Investor Steve Eisman, best known for betting against the housing market in the lead-up to the 2008 financial crisis, issued a sharp warning on what he sees as the single-biggest threat to the U.S. economy.
What Happened: On The Real Eisman Playbook podcast on Friday, Eisman said, “The underlying fundamentals of the United States economy are quite strong,” referring to the 3% growth in GDP during the second quarter, which marks a rebound from the prior quarter.
According to Eisman, the only thing that can “derail” this momentum, is “a trade war,” referring to a slew of new tariffs that were announced by President Donald Trump over the past week.
“Now, the deadline for trade negotiations was today, August 1. And today, Friday morning, President Trump announced a slew of tariffs with countries that have not reached an agreement with the United States,” he says, highlighting countries such as Cambodia, Thailand and Switzerland, which were hit with new rates, 19%, 20% and 39%, respectively.
Eisman notes that the implications of these tariffs are long-term. “This week makes clear that the story is far from over,” he says. “Without a doubt the global economy will be functioning with a higher level of tariffs than before.”
Why It Matters: Economist Peter Schiff has echoed similar concerns over the weekend, pushing back against Trump’s claims that the U.S. was going to get rich from tariff revenues.
In a post on X, Schiff said, “paying taxes doesn’t make us rich,” adding that taxes merely “redistribute wealth, they don’t create it,” while once again reiterating a claim he’s made several times in the past, that tariffs will be paid by American companies and consumers.
Trump recently suggested that part of the tariff revenue could be returned to Americans in the form of rebate checks. “We're thinking about a little rebate. But the big thing we want to do is pay down debt. But we're thinking about a rebate,” he said last week.
Photo Courtesy: Dilok Klaisataporn on Shutterstock.com
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