Brace for higher prices
Tariffs are pitched as a way to boost domestic manufacturing by making imports more expensive, potentially encouraging local production. But Schiff warns that even if more goods are made in the U.S., the outcome won’t necessarily be good news for consumers.
“If we are going to make the products we now import, which is something we will be forced to do eventually anyway, it means prices will be a lot higher,” he cautioned noting that building new factories and training workers is expensive.
Schiff isn’t alone in his concerns. While tariffs can shield domestic industries from foreign competition, they often lead to higher costs for consumers as businesses pass on the added expenses.
This trade-off has long been debated by economists, who see tariffs as a double-edged sword — offering some protection to local producers but at the expense of affordability.
It’s not the first time Trump has employed tariffs. He did so in 2018, during his first term in office. The following year, economists from the Federal Reserve Bank of New York, Princeton University, and Columbia University published a joint study analyzing the costs and benefits of Trump’s tariffs.
Their conclusion was clear: “The tariff revenue the U.S. is now collecting is insufficient to compensate [for] the losses being borne by the consumers of imports.”
In fact, they found that by the end of 2018, U.S. consumers were experiencing a loss in real income of $1.4 billion — per month — as a direct result of the tariffs.
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Learn MoreSafe haven in an economic storm
The announcement of sweeping tariffs has sent shockwaves through financial markets, but one asset has remained remarkably resilient — gold.
“Gold added slightly to yesterday's big gain, hitting a new record high above $2,820 and closing the day, week, and month above $2,800 for the first time ever,” Schiff wrote on Jan. 31. “Yet true to form, gold stocks gave up about 40% of yesterday's gains. That means more big gains for gold are coming.”
Gold has indeed been on a tear, surging 39% over the past year as investors flock to it as a hedge against inflation and economic uncertainty.
There are many ways to gain exposure to the precious metal. Investors can purchase gold bullion, own shares of gold mining companies, invest in gold ETFs and even tap into potential tax advantages through a gold IRA.
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