Peter Schiff Challenges US Dominance After Elon Musk's China Consumption Narrative — A 50% Drop In The Dollar Could Supercharge China's Global Consumer Base

Economist Peter Schiff is challenging conventional wisdom that China needs the United States more than vice versa, questioning just how essential U.S. consumer demand really is for China’s manufacturing engine, amid a surge in the global middle-class consumer base.

What Happened: On Sunday, Schiff, a vocal critic of President Donald Trump's tariff policies, pushed back against a growing pro-tariff narrative that claims China has no alternative buyers for its manufactured goods besides American consumers, in a post on X.

“It's said there's no way China can find buyers for its manufactured goods without U.S. consumers,” Schiff said. “But we're only 4% of the world's population.”

It's said there's no way China can find buyers for its manufactured goods without U.S. consumers. But we're only 4% of the world's population. If the dollar's exchange rate dropped by 50%, the savings and incomes of the other 96% would double, empowering China's other customers.

— Peter Schiff (@PeterSchiff) May 4, 2025

Schiff contends that the true constraint on global consumption is the artificially inflated U.S. dollar. He argues that if the dollar were to depreciate by 50% against a basket of global currencies, “the savings and incomes of the other 96% would double,” boosting the purchasing power of China's “other customers.”

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He explains this further by stating that demand in the U.S. is a function of the Dollar’s exchange rate. “If the dollar falls relative to other currencies, the purchasing power of Americans is transferred abroad,” Schiff says. In other words, as the dollar weakens, consumers in other countries gain greater purchasing power.

But U.S. demand is a function of the dollar's exchange rate. If the dollar falls relative to other currencies, the purchasing power of Americans is transferred abroad. What Americans can no longer afford is suddenly affordable by more non-U.S. consumers.

— Peter Schiff (@PeterSchiff) May 4, 2025

Recently, Tesla Inc. CEO, Elon Musk, said in a post on X that China was already a much bigger consumer of manufactured goods than the U.S. He added that “This year, Chinese consumers will buy more cars than America and Europe combined.”

This was in response to an article on X by hedge fund manager Ray Dalio, regarding how “the United States’ role as the world’s biggest consumer of manufactured goods and greatest producer of debt assets to finance its over-consumption is unsustainable.”

Correction: China is a much bigger consumer of manufactured goods than the United States.

This year, Chinese consumers will buy more cars than America and Europe combined.

— gorklon rust (@elonmusk) April 29, 2025

Why It Matters: The U.S. Dollar has been under pressure throughout the past month, slipping to a three-year low mid-April, before recovering some ground over the past week.

Analysts at Deutsche Bank AG have called it a “simultaneous collapse” of U.S. assets, with stocks, bonds, and the dollar all falling in tandem.

Schiff has repeatedly argued that a strong yuan and a weaker U.S. dollar may actually benefit Beijing by boosting domestic consumption, countering the narrative that China would avoid dumping U.S. Treasuries to protect its own economy.

He also said, early last month, that China might be selling its U.S. Dollar and Treasury holdings, while stocking up on the Euro and Bunds. “This will allow the [European Central Bank] to keep interest rates and inflation low and China to sell more goods to the EU,” according to Schiff.

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