Show Notes
Many people have noted the precipitous drop in the stock market and their own IRAs since President Donald Trump unveiled a full slate of eye-popping tariffs last Friday. In the “Tariff Panic Week” that’s followed, many media accounts have suggested that the Trump administration’s actions are reckless, and unprovoked by other economic factors.
On the latest episode of The Drill Down podcast, co-hosts Peter Schweizer and Eric Eggers explain the tariffs as part of the Trump administration’s broader strategy for improving the country’s economic health.
“It has been a tumultuous last couple of days and a costly one to stock markets and the portfolios of many, including many people who are listening to this podcast,” says Eric Eggers. “But what we want to do is put what’s happening as a reaction to the tariffs and what the Trump administration’s policies seem to be in a much larger picture.”
Tariffs themselves have been embraced by numerous Democrats, as Schweizer and Eggers point out in a montage featuring Chuck Schumer, Bernie Sanders, Barack Obama and Nancy Pelosi.
“Why the switch?” Schweizer asks. Because the Democrats constituents have changed.
“The Democrats used to be the party that Wall Street didn’t really like,” Schweizer says. “That is now reversed. So, that’s where the money is coming from for the Democrats.”
The tariffs are designed, in part, to bring in more revenue to help minimize the US federal deficit- a deficit exacerbated by dramatic increases in federal spending.
“We were spending money like drunken sailors, and that’s kind of an insult to drunken sailors because we spent so much,” Schweizer says. The US spent $4.4 trillion in 2019, rising to $6.8 trillion in 2024. “You go to 2024, we were spending 50 percent more than we spent in 2019, while the population growth was 3 percent. It was all a façade… and now you’ve got to deflate the balloon a little bit.”
The hosts highlight what Treasury Secretary Scott Bessent noted over the weekend, that the yield on Treasury bills has dropped as well. It was at 4.8 percent in January and fell to below 4 percent in the wake of the tariff news. This will exert downward pressure on interest rates for things like consumer credit and mortgages at a time when consumer debt is at historic highs. Approximately $9.2 trillion in federal debt will mature in 2025, and lower rates could save the government billions in interest payments as well.
Schweizer and Eggers also note the Trump administration’s argument that, from a national security standpoint, incentivizing more domestic production of certain items makes a lot of sense.
“(Treasury Secretary) Bessent is saying we learned during Covid how much we were dependent on China to produce these products, and it is strategically bad to rely on an adversary for such important goods,” Eggers says, “So, if the goal of these tariffs is to help increase US production capacity, they want to bring China to the table. They want China to consume more and produce less. They want the US to produce more and have China consume less.”
The trade element of this issue is, of course, that most economists dislike tariffs because of the protectionism and inefficiency they encourage. Schweizer points out, though, that the tariffs are reciprocal, imposed on countries that have tariffs or similar trade barriers against US goods. China has many of these, and the hosts mention the 200 percent tariff imposed on American dairy products by Canada as examples of this.
The administration’s hope on the trade side is that tariffs will force other countries to reduce these barriers. Schweizer says, “I think we’re going to see a lot of encouraging movement going forward. And we’re going to actually go towards what everybody says they want, which is a world with open, free, and fair trade. I think this is the best shot at moving in that direction.”
“It’s a heavy lift. I mean, you’re going to get squealing and opposition,” Schweizer says. “But people are coming to the table because the most powerful asset we have is access to our market. People want to sell in the United States because we are spenders. We have a consumer market that is unmatched. And we need to use that in a positive way to make sure that our goods are able to get into these foreign markets,” he said.
