Guest Post by Peter Schiff

If the U.S. is going to start building factories and developing the necessary infrastructure and supply chains, what are we going to stop doing to pay for it? One thing is shopping. Americans are going to have to sharply reduce spending and increase savings.

But this means a severe recession with exploding budget deficits as spending rises and tax revenue plunges. Tariffs won’t help much as if consumers buy less, imports fall sharply, undercutting tax revenue. That means deficits will crowd out all the savings necessary to finance the re-industrialization of America.

Also, as foreign investors will no longer be recycling their large trade surpluses into our treasury market, who will by the $26 trillion in existing Treasuries that will mature over the next four years? If Americans have to buy all that debt, where will the money come from to build factories?

The only way to enable the necessary capital investment will be for the government to slash spending during the recession, including on entitlements and defense, and likely default on the national debt. The road back to independence is much rockier than the President thinks.