VideoPeter SchiffPeter Schiff

Tariffs Failed. Imports Hit a Record. France Is Rioting. We're Next.

The presenter links record U.S. imports and a widening trade deficit to tariff front-running, and argues tariffs have not reduced purchases or restored domestic production. He also focuses on fiscal pressures in the United States and France, including rising prices, debt, government spending, and bond-market risks. Historical examples inform his concerns about war financing, central-bank policy, and the consequences of political and military decisions.

Trade PolicySupply ChainsGovernment DebtInflationFiscal PolicyInterest Rates

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Key Takeaways

U.S. equities and Brazilian stocks both advanced, but the episodes’ market backdrops differed: the S&P 500 and Nasdaq reached records even though about 60% of S&P 500 stocks remained more than 20% below their highs, while Brazil’s rally followed polls shifting toward Flavio Bolsonaro and his growth, tax-cut, and budgeting message. The presenter says a slight pullback in U.S. yields may have helped the U.S. rally.

The August U.S. trade deficit reached $105.6 billion, above estimates, while imports hit a record despite tariffs. The presenter says tariff front-running contributed to unusually large deficits early in 2025, and links the record capital-goods deficit partly to equipment for AI data-center construction.

The presenter expects the trade deficit to keep worsening through the rest of the year and probably into the next, despite the post-Liberation Day decline that he attributes to imports having been brought forward. He says deficits under Trump may exceed those under any prior president, contrasting that forecast with Trump’s stated view that trade deficits represent losses.

The presenter’s fiscal critique centers on the gap between promises and outcomes: he says Republicans’ two years controlling Congress brought higher deficits, argues Trump did not intend to cut spending through DOGE, and says Scott Bessent has shifted from an initial focus on paying down debt to growth without a debt-reduction plan. He estimates the deficit at almost 8% of GDP using the increase in national debt, explicitly distinguishing that estimate from the government-reported measure.

The presenter argues that Trump could have used vetoes of continuing resolutions and debt-ceiling increases as leverage because overriding a veto requires two-thirds votes in both chambers; he contends that failure to override a debt-ceiling veto would have forced spending cuts and a balanced budget. He also argues that relying on growth is not a dependable substitute for a debt-reduction plan.

The presenter says the ISM Services Prices Paid Index rose to 74 in September, its highest since July 2022, with all 17 surveyed industries reporting higher input prices. He warns that worsening inflation and trade problems could hurt Republicans’ midterm prospects, and separately predicts a future midterm-cycle clash between Democrats seeking more spending and a bond market pushing back, with inflation potentially returning.

MARKETS

Stocks And Yields — The S&P 500 and Nasdaq closed at record highs, but the Dow and Russell 2000 did not. The presenter says about 60% of S&P 500 stocks were more than 20% below their highs. The 10-year Treasury yield was 5.28% and the 30-year yield was 5.66%; he says a slight pullback in yields may have helped stocks rally.

“Well, after flirting with all-time record highs, both the S&P and the Nasdaq not only made new intra-day highs today, but they also closed at record highs…”—

FRANCE-EUROPE

French Bond Pressure — The presenter reports a 4.75% yield on France’s 10-year bond and a 3.45% yield on Germany’s 10-year Bund, putting the French-German spread at about 1.5 percentage points. He says French yields could rise further.

“Right now, the, yield on the French 10-year, bond is 4.75%…”—

Debt And Deficits — The presenter cites France’s debt-to-GDP ratio at 119%, versus 123% for the United States and 64.4% for Germany. He reports France’s official deficit at 5.1% of GDP and estimates the actual figure at about 5.4%, compared with an official U.S. deficit of 5.8%.

“And so why is the default risk higher, with France? Well, the debt-to-GDP in France is 119%. That's almost as bad as ours. You know, we're, we're 123%…”—

Spending Cuts — The presenter says French government spending is 57% of GDP, compared with just under 40% for total U.S. government spending across all levels. France is trying to reduce its deficit to 5% of GDP, a modest target; he says it must cut spending to narrow the spread between French and German government bonds.

“So we're way, way worse than France, yet France is already starting to have the beginnings of a crisis…”—

HISTORY-WAR

War Financing — The presenter argues that money created to finance World War I helped fuel the 1920s stock-market bubble, which burst in 1929. He says the government’s need to sell bonds led to an amendment of the Federal Reserve Act allowing the Fed to buy Treasuries.

“In fact, the money that we created to pay for that war, ended up really causing the stock market bubble in, in the '20s that burst in 1929…”—

Versailles And Hitler — The presenter argues that the Treaty of Versailles, harsh reparations imposed on Germany, and hyperinflation helped create conditions for Hitler’s rise to power.

“What allowed Hitler to rise to power, was the, the Treaty of Versailles and the, the harsh reparations that were imposed on Germany and the hyperinflation…”—

War Powers — The presenter argues that Congress, rather than one president, should decide whether the United States goes to war. He says Congress is a deliberative body that can debate the decision.

“If Congress declares a war, okay, now he commands the troops, but he cannot command the troops into war. He can only command the troops once there is a war…”—

TRADE

Record Deficit — The August U.S. trade deficit was $105.6 billion, above the $99 billion forecast and the $103 billion high end of estimates. July’s deficit was revised up to $92.8 billion from $88.6 billion. The presenter calls August the fifth-largest monthly deficit in history and the worst outside the first three months of 2025.

“So the forecast was for a $99 billion August trade deficit And the number came out at 105.6 billion. So well above estimates…”—

Import Pull-Forward — The presenter says importers pulled purchases forward to avoid tariffs, contributing to the unusually large deficits in the first three months of 2025. He says deficits declined after Liberation Day because many imports had already arrived.

“Of course, mostly on Trump's watch. I went over this in the last podcast, but that was all the front-running for the tariffs…”—

U.S.-FISCAL

Services Prices — The ISM Services Index eased to 54.9 in September from 55.4 in August but remained above 50. Its Prices Paid Index rose from 72.6 to 74, the highest since July 2022; all 17 surveyed industries reported rising input prices. The presenter says worsening inflation and trade problems could hurt Republicans’ midterm prospects.

“Now, it didn't crash. It's still above 50, so it's not technically contraction, but it was 55.4 in the prior month, in August…”—

GOP Fiscal Record — The presenter argues that Republicans’ two years controlling Congress brought higher deficits and the “big beautiful bill,” which he calls a disaster.

“Yes, we didn't have a Democratic Congress in 2025 and 2026, but we're gonna have it in 2027, 2028…”—

Veto Leverage — The presenter argues Trump could have vetoed continuing resolutions and debt-ceiling increases. Overriding a veto requires a two-thirds vote in both chambers; he contends that if Congress could not override a debt-ceiling veto, it would have had to cut spending and balance the budget.

“All the continuing resolutions. He could have vetoed the, increases in the debt ceiling…”—

Global Debt Unrest

The host opens by warning that fiscal and social unrest is not confined to the United States, pointing to France as an early example of the political backlash to spending cuts.

Stocks Hit Records

The S&P 500 and Nasdaq set closing records, but the host says gains remain concentrated in a few stocks while most S&P constituents lag; a slight dip in bond yields may have helped.

Trade Deficit Shock

August's total U.S. trade deficit exceeded forecasts and reached a historically extreme level, with revisions worsening July's figure and imports of capital goods contributing to the result.

Tariffs Backfire

The host argues tariff front-running explains earlier import swings, but August imports reached a record despite tariffs, which raised costs without reducing purchases or restoring domestic production.

Inflation Signals Rising

The ISM services price index rose to its highest level since July 2022, with surveyed industries reporting rising input costs; the host says inflation has worsened under Trump.

GOP Spending Failure

The host criticizes Republicans for using their congressional majority to increase deficits, arguing that the spending legislation squandered a chance to improve the fiscal outlook.

Veto Power Missed

He says Trump could have used presidential vetoes to force Congress to negotiate spending cuts or balance the budget, but instead supported eliminating the debt ceiling.

MAGA Loyalty Machine

The host portrays Trump as using loyalty and primary challenges to control Republicans, criticizes alleged self-enrichment by the Trump family, and says the party's record may help Democrats move further left.

France Bond Spread Alarm

French bond yields and their spread over German bonds signal rising creditor concern, which the host links to France's heavy debt, large deficits, and weaker fiscal position than Germany.

France Cuts Spark Protests

France faces protests as modest proposals to reduce deficits meet public resistance; students demand more education spending even as the government says it must cut outlays.

Welfare State Backlash

The host attributes resistance to cuts less to immigration than to a deeply rooted welfare state in which citizens expect continued government benefits.

Pension Changes Explained

France's pension proposal would slow benefit increases for some recipients rather than cut their pensions, a limited measure the host says is being presented as restraint.

Healthcare and Sick Pay Tweaks

Other proposals would slow healthcare spending growth and tighten sick-pay and work-injury benefits, but the host argues these are small adjustments rather than meaningful cuts.

Freezes and Token Cuts

The French plan also includes nominal spending limits and modest cuts to selected programs; the host says these measures are unlikely to solve the underlying fiscal problem.

Debt Crisis and ECB Limits

The host warns that protests over even limited cuts could spread, and says Americans would likewise resist reductions to Social Security and other benefits.

Eurozone Moral Hazard

France may face a debt crisis if it fails to rein in spending, while the European Central Bank—not the French government—controls euro creation.

ECB Bailouts and Inflation

The host argues the euro's fiscal rules created moral hazard because governments could borrow heavily while expecting the costs to be shared across the currency union.

France as US Warning

He says the ECB's pandemic-era bond buying bailed out member governments and that monetary stimulus justified by undershooting its inflation target helped produce inflation above that target.

Brazil Election Market Reaction

France's fiscal conflict serves as a warning for the United States: the host expects bond-market pressure to collide with demands for more spending and could lead to unrest.

Tucker Interview on War

Brazilian markets rallied as Flavio Bolsonaro, a more market-friendly challenger, gained ground; the host sees anti-incumbency and desire for change as important forces.

Why WWI Led to WWII

Discussing Tucker Carlson's interview with Jacob Rees-Mogg, the host agrees World War I helped cause World War II but says the central mistake was America's entry into the first war.

Unintended War Consequences

The host argues U.S. involvement in World War I helped create conditions for the Treaty of Versailles, German hyperinflation, and the rise of the Nazis, with disastrous consequences.

Wrap Up and Gold Pitch

He stresses the unintended consequences of war and argues that decisions to use force should be deliberative, Congress-led, and treated as a last resort.

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