Barry Habib breaks down Trump’s tariff overhaul—slashing rates globally while hiking them on China—sparking a $2.9K Dow surge, framing it as a debt-fighting "consumption tax" on imports amid $30T+ U.S. debt. He calls it a chess move to pressure Beijing, with Treasury Secretary Bessant’s stock delisting threat adding leverage, while dismissing market euphoria as fleeting due to program trading risks. Gold’s surge as a hedge underscores Habib’s skepticism of sustained gains, predicting EU retaliation will fade as U.S.-China tensions escalate. The shift signals Trump’s anti-elite, pro-middle-class pivot, with housing and trade policies targeting systemic imbalances. [Automatically generated summary]
At Manhattan University, a graduate degree is not out of reach.
You'll gain real-world skills, credentials, employers' value, and connections to New York City's top companies.
Choose from their new master of science degrees in healthcare, informatics, digital marketing and analytics, business analytics, or financial analytics.
All built around hands-on learning and industry partnerships.
Graduate ready to lead, not just work.
Take the next step at manhattan.edu/slash graduate.
Manhattan University.
Lead the future.
You're back in the Stone Zone.
Joining us now, Barry Habib.
He is the chief executive officer of MBS Highway.
He's an American entrepreneur and a frequent media source when it comes to his expertise on mortgages and the housing market.
But I call him an economic guru because he is so much more than an expert on housing and mortgage.
He is a finger on the pulse of the economy and how it really works.
And what I love about Barry is he's able to make complicated things understandable to the average citizen.
So, Barry, welcome back into the Stone Zone.
Thanks, Roger.
It's always wonderful to be with you.
So there's a lot of disinformation out there.
President Donald Trump moving ahead like the stalwart that he is on one of the prongs of his plan to revive the American middle class and return prosperity and jobs and opportunity to the country.
President Trump today announced he is temporarily lowering tariffs on every nation except for China, whose tariff he is raising.
How do you expect the American economy will respond to higher tariffs on China?
Well, if you go by the stock market as a gauge, the stock market really liked it.
We went from a stock market that was to the downside to finishing the day up on the Dow, you know, 2,962 points.
That's one of the biggest turnarounds and dollar and point changes that I can recall seeing.
So it's being cheered on by the marketplace, I guess, feeling that the economy will do very well.
You know, Roger, these tariffs, we've been seeing a lot of market movement back and forth as the headlines come out.
It's creating a lot of uncertainty.
And that's the main thing right now is just people are uncertain.
And the media plays checkers.
They don't play chess.
What I'd like to do with you is take a deeper look at this stuff and maybe what could be driving some of the reasons and rationale as to how these tariffs have been implemented.
Okay, well, so first off, when we take a look at tariffs, why are we doing this?
I think many people will agree that the path we were on was unsustainable.
To have the large amount of debts that we have, the large deficit that we have, over $2 trillion and $30 trillion plus in debt, greater than our GDP, more than 100% of GDP.
These things don't lead to good outcomes.
And we could have made changes, but those days are gone.
The Biden administration, they put us in a pretty big hole.
Now, it's unfortunate that we're here, but the key is, is how do we fix it?
So what are our options?
Option one, can we cut spending enough?
Well, when you think about the things that are kind of must spends, like you have to spend on military, the interest on the debt, Social Security, Medicare, Medicaid, when you take that, it's really the lion's share of what we spend.
The amount that's left for discretionary spending, while it is sizable, it's just you can't cut that much out of it to narrow the gap.
So, okay, what else can you do?
You can raise taxes, but the top 10% are literally keeping our economy going right now.
They represent about 80% of economic activity.
And therefore, if you tax them, you will send the economy into a tailspin.
However, it's even if you took 100% of what they earned, you still wouldn't close the gap on what the deficit is.
The deficit is just that big.
So, what else can you do?
Well, of that tax, like many people have in other countries, if you've traveled, you've experienced that called value-added tax.
It's a tax on consumption.
When you buy something, it's like a sales tax, but to a greater extent.
Well, we don't, I don't think at this point in time have the appetite for it, but this is a form of that on imported goods.
So, in trying to do this, you're trying to raise revenue and take in revenue to reduce the deficit, and you can do it in a sizable manner without having to go to extremes on taxing people to hurt the economy or cutting vital things that are things that we depend upon or cutting the military too thin.
So, it's understandable.
However, it does have a downside because what happens now is imported goods could wind up costing more, but people don't understand how it works.
They see the headlines, they hear all this crap, and the negative media bias and anything that Trump does, they want to criticize.
So, it's easy to take pot shots, but let's take a little bit of a dive where people don't understand it.
So, who pays this?
It is not paid by the country.
So, if you put a tax on an import tax on Vietnam, Vietnam doesn't pay it.
So, when they send something to us, it is the importer.
XYZ company wants to buy these shirts or clothing or dress or pants from Vietnam.
They buy it.
They pay the tax.
It's like when you go to a store and you pay a sales tax.
So, that's what happens.
You make that tax payment from the importer.
Now, the importer has a decision to make.
That item that used to cost $100 now might cost them, let's say it's a 20% tax, now cost them $120.
Do they have the power to go ahead and send that $20 increase on to their wholesaler or whomever they are selling it to?
Maybe they do.
But when they do now, that wholesaler makes a profit on top of it to the retailer.
Maybe, I don't know, that's 20%.
And then on top of that, the retailer might have 100% markup when they sell it.
So the wholesalers' profit, the retailer's profit are not tariffed.
They don't get tariffed.
So even if there's a 20% tariff, the consumer may only see something closer to 5%.
And I'm not saying 5% is insignificant, but it's important to understand this as to how much it should be.
Is it inflationary?
Only one time.
It's not like normal inflation, which is persistent.
It's a one-time price adjustment.
So now that we understand this, what's the idea here?
We did an analysis, Roger.
I sent it to you on every country's percentage of GDP that what they export to us.
And it is very significant.
So that's why a lot of countries want to come and make deals with us.
Now, it takes a little time for them to feel the pain, which is why what President Trump is trying to do is play tests here and not checkers.
Now, China is a different story.
And we are seeing an escalation in trade war come back and forth between the U.S. and China.
The one major card that could be played by the U.S. is, what if you delisted Chinese stocks and robbed them of the ability to have capital for their companies in China that comes from the U.S.?
That could be a major card.
Scott Bessant, when asked about this, said everything is on the table.
So that just kind of gives you an outline of where we are and what the mindset is.
And obviously, undertone of this is, of course, we want a level and more fair playing field of trade because President Trump, and rightfully so, feels like there has not been fairness in trade.
So you could say, hey, look, I don't want to rock the boat.
Even though I'm getting screwed here, I don't want to go through any pain, but then you're on that unsustainable path.
Or you could say, let's make this more fair.
Let's raise some revenue.
It means we go under a little bit of pain here initially, but longer term it's fixed because if you don't do anything, it just gets worse and then you could have a crisis.
Rural Americans deserve access to the best our nation has to offer, especially when it comes to health care.
Rural Healthcare Crisis00:06:38
Across every state and every community, America's rural hospitals are the first line of defense, protecting our families, neighbors, and loved ones.
No matter where you live, hospital care doesn't clock out.
They're there 24 hours a day, seven days a week, 365 days a year.
Each year, America's over 5,000 hospitals care for millions of patients, providing 24-7 emergency care, delivering babies, cancer treatments, and other life-saving care that patients rely on.
Behind every one of those patients are doctors, nurses, and caregivers working tirelessly to keep people healthy and safe.
Hospitals are our community's lifelines.
They employ our neighbors and keep our families health.
But now, some in Congress are threatening access to care.
Tell Congress, protect patient care to keep America strong.
Don't cut rural health care.
I watched Secretary Bessant did a press stand-up outside the White House not long ago, a couple of hours ago.
I am really in awe at this guy's skills as a communicator.
I think he is a very reassuring voice of calm.
I mean, I know him and I know him to be an outside-the-box thinker who is completely loyal to the president and completely committed to this plan.
The New Republic ran a totally baseless article the other day saying he was so upset by the president's economic plan that he was thinking of resigning.
I spoke to Besson myself Sunday night, whole cloth, nothing to it whatsoever.
He is deeply committed to the president's plan, and he gave me a number of reasons why he thought it would work in the long term.
But you're right, Trump is playing the long game.
Now, I also saw Secretary of Commerce Luttnick on the Sunday shows last Sunday.
My takeaway was not candidly as positive.
He was entertaining, but he didn't have the reassuring calm and confidence.
And actually, Besson's more like you, Barry.
He takes complicated issues and he makes them understandable to the average consumer and the average American.
That's a very important key.
And I had the pleasure of spending about 15 minutes one-on-one with Scott Besson in no small part, thanks to the fact that he knows that you and I have a friendship and his high regard and respect for you allowed him to give me the time to spend with him.
I found him to be absolutely brilliant and the best Treasury Secretary that I have ever seen in the United States that has an understanding of the housing market, the mortgage market, the spreads between 30-year fixed rate mortgages and treasuries, how to handle the treasury market issuance, which is very important.
He has a desire to bring long-term yields down, and I think he'll be very, very successful in doing so.
I was in awe at his vast knowledge of not just the things that normal Treasury Secretaries are looking at, but of even in other areas.
The guy, his history is one of brilliance as a fund manager.
He worked with Stanley Drunkenmiller.
He is someone who is extremely, extremely experienced and knowledgeable, and not just having experience, but having successful experience.
You know, I had a conversation with him months ago about the housing market and the fact that the lack of affordable housing is a gigantic problem in this country.
Robert F. Kennedy Jr., I think, deserves credit for really raising this during the most recent presidential campaign.
And I hadn't realized it.
The extent to which it is a problem, it's not just a problem in any one section of the country.
It's a problem across the country.
I think that Bill Pulte, who the president appointed to the federal home finance administration, like Besson, another superstar, a guy who comes from the housing industry, Pulte Holmes, people may be familiar with the name, one of the largest home builders in the country.
Trump has an all-star team around him, particularly when it comes to the economy.
Now, the stock market shot up today, as you say, to a record high or a record gain.
Do you think, what do you think?
This may be an impossible question to answer.
What do you expect the stock market to do tomorrow?
I'm a little leery that these gains continue.
I think there could be some profit taking that happens.
You know, the last couple of days, I know you get our commentary.
We had thought that the stock market would have a turning point two days ago.
It did.
And yesterday, with the stock market up, I did not feel it would hold its gains.
And it was up 1,500 points.
And our commentary was that it would close to the downside.
And it did.
And then this morning, quite honestly, what I said is, I have no freaking clue what it's going to do today because there's just a lot of uncertainty out there.
And we don't know which way the headlines are going to go.
But I think the stock market at these levels had such a strong close that it's quite possible that in the morning we see it open.
But I don't know if there is conviction, Roger, for this to continue throughout the day.
I'm looking at my charts here.
I think that we could see a little bit more of a move up in the morning, but it would not surprise me to see some of those gains relinquished.
And then you have a lot of trading that says, okay, well, before we see another down day, I want to get out.
And that's why you've seen so much momentum.
It happens so quickly because now with all the program trading, as soon as you start to see some profits gone, then it triggers selling and selling and selling, but gets more selling.
So I would not be surprised to see an upside open tomorrow, but I think that there's a reasonably good chance that a lot of experienced traders will use that as an exit period and get out while there's still so much uncertainty.
And therefore, I don't think we hold the gains.
In my book published several years ago, Stone's Rules with forward by my good friend Tucker Carlson, I had two rules.
One was what goes up must come down.
The other one you'll like even more.
Whoever talks first loses.
And so it's going to be interesting to see what happens.
What do you expect the European Union to do?
Will they make a substantial concession to the United States in light of the president's strategy of isolating China?
Gold Over Cash00:06:02
Or is the EU going to work with China against American interests?
We have about two minutes here and then we'll go to commercial.
Well, as you know, the EU had Today voted to ratify their plan to come up with a plan which would have some retaliatory tariffs against the U.S.
But in light of what happened today, where we dropped it to just the 10% baseline, I would expect Europe to back off.
I don't think Europe wants to be in a situation where they're at odds with the U.S. Whether or not they trust the U.S. completely or not, I think they trust the U.S. more than they trust China.
And therefore, I don't see them trying to form alliances with China against the U.S.
I think that this move by President Trump today to reduce the tariffs to the 10% baseline will bring the European Union closer to trying to cut deals with us in fairness rather than move towards China.
Folks, if you're just tuning in, this is the Stone Zone on the Red Apple Audio Networks, and we're talking to Barry Habib.
I call him an economic guru because to say that he's just an expert on housings and mortgage would greatly understate his knowledge and his wisdom.
We're glad to have him because, well, as I think it was James Carville, my Democrat counterpart once said, it's the economy, stupid.
And indeed, it is the economy.
Here's what we know.
What we were doing under Joe Biden and Barack Obama was not working.
Did not work.
We reversed that trend when Trump was president in his first term.
Then Biden returned us to the policies of Obama and the economy suffered, particularly the middle class, working family and taxpayers.
Donald Trump has changed the political dynamic.
The Republican Party is now the party of working people, of the middle class, no longer the party of the elites, no longer the party of Wall Street, no longer the party of the millionaires and billionaires.
We'll be right back with more of Barry Habib.
So whatever you do, don't touch that dial.
And we're back in the stone zone here on the Red Apple Audio Networks.
We're talking to Barry Habib, the chief executive officer of MBS Highway.
We just call him economic guru.
Here's a question for you, Barry, just a little off topic, but how do you feel about acquiring precious metals like gold and silver in a tumultuous economic time like this?
Roger, we've talked about this several times.
And back about $800 in price ago in gold, you know, bullish and every time I've been giving you the same thing.
And here we are at these extraordinarily higher levels.
So our thoughts on gold, I know you agree, have been on and people that have heeded that advice have done exceedingly well in there.
I do think that in times of uncertainty, gold is a place that you can certainly hide.
Because here's what would happen.
The way the mechanics of the market, I just want to try and explain this to people.
So we had some unusual circumstances.
You saw stock prices decline this morning as well.
You saw at the same time, treasure, which means bond prices were selling off, stocks were selling off, and our dollar was weakening.
So what was happening?
What did people decide to do?
They didn't put it in Bitcoin.
Where did they go?
They went to probably some in cash, but gold was soaring.
So a lot of people put their money in gold.
So during times of volatility and uncertainty, gold seems to be the place to be.
And it was very interesting because as stocks rallied and came back and the bond market came back, so yields declined.
So people bought bonds.
They really bought stocks.
But what did they do?
They did not sell gold to do so.
They took it out of cash, which means that they said, hey, gold is a place I'm hiding if things get bad.
But even though that's money I'm hiding, I'm not parking it there.
I'm keeping it there because I'm comfortable with gold.
All this to try and answer your question and say, I think gold has more room to run, Roger, because I don't think that this move up in gold is temporary.
Because if it were, gold would have lost its gains when the stock market rallied back and people said, okay, I'm going to buy stocks with both fists.
Let me sell gold to do so.
No, they took it out of cash or they took it on margin.
And that's why.
Now, by the way, Roger, here's another thing that's very important about answering your question on gold.
When the stock market takes a sudden drop like it did, it's not that it declined, but that it declined suddenly.
That triggers margin calls.
So broker dealers say, hey, you have this on margin.
You've now come underneath your margin requirements.
You got to pay up and you got to pay up now.
So how do you raise cash?
One of the ways that they would do it is by selling other assets.
The old saying is you don't sell what you want.
You sell what you can.
And what you can sell are things that have value like from the bond market or gold.
They did not choose to sell gold.
They sold bonds.
They took it out in cash.
So what this tells you is that gold is someplace where people are investing money and they're not letting it go.
So that's my reasoning as to why I think gold will continue to do well for us, Roger.
All right.
I appreciate it.
I think we are unfortunately out of time.
I want to thank my guest, Barry Habib, the chief executive officer of MBS Iowa, but we just call him the guru, Barry, the economic guru.
Barry, thank you so much for joining us today in the Stone Zone.
And thanks.
And folks, until we meet again, God bless you and Godspeed.
If you're looking to create, grow, and sustain your wealth, download and subscribe to the Pain Points of Wealth podcast at bebullish.com with Bob, Ryan, and Chris Payne.
It's your podcast for market insights, money tips, and real talk on the economy.