Economist Peter Schiff has urged China to resolve its trade deficit with the United States by dumping its U.S. Treasuries and dollars and using the proceeds to buy gold, which it would then use to back a revalued yuan. According to Schiff, this move would cause the dollar to crash against the yuan and U.S. interest rates to surge.

In an X post, Schiff, who has increasingly criticized the Trump administration’s economic policies, said this would also benefit Chinese consumers, who would be able to afford U.S.-made products.

“Chinese consumers will instantly be enriched, as purchasing power is transferred from the U.S. to China. The Chinese will then be able to afford all the goods China now ships to the U.S. They will also be able to buy a lot of stuff in the U.S., like our used cars, that Americans can no longer afford to maintain or drive. So, the Chinese will get to consume all the goods they produce,” Schiff stated.

According to Schiff, if China followed his advice, Americans, not the Chinese, would experience massive inflation and a collapse in living standards.

The economist’s comments came amid a trade war between the two economic giants, which escalated after U.S. President Donald Trump imposed reciprocal tariffs against more than 180 countries. This move prompted China to respond with a 34% tariff on all U.S. goods entering the Asian country.

Fears that the trade war would lead to price increases and ultimately recession have been dismissed by Trump’s trade adviser Peter Navarro. According to a British Broadcasting Corporation (BBC) report, Navarro described the global stock market decline as “a beautiful situation.” The trade adviser also repeated the Trump administration’s argument that a value-added tax (VAT) is a form of tariff used by the United States’ trade partners.

However, this assertion is slammed by Schiff, who insists that a VAT only applies to all goods sold, including those sourced locally. He said that imports into the U.S. are subject to state sales taxes. Meanwhile, some Trump backers, like billionaire Bill Ackman, have warned of “a self-induced economic nuclear winter” if the tariff policy is not reversed.

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