffs, as domestic sales are likely to decline due to higher prices.