Step 1: Step 1
That's it. You're done.
I figure having the tasty-smelling peanut butter so close yet unobtainable irritates the squirrels and causes them to lose their natural caution in an effort to get at the goodies.
You could substitute a piece of copper or steel tubing, it just has to be small enough so the squirrel can't get at the peanut butter without working pretty hard.
First day I tried it I got a squirrel in about an hour whereas the previous five days I'd had the peanut butter cleanly licked off the trigger bar and no squirrel to show for it. Got another squirrel the following day and my wife's tomatoes have been unmolested since.