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The Dow Heavily Down Off Over One Percent; The Trade War Ramps Up And The Markets Sell-Off Around The World; Business Leaders Find Their Voices Over The U.S. Border Scandal; Russians Rejoice As The Host Nation Is Heading To The Knockout Phase Of The World Cup; Trump: Illegal Migrants Infest the United States; The Trumps Welcome Spanish Royals to White House; President Xi Jinping Commends Kim Jong-un on Positive Summit with Trump; Angela Merkel: Europe Needs a Coordinated Approach to Migration; World Cup Host Russia Defeats Egypt 3-1; China: We'll Strike Back Hard Against U.S. Tariffs; Greece's Bailout Decision Looms; Egypt Strikes Sponsorship Deal with FIFA. Aired 4-5p ET

Aired June 19, 2018 - 16:00:00   ET


RICHARD QUEST, CNN HOST: Closing bell ringing on Wall Street, the Dow heavily down off over 1 percent, but really off the lows of the session.

It had been much further down, all the major markets are down. We will give you the details of what dots the Is and crossed the Ts and one, two,

three - the trading is over. Some would say, "Thank goodness." The day has finished. It is Tuesday, the 19th of June.

Tonight, the trade war ramps up and the markets sell off around the world. Business leaders find their voices over the U.S. border scandal. One group

says it must end now. You'll hear the voices.

And Russians rejoice as the host nation is heading to the knockout phase of the World Cup. We will update you as the evening progresses. I am Richard

Quest, live in the world's financial capital on a glorious summer's day, New York City where of course, I mean business.

Good evening. Tonight, Donald Trump has hit the accelerator on the road to a full scale trade war with China. It threatened to slap extra tariffs on

a further $200 billion worth of Chinese goods. The investors are now fearing that we may finally have reached that tipping point.

Take a look at the damage that's being done at the moment. And you see it across the financial world. Let's start with the Dow Jones Industrials.

Now, the Dow has now turned negative for 2018.

It is the sixth day of losses, so if you take a look, down 1.5 percent at the worst point today, bearing in mind that the market opened sharply

lower. At the worst moment, it was down 419 points and it pretty much stayed around the 200 to 300 points down all the way, closing off 287 - a

loss of 1.15 percent.

On the Dow 30, if we look at the components of this, now at one point during the day, there was only two or three that were actually higher up,

but almost every stock is down and you'll not be surprised, it's the usual suspects. Boeing down nearly 4 percent, Caterpillar 3.5 percent, 3M,

DuPonte, United Technologies, GE - the big industrials that will be hit either by tariffs from China or non-tariff barriers for making life more

difficult for U.S. corporations to do business in China.

Even Apple which is rumored to be having an exemption from the tariffs, not confirmed by the way, even Apple was off 1.5 percent. What we are showing

in the U.S. really had been reflected around the globe bearing in mind that President Trump's statement announcing that he would do $200 billion of

extra tariffs came late last night, U.S. time, but it was in time for Asia certainly to respond and you saw Shanghai off nearly 4 percent. Europe

followed through. The Xetra DAX - bearing in mind the political and economic problems in Germany at the moment down there, and look at London,

London was off as well and in New York, even the NASDAQ could barely eke out.

So, look, where is the money going? Well, investors are piling into safe havens. The U.S. dollar has risen sharply as stocks have fallen. This is

the DXY, the dollar index and you can see from June, it has - now, the index - these indices move quite large numbers and small numbers, but you

can see, we are up to here, 95 as opposed to the low point of 93.

Put it all together, we needed to understand on "Quest Express" one trader said the market had indeed been spooked by what they have seen.


MATTHEW CHESLOCK, EQUITY TRADER, VIRTU FINANCIALS: It is escalating a little bit quicker than we thought. We hoped there was going to be some

negotiation between the President and China. We are not really seeing that.

So, that's what kind of spooked the market. You're seeing these large multinational companies are the ones that are really dragging the Dow down

as you mentioned.

QUEST: OK, but this will happen because overnight, the President of the United States put out a statement saying, if China relates with the ones

that they've said they were going to do, he would enforce $200 billion worth of tariffs and China has now said, "You do your $200 billion and we

will do $200 billion as well."

CHESLOCK: That's not really negotiating really. It's more of retaliatory and that's not what you want. You want to have some formative discussions

and they can hopefully solve something, but you know, what President Trump is forcing their hand right now and he is going to say, "You know what? If

we're not going to get to the table, we are going to get something out of this."


QUEST: Clare Sebastian is with me. When I was talking to Matthew Cheslock earlier in the day, the Dow was off around 300 and we pretty much ended

that, so for most of the session, the market held its nerve.

CLARE SEBASTIAN, CNN CORRESPONDENT: Well, Richard, there are a couple of ways of looking at this. One, yes, it looks on the surface to be fairly

resilient. We have seen bigger moves than this, or perhaps lesser rhetoric when it comes to trade, but this is the sixth straight day of losses for

the Dow.


SEBASTIAN: It is also now down on the year, and so there is some debate out there about how much resilience the market is actually showing. We

have got that jolt from that $200 billion number and that's because that throws up a couple of unknowns. You alluded to it in your introduction

that what does it say about what China is going to do next? If China -- China can't actually put $200 billion worth of tariffs on U.S. imports

because they will run out of imports to tariff, so what will they do next?

Could they hit U.S. Treasury? Could they make life more difficult for U.S. companies? All of that makes it much more difficult for these companies to

plan ahead, and there is a lack of clarity generated, Richard for people who are seating around this policy in general. What does it meant to

achieve? They feel that it hasn't really been articulated and that is adding to the sense of uncertainty down here.

QUEST: All right, so with that sense of uncertainty, the market - I come back to this idea because I talked about it with Mohamed El-Erian and I

said, "Is it a trade war?" And he still wouldn't say it was a trade war because nothing has actually happened yet. The market - the people where

you are do not believe the worst is going to happen.

SEBASTIAN: Again, there is a bit of a split between those who are taking it slightly shorter term view and perhaps, looking ahead for the next

earnings season in the next quarter, and those were trading perhaps on the next 12 months, and frankly, one trader today said, "You know, yes, this is

very uncertain out there now. Companies aren't able to plan. We don't know what the next earnings season is going to hold."

Yes, the Fed has told us just a few ago that the trade tariffs, the dispute did not show up in the numbers yet, but there are those that say, "Look,

until we see that this is going to start a global recession, until that point, we don't consider this a trade war." And so far, Richard, the

economy is very resilient here.

QUEST: So, in this scenario, it is difficult to see which way forward, bearing in mind the sorts of numbers we are seeing. I mean, Boeing down

nearly 4 percent, Caterpillar off 3.5 percent. One gets the feeling, I mean, one sort of knows, Clare that if this is suddenly solved, these

stocks will go like a rocket.

SEBASTIAN: Right, but I don't think there is much hope out there. This is going to be immediately solved, Richard, and I think while obviously there

are people out there who see the market as resilient at the moment, the consensus that I am getting is that we may just be stuck in this range now

for a moment that we might trade a bit lower, we might trade a little bit higher or we not going to have a sustained rally for the time being.

QUEST: Clare Sebastian at the stock exchange. Thank you and we appreciate that. Now, while Donald Trump has been turning up the rhetoric on China,

the spat between the U.S. and its key trading partners around the world is already taking a real toll in a meaningful way. We are talking here not

just about philosophy and esoteric.

I am going to show you the reality already happening in the economies of the United States and where the effects are being felt.

Let's start with pork prices. They are falling which is unusual when you think that tariffs are coming in, but the reason pork prices are falling

because Mexico is the biggest buyer, and considering 20 percent tariffs costing U.S. producers, which is again, ironic because its farmers that

will be hit hard because of the falling price of hogs.

And U.S. steelmakers are - now, they are benefiting from the 25 percent rise in tariffs. There's the steel, however, the steel prices and buyers,

prices are soaring. If you need this stuff to make your product, well, prices are now 40 percent. You've got two choices in that scenario. You

either, eat into the margins or you pass it on to your consumers, and it's a similar thing for aluminum. It seems so simple, just basic aluminum.

But it's bad for beer brewers who need it and it may only be a cent or so or less than on a can, but eventually, it's taking its toll and the price

of this is rising. We are seeing it in the markets already.

And finally, soy beans. Now look, this is the new clear option in many ways for the Chinese, and now, soy bean farmers are on edge. China buys 25

percent of American soy threatening to hit the U.S. soy next.

Put it in together, you start to see exactly the real live effects. Ken Rogoff, we know that the gains of a new steel mill or a new steel line

opening are seen immediately, but the costs in jobs are a few here, a few here, a few there, and it's much harder to actually see. Ken Rogoff at


KENNETH ROGOFF, PROFESSOR OF PUBLIC POLICY, HARVARD UNIVERSITY: Hi, well, there is no question when you slap tariffs on steel. We use it in a lot of

different things in the economy. It almost certainly cost jobs. It doesn't win jobs. I thought it was going to stop at that, that usually

trade wars are a bit of a skirmish, a little push back, you know, posturing at the border.

Donald Trump is now, "Well, we are going to do half your trade and if you do anything about it, we are going to do all your trade." We just haven't

seen anything like that in I don't know when.


QUEST: So, with this in mind, Peter Navarro who of course is Donald Trump's trade adviser, describes this as courageous. He says that what's

being done is necessary that the American consumer will need to deal with this because of long term benefits. I have difficulty here because

traditional economists like yourself say one thing. You've got Navarro saying something else.

The man in the middle for me today doesn't know which to believe.

ROGOFF: Well, I think Peter Navarro - and this was of at another planet when he talked about wanting to balance U.S. trade if we are spending a lot

more than we're earning, we are going to end up importing stuff and not making all ourselves. On the other hand, to give the devil his due, we do

have a problem with intellectual property rights with China where they - Chinese force U.S. firms, foreign firms to give their intellectual

proprietary ideas to Chinese firms if they want to build things in China.

They probably directly copy things, even steal things. That's a big issue that needs to get settled. Sometimes, Donald Trump says that sometimes, he

goes off on these tantrums that don't make sense.

QUEST: At the end of the day, how significant it is economically that the U.S. could be the trade war with China, it has got a limited tit for tat

with the EU, Mexico, Japan, and on steel, but that seems to have been contained?

ROGOFF: For now. Yes, for now. I mean, it's kind of not going off on Canada or Mexico where the tariffs aren't very high and we benefit a lot.

The real issue is with China. The U.S. and China are vying to be the super power. The U.S. has this advantage and technology they don't want taken

away, but some of the stuff Peter Navarro says and Donald Trump says about, "Well, we run a big deficit with China." You shouldn't look at your

deficit with one country and you have to think about your deficit in a macro sense.

QUEST: Why? Why?


ROGOFF: We can have a recession.

QUEST: Hang on, hang on. Let's just - let's take an extra minute and get to grips with this, Ken, when Donald Trump says but there is a deficit in

goods of hundreds of millions of dollars and that's that suggests unfair trading practices, he is right.

ROGOFF: No, he is not right. If the government was spending a trillion dollars more than it is taking in taxation, it has got to spill out

somewhere. And yes, the Chinese do things that at the margin, but most of it is the intellectual property rights.

We run deficits with most of the world because we are big spenders. The world likes lending us money and that's why things are going that way. We

get it at very low interest rates, maybe it's not so dumb.

The only way - the only way we can drastically close the trade deficit is to have a big recession, which would cut back consumption. We wouldn't buy

as many Chinese goods that would do it. I can't imagine that's what Donald Trump is looking for.

QUEST: Professor Rogoff, thank you, sir. It's always good to have you on the program. Thank you.

ROGOFF: Thank you.

QUEST: Now, later in the program, you will hear from Mohamed El-Erian about what investors should expect next and why Mohamed still doesn't think

you can call this a trade war. He and I somewhat disagree, but I would never disagree with somebody as eminent as Mohamed El-Erian but we got the


They've undercut our expectations for the host nation Russia at the World Cup, yet, they recorded two victories from their opening games - two games

- with a commanding three-one victory over Egypt. Cheryshev scored again his third at the tournament, yes; it was his third goal. It was a lovely

strike, effectively dumping Egypt at the World Cup.

There you go. Major upset in the days earlier against Colombia beaten by Japan. Really in the World Cup, anything can happen. One of the last

ranked teams, and Senegal upsets Poland. The two-one victory, the first victory by an African nation in this year's tournament.

Amanda Davies is in Moscow, joins me now. So, another impressive result by Russia and we will also mention that that means LGBT Charities in the UK

will get another 30,000 pounds I believe and that's $45,000.00 from Paddy Power. We'll explain all of that later. But let's stick to the football,

Amanda Davies. How did they pull it off?

AMANDA DAVIES, CNN CORRESPONDENT: Richard, you might be able to hear there is something of a party going on here in Moscow. The car horns are

blaring, there are groups of people coming back from their relative bars and fan zones where they were watching the match draped in flags, and the

party is well and truly under way.


DAVIES: And you have to say, that this Russian team really are defying the odds. I was really chuckling looking back through my notes. Three

tournament notes where all of the questions were, "How will Russia get this four ready goals?" Well, they have now scored eight goals in their first

two games, which is the most successful start to a World Cup tournament by the host ever.

It is quite incredible. We expected them to have a tougher match against Egypt than they had against Saudi Arabia in their opening game. You have

to say they were helped by the fact that Egypt's star man, Mo Salah, yes, he played but was obviously still carrying quite a serious shoulder injury.

But they stepped up and absolutely took their chances, but then as Cheryshev scoring again, who would have thought, it would have been up

there at the top of the goal scoring shot with the likes of Cristiano Ronaldo, somebody who has absolutely been a journeyman footballer all

through his career and here he is, leading the Russian side at a Russian World Cup.

It is quite incredible and they haven't quite qualified as of their group, but all but made it through to the next round, something Russia have never


QUEST: And if we look at the other matches of the day so far, the upset, I mean, how much of an upset is it that Japan did what it did?

DAVIES: I think you'd say it was an upset. Colombia made it to the quarter finals four years ago in Brazil. Their fans have absolutely

descended on this World Cup in force expecting them to do certainly better than Japan's supporters hoped them to do, a very, very emotional victory

for Japan this one though because of the earthquake in Osaka just a couple of days ago and the coach in the run up for the game had been saying, his

players has been quite affected by the news of that three people who had died. There were a few of the players who weren't sure how their friends

and family were, but they absolutely used that so often in these World Cups and these major tournaments, we see teams use these kinds of things as

extra motivation, as a galvanizing force and Japan certainly did that.

Added to the fact that actually, their coach only took over the last day of - he only had his first game the last day of May, so quite something that

he has managed to pull off for that shock for Japan.

QUEST: Amanda, good to see you. And what a magnificent background. That background is absolutely - I mean, talk about classic. Is it really

(inaudible) or is it a picture?

DAVIES: It is. I can confirm it is real. I haven't yet been inside. I haven't had a chance, but it is, it is fantastic isn't it as a setting -

people say you know, "What is the Russia World Cup going to be like in terms of the setting?" It is absolutely spectacular in St. Petersburg

where the games today has been is exactly the same.

QUEST: Excellent. Go and have a look tomorrow and send me the bill. Thank you very much. Amanda Davies who will be (inaudible) on Russia.

When we return, business leaders break their silence. They are joining the outcry over the controversial immigration policy in the U.S. of separating

children and we'll have the reaction from China as the country accuses the Trump administration of what is extortionist behavior. It is "Quest Means

Business" we're in New York.


QUEST: We know where the politicians stand. We have heard from the activists, the religious groups have made their views known. Now, the U.S.

business community has broken its silence on the controversial immigration policy that is separating children from their parents at the border.

The U.S. Chamber of Commerce has delivered a full throated rebuke of the administration's policy stating, "Since our founding, we have embraced

certain core values, one of those values is that children should not be punished for the crimes of their parents. There is no other way to say it,

this is not who we are and it must end now."

Speaking at an event for the National Federation of Independent Small Businesses, Donald Trump said it was illegal immigrants who pose the real

danger to the country.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: People that come and violate the law, they endanger their children in the process and frankly, they

endanger all of our children.

You see what happens with MS-13 where your sons and daughters are attacked violently. Kids that have never even heard of such a thing are being

attacked violently, not with guns, but with knives because it's much more painful.

Inconceivable. Here we are talking about business, inconceivable that we even have to talk about MS-13 and other gangs. They attack violently. The

most painful way possible.

And a bullet is too quick and we are allowing these people into our country? Not with me. We are taking them out by the thousands.


QUEST: Jeff Zeleny is at the White House. Jeff, some uncomfortable questions for you, firstly, will it make any difference that the business

community gets involved here. Will they be able to make the administration listen or change where others have failed?

JEFF ZELENY, CNN CORRESPONDENT: Richard, I think the short answer is no. I don't think it will make any difference. I mean, the reality is the

United States Chamber of Commerce and local affiliates across this country have indeed supported comprehensive immigration reform.

They have been pushing for years for immigration reform and they are in fact at odds with the administration on a variety of immigration matters

from visas to relaxing some protocols and others for coming in and they certainly do not support spending the money on the border wall.

So, no, I do not think it matters in this case. We saw the President speaking to a small business group. It just happened to be a group that

was on his agenda on his calendar to speak to, so he was talking about the news of the day.

There was a bit of applause, but also a lot of awkward silence in the room because again, this group of small businesses, there are many small

businesses owned by minority owned businesses here, but the reality here is, no, I do not think it will matter.

QUEST: OK, so the people I have been speaking to, I was talking to some of them down at the stock exchange this morning, some of the traders and if

you scratched deep enough or at least go far enough, you will find many people will privately and secretly say, look, they don't like the results

of this, but what else is the U.S. to do if people choose to bring their children with them in dangerous circumstances, what else is the U.S. going

to do?

And my question here is, middle America, large parts won't like the results, but they won't be against the policy.

ZELENY: We will find out. I think this is entering a bit of unchartered territory. We know that large swathes of President Trump's supporters you

know, certainly wanted tougher immigration laws. What is a different sort of moment in this equation are those images, are the pictures of children

at the border. I think this is breaking through in a bit of a different way. Look at evangelical supporters, the churches, other groups. I cannot

recall something at least during this administration where there have been so many supporters otherwise of the President going against a policy item

of his, from Franklin Graham, to you know, the U.S. Conference of Catholic Bishops, to other smaller Southern Baptist groups. I think that is a

different point.

But you are right in the sense that the reality is that immigration overall works as a rallying point for the President's base.

QUEST: We haven't heard from Ivanka Trump, I am assuming, particularly bearing in mind the last photo that she tweeted of her holding her young

child. I am imagining that the first time she does put her head publicly above the power, but she is going to be lambasted with questions about,

"What have you told your father?"


ZELENY: I do not believe that she would come out with any type of a public way. It is a bit surprising that we have not heard from a senior adviser

for the President who clearly has made other points of showing her father images of children, thinking back to a year ago, April, when she showed her

father images of those children in a chemical gas attack in Syria.

Of course, a couple of days later, that led to strikes there. She has been - she had not been in charge of immigration, but children and families are

certainly part of her portfolio. We have not heard anything publicly from her, even privately, we have not been able to discern behind the scenes if

she has been advising him.

She was in California yesterday for a swing of fundraisers to help reelect Republicans, but add this to the list of things that she has not spoken on.

She has been silent on more things than she has actually spoken out on.

QUEST: Jeff Zeleny at the White House, thank you, sir.


QUEST: Thank you. As they did with the travel ban, we are talking there about what companies are doing, but the major tech companies are using

their platforms to condemn the administration.

Apple's Chief Executive, Tim Cook has called the practice inhuman and heartbreaking. Microsoft has released an official statement to the

administration to change its position and Airbnb Chief Executive tweeted, "Ripping children from their parents' arms, this cruelest policy must end."

Samuel Burke is in London. Samuel, you heard Jeff Zeleny, and what the American Chamber of Commerce have come out, I mean, I can see why one can

applaud why they have done it, perhaps if you take that view, but it's not going to make any difference.

SAMUEL BURKE, CNN CORRESPONDENT: When I was speaking to tech executives today, they admitted, they don't know if this will make a difference, but

it hit home for them.

Remember, Richard, for the tech community, so many of these CEOs are themselves immigrants. I am talking about Elon Musk, Satya Nadella, Sundar

Pichai - so even if they can't make the difference, they themselves are immigrants and these companies both here in the UK as well as in the U.S.

depend on huge amounts of immigrants especially engineers, so this is very personal for them.

So, Mark Zuckerberg, Sheryl Sandberg - making donations to a group that is trying to reunite the migrant children with their families, but in the case

of Microsoft since we mentioned Satya Nadella, there is an interesting twist here that speaks to a larger issue, much bigger than just the

particular issue of the children at hand here, who had an intern actually put out this tweet, this is technically an employee of Microsoft asking

Microsoft about their relationship that they have selling software in this case, the Cloud software to ICE - Immigration and Custom Enforcement - in

the U.S., "Satya Nadella, as a current Microsoft intern, I'd also like to know why Microsoft is proud to support the work of ICE," only after this

tweet and pressure from employees inside of Microsoft came out, then did Microsoft take a position.

A lot of tech companies, all of a sudden, Richard are in a very complicated spot, family unification has been a fundamental tenet of American policy

and law since the end of World War II, Microsoft says.

QUEST: But Samuel, again, maybe this is on the lesser scale of controversy because there are so many people, or university coming out against this,

but there are those people, you heard me and Zeleney about it, that are in favor of this policy. And point out that the real issue here is not the

separation of children from parents, but the real issue is the parents who either send the children on their own or choose to bring them in very

dangerous conditions to try to illegally enter the United States.

BURKE: And I don't think these tech leaders are blind to that. They know that there is a reason that Donald Trump was elected. I don't think any of

them are going to go into his office. I doubt Tim Cook even though he's talked to him about tariffs is going to go in on this issue, but what they

said to me today, Richard, was that in spite of that and even if they can't make a difference immediately, because it is so personal for them, they are

going to try.

Though one tech executive did say to me, they believe that because Donald Trump goes off of ratings and what he sees on cable television, that if

this has sustained enough, one executive told me, he does believe that Donald Trump could change his mind because of this pressure through the


QUEST: Samuel Burke is in London. Thank you, Samuel for staying late tonight helping us out. Thank you.

Donald Trump has threatened China with another $200 billion tariffs. It's a very busy day. The number is massive. The significance in the game of

who blinks first - over the years, we have talked so many times about trade wars, you and I, now we are the closest to it than anything.


[16:30:00] QUEST: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. When China's bank just strike back against

Trump's new tariffs, we'll have a report from Beijing where it lies exactly what this actually means.

With almost the end of the bailout here after Greece, one of the economy ministers will be with me here in New York as we continue our conversation

and discussion tonight, this is CNN, and here on this network, the facts always come first.

President Donald Trump says illegal immigrants are infesting the United States. In a series of tweets, Mr. Trump has defended U.S. policies that

are separating some children from their parents at the U.S. border. He's calling on the Congress to change the country's immigration laws.

President Trump and First Lady Melania welcomes Spain's King Felipe and the -- sixth, and Queen Letizia to the White House. The Spanish first world's

first -- third, well, office meeting, King Felipe called his visit a great end to a perfect visit of his U.S. tour.

China's President commended Kim Jong-un on his summit with Donald Trump. Xi Jinping met with the North Korean leader in Beijing and Chinese state TV

shared Kim receiving a full ceremonial welcome, it's his third visit to China in three months.

And Germany's Chancellor Angela Merkel says Europe needs to have a more coordinated approach to migration. The comments came with a press

conference, following her bilateral meeting with Emmanuel Macron of France.

The two leaders discussed EU reform and the migrant crisis is high on the agenda. Host team Russia has defeated Egypt in World Cup action on

Tuesday. The score was 3-1, virtually sealing their place in the last 16. That's despite which I know, Mohamed Salah for the Pharaohs, Salah didn't

look quite himself after a shoulder injury, although he did score a penalty.

China has vowed to strike back hard against any new trade penalties by the Trump administration. And their promise to do so was within hours of

President Trump putting out a statement, saying that the retaliation for the first set of tariffs would mean $200 billion war.

Let me show you this rather deteriorating or rather completely deteriorating situation. So the U.S. originally says it will introduce $50

billion worth of tariffs. A comprehensive list of nuclear reactors to talk about.

And China in response comes out with $50 billion with the same date of July the 6th. Now, here's the interesting part, when they did this, the U.S.

put out a statement which we got last night, saying if you do this, we will do this, $200 billion.

[16:35:00] Now China has a real problem, well, but you see, China only imports $170 billion worth of stuff from the United States, so it can't

actually retaliate with a full $200 billion, certainly not on top of the $50 billion that it's already done.

And now, the U.S. is threatening another $200 billion on top of China. If you don't call this a trade war, I don't know what it is. Well, Beijing is

accusing Washington of extreme pressure and extortionist behavior. CNN's Matt Rivers is in Beijing and sent us this dispatch.


MATT RIVERS, CNN CORRESPONDENT: Well, Richard, if the United States moves forward with those additional $200 billion in tariffs over the next several

months, China says it's going to retaliate. So the question is how exactly will they do that?

You can bet that they're going to put more tariffs on American imports yet to China, but there's a catch there. Last year, the United States only

sent about $130 billion worth of goods here to China, so if the Chinese want to retaliate with the same number of tariffs, the same value of

tariffs, then the United States is going to put on -- well, they can't just tariff American imports here.

So what else will they do? Well, what most experts, analysts that we've spoken to here in China say that they're going to target American companies

working here in China, make life more difficult for the Apples and the Ciscos and the Fords of the world that rely on the Chinese market for

profitable bottom lines.

The other thing they could do is whip up nationalism in state-run media to create some sort of informal boycott of American goods. We don't know

exactly what they're going to do, but Richard, it's clear that the Chinese have a lot of tools at their disposal if this trade war ramps up.


QUEST: Matt Rivers in Beijing. I've had their problem calling this a trade war for some weeks, it looks like it, it smells like it, and now it's

turning into a full scale one. Mohamed El-Erian is chief economist, adviser at Allianz, I asked him if we can now put the rest of the debate --

is this a trade war?


MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: I don't know if it can be put to rest, I think there's still a question mark, is this a means to

an end or is this an end to itself?

We've seen in the past that the rhetoric can get quite high, and the question is what then? I think the markets view it as this is more of a

risk of a trade war than it was 24 hours ago.

But I think the question is still open.

QUEST: Well, you say that, but we've already got -- we've already got the first round of tit-for-tat about to take effect. And now we've got the

threatening of a further $200 billion on both sides. I mean, this is starting to get serious.

EL-ERIAN: Oh, it is starting to get serious, and when you do a tit-for- tat, you risk slipping into something -- so absolutely. Two qualifications and that's why you're hearing me be more conditional. First, none of this

is irreversible, secondly, if the markets truly believe that this were a trade war, then stocks would be lower a lot more, the dollar would be a lot

stronger and industries would be declining even more.

So the market is saying, this is a warning sign, but the market yet hasn't embraced that this is the beginning of a full blown trade war.

QUEST: Does one unknown here, of course it is the president of the United States, in the sense that previous presidents have been very warring(ph),

met -- perhaps learning the lessons of history not even to go this far.

EL-ERIAN: Yes, this is certainly the farthest we've been for a long time because people recognize that you can inadvertently slip into a trade war.

The G7 which had not so long ago, people have forgotten was very unusual.

How often do you get a congenial and a constructive grouping of like-minded people who can't even agree on a final communique. So yes, this is very

different. But there are those who believe that we need a shock to the system in order to deal with up two genuine issues here.

Not tariffs, but there are two genuine issues. Non-tariff barriers including the joint venture requirements and theft of intellectual

property. So the question is whether the tariff threats can lead to action on these issues.

QUEST: If we look at the G7 at the moment, and not necessarily the (INAUDIBLE), but just look at the sort of the state. The U.K., we have the

report from the BCC and others sharing the slowest growth since the great recession and it's not going to get much better.

Germany at the moment is in disarray on the question of migration and the coalition. Italy with its new populist government. France beset by

industrial action at the moment. Spain, a new government too, Canada similarly has got problems.

I mean, you can see where I'm going with this, Mohamed, things are not looking good in terms of the developed economies.

[16:40:00] EL-ERIAN: Yes, and if you're sitting elsewhere, if you're sitting in Asia, you ask yourself, hey, wait a minute, I signed into a

system where the core of the system which is the advanced economies act responsibly and I am the periphery is where the volatility is.

Well, guess what? You have a lot of volatility in the periphery and the core itself has become this predictable. I think what we're going to see

in the short term are a couple of things, Richard. One, we're going to stop romancing the synchronized pick up in global growth.

That was the phrase that people embraced and now they're realizing that with the exception of the U.S., growth is going down around the world. So

we're going to have very interesting differentials starting to play in.

Second, there's going to be a lot more questioning about the functioning of the system. If the middle, if the core is weaker, that means the system as

a whole is weaker.

QUEST: Where's the leadership going to come from? Because I'm getting the feeling that at the end of the day this is going to be about leadership.

EL-ERIAN: Yes, and people will ultimately look at some combination of the G7 or the U.S. in the leadership role. I think the irony is, all this is

happening at a time when the IMF itself is not able to conquer --

QUEST: Right, yes --

EL-ERIAN: The middle. So we're going to have to look for governments to step up, and there's going to be a lot of emphasis on whether the U.S. plus

somebody else or just the U.S. can do it.

QUEST: Are you worried?

EL-ERIAN: You know, my mother when I was young told me that when you don't have -- even if you don't have something to worry about, you worry. So I'm

a worrier by nature.


Yes, I am worried. And I'm worried more for my daughter's generation than I am for my own generation. I think that the global system is re-aligning

itself, but it's not clear what we're re-aligning to.


QUEST: And that is a sobering thought from Mohamed El-Erian. And when we return, an old problem for Europe is returning to the fray in Greece, as

Eurozone finance ministers get set to decide the next round of debt relief, the country's ultimate minister of economy is with me.


QUEST: Welcome back on QUEST MEANS BUSINESS. Europe's economic minister and commissioner has given Greece a vote of confidence ahead of a milestone

week for its economy. Pierre Moscovici says Greece has delivered on its commitment with Eurozone finance ministers due to decide on Thursday how to

wind down its bailout program.

Here in the C-suite with me is Alexis Charitsis in the C-suite. The Greek alternate Economic Minister, good to see you minister.


QUEST: At the end of the day, they're going to give you to a certain extent, the bailout will unwind, you'll be gunning for the long term in

terms of the terms and conditions of repayment and like. But it's definitely --


QUEST: That Greece still needs serious long-term debt relief.

CHARITSIS: That's right, actually that's a crucial issue, that's the issue that will be discussed in the Euro group and next Thursday.

[16:45:00] And we strongly believe and we have every invitation to believe actually that there will be a decision on the Euro group on Thursday that

will be beneficial to the group finally.

QUEST: What do you want? I mean, do you want -- they're not going to write it off and --


QUEST: Already --


QUEST: The terms are extremely favorable. As Wolfgang Schuberry (ph) used to remind us in every opportunity, Greece doesn't have to pay back this

money for many years, and even when it does, it's a very preferential --

CHARITSIS: No, actually, there was a Euro group statement last year in June, 2017, we sent sort of quite explicitly described the overall plan for

debt relief for Greece. So we don't expect to win any surprises there.

The plan is there, but it has to be more detailed and more structured in terms of what exactly it would entail. So we expect some, especially the

maturities, we expect some preloaded measures.

But then --

QUEST: Will not be enough --

CHARITSIS: At the end of the day --

QUEST: Will not be enough or is Greece saddled with the billions of euros of debt for the foreseeable future? In other words, your children will be

paying it back long after you've gone.

CHARITSIS: No, listen, I think that what we have done in the last three years is that we've demonstrated a strong belief, the will to do everything

necessary in order to reach this point. After this three years, and you know, we experienced so many important meetings in this three years.

But now we've reached a crucial historic milestone. We need to -- everyone needs to deliver. We delivered our part, I think it's time for our --

QUEST: But what does -- but what does --

CHARITSIS: It's time for our counterparts to deliver their own pattern.

QUEST: What does that mean? What does that mean?

CHARITSIS: That means that we want an agreement that will give us a key to the market that Greek debt is sustainable. This is the main measures, this

is the measures that will give us the opportunity on the 20th of August to exit the program in a successful way, in a clean way as we say it and

access the markets without having to depend on support from the institutions any more.

QUEST: Has there been fundamental changes in the way -- not only the Greek economy works, but in the way the Greek people understand their economy to


CHARITSIS: I see there have been massive changes. And sometimes people outside Greece do not realize what the country has been through in this

last eight years of the crisis. Even if you compare the official figures, you will see this is not an exaggeration that what we experienced the last

eight years can be compared to what the United States experienced during the great depression.

There was such the amount of a consequence and social and economic consequence of the crisis. So now I think everyone realizes we've reached

a tipping point I would say. We are now well on our way to recovery, 2017 was the first year of actual growth after 10 years, 1.4 percent --

actually, the first year of 2018 was even better, was 2.3 percent growth.

So we are on the right path right now. So we expect the decision on Thursday to --

QUEST: Right --

CHARITSIS: To sort of conclude this process.

QUEST: And finally, as part of that, it's amazing, the Prime Minister who was elected in other referendum and had all sorts of things and everybody

said it wouldn't last a week next Thursday has lasted as long as it has.

CHARITSIS: Don't forget, after the referendum she had another election --

QUEST: Yes --

CHARITSIS: And she won it, and --

QUEST: And everyone still said it wouldn't last.

CHARITSIS: She won --

QUEST: Everybody had been saying, it was outrageous.

CHARITSIS: She won the election, she won the election on a certain platform. The platform included --

QUEST: Right --

CHARITSIS: The -- included the program, included measures for the workers there, included measures to improve the business of -- we delivered all

these three fronts and we are here now to enter a new phase with the Greek economy.

QUEST: Next time we do this interview, please let's do it in the islands.

CHARITSIS: OK, we'll do it, OK.

QUEST: Thank you.

CHARITSIS: Thank you very much, Richard.

QUEST: Tomorrow on QUEST EXPRESS, the Chairman of the Athens Stock Exchange will join me on the floor of the New York Stock Exchange and it's

noon in New York, 5:00 p.m. in London, it's the QUEST EXPRESS live from the NYC.

You win some, you lose some, Egypt's football team had a rough World Cup so far off the pitch, its government is far more optimistic. The tourism

minister will explain why you can get some -- you can -- you can grasp victory even in the face of defeat(ph), after the break.


QUEST: Egypt may be facing a World Cup exit after tonight's defeat from the hands of Russia. Now, it doesn't mean that the Egyptian government is

giving up on the tournament. Egypt has become an official supporter of the World Cup to promote tourism and investment in Egypt.

Not something which I got to experience firsthand in last month's CNN business traveler where I went of course to Cairo.


RANIA AL-MASHAT, MINISTER OF TOURISM, EGYPT: We want to start targeting a generation that is looking for excitement, looking for authenticity, is

looking to experience something that they may not necessarily see and definitely will not be able to experience in other places.


QUEST: Egypt's tourism minister and she was at tonight's game and the minister joins me now on the line. Obviously, minister, we will be better

off talking if the team had won rather than lost. But it's not over yet, I mean, there's still some hope, it was a very good match.

AL-MASHAT: Yes, well, and actually like other fellow Egyptians, I'm saddened with the -- that we couldn't progress further, but again, the

Pharaohs gave it their best on the pitch and they did very well in Uruguay's match last week and all of them represent the nation in a good


QUEST: Now, you have decided or Egypt decided to become a regional sponsor of FIFA which is very interesting, bearing in mind many countries have

decided or at least companies have decided until there are FIFA reforms in place.

What advantage do you think it brings to you and to Egypt to be a regional sponsor or to be a sponsor of FIFA?

AL-MASHAT: Well, of course, in sponsoring the World Cup comes the two reasons. We wanted to support the nation's great achievement to each --

the tournament after 28 years of absence. We also wanted to promote each, the massive global audience.

The World Cup is one of the most viewed tournaments worldwide, the viewership is in the billions. We're targeting people all over the world

and we're trying to use our edge with technology, innovative ideas to be able to attract some more audiences and more tourists and investors to


QUEST: As you try to turn -- well, you always get, I mean, you get millions of visitors anyway, as suppose, who are you attracting? Who are

you hoping is going to come to Egypt? What's the tourists that you want?

AL-MASHAT: We want tourists to come and not only visit our sites, but we want them to live the experience of Egypt. And that's what we're trying to

do here --

QUEST: Yes --

AL-MASHAT: In Russia. We have different venues, a firm donor which is dedicated to Egypt, and we want people to experience our music, experience

our food, get a taste of what the country have to offer. We have a competition where you can win a holiday to Egypt, it's called Share Like an

Egyptian similar to the song in the past which was "Walk Like an Egyptian".

So now we have Share Like an Egyptian on Instagram, on Twitter, on Facebook, the most liked uploaded pictures and videos will get the chance

to come on a dream trip to Egypt. There will be 60 lucky winners.

We also have Facebook and SnapChat also --

QUEST: Right --

AL-MASHAT: Where you can download and really experience part of the World Cup with us.

QUEST: Right, so are you going to get the chance to see Mo Salah before he leaves. Are you going to get the chance to say, hey, well done anyway and

good to have you and see you back home.

[16:55:00] AL-MASHAT: Well, we all watched Mo Salah today and everyone cheered for him in the stadium, of course, his injury last month was one

which was quite tough not just for him, but for all the Egyptians that were following.

And we wish him all the best and there's definitely a chance to meet up and tell him we're still all behind him and we're looking forward to the next


QUEST: Looking forward to the next match indeed, minister, I'm sure, you'll enjoy it and we'll talk more, thank you as always. And look, it's

late there, it's coming up towards midnight, but again, what everyone does in Russia after you sort of have a difficult match, I suppose maybe a drink

or three all of these -- have an evening out. Thank you minister.

Now, if you want to keep on top of the day's top business, apply it in just 90 seconds, it's your daily briefing. Remember, it's before and after the

bell, you just ask Alexa or Google, CNNMoney flash briefing! I promise you it will work and if it doesn't, send me the bill.

When we come back, we'll have a profitable moment -- no, don't send me the bill, though you would love to do that, do not, forget I ever said that.


QUEST: Tonight's profitable moment, on the show you had two of the top economist in the world, Ken Rogoff and Mohamed El-Erian. And both of them

told us the seriousness of the situation with trade tariffs and the worsening situation.

And there behind me, you see exactly what will happen and what happened and what will continue to happen unless this is solved soon. Markets will

continue to fall, there will be great uncertainty in business, economies will slow down.

We are just at the beginning of this at the moment, but make no bones about it, unless there's resolution, I promise you, this will get much worse and

many people believe it will.

And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable,

I'll see you tomorrow.