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QUEST MEANS BUSINESS
Donald Trump's Mexican Tariffs Sparks Mayhem On The Markets; China Is Preparing To Deliver Its Own Body Blow To The U.S. Economy; Truckers in America Still Back President Trump Despite Trade War; Mexico's President Says the U.S. Threat to Slap Tariffs on Mexican Products is not the Way to Stop the Flow of Migrants Across the Border; Uber Shares Faces Bumpy Ride After Q1 Report. Aired: 3-4p ET
Aired May 31, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, CNN ANCHOR: We are swimming in a sea of red, investors certainly did not see this one coming. President Trump threatening to
impose 5 percent tariffs of all goods imported from Mexico if that country does not stop illegal border crossings.
U.S. stocks are close to the lows of the day as we enter the final hour of trade, those are the markets and these are the reasons why. Donald Trump's
Mexican tariffs sparks mayhem on the markets. We've got new reporting on who was behind the idea. And sell in May seven may and run away.
Investors are flying to safety as the trade war intensifies.
And as new tariffs from China are now in effect, Beijing doesn't stop there as it prepares its own blacklist.
Live from the world's financial capital here in New York City. It is Friday, the 31st of May. I am Zain Asher and this is QUEST MEANS BUSINESS.
All right, good evening, everyone. Tonight, Donald Trump stuns the market and opens a new front in the trade war. The U.S. President is now
threatening a blanket tariff on all goods from Mexico, risking economic disaster on both sides of the border.
Stocks around the world are lower. The Dow is off more than 1 percent. S&P 500 and the NASDAQ are also taking a beating as I speak as well. Mr.
Trump spent the day criticizing Mexico on Twitter. He says that in just over a week's time, tariffs will hit and continue to rise until Mexico
achieves what he will think is basically impossible: stopping illegal immigration to the United States.
Mexican president Andres Manuel Lopez Obrador says tariffs are not how social problems are resolved. He is hopeful the President will reconsider.
(BEGIN VIDEO CLIP)
ANDRES MANUEL LOPEZ OBRADOR, MEXICAN PRESIDENT (through translator): I believe that President Trump will understand that this is not the way to
solve things. I think that there will be a correction, if not right away at some point nice because these measures are neither in the interest of
Mexicans or United States citizens.
(END VIDEO CLIP)
ASHER: Jeremy Diamond is at the White House and Alison Kosik is at the New York Stock Exchange for us. So Jeremy, I want to start with you. I mean,
it just seems as though trade tariffs are not really about trade anymore. They've now become a political weapon. Walk us through that.
JEREMY DIAMOND, CNN WHITE HOUSE REPORTER: That's right, and we've watched the different ways that this President has tried to use tariffs as a
weapon. Usually, though it has dealt with trade disputes. This time we're seeing him use it as a weapon to try and resolve this immigration situation
at the southern border.
And the President is making quite clear that he is going to impose these tariffs on June 10. Five percent and then slowly scaling those up a month
after a month unless Mexico takes certain actions to contradict that.
But at the same time, we know that the President has been warned by several of his key advisors against taking this step. The Treasury Secretary Steve
Mnuchin, the U.S. Trade Representative Robert Lighthizer, both of them, according to our sources, warning the President against taking this step
particularly because it imperils passage of the USMCA, which is the revamped NAFTA free trade agreement that, of course, the President has made
a top priority to get through Congress.
This President and his advisers have been hoping to use that bill, or that trade agreement as really a key central plank of his 2020 reelection
campaign. And now with the President imposing these tariffs on all imports from Mexico that is very much now in jeopardy.
ASHER: So is this just a brazen attempt to change the subject given Mueller's statement? What are your thoughts on that?
DIAMOND: You know, that's always the consideration when you're talking about any move that the President is making at a time when he is in a bad
news cycle. But at the same time, our sources have told us that the President was very much unnerved this week watching this increase in this
spike really, in migrants crossing illegally into the United States this week.
There was one day this week where over a thousand migrants crossed over. The President tweeted about that. And so we know that that has certainly
been on his mind, not only this week, but really in recent weeks, we've seen him talk about how Mexico needs to do more to stem this flow of
migrants crossing into the United States.
And now we're seeing the President act on that. Again, this was a decision that pitted the President's advisers, Mnuchin and Lighthizer coming out
against it, but the President did have support from some key advisors, Stephen Miller, his hawkish immigration adviser, Mick Mulvaney, as well as
Peter Navarro, the President's trade adviser.
ASHER: Right, Jeremy Diamond live for us there. Thank you so much. I want to bring in Alison Kosik who has been at the New York Stock Exchange
all day. So Alison, obviously investors have been squarely focused on the U.S.-China trade war, but this move against Mexico took everyone totally by
[15:05:01] ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Oh, absolutely. That tweet last night from President Trump blindsiding Trump investors here. We
saw that from the open and now almost to the close. We are an hour away from the closing bell, and it looks like the Dow is going to close below
25,000 for the first time in four months.
The big worry here that tariff, this threat to impose this 5 percent tariff on all goods imported from Mexico will raise business costs. And then of
course, trickle down to the consumer getting hit squarely in the face.
The auto industry, you see stocks like GM, Ford, Fiat-Chrysler down anywhere from three to five percent. And you look at their supply chains
talking about between Mexico and the U.S., they're so closely integrated that sometimes these manufactured products, Zain, cross the border one,
two, three times, so a tariff would really become cost prohibitive for these two countries to do business in auto industry.
But you know what? Time is not on their side, because if this tariff does go into effect, it's one week from this Monday, so finding another supplier
is nearly impossible. So it's a huge worry here at Wall Street, how something like this will really shake out if this tariff does go into
ASHER: And Alison, you and I both know that famous adage, sell in May, go away. I mean, the whole month aside from these tariffs against Mexico, the
whole month of May has been somewhat problematic for U.S. investors.
KOSIK: Yes, I mean, stocks have been going pretty strong up until May. I mean, you see this -- that the Dow has been on this six week losing streak
and the S&P 500, the NASDAQ, they are on a four-week losing streak and May is turning out to be the first down month for the year.
We may finally be seeing not just of course today with the threat of tariffs on Mexican products. But we may finally be seeing the Chinese
tariff situation really impacting stocks, because you know, we just came off in earning season, we're in the middle or the end of one and we're
seeing companies talk about earnings, talk about the tariffs and the impact of those Chinese tariffs. And so you're seeing Wall Street become worried
now -- Zain.
ASHER: All right, Alison Kosik live for us there. Thank you so much. Appreciate that. All right, tariffs on Mexico would hit American consumers
far more directly than the Chinese tariffs.
Every American auto factory depends on Mexican parts. Shares are falling for the entire auto sector. The industry says that any added costs will
simply make cars more expensive. The U.S. and Mexico are vital to each other's food supply.
Mexico is the largest supplier of agricultural imports for Americans with crops like avocados and tomatoes. And for American farmers, Mexico is the
second biggest exports market for things like corn, soybeans and dairy.
Two thirds of all beer Americans imported last year came from Mexico. Shares in Constellation brand are down 6 percent. They own Corona, Modelo
and Pacifico beers.
Ramiro Cavazos is in Aspen, Colorado. He is the President of the U.S.- Hispanic Chamber of Commerce. He joins us live now. So thank you so much for being with us, Mr. Cavazos. My question to you is, what are the
options in terms of how Mexico chooses to respond here?
RAMIRO CAVAZOS, PRESIDENT, U.S.-HISPANIC CHAMBER OF COMMERCE: Well, Zain, thank you for having me on. The United States Hispanic Chamber of Commerce
strongly opposes this tariff on all products imported from Mexico. It will definitely affect consumers in America and businesses.
If we are not careful to answer your question, it could be if this tariff is implemented, and this tax, which it would be a tax on Americans, for all
products that they would buy that were imported from Mexico. The consequences are that Mexico itself could excise its own decision making
and put tariffs on American products that are exported into Mexico.
Our relationship is inextricably linked. We do over $650 billion in business with one another, it's two-way trade. They are our neighbor to
the south and this would only affect American businesses, our American consumer costs would go up, and it would affect automobiles, it would
affect fruit, vegetables, electronic, machinery, oil, gas, and of course, food and wine, and all of these products would be impacted and then in
turn, all Americans would be hurt in their pocketbooks.
ASHER: We haven't really seen the U.S. sort of using tariffs -- trade tariffs as a way to punish a country for political reasons. I mean, just
walk us through how likely Mexico is to mount legal challenges to this.
CAVAZOS: Well, the fact is that the largest ethnic group in America are German-Americans. The country that we live in for more than 250 years has
been a country built by immigrants. That innovation, that technology has made us the strongest economy in the world.
[15:10:04] CAVAZOS: We need the labor force, we need the jobs that are going unfilled with individuals that are coming to this country. And we
can call them undocumented workers or illegal immigrants. The fact is that they're economic migrants. They are moving to this country because the job
opportunities are here. We need their labor and their innovation.
And so the consequences for this would be very severe to the American economy if we move forward with this type of attacks. This is a country
that has depended upon, you know, low-wage to high-wage jobs. We have more than 12 million jobs that are unfilled in the U.S. today.
Mexico produces more professional engineers that are licensed than the U.S. produced last year. So as an example, we need to invest in ourselves as a
country and educate our community. And many of these immigrants are coming here going to American colleges and universities being productive starting
companies, at five times the average rate of an American. Immigrants employ one out of every 10 Americans in our country, in their businesses.
So this would impact this for many years to come.
ASHER: The U.S. President says that the America First idea is a total fallacy. What do you think he meant? Sorry, the Mexican President said
that American First is a total fallacy. What do you think he meant by that?
CAVAZOS: Well, the notion of imposing a tax a tariff that would only serve to punish Americans through what it would cost us at the grocery store to
buy products or buy a car. That is no way to, as I think the President of Mexico put it to coerce in a social way, and affect the flow of immigrants
to this country. This is not the way to solve that problem.
We do need more secure borders, we do need to use technology, we need to appoint more judges to deal with the backlog of these immigrant cases. But
we need to realize that we are economic partners, and that this has been happening for more than 200 years. People coming from this country, the
Irish, they came over during the potato famine; Italians, Germans, people from Southeast Asia and other countries.
This is a country that has benefited through the diversity of our community here and the innovation to business that has been the reason why people
come to this country for that freedom. And if America First, which it is, in my opinion, the best country in the world, we need immigrants to
continue to grow our economy, because our replacement rate as a nation is not creating enough individuals organically in the U.S. to fill the jobs of
That's why we do need immigrants and we need to do it wisely. We need to fix our immigration system. This tax is not going to stem the flow --
inflow of migration, and it will not solve our immigration problems. We strongly oppose this tariff. It is a mistake. And it will affect all
business in America, Republican, Democrat, north, south, east or west from every state, every ethnic group, and every nationality.
This is something that is a grave concern to us. I'm glad to see and hear that people within the administration are also opposing this and people
from both parties -- the Republican and Democratic Party.
We're a nonpartisan business organization. Our effort is to advocate on behalf of our 4.5 million Latino-owned businesses that form 20 percent of
our population, and $1.5 trillion from an economic impact, the fastest growing segment of our American economy are Latino owned businesses
creating jobs, investing, buying real estate and exporting and importing a higher percentage of Latinos because of the fact that we're neighbors with
Mexico, we have the cultural and the language and the affinity that helps us with bringing in products and services and also exporting products and
services to people that we know.
ASHER: Right. I mean, you mentioned one thing that is absolutely correct. This policy is drawing anger from both Republicans and Democrats,
especially because this is likely to hurt several Republicans own constituents. Mr. Cavazos, we have to leave it there. Thank you so much.
Well, President Trump's threat drew the anger of Democrats that much was obviously as expected, but Republicans, as I mentioned, also are saying
this is a very bad idea as well.
In fact, the Chairman of the U.S. Senate Finance Committee, Chuck Grassley wrote, "Trade policy and border security are separate issues. This is a
misuse on presidential tariff authority. I support nearly every one of the President's immigration policies, but this is not one of them."
This is a tightrope walk for Republicans in Congress. They want to be on the President's side when it comes to border security, but they are against
tariffs on Mexico that are likely to hurt their own voters. Phil Mattingly is joining us live now from Washington.
[15:15:12] ASHER: So Phil, here's the thing is the President shooting himself in the foot here, especially when it comes to what this ends up
meaning for ratifying the new NAFTA deal?
PHIL MATTINGLY, CNN U.S. CONGRESSIONAL CORRESPONDENT: Yes, look, I think beyond the fact that Republicans are obviously generally opposed to tariffs
ideologically, they're opposed to tariffs. Last night, many were very angry beyond Senator Chuck Grassley go up and down the list, you kind of
hit a key point that this is going to deeply impact a lot of senator states whether it is Iowa, Ohio or Texas.
But there's also the broader strategic issue here, which is the administration stated top number one legislative priority is passing the
NAFTA 2.0 or USMCA or whatever you want to call it over the course of the next couple of months.
Mexico obviously being a key piece of that, and senators and House members, Republican and Democrat being needed to actually pass the USMCA. And I
think there's real concern right now, particularly amongst Republicans, particularly among Senate Republicans that what the President just did, not
just from a U.S. to Mexico relationship standpoint, but also just how legislators are reacting on the Hill significantly set back the USMCA
An effort that he had already set back just a few hours prior when the administration started the clock by setting up a kind of their statement of
administrative proposals before Speaker Nancy Pelosi who controls the House was expecting it, before she wanted it to come starting a 30 -day clock on
So there were a couple things that happened yesterday that made people on Capitol Hill very wary that the President's number one legislative
priority, the USMCA can actually get done in a timely manner.
ASHER: All right, Phil Mattingly live for us there. Thank you so much. Appreciate that. All right, still to come here on QUEST MEANS BUSINESS.
The U.S. trade war now engulfs its five largest trading partners as investors flee to safety to avoid getting caught in that crossfire. That's
ASHER: Welcome back. The White House is now fighting a trade war on multiple fronts. The conflicts stretch across three continents and involve
most of the U.S.'s biggest trading partners. Take a look here -- Mexico, Canada, China, Japan, Germany -- together they account for over half of the
U.S.'s entire trade all of this year. All have become targets in President Donald Trump's trade war.
For investors, the tariff friction is triggering a global flight to safety yields in the German bund, viewed as one of the world's safest assets.
It's actually now at historic low.
[15:20:04] ASHER: Adam Posen is the President of the Peterson Institute for International Economics. He joins us live now. So Adam, thank you so
much for being with us. So why is the President so adamant about fighting these trade wars with multiple countries all at once?
ADAM POSEN, PRESIDENT, PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS: I honestly don't know Zain. I don't want to get into his tactical mindset.
I think the more important thing which is revealed by your intro about the market reaction is people are waking up to the fact that this is no longer
just a negotiating tactic.
This is something where he is being driven by ideological forces, where he is weaponizing tariffs, rather than trying to get deals, and where,
frankly, other countries are saying, why should we bother doing deals if he's going to behave this way?
So I think that's the story. It's what's in Trump's mind that's now getting out of his control.
ASHER: Okay, so just explain to us what sort of impact this is having when it comes to investors fleeing to traditional safe havens. I'm talking
about gold, the bond market, Japanese yen, just walk us through that?
POSEN: Yes. No, no, absolutely. So usually, when the U.S. gets involved in a trade conflict or anything with geopolitical ramifications, there is a
flight to safety. And the flight to safety, as you imply, tends to go either into dollar assets, into countries that are seen as safe
repositories, their bonds, and occasionally into precious metals like gold.
What's interesting about today, as you mentioned in the lead in is the German bunds have been a beneficiary of the safe haven flow at this time.
And while German bunds usually benefit from fears within the euro area, it's rare for bunds to benefit when the U.S. is attacking, particularly
attacking the global auto industry.
I mean, half of Volkswagens exports of autos coming to the U.S. are produced in Mexico. So for people to be using the bund as a safe haven
today and seeing the euro go up a tick is really a statement that people are not finding the U.S. as safe as they were a couple of days ago.
ASHER: Interesting. And so when you combine all of this, which really caught the markets by surprise, what's happening with Mexico, in addition
to the U.S.-China trade war, I mean, what is that? What does that do to overall global business confidence?
POSEN: I think you're right that this has to be seen in the broader context. I mean, that we are seeing now, China announced I think,
overnight, that they have a potential list of companies that could call unreliable that they could treat the way the U.S. treated Huawei, that we
are in an environment where one thing feeds on the other.
AMLO, the Mexican President has been quite restrained in his response. But this is no longer just about Mexico-U.S. And this is about how -- what
kind of environment globally there is for real investment, not just speculative flows, but companies making decisions where to put plants, how
much to do R&D.
And this is a world that's what I've referred to in the past as the post American world economy, one where the average uncertainty is higher and
unfortunately, average returns on investment are lower.
ASHER: So I mean, how do you handle this as a U.S. business that obviously relies on Mexico for certain parts, because on the one hand, you may
anticipate that perhaps if worst case scenario, the tariffs would increase 5 percent, 10 percent, 25 percent. The best case scenario, you sort of
think where you know that this is sort of real, tough negotiating strategy by the President, and it will likely in the end get resolved.
So with those two factors, how do you handle that as a U.S. business?
POSEN: If I am you, I mean, I can't speak as have never having run a business, only a nonprofit and government agencies. But my understanding
would be, no matter how high a probability you put on this being resolved, this is telling you that it's hard to say anything is ever finally
And this tells you it's very unlikely you're going to see USMC get passed through Congress anytime soon. So you have to start diversifying your
supply chain, you have to start thinking about alternatives. And so in terms of sourcing and marketing, this is very hard for companies in doing -
- getting sourcing from Mexico, frankly, it's like U.K. exit Brexit.
You know, this is a deeply intertwined economy for good reason, good economic investment reason why they're so intertwined. And so substituting
for it is hard. It's not like some plastics manufacturer of toys, shifting from China to Vietnam, which is actually much easier.
ASHER: All right, Adam Posen, live for us there. Thank you so much for being on the program. Have a great weekend.
POSEN: Thank you.
ASHER: Well, the Trump administration takes aim at its neighbors. China is preparing to deliver its own body blow to the U.S. economy. Beijing is
working on a blacklist, which will single out what it describes, as unreliable companies and individuals.
China says that any companies that violate market rules will be added to the list. Let's bring in Matt Egan who has been covering Huawei and China
and this story for quite a while. So what does it mean for U.S. businesses if they end up on this unreliable entity list?
[15:25:11] MATT EGAN, CNN BUSINESS LEAD WRITER: So there's a lot of details we don't know yet. We don't know what companies will be on there.
We don't know the timing when this would take effect. And we don't even really know exactly what it means. But it's certainly not a list you want
to be on. And it is literally a reaction to the U.S. crackdown on Huawei, which, you know, really poses an existential threat to what is the crown
jewel of China's tech ambitions, particularly around 5G.
ASHER: So how do U.S. businesses respond to this? If they end up on the list, what do they do?
EGAN: That's a good question. I mean, we're really in unchartered waters here. I mean, you have to think about, it just kind of shows how much
things have gotten out of hand, you know, companies at one point we're thinking about potential tariffs and how they would react, not anything
about actual tariffs and higher tariffs.
And now there's sort of a threat of a blacklist, you know, there's talk about rare earth minerals being potentially banned as far as exports go.
And I think it really shows just how much things have really escalated here.
And if you're one of these companies on this list, you're certainly going to do your best to lobby to get off that list to make sure that the
restrictions are not really punitive, but you also have to plan for the potential that you will be on that list.
ASHER: So if the U.S.-China trade war ends up getting resolved, what does it mean for Huawei? What does it mean for this entity list? And what are
your thoughts on that?
EGAN: So presumably, all of those things would get better, right? If somehow the negotiators on both sides were able to reach a breakthrough,
and there was a trade agreement, the tariffs got lifted, presumably that would mean that this blacklist would have never gotten an effect or will go
But you know, you have to think about the long-term consequences here. Because even if there was some sort of a breakthrough, you wonder about how
either side really has trust anymore in one another because it's just gotten pretty serious as far as this trade war goes. And you wonder about
the long term trust issues here.
ASHER: Yes, that is a problem. Matt Egan live for us. Thank you so much. Appreciate that. Okay, so another miserable session for the Dow. It's set
to finish the month with another heavy triple digit loss. There we are down 326 points. Well, we'll have our Paul La Monica explaining the
details after the break?
[15:30:00] ZAIN ASHER, HOST, QUEST MEANS BUSINESS: Hello everyone, I'm Zain Asher. Coming up on the next half hour of QUEST MEANS BUSINESS, we'll
speak to truckers in one key swing state who are still backing President Trump despite the pain of recent tariffs and how to lose a billion dollars
in just 3 months. Reaction from investors to Uber's first public results, and it's not as bad as you might have expected.
But first though, these are the headlines we are following for you at this hour. Mexico's president says the U.S. threat to slap tariffs on Mexican
products is not the way to stop the flow of migrants across the border. U.S. President Donald Trump is vowing to impose tariffs of up to 25
percent. Mexico's Foreign Minister says he'll travel to Washington to hold talks aimed at heading off the U.S. ultimatum.
A U.S. State Department is looking into reports that North Korea executed its top negotiator after February's failed summit in Hanoi. A South Korean
newspaper says the negotiator was accused of failing supreme leader Kim Jong-un. CNN has been unable to verify that particular report.
South Korean authorities have identified the seven people killed when their tour boat was hit by another boat and sank in the Danube River. Twenty one
people are still missing from Wednesday's crash. Hungary's Foreign Minister says the search area is now being expanded.
And some breaking news to bring you, the British retail tycoon Philip Green has been charged with four counts of misdemeanor assault in the U.S. after
a Pilates instructor accused Green of inappropriately touching her on several occasions. The incident allegedly occurred at a luxury resort in
Tucson, Arizona in 2016 and 2018. A spokesperson for Green's Arcadia Group has told CNN that he denies all the allegations.
The old saying sell in May and go away doesn't always call true or certainly has this year. The Dow is off more than 300 points ahead of the
closing bell. We've got half an hour until we close. It casts a pretty dismal month for the three major indices, they've all tumbled more than 6
percent. Paul La Monica is here to explain why?
I mean, first of all, just talk about today. When it came to the president threatening a 5 percent tariff on all goods imported from Mexico, investors
were really blind-sided by that.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think that this news clearly caught everyone by surprise because the talk was just -- you know, we
thought that the USMCA was going to be ratified pretty soon than new NAFTA, and now all of a sudden that's in jeopardy because you have President Trump
threatening all these tariffs on Mexico, which is another huge trading partner of America.
So you combine that and all of the trade tension with China, and it has led to a miserable month for the markets. Investors are justifiably worried
about where the global economy might be heading if the U.S. is having these trade battles not just with China, but potentially Mexico.
There still are things that need to be ironed out with Japan, with the EU, so it's by no means I think a good time for investors that believe in, you
know, free market capitals.
ASHER: So why has May been such an ugly month? Obviously, you mentioned the U.S., China, trade war which you have talked about all the time, and
then obviously this threat of tariffs against Mexico. Why else though has Mexico -- have may been such an ugly month?
LA MONICA: Yes, I think it really is mostly about trade, because when you look at the rest of the month, we didn't have any significant announcements
from the Federal Reserve. A lot of big companies, most of their earnings were in April. You did have some good results from prominent retailers
like Wal-Mart and Target in May, but that hasn't been enough to lift the broader markets.
So I think investors are really just focusing on the worries, the global macro-economic worries. I mean, Wynn Resorts for example is one of the
worst performers in the S&P 500 this month, they have big exposure to China through their casinos in Macau.
I think a lot of retail companies are tumbling because of concerns about the ripple effects of tariffs on --
ASHER: And possibly you have the cost -- I think since you guys -- that's what I think --
LA MONICA: Chinese goods, costs going up.
ASHER: If we go back to 2017, I mean, that was a stellar year for the U.S. Stock Market, and everybody thought that Donald Trump was the savior for
U.S. stocks. Now, is it going to be the Fed, is it up to the Fed, and will they likely cut interest rates maybe a couple of times in order to sort of
counteract the negative impacts of Donald Trump's trade wars?
[15:35:00] LA MONICA: Yes, I mean, let's back-track for a second. I don't think Trump was the savior in 2017 because he inherited a pretty nice
stock market --
ASHER: Right --
LA MONICA: From President Obama. So let's get that out of the way, even though he'd love to take credit for the record highs --
ASHER: Let's not give him too much credit --
LA MONICA: In 2017. All that being said, Zain, I think that it is fair to wonder what's going to be next with the Federal Reserve. President Trump
has said vocally several times that he would love to see the Fed cut interest rates, Fed fund's futures are now indicating several cuts this
And I think that's likely if this trade war hurts the U.S. economy, particularly consumer spending, but I have a story up on CNN business right
now, I spoke to people who were worried that inflation is still an issue and that the trade war would lead to higher prices on many consumer goods
than are being imported, that's a problem.
The job market is still pretty healthy which President Trump deserves some credit for and wages are going up, that's inflationary as well. So the Fed
might be in this weird scenario where the economy is starting to slow down, inflation is picking up, stagflation which was a big bugaboo in the 1970s
could be rearing its ugly head again.
And if that happens, the Fed may have no choice but to just sit on its hands and hope cooler heads prevail --
ASHER: Right --
LA MONICA: And that a trade war is averted and that boosts the economy, and then they don't have to worry about making any rate changes any time
ASHER: All right, they are sending a difficult position though when it comes to figuring out what to do. Paul La Monica live for us, thank you so
much. European markets were also driven into the red by the U.S. threat of tariffs against Mexico. That was the worst performer tumbling more than
1.5 percent, German car makers Volkswagen, BMW and Daimler all have plants in Mexico, their shares fell between that 1.5 percent and 2.5 percent.
We'll have a little bit more on that a little bit later on the show. Now, not every investor is hitting the panic button just yet. Speaking to Julia
Chatterley on the "EXPRESS", Tim Anderson of TJM Investment said market moves like this are not that unusual.
(BEGIN VIDEO CLIP)
TIM ANDERSON, MANAGING DIRECTOR, TJM INVESTMENTS: The markets obviously have a history over the -- just over last year of being very resilient when
it comes to --
JULIA CHATTERLEY, CNN: Right --
ANDERSON: Trade and tariff headlines. We're not having that bad of a day today. We've been on a little bit of a downward spiral anyway. And really
for us to be down as you just mentioned, maybe six, a little over 6 percent --
CHATTERLEY: Yes --
ANDERSON: For the month, over the strongest of bull markets and strongest of up years that the market has seen going back the last 20 years or so,
it's the average of a 5 percent pull-back. It happens three times a year for the S&P 500.
(END VIDEO CLIP)
ASHER: Uber has had a bumpy ride on Wall Street this Friday after reporting a billion dollars in losses in its first quarter. Uber shares
shot up in afterhours trading on Thursday after the earnings report. Today though has been a bit of a see-saw day for Uber shares are now on the rise
Let's bring in Clare Sebastian who has been covering the report. So you would think that with a billion dollars in losses --
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes --
ASHER: Shares will be tumbling, but not quite, it's actually up, I'm not sure, if we have it. But they're up right now about a quarter of 1
percent. Just explain why? It turns out it wasn't as bad as investors had anticipated.
SEBASTIAN: Right, a quarter of a percent rise in the market, otherwise sharply down is a pretty good result for a company that's been in the
doldrums since its IPO is still well below the IPO price of $45. But this was his first earnings report since going public, and relative to
expectations, we had already -- don't forget, seen analysts numbers that they put out in their SEC Friday.
And the loss was at the lower end, and estimates still a billion dollars, but -- and revenue was at the higher end of estimates. So this wasn't as
bad as it could have been. Plus, there were some soothing noises coming from the CEO Dara Khosrowshahi in the core.
And particular when you talked about the competitive landscape. You said, the key know is that Lyft and Uber are going to start to compete more on
product and on brand rather than on price. That led to a huge sigh of relief --
But he said they have throwing money at the problem, they continue to throw money at the problem in the last quarter, but competitive landscape is
going to ease a little bit, and that means that the --
ASHER: So --
SEBASTIAN: Pressure of margins is going to ease.
ASHER: So what is Uber's path to profitability, do they have one?
SEBASTIAN: This is something that is not a short-term issue, but Uber -- I mean, Dara Khosrowshahi has repeatedly compared them to Amazon who didn't
make a profit for years after going public as they expanded and moved into new areas. This is what Uber is doing, their -- what it has been looking
at Uber Eats for example, gross bookings on ride hailing was up 22 percent, Uber Eats was up 108 percent.
So it's much faster growing. Last, an interesting statistics that we learned is that 50 percent of Uber Eats customers are not ride-hailing
customers. So the company is saying now that they are looking for options just to kind of cross-sale across Uber Eats back into ride-hailing was
before they were using ride-hailing --
ASHER: It's interesting --
SEBASTIAN: To bring customers to Uber Eats. Uber Freight is another one where we've seen growth that exceeds ride-hailing in that segment. So it's
the other areas, plus autonomous is really where the future is.
ASHER: Clare Sebastian, live for us, thank you so much. All right, when we come back here on QUEST MEANS BUSINESS, auto stocks are plunging on news
of Trump's tariff threat, why the cost of building and buying a car can really get that much more expensive, that's next.
[15:40:00] (COMMERCIAL BREAK)
ASHER: U.S. automakers are poised to take a massive hit if the Trump administration stops slapping tariffs on Mexican imports. That's because
every American car factory uses parts from Mexico to build its vehicles. Car cost could increase by tens of billions of dollars which could then
drive up prices at car dealerships.
Deutsche Bank estimates vehicles could cost $1,300 more if the maximum 25 percent tariffs were actually put in place. Auto stocks worldwide are
plunging on the news, Ford, GM, Volkswagen, Mazda, all of them, all of them in the red. CNN -- Volkswagen tells CNN the tariffs could actually hurt
U.S. consumers and threaten job growth as well.
John Bozzella is the CEO of Global Automakers; a trade association representing car manufacturers and equipment suppliers. He joins us live
now. So John, thank you so much for being with us. So just walk us through in detail what these tariffs, these 5 percent tariffs on Mexico
actually mean for your industry, the car sector.
JOHN BOZZELLA, PRESIDENT & CEO, GLOBAL AUTOMAKERS: Yes, so, it's really very significant. These are taxes on American consumers and American
businesses. So, we're going to increase the price of cars coming in from Mexico that are sold to U.S. consumers. And just as importantly, and as
you observed, we're going to increase the cost of car parts.
And so those car parts come into the country to support American automotive production. So we're going to hurt consumers, people will purchase fewer
vehicles, we're going to hurt American factories, so it's not good for consumers and it's certainly not good for the industry.
ASHER: So from the president's perspective, how hard would it be for U.S. car manufacturers to avoid using Mexico for their car parts and to switch
to other suppliers?
BOZZELLA: You know, well, look, you have to understand why we're in this situation. The fact of the matter is that we have had a duty-free trade in
North America for almost a quarter of a century. So these have been the running rules, so long-time supply chains have been established, major
multi-billion-dollar investments have been made understanding that those are the rules.
And what's happened is that the U.S. auto industry has thrived as a result of it. We've created a really good competitive manufacturing platform here
in the United States because of this ability to trade vehicles and parts and support American consumers. So it would be significant. You know,
these are long lead time investment decisions that need to be made. And so it wouldn't happen easily, it would be costly and it would take a long
[15:45:00] ASHER: So for average American consumers looking to buy cars. I mean, when would they start to feel the impact just in terms of increased
BOZZELLA: Yes, look, it could almost be immediate. And I should remind -- yes, and you know this, and certainly we should remind your viewers,
customers in the United States are already paying more for cars and trucks because of tariffs. Steel and aluminum tariffs have increased the cost of
building cars and trucks in the United States by billions of dollars.
So we're already seeing cost increases moving into the system and resulting in price increases and margin squeezes for companies. This is also true
because of the tit-for-tat tariffs in -- with -- between China and the United States. So the cumulative effect of all of these is already having
an impact on prices.
ASHER: So assuming -- let's assume the worst case scenario. I'm a positive person, but let's assume the worst case scenario. You have the
president imposing 5 percent tariffs, that increases to 10 percent, 20 percent, 25 percent to get Mexico's attention when it comes to cross-border
illegal immigration. How do you respond to that? How does the car industry respond to that if the tariffs get as high as 25 percent?
BOZZELLA: It would be devastating for the industry, for American auto workers and for American consumers. What would happen, the response would
be that prices would go up by thousands of dollars a car, probably $4,000 to $7,000 a car. As a result of that, sales would go down 2 to 3 million
units in the United States, and that could impact hundreds of thousands of Americans who are working in the supply chain and in auto manufacturing.
ASHER: All right, John Bozzella, thank you so much for being with us, appreciate that.
BOZZELLA: Thank you.
ASHER: The U.S. president's tariffs have also hit some of his core constituents, American truckers. Falling imports have hit their revenues,
despite that, some truckers say they still support their president. Martin Savidge has more.
MARTIN SAVIDGE, CNN CORRESPONDENT (on camera): Mark Zimmerman is in for the long haul.
MARK ZIMMERMAN, CEO, ZIMMERMAN TRUCK LINES: I am the third generation owner of Zimmerman Truck Lines.
SAVIDGE (voice-over): He's got over 100 trucks and 140 employees in rural Mifflintown, Pennsylvania, deep in Trump country.
(on camera): Who did you vote for in 2016?
ZIMMERMAN: I voted for President Trump.
SAVIDGE: Trump loves truckers. In 2017, the president parked a big rig at the White House and proudly proclaimed --
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: No one knows America like truckers know America.
SAVIDGE: How would you say the trucking business is these days?
ZIMMERMAN: The trucking industry is a challenge, today, every day we come to work is a fight --
SAVIDGE (voice-over): Industry data shows the rates trucking companies charge are down, nearly as much as 17 percent. The reason in part, the
president's trade war. With fewer goods like steel and electronics coming in to U.S. ports, fewer trucks are needed to move them.
Zimmerman says his company's revenues are down 8 percent from last year.
(on camera): Do you in any way feel that he's the man responsible for the trade war and the setback you've been dealt.
ZIMMERMAN: It has an effect on our business, yes, but I don't blame him for it.
SAVIDGE (voice-over): This is probably a good time to point out that Mifflintown is in Juniata, County, Pennsylvania, which voted more than 79
percent for Trump. Profits may be down at Zimmerman Trucking, but here in this critical swing state, the president's popularity is still high.
UNIDENTIFIED MALE: I mean, he's been doing more for this country than any president or even probably since Reagan.
SAVIDGE: Just down the road at the club house Grill, despite the local negative impact, Trump's trade war and other policies are going over well.
UNIDENTIFIED FEMALE: He continues to say I'm going to build the wall, and he cares about the American people --
SAVIDGE: In fact, almost all we talked to already know who they'll vote for next time including Mark Zimmerman, who is currently feeling the pain
of President Trump's policies.
ZIMMERMAN: I am by him, a 100 percent certain I would be voting for President Trump in 2020.
SAVIDGE (on camera): Getting back to the trade war, it might seem kind of intuitive that if the president's policies have a negative impact on his
constituents that they would like him or perhaps like him even more. Yet, that is the case and it all comes down to perception, they see a president
not as failing, but fighting for America and for them. Martin Savidge, CNN, Mifflin, Pennsylvania.
ASHER: Madrid is going full English for the finals of the Champions League. It's Liverpool versus Tottenham. We'll be live in the Spanish
capital after the break.
[15:50:00] (COMMERCIAL BREAK)
ASHER: It is -- all right, it looks as though Kellyanne Conway is speaking outside the White House, let's listen in.
KELLYANE CONWAY, COUNSELOR TO DONALD TRUMP: Reciprocal, very bad trade deals for many years, and trying to make bilateral trade deals that are
better for America and American workers and American interest and he's done that along with the president or for the president in South Korea,
obviously, the USMCA is very important to our administration.
We'd like Congress to act on it, to vote on it.
UNIDENTIFIED FEMALE: Do you support the move, Kellyanne?
CONWAY: Well, you can ask Ambassador Lighthizer supports the president's agenda. And as our chief negotiator, he will continue to push forward to
get USMCA the vote that it deserves. He will continue to negotiate trade deals with China. And you know, I'm sure you know that President Trump
plans on meeting with President Xi of China when they're over at the G-20. So they'll talk about trade and I'm sure fentanyl and the like.
But you know, tariffs are -- tariffs are a good way to get a trading partner's attention, and apparently the president did.
UNIDENTIFIED FEMALE: With this Russia, Kellyanne, is it such a --
UNIDENTIFIED FEMALE: And some officials have said.
UNIDENTIFIED MALE: Do you think --
UNIDENTIFIED MALE: Kellyanne, do you think it's a move that tariffs will have positive effects?
UNIDENTIFIED MALE: Sexuality, how important is this to him?
CONWAY: It's very important, he just tweeted about it. And I personally know it's very important to him. It's something that we've discussed
publicly and privately over a number of years and he's had that as a priority as well. It is just a disgrace what happens to people based on
their sexual orientation, particularly around the globe, including countries where practically a lot of media companies film their movies.
So, those who were talking about pulling out of Georgia now, they happened to film their movies in places that aren't particularly very kind to people
of different orientations. But that aside, the president just tweeted out -- sent a couple of tweets about pride month and about -- and specifically
trying to call -- trying to bring other countries along with what we are doing as United States of America and depenalizing homosexuality.
You see what the president did last September at the UN, at the General Assembly when he was able to get 130 or so countries to come along and
agree with the United States about the drug crisis. So hopefully, we can do something similar here and on other issues.
UNIDENTIFIED MALE: And how do you address the millions of people who say this administration has no credibility?
UNIDENTIFIED FEMALE: The only way to suspend immigration to any country, like they would travel there, and he could do that for while they're trying
more countries. Why was that not an option before during tariffs?
CONWAY: Is there are plenty of options at the president's disposal. But I will tell you, Emerald(ph), that we just don't think Mexico had done enough
and Congress has done even less than that. And if they're not going to be, you know, wearing partners and our quest to make sure that we stop the
surge coming over our southern border.
[15:55:00] Even more of your outlets now are covering it in print, on radio, on TV, and that's appreciated on behalf of the American people.
People should see and know what's happening at the border, not have people just spin it for their own partisan -- according to their own partisan
beliefs as Chuck and Nancy did in January when they told the country a lie that it's a manufacture crisis.
You now have more Democrats, according to the polls, saying that more rank and file, they think we have a crisis at the border. So it's urgent, the
numbers are increasing, not decreasing. The president has been consistent about this for four years since he announced his candidacy, and he wants
Mexico to do more.
So what can Mexico do? I think that last night on a call, and I'm sure many of you -- all of you participated in that call. You heard Kevin McAleenan;
our acting Secretary to HHS -- excuse me, DHS, you heard acting Chief of Staff Mick Mulvaney talk about let's fix asylum, let's fix -- let's get an
operational security system in place with Guatemala.
Let's get the Northern Triangle countries to participate, too. But Mexico has for many years had a pretty tough immigration policy against Central
Americans. And we're just asking them to help us, to not be this gateway between the Northern Triangle countries and to allow policies like remain
in Mexico to flourish.
Because that will give a third safe country rite of passage to the Central Americans who are taking this treacherous journey. This is a multibillion-
dollar business that these people are giving of their savings and sometimes worse. Sometimes more than that to come and make that treacherous journey
And we don't know -- none of you knows what happens to all the people once they cross over. You can't tell me they're all safe. You can't tell me
the kids aren't trafficked, aren't bringing drugs across into our communities. So let's work together on this, I think that's what the
president is telling Mexico, you've got to do more.
UNIDENTIFIED MALE: Mexican delegation that is coming here to D.C. today?
UNIDENTIFIED MALE: Is there going to be a meeting with the Mexican --
CONWAY: We saw -- we've heard that they're on their way, so we'll see what happens when they get here.
UNIDENTIFIED MALE: Jeopardize USMCA?
UNIDENTIFIED MALE: Do these tariffs jeopardize --
CONWAY: No, it shouldn't -- it should not jeopardize USMCA because you saw the Vice President was just in Canada yesterday with Prime Minister
Trudeau. We are fully confident that USMCA could pass the house, and I think if Speaker Pelosi put it to a vote, she would -- she would get
positive votes from her own rank and file.
We know our legislative team here is on top of that. We know that many Democrats, rank and file Democrats including the 31 that sit in districts
that Trump-Pence won would like to do this for their constituents.
UNIDENTIFIED MALE: But it's not a done deal in Mexico here, right? I mean, don't they still have to act -- you're telling us that you think these two
can proceed on parallel tracks?
CONWAY: Yes, absolutely. We can proceed on to parallel tracks. The president says that there is a humanitarian crisis -- humanitarian --
excuse me, humanitarian security crisis at the border. It's always -- he always said that for the last however many months.
He will continue to want to fix the crisis at the border. We have people pouring in, you've seen the statistics, 1,000 just yesterday or so, we're
up to a 100,000 in some months, that just can't be. And we need to be a country that respects and promotes legal immigration. The president went
into the Rose Garden ten days ago now, two weeks ago, talks and put forward a two-track policy, full and final border security, how do we do that?
He laid it out and then to fix our legal immigration system, to move it to a merit-based system. He laid all that out, too. But it would be great if
Congress put the USMCA to a vote sometime soon, because next, we have to go in that -- in that direction.
UNIDENTIFIED MALE: You were saying that this issue is merely trying to avoid the Mueller --
UNIDENTIFIED MALE: Executed their nuclear --
UNIDENTIFIED MALE: Supports --
UNIDENTIFIED MALE: How concerned are you about North Korea's reports that they've executed some --
CONWAY: I'm just going to echo what Secretary of State Pompeo said today from Germany which is that he's trying to run that information down and he
doesn't have anything to add at this moment. I certainly don't.
UNIDENTIFIED MALE: Kellyanne, what do you say to the people who say --
CONWAY: Pardon, where are the people? Where are these people?
UNIDENTIFIED MALE: There are millions of Americans -- look --
CONWAY: Millions of Americans?
UNIDENTIFIED MALE: The question remains --
CONWAY: No, go ahead --
UNIDENTIFIED MALE: To those who say that this is --
CONWAY: Who are they?
UNIDENTIFIED MALE: Their version --
CONWAY: I want to address them, who are they?
UNIDENTIFIED MALE: I'm asking -- it's me --
CONWAY: Are they here, are they -- where are they? Where are they --
UNIDENTIFIED MALE: I'm standing right here, I'm asking you the question --
CONWAY: OK, so it's your question --
UNIDENTIFIED MALE: What do you --
CONWAY: What do I say to Brian Cameron, he says we went for millions of people to use above --
UNIDENTIFIED MALE: What do you say to anyone who asked whether or not this issue is merely the administration trying --
CONWAY: What issue?
UNIDENTIFIED MALE: To take the immigration issue. You're merely addressing the immigration issue to deflect from the Mueller report, what
happened after this.
CONWAY: Why do we deflect from the Mueller report, has been out for two months by the way. Have you read it?
UNIDENTIFIED MALE: Yes, I've read it three times, actually --
CONWAY: OK, great --
UNIDENTIFIED MALE: Pages of excerpts you read --
CONWAY: You've had a great Spring, I have indeed. And so why would we deflect from the Mueller report when the Mueller report said --
ASHER: All right, counselor to the president, Kellyanne Conway speaking there. It got a little bit testy towards the end where there were --
Kellyanne Conway is actually asked whether all of this controversy surrounding tariffs against goods imported from Mexico was just an attempt
to deflect from the Mueller report.
She says it wasn't, but she said that this is a very good way to get trading partners attention, and that Mexico simply has not done enough --
has not done enough to combat illegal immigration of its border. She believes that Congress should still vote on the USMCA which is the new
And that is the end of QUEST MEANS BUSINESS, you can see the closing bell there, I'm Zain Asher, "THE LEAD" with Jake Tapper starts right now.