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HALA GORANI TONIGHT

Trump Blames U.S. Businesses, Jay Powell for Trade War Problems; G7 to Take Place This Weekend in Biarritz; William and Kate Board Budget Airline to Scotland; China To Impose New Tariffs On $75 Billion In U.S. Goods; U.S. Justice Ginsburg Receives New Cancer Treatment; Putin Orders "Symmetrical" Response To U.S. Misael Test; Former Overstock CEO: FBI Asked Me To Pursue Maria Butina. Aired 2-3p ET

Aired August 23, 2019 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[14:00:20] ISA SOARES, CNN HOST, HALA GORANI TONIGHT: Hello, everyone. Live from CNN London, I'm Isa Soares, in for Hala Gorani.

Tonight, the U.S. president on a Twitter rampage against the head of his own Central Bank. We're following the Dow this hour, as you can see, down

more than 450 points. This, it's tanking after those tweets. We'll bring you the full story.

And the world cries foul as fire engulfs the Amazon: Leaders call on Brazil's government to take action or else.

Plus, a deep state plot involving an alleged relationship with an accused Russian spy. This former CEO story is so strange, it actually may have

cost him his job.

But first, we begin with the latest salvos in the U.S.-China trade war that are sending markets plunging. Here's a live look, as you can see, now, at

the Dow, down more than -- down 484 points, about two hours left in the trading day.

Markets were initially shaken by China, if you remember, announcing retaliatory tariffs. But things really took a turn after U.S. President

Donald Trump tweeted that he is ordering, he said, U.S. companies to find an alternative to doing business in China.

TEXT: Donald J. Trump: ... better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for

decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including

bringing...

SOARES: He said, "hereby ordered," were his words in that tweet.

TEXT: Donald J. Trump: ... My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?

SOARES: He also took shots at the Federal Reserve chairman that he appointed, asking, on Twitter, "Who is the bigger enemy? Jay Powell or

Chinese President Xi?"

Sarah Westwood joins me now from the White House, while CNN senior business writer Matt Egan is in New York.

And, Sarah, let me start with you. The president, I understand, has been talking tough today. And I know he's talking with his trade team. Do we

know how he's going to respond, as he orders companies to move away from China?

SARAH WESTWOOD, CNN WHITE HOUSE REPORTER: Well, Isa, White House aides aren't saying what President Trump plans to do in response to China's

implementation of retaliatory tariffs. But he has been huddling with his trade advisors, here at the White House, this morning, ahead of what he

says will be an announcement this afternoon of what his administration's response will be.

Now, that could be any number -- a range of issues. But keep in mind that he had been escalating this trade war with China just this month. Earlier

this month, he decided to go ahead and implement some tariffs that he had temporarily suspended over the summer.

And even though he delayed some of those until December last week, that was not really seen as an olive branch to China because he was doing it,

sources told CNN, to avoid putting the pinch on American consumers ahead of the Christmas shopping season.

Now, President Trump is still taking aim at the Federal Reserve. It's his favorite economic scapegoat when it comes to any sign of strain within the

economy. But he is also planning what appears to be a robust response to China, as you mentioned, in a tweetstorm this morning, saying he hereby

ordered all U.S. companies to stop doing business with China, start looking for alternatives. And, Isa, it's not really clear how the president thinks

he has the authority to do that.

SOARES: A very good point, Sarah. Do stay with us. I want to bring Matt in.

Because, Matt, we're looking now at the Dow. Dow is down, now, 504 points, almost two percent lower with just a few hours, in fact, left of trade.

And we know, Matt, the markets do not like this. They don't like uncertainty. What are you hearing from investors?

What are they most worried about? What we heard from Jay Powell or this -- the Twitter storm between and the fight between Jay Powell and, in fact,

the president? Or the fact, the president is retaliating, possibly retaliating on the China trade?

MATT EGAN, CNN BUSINESS SENIOR WRITER: Isa, I think it's all of the above. But really, the number one fear is the trade war. The trade war just keeps

getting worse. And that is clearly spooking investors because the U.S. economy was already starting to show some cracks.

Business spending has been soft, manufacturing has been weak. We learned that in August, the manufacturing sector in the United States outright

contracted for the first time in nearly a decade. And both of those issues are tied to the trade war.

So the fact that China has announced plans to put tariffs -- to raise tariffs on $75 billion of U.S. goods, is only going to make that worse.

And the fact that President Trump has now announced some unspecified retaliation of his own, again, suggests an escalation here. There's so

much tit-for-tat going on here that it's getting hard to even understand who was retaliating against whom, and for what.

And the fact that President Trump sent out that tweet that said, you know, "We don't need China and we'd be better off without them," I mean, that was

when we really saw the market start to fall.

[14:04:58] So this all suggests that the trade war is going to get worse, and that makes it really hard for businesses. I mean, they don't know how

to plan, they don't know if they should be hiring workers or firing them, if they should be expanding or retreating.

And the risk, of course, is that Washington and Beijing, that they take this too far and that they accidentally tip the world economy into

recession, if it's not already there.

SOARES: Yes. And the fear, of course, that he could be playing into China's hand and then pushing the U.S. into recession. Do stay with us,

Matt. I want to go back to Sarah.

Sarah, the president, his words -- words, we know, matter. And so does, as Matt was pointing out, the confidence of the U.S. economy. I just want to

bring viewers this -- one of his many tweets that we saw in the mornings, early morning in the United States. He said, "My only question is, who is

our bigger enemy, Jay Powell or Chairman Xi?"

What does this battle between both these men do? I mean, how can anyone make sense of this, the comparison here?

WESTWOOD: Well, Isa, President Trump had been taking aim at Jerome Powell, the chairman of the Federal Reserve, for weeks now. He really sees Powell

as the scapegoat for any sign of tension within the economy now, as there have been fears over the past couple of weeks, of a potential downturn in

the economy, a potential end to the kind of growth that President Trump has enjoyed during his first two years in office.

He has increasingly placed the blame on the Fed for that. He thinks that the Fed was too slow to cut rates and when they did so, didn't cut them by

enough. He thinks that the Federal Reserve should be doing a lot more to help juice the economy, and he's not been shy about making that view known.

Even though there are many economic analysts, investors, consumers who see his trade war with China as the culprit for the turbulence that we've seen

in the markets, today included. And President Trump, he has continued to insist that his trade war with China is successful, even in the face of

evidence, like today, that talks are not progressing, they're not getting anywhere close to the kind of agreement Trump says he sought out to secure

-- Isa.

SOARES: Yes. Just the language is a sign of that, isn't it, Sarah? Let's go to Matt.

And, Matt, we've heard as well, today, from Jay Powell, who Sarah was hinting at there, has been used as a pinata, I think it's fair to say, by

President Trump. He has been trying to force the president to lower interest rates. What has Powell had to say regarding the state of the

economy? Is he worried that the U.S. could be heading towards a recession here?

EGAN: Jay Powell did sound concerned today. He acknowledged what we all know, which is that the global economic outlook has become more turbulent

in recent weeks, and that the trade war is playing a major role for that.

But he didn't really tip his hand about what the Fed is going to do next. He simply said that the Fed will do what it takes to keep the economic

expansion going. But, you know, you can really interpret that a lot of different ways.

What I really think is important, though, Isa, is that he also said that the Fed doesn't really have a playbook for how to respond to this kind of a

situation, where the world's two biggest economies are in a trade war. He said that the Fed has a lot of experience with normal situations, like

inflation spikes or economic downturns, but not for responding to this new kind of trade uncertainty. He called that "a new challenge." I think it's

safe to say that is an understatement here -- Isa.

SOARES: Very much so. Thanks very much, there, Matt Egan and Sarah Westwood. Thank you to you both.

Now, so while President Trump grapples with all these economic challenges that we just outlined, there's also a host of geopolitical issues on his

plate. They'll be dealt with -- or at least discussed -- at the G7 summit in Biarritz this weekend, where he'll meet fellow world leaders from

France, Germany, the U.K., Canada, Japan as well as Italy. Let's go straight to Jim Bittermann, who joins us now from France.

President Trump, Jim, will be coming to Europe, no doubt thinking about what we just discussed with our two correspondents: the economy, Chinese

trade war. But at the same time, he's also be facing, no doubt, international outrage over Brazil and Bolsonaro's policies. Should we be

expecting fireworks here?

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: I don't know if it's going to be fireworks that we'll see. But I think behind the scenes,

I think there's quite a bit of fireworks in store because there are a number of different issues, not only the Amazon, not only the economy.

There's Iran, there's his -- the U.S. versus Europe, the kind of thing that Trump has been promulgating to divide Europe.

It's going to be a summit that's going to be very raucous. And as proof of that, President Macron of France, the host, said just a couple of days ago,

that they're not even going to draw up a final communique because they don't think there's going to be anything they're going to be able to agree

on, these seven leaders, like what happened in Canada a year ago.

[14:10:00] In any case, we're here, Saint-Jean-de-Luz, which is about 10 miles away from the actual summit site itself. But today, we were running

around the summit site a little bit and I wanted to show you a little bit, how things have changed there. Here's a look at it.

(BEGIN VIDEOTAPE)

BITTERMANN (voice-over): This is what Biarritz, France is supposed to look like this time of year: The laid-back seaside community on France's

southwest Atlantic coast is a favorite for summering tourists.

But this is what it will look like this weekend: More than 13,000 police and gendarmes will encircle the city with layers of security that extend

all the way to the Spanish border, 20 miles away.

When the summit begins on Saturday, the sunbathers will be chased off the beaches, hotels and restaurants emptied and, in some cases, closed, all to

protect the top world leaders who will gather here at the Hotel du Palais, a luxurious resort built by Napoleon III for his young wife, Eugenie.

Security to protect the G7's principals, as well as a dozen or so other international delegations from anti-G7 protestors who have set up campsites

not far away. France's infamous Yellow Vest movement as well as anti- globalists of every stripe regard the G7 as a club of the rich, which ignores the social and environmental concerns of the poor, even though

France put some of those issues on the G7 agenda.

AURELIE TROUVE, ALTERNATIVES G7: They decide policies just in the interests of the very rich people, and of the capitals, the finance, big

finance. And we denounce (ph) that and we want to show that there exists big social movements against these policies and also that we have

alternatives to this system.

BITTERMANN (voice-over): Because the G7 leaders require so much protection and the anti-G7 protests could turn violent, local merchants wonder if it's

all worth it, virtually closing down a region that depends on tourism for 20 percent of its economic activity.

AURORE PRAIN, REGIONAL MERCHANTS ASSOCIATION (through translator): It's during high season, our high season. It's the best of the month year and

we were not consulted. No one asked our opinion.

BITTERMANN (voice-over): What makes it all the more aggravating for some is the likelihood that this G7 will accomplish little more than the last

one in Canada, when the U.S. refused to sign the final communique.

Host President Emmanuel Macron told reporters this week that sine there's so little agreement among the leaders, he'll avoid a similar disastrous

outcome by not even drafting a final communique, something rarely heard of in diplomatic exchanges like the one here this weekend.

Leading some to question whether it's even worth the trouble, having a G7 meeting at all.

FRANCOIS HEISBOURG, FOUNDATION FOR STRATEGIC RESEARCH: To quote Winston Churchill, "Jaw-jaw is better than war-war," that's -- but you know, one

should never forget that. The G7 meeting in Canada last year was dreadful, but it was not useless. It actually forced the non-American players to

come to terms with the extraordinarily different nature of the new American administration at the time.

(END VIDEOTAPE)

BITTERMANN: And of course, the president hasn't changed, Isa. It's the same president as Canada. Some observers here are saying that expectations

are even lower than they were a year ago, in Canada -- Isa.

SOARES: Jim Bittermann there for us. Thanks very much, Jim, good to see you.

Now, it wasn't originally on the agenda, but G7 leaders, alarmed by the pictures they are seeing from Brazil, may also discuss those massive

wildfires in the Amazon. There have been more than 70,000 fires in Brazil this year alone. France, Germany, Ireland and Finland have shared their

horror over the destruction.

Now, Brazil's president, Jair Bolsonaro, is considering sending the army to tackle the wildfires, after earlier dismissing the concerns of

environmentalists. But he has contempt for the G7, for what he calls, quote, "Their colonist mentality in trying to interfere in this country,"

which (ph) is (ph) something that we've heard from him throughout.

Now, let's get perspective on the crisis, now, from Shasta Darlington, who's on the ground for us in Brazil. And here with me is John Defterios

with more on how the G7 industrial nations are in fact responding.

Shasta, let me start with you. Give us a sense of the fires today. I'm assuming they're still continuing, and Brazil has, of yet, not found a way

to put a stop to them.

SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: That's right, Isa. There are pockets of the rainforest that are still on fire, they have not

been put out. If you look at the satellite images, you can see smoke streaming across the country, still. This is largely hanging over the

Amazon.

What is interesting is, as you pointed out, this is -- went from being an environmental crisis to something of an international diplomatic crisis.

And it has forced the government to take this issue a bit more seriously.

So while the president, Jair Bolsonaro, started out blaming environmentalists, saying, "Oh, it's probably the NGOs setting fires in the

Amazon to make me look bad because I've defunded (INAUDIBLE), he's now admitted that it could in fact be the farmers and loggers and ranchers that

the environmentalists have said are trying to clear land, given the pro- development policies in Brazil.

[14:15:10] And he's also held an emergency meeting with his ministers, to try and come up with a best response, urging them to take all necessary

measures. And even talked about the possibility of sending the army in.

All of this, you know, could be too little, too late for the Amazon, and even for his international reputation. As we see all of these countries

either urging the topic to be on the agenda at the G7, or even threatening to stop buying beef from Brazil, as (INAUDIBLE) when the Amazon forest is

cut down, a lot of that land has gone towards cattle ranching and soybean production.

So if people start talking with their wallets, this really could turn into a bigger crisis than anybody anticipated -- Isa.

SOARES: And it does seem like Jair Bolsonaro's finally paying attention to what the world has to say, Shasta. But is he offering any solutions? Is

he -- have you heard of a strategy exactly, how to put out the fire? Because logistically, it will be a challenge, to say the least.

DARLINGTON: Yes, absolutely. You're right, Isa. The Amazon is huge. It's -- it covers many states inside of Brazil, and even beyond Brazil.

Much of it is uninhabited or only small towns or indigenous communities that don't have firefighters who can jump on these fires. Some countries

have started offering their help.

But in some ways, this plays into Bolsonaro's narrative all along, that foreign countries and foreign companies are actually using climate change

and their defense of the Amazon as an excuse to try and get their hands on that land and all of the possibilities.

So it's an open question, whether or not he would ever accept help from outside of Brazil. And I wouldn't be surprised if we didn't start seeing a

bit of sort of nationalistic sentiment also, here.

Up until now, most Brazilians and Poles have said that they want the Amazon defended, even the agricultural lobby has said that it does no good to

them. They can't sell their goods and their products if Brazil thinks they're tearing down the Amazon to get them.

So everyone -- a large portion of the population has been in favor of protecting the Amazon, but this could incite a whole different range of

sentiments, if people really feel like the world is crashing down on Brazil -- Isa.

SOARES: Yet he says he doesn't want the world to get involved because of other commercial intentions, yet he is the president who is offering (ph)

to undo the demarcations and to open up for business. So quite ironic in that statement. Shasta, thank you very much.

Let's talk more about what we can expect -- what we've been hearing, in fact, from G7 because I think there's something -- I was speaking to a

Brazilian friend of mine, and it's clear, John, that they weren't -- that Jay Bolsonaro wasn't expecting the international reaction that we've seen

in the last 24 hours, from the likes of Emmanuel Macron saying, "Our house is burning," but also not just saying those words, but also saying, "We

could go further with that with trade deals."

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: It's quite a call to action - -

SOARES: Yes.

DEFTERIOS: -- by the European Union, if you think about it. From the core, both France and Germany had a response to day. And from the north,

with Ireland and the Finns. The Finns, saying they perhaps would ban an import of Brazilian beef, going forward.

How much does Jair Bolsonaro really care about this, is the real question. He's taken a position very much like Donald Trump. Likes to be the

outlier, likes to create controversy, likes the independence.

Now, there's a couple of things we could take a look at in terms of impact here. There's about 260 million members of Mercosur. Perhaps they're

thinking the other countries, the four that are still members -- Venezuela's been suspended since 2016 -- would put pressure on Brazil.

But of that 260 million-plus members of Mercosur, 210 million are Brazil. So he is the anchor country. So they fact they're using this kind of

carrot-and-stick approach will help you if you want us to help, the German environmental minister was suggesting it.

But on the second side of it, though, they're saying, "If you don't do something, we're going to break this agreement with Mercosur," and they

spent 20 years doing it. So they signed it at the end of June, great accolades, European Union and Latin America trading with each other. And

all of a sudden they're saying, "We have to factor in the environment on any trade agreement."

And I think that's that major shift here. A senior E.U. official was saying, "We have to think of people, nature and environmental damage when

we sign any trade agreement, and they're willing to break it up and go back again.

SOARES: Because when we heard from Macron yesterday, there was a sense that he felt that Jair Bolsonaro had lied to him and that (ph) -- when they

last met. That he wasn't serious on climate change.

And in fact, if we look over the last six months, he definitely isn't taking the -- you know, the Amazon as seriously as perhaps leaders like

Macron would like.

[14:20:00] On the question of the European trade deal -- because we had a guest on the show from Amazon Watch yesterday, who said, "It's not just

about" -- of course it's about leaders, international leaders putting pressure. But critically, about businesses, key industries here that play

a part. And I think Shasta tapped on that slightly.

DEFTERIOS: Yes. So there is a different category, here. I was suggesting they're using the carrot-and-stick. European Union's leaning on Brazil

because they represent about one fifth of the overall trade into Brazil, so this is something that does matter.

Remember (ph), Bolsonaro says, "I'll be quite radical, but I'm going to be having a very close ear on the Brazilian business community because I want

it to grow again." Don't forget, he came into office because of a very severe recession. So I think the European Union, with better than a half a

billion consumers, says, 'We have weight right now."

But the language from Macron and the special aide to Macron was quite radical. "You lied to me during the meeting at the G20" -- and Brazil's a

member of the G20 -- in Osaka. The Germans were saying, "We're willing to help you but we're not going to be knocking at your door. You've got to

come to us and say, 'Yes, I have a problem in the Amazon and yes I need help.'" I don't see Bolsonaro doing something like that, to be candid,

Isa.

And it's a big player in Latin America. And he's got this nationalist tone, Bolsonaro, as you well know --

SOARES: Absolutely, yes.

DEFTERIOS: -- I can't see him coming back to the bargaining table and say, "Well --

SOARES: No.

DEFTERIOS: -- "I made a mistake, let's try to renegotiate this."

SOARES: Not only that, he's got the support of key industries, key farming industries in Brazil as well. And as you all know, he's known as Trumpino,

"The Small Trump." So this is something -- it'll be interesting to see what the G7 can achieve, and whether President Trump actually says anything

that would add pressure, I think, to --

DEFTERIOS: Well, I think it's -- yes, it's a great point. But I think the G7 has to get some teeth. It can't -- they're not even going to write a

communique this time. What sort of pressure is the G7 really going to have on Bolsonaro if Trump takes sides with Bolsonaro?

SOARES: And, really, this is something -- when I saw Macron's tweet, when -- I retweeted it straight as (ph) well, they should have been saying

something three weeks ago, when in fact -- you know that the Amazon was on fire -- a bit too late.

Thank you very much, fascinating discussion, John.

And also to Shasta Darlington, who is with us in -- is she in Sao Paulo or Rio de Janeiro? Sao Paulo.

Shasta, good to see you. Thank you very much.

Now, as the climate crisis takes center stage in these headlines, we're all asking what little we can do. Even the royals, believe it or not. The

duke and duchess of Cambridge shunned the private jet for a budget airline. But we'll tell you why their efforts to reduce their carbon footprint are

raising eyebrows here in the U.K. I'm not kidding, you'll (ph) bring that story after this.

(COMMERCIAL BREAK)

SOARES: Now, Britain's Prime William and his family may have earned some credibility with environmentalists this week. William, Kate and their

three children flew on the economy airline Flybe from Norwich in eastern England to Aberdeen on Scotland's east coast.

The decision to travel without all the royal trappings comes after environmentalists called out Prince Harry and his wife, Meghan. Critics

said some of their recent travels on a private jet were hypocritical, given their activism on climate change. Hadas Gold joins me now with more.

[14:25:05] And, you know, this is fascinating, given that what we have seen this week, regarding Prince Harry -- and just to get viewers a sense of

what exactly I'm talking about -- here it is. "Eco-Warriors Harry and Meg on Second Private Plane Hauls (ph) in in Days, Jumbo Jet."

We'll talk about how British media covering this. But how much is what we've seen by Prince Harry and his wife, a bit of a dig at -- at the rest

of the family?

HADAS GOLD, CNN REPORTER: Well, it's definitely a dig at Harry and Meghan because they've taken what has been reported to be four private jet trips

in the last 11 days or so. And they've been for private holidays in Ibiza and then also in Nice, to visit with Elton John.

And it definitely contrasts, when then you see, actually, the future heir to the British throne going on an economy flight. And if you -- what a lot

of critics are saying, is that it's hypocritical because they spend so much time advocating on efforts to try to combat climate change. Harry has even

said that they're only going to have two children because children can -- you know, too many -- too much population in the world is affecting climate

change.

But then at the same time, they're riding on these private jets that emit four times the carbon that you would emit if you took an economy flight.

And what they're -- and even though Elton John and a lot of these celebrities have come out and said, "Well, we're paying off with carbon

offset" --

SOARES: I was going to say, maybe they can carbon-offset it.

GOLD: You can -- you can pay the carbon offset. But they're also critics of the carbon offset. They say, "You know, why even try to pay it off?

Just don't do it in the first place. Why try to pay to make up for something when you're doing -- you could just not do it at all."

Now, others are saying, "Well, listen, Harry and Meghan have a lot of threats against them, there's a lot of people who want to hurt them. It's

better for them to travel privately and they're not paying for it, it's somebody else who's paying for them."

But this is the problem you see. People in power, celebrities, politicians who go around, advocating for things like climate change. I always think

of going to Davos. In Davos, we'd be in this beautiful place --

SOARES: Yes. And we've both been there --

(CROSSTALK)

GOLD: -- Yes. They're advocating for climate change, talking about all these grand ideas and how they can save the world. Meanwhile, you're

choking on yourself outside, walking to the venue, because of all these idling Mercedes cars, waiting for the people inside --

SOARES: And private jets, they're (ph) getting (ph) --

GOLD: -- and private jets coming in. And so that's what you find yourself, often, as a celebrity or as a politician. You talk the talk and

then the media and people want to see you walk the walk as well.

SOARES: Let's talk about the media. But do people really care about this, in terms of, you know, what the royals are doing? Because if they're doing

good with their -- you know, be it in Africa or in other charities, do they think that perhaps they're offsetting in other ways that may be -- that may

help?

GOLD: I do think an -- definitely to an extent, some of the coverage is more about the perceived drama within the family. You know, the Harry and

Meghan versus the William and Kate. And I do think that is a big element in a lot of the coverage of this situation, is trying to contrast them.

I think that people care to an extent. But I've been following Twitter all day long on this, to see what people are saying --

SOARES: What's the reaction?

GOLD: -- and you see, actually, there's sort of the Meghan camp and the Kate camp. But the Meghan camp are saying, "You know, listen, she has had

a ton of threats on her life. They have a small child. It is better and safer for them, especially when it was more of an international flight than

a flight, you know, from England to Scotland that may be smarter."

But I do -- I do have to say, I do think a lot of it has to do with all this perceived tension in the family, and somehow, people are trying to put

on the story that William and Kate did this on purpose, knowing that Harry and Meghan had taken a private jet.

SOARES: Well, if they did, it's very clever. Let me just show you this headline, here, from inside the paper, which my producer thinks is

brilliant. "Harry's Emission Impossible." Only "The Sun" actually can get headlines like this.

But I think part of it as well, a lot of the British press are kind of feeding into this, them -- one versus the other, aren't they? So. Thanks

very much, Hadas. Great to see you.

And still to come tonight, an escalating trade war with China and economic trouble at home. A lot is weighing on Donald Trump as he gears up for the

G7.

And he was a household name in the U.S., synonymous with Republican activism. A look -- we'll take a closer look at the life and legacy of

David Koch, whose impact on the American conservative movement will be felt long after his death.

[14:29:09] We'll bring you those stories, after a very short break.

(COMMERCIAL BREAK)

[14:30:34] ISA SOARES, CNN INTERNATIONAL CORRESPONDENT: Welcome back, now, the U.S. president will be leaving Washington in the coming hours to go to

France for the G7 summit. You may remember he stormed out of last year's summit early and leaving many wondering if he'll do it the same this year.

Especially given the tumultuous week he has had. A week that included in outburst at NATO at a Denmark, remember, because they refused to sell him

Greenland. Anointing himself as well, the chosen one, as he looked up to the sky to confront China on trade and accusing Jewish Americans who vote

for Democrats as being disloyal. So much that's happened this week, I feel like I've had whiplash.

But, of course, the issues that really, the president this week, are all related to the economy. And in fact, which is if we look at the Dow, it's

down quickly almost 500 points. China slapping a new round of tariffs on $75 billion worth of U.S. goods and the markets into a nose dive.

The president has been lashing out today on tweeting in the early mornings today. He's also being dismissing warnings of an economic slowdown.

Let's discuss this now with Jeffrey Schott, who is a senior fellow at Peterson Institute for International Economics and joins us now from

Washington.

Jeffery, great to be on the show here with you. Let's talk about all those points and more. Look, we know the president is meeting, this hour, at

least was at the top of this hour with his straight team. He says that he's going to respond to China's trade tariff this afternoon.

What tolls, Jeffrey, do you think he has left and how can he respond?

JEFFREY SCHOTT, SENIOR FELLOW AT PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS: Well, he has a lot of authorities that's been delegated by the

Congress over many decades to the executive. And he's used it a lot to impose tariffs on autos, steel and aluminum in the life. He can do more on

China and he's likely to react angrily even more angrily than he has already to the announcement that China is doing what it said it was going

to do and that is respond to his threat to impose more tariffs on their goods in September and December of this year.

SOARES: He says -- he also says a great American companies are here by ordered to immediately start looking for an alternative to China, he says.

Can he order them? Just explain to our international audience. Can you really order them to do so?

SCHOTT: No. But he can job own them and he create situations where they look for alternatives. One of the ways they look for alternatives is when

prices go up and importing from China, they look to other markets. And U.S. trade with China has actually gone down over the past year. U.S. is

buying less from China, though we're still buying an awful lot.

But a lot of the goods that we used to buy from China, we're buying from other countries in Asia. So our overall trade deficit has not changed very

much at all.

SOARES: Yes. But this is highly risky, is it not, Jeffrey? I just want to bring in the Dow. In fact, if I can get Laura, my producer to bring in

the Dow.

Because we've already seen the reaction from stock markets who, as you all know, don't like uncertainty. The Dow is down just over 500 points down.

Almost close to two percent.

This tit for tat that we've seen, isn't there a risk, Jeffrey, that he's playing into the hands of China and perhaps increasing the risk of a

recession here?

[14:35:04] SCHOTT: Well, he's certainly hurting American companies because the cause of production is going up. The uncertainty about their business

environment is becoming greater and that is inhibiting them for making the investments they need for future growth.

So we're basically mortgaging our future because of the uncertainty and unpredictability, the volatility, the craziness of the policies that are

coming out of the White House on almost a daily basis.

SOARES: Yes, he seems to think it is rosy, both the president and his team. He says that the economy is really. He wants to lower rates. We've

seen him attacking Jay Powell today and he wants to launch of QE, quantitative easing. Is there a sense, perhaps, in all of this, Jeffrey,

that he's in denial about the economy?

SCHOTT: Well, he's looking at the unemployment rate, he's looking at the high level of the start market. But what the Fed is looking at is the

uncertainty and its impact on investment and how that is going to affect medium term growth in the U.S. economy. And those signs are heading

downward that the economy is weakening.

Most economists think that and think there is a good risk of a recession going forward in the next 12 to 18 months. And that's why the president

and his advisers are thinking about or talking about possible additional tax cuts that continue to juice the economy through the U.S. election next

November.

SOARES: Which you kind of flip-flop on. Very, very quickly, Jeffrey. What we've seen, the words against Jay Powell and almost tweeting like --

really like a pinata. That's how he's treated very much Jay Powell in the last few weeks. What's your biggest worry here?

SCHOTT: my biggest worry is that this creates a political threat of the independent of the Fed. That is the greatest danger for the U.S. economy.

SOARES: Thanks very much. Jeffery Schott there. Thank you for taking the time to speak to us on the show. Fascinating. Thank you very much.

SCHOTT: Thank you.

SOARES: Now, the president's volatility has left some questioning whether there is any political strategy behind all of this. I want to bring in

Michael Shear on this. He's a White House correspondent for the New York Times. He joins us from Washington.

Michael, before we start to talking about G7, I want to really get you a sense of work to answer that question. Is there a strategy behind all of

this?

MICHAEL SHEAR, WHITE HOUSE CORRESPONDENT, NEW YORK TIMES: Well, look, it's hard to get inside the head of President Trump. But most times, I'm very

skeptical of the idea that much of what he does is shaped by some long-term grand strategy. This is not the kind of president we have. We have a

president who operates from his gut and who reacts mostly to the kind of things, the inputs that he takes from television, from people who have

whispered in his ear, you know, minutes before he speaks.

He reacts to what's right in front of his face, not to some grand plan that he's laid out. So I think mostly what we've seen here with China and trade

and his reaction to the allies that he's about to go meet this weekend, is mostly a gut level reaction, not a strategy.

SOARES: On the show, we have spoken about Brazil, climate change, G7. We went live to France, and as well to the White House to talk about those

tweets from the president. I know, Michael, you've been traveling to France to cover the G7. Put into perspective for our global audience, what

do you think we can expect after this week's Twitter storm -- tweet storm? Do we expect more havoc, perhaps, from the president, as he makes his way

to France?

SHEAR: Well, I can tell you that that is certainly what the other leaders of the G7 are bracing for. You know, the group of seven that meets every

year, they usually meet with the idea that by the end two days of discussions -- reach consensus and come out with a joint statement among

all of them, that they all agree to. They have completely given up on that idea this time around.

They decided that the last several times that Donald Trump has attended these kinds of meetings, he's blown them up. He's thrown temper tantrums.

He's refused to sign kind of -- sing in on to the agreements that the other nations have reached consensus on.

And so they're not even -- they're not even going to try this time. They're not having a joint statement, not even asking the president to sing

on to them. And that's all because they have -- they have largely seen over the last two and a half years that reasoning with him, you know,

doesn't really work. He's made up his mind before he comes into these settings and that he doesn't see eye to eye with most of his allies.

[14:40:16] SOARES: Though then, would you say, Michael, that he's walking into this G7, perhaps, more isolated than ever?

SHEAR: I think so or, at least, as isolated. I mean, I think the one wild card this time is Boris Johnson who, at least, temperamentally, seems to be

an ally of his or something of a kindred spirit. I mean, it is certainly the case that Britain is still not where the United States is on a whole

bunch of issues. You can look at, for example, support for the Iran nuclear agreement or climate change where Boris Johnson's government is

still much more in lockstep with the rest of the European countries, then he is with President Trump.

But from a temperamental standpoint, I think we're all expecting a kind of mini Trump to be standing alongside President Trump and that the two of

them may both find it in their interest to kind of poke the rest of the leaders in their eye and stir up trouble.

And so I think, you know, you asked at the beginning what do we expect over the next, you know, say 48, 72 hours, I think -- I think there is an

expectation that it may be sort of five leaders versus two. Donald Trump and Boris Johnson against the rest of the group. At least in terms of the

kind of animated spirit that both of them bring.

SOARES: Yes. Especially as Boris Johnson trashes Europe for some sort of deal as we head into Brexit deadline.

Michael Shear, thank you very much, joining us there from Washington. Good to see you. Thank you.

Now, American billionaire and conservative political donor, David Koch has died at the age of 79. Koch and his brother Charles ran their family's

industrial conglomerate Koch Industries. David retired last year.

But the brothers maybe better known for creating a political empire of sorts. Controversially, using their vast wealth to retransform American

politics with their small government free market message.

Let's get more on this. CNN's Phil Mattingly is standing by in Washington for more on Koch's life and legacy. And, Phil, put into perspective for

our international audience. Who really was he and what kind of legacy has he left?

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: It's interesting. I think everybody knows him, particularly, now over the course of the last

decade, he and his brother for what they've done, politically. But obviously, Koch Industries is one of the largest corporations in the world.

He was the CEO with that for a long period of time. He's also, the Koch Industries more than a billion dollars to philanthropic efforts, most

notably with the arts and hospital, things like that.

But why he has become known, and I think you made a -- you missed a keyword here, when it comes to how they operated, politically, it was

transformational. What he and his brother, what their network of affiliated groups willing to do with millions of their dollars is something

that is totally transformed U.S. politics.

What they did, as opposed to waiting until election, plunging some money into specific races or specific candidates is they created what was quite

literally a network of multiple groups that had long-term activists inside states that really moved the conversation and where ever you politically

lie, you can decide whether it was good or bad.

But it not only moved the conversation, it moved American policy over the course of a decade. And I think there's no question about their effect on

politics. You mentioned, they were for limited government. They were more libertarian, they were Republican, but they certainly helped a lot of

Republican causes. I think interestingly enough, they broke quite often with President Trump. They made clear they aren't very comfortable on a

number of his issues, most notably on trade in recent years.

But when look at there, how they added to the Tea Party movement, how they moved a number of current lawmakers who were in very powerful positions in

the Republican Party, there's no question about it. They have been, if not the most substantial or one of the most substantial donors and activists

over the course of the last decade or two.

SOARES: Phil Mattingly there for us. Thanks very much, Phil.

And I want to bring some breaking news just in to CNN. U.S. Supreme Court Justice, Ruth Bader Ginsburg has just completed treatment for pancreatic

cancer. Statement from the court says that a malignant tumor was treated and there's no evidence of the disease elsewhere. She's canceled summer

visit, but is otherwise maintaining an active treasure.

This is the 86-year-old's forefront of treatment for cancer.

Let's get more. Ariane De Vogue joins me now. What more do we know about this treatment? I know it's the forefront was saying. What are you

hearing?

ARIANE DE VOGUE, CNN SUPREME COURT REPORTER: Well, we just got the statement from the court, as you said. It said that she had completed this

three-week course of treatment on an outpatient basis to treat this tumor on her pancreas.

The court said in the statement that abnormality was first detected after routine blood test in early July and a biopsy performed on July 31st here

at in New York, it's Sloan Kettering. The court said that the tumor was treated definitively and there's no evidence of disease elsewhere in the

body. She will continue to have her periodic blood tests and scans, no further treatment is needed at this time.

[14:45:07] This comes from a very active Ruth Bader Ginsburg. You remember last year, she was treated with cancer. She took time off the court to

deal with that. But then she got back on the bench. She continue to do her speaking events and continue along. This summer, she has several

events that are schooled.

The Supreme Court itself is going to sit again for arguments in early October. Keep in mind, Ruth Bader Ginsburg, she's the leading liberal

lioness on this court. And so a lot of people will be thinking about her today. We expect to get more information. But right now, that's all the

information we have from the court's press office.

SOARES: She's quite a lioness, that's for sure. But wonderful to hear that she's well and that really, there's no further tests at this time.

Ariane De Vogue, thank you very much. We'll have much more after a very short break.

(COMMERCIAL BREAK)

SOARES: Now, Russia's president is ordering his military to respond to the U.S. after a successful American cruise missile test earlier this week.

Vladimir Putin says U.S. is provoking Russia. Take a listen to this.

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): Given the newly emerging circumstances, I instruct the ministries and relevant departments

to analyze the level of threat posed by the actions of the United States to our country and take comprehensive measures to prepare some metrical

response.

(END VIDEO CLIP)

SOARES: Frederik Pleitgen joins me now live from Moscow. And, Fred, I know that he isn't very cheerful in many of these press conferences, but

he, clearly, didn't look very happy as when we heard him today. Talk to us about this symmetrical response on what that could potentially look like.

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes. I think you're absolutely right, Isa. I think that Kremlin leader, I think

Vladimir Putin was extremely angry about this missile test which is a land- based tomahawk missile that the U.S. tested, which, of course, wouldn't have been possible. If the Intermediate Range Nuclear Forces Treaty or INF

would still be in place. But, of course, the U.S. decided to leave that treaty and then Russia did as a response as well. And therefore, that

treaty is no longer in place.

Now, the big problem of Vladimir Putin today, clearly, he said he has with that is that he says, look, the U.S. tested this missile. I think we're

seeing video of that test right now. Only 16 days after it officially left the INF. Vladimir Putin says he believes therefore this must have been

something that was preplanned by the United States to leave this treaty and then try and blame the fact that this treaty went away altogether on the

Russians.

Of course, what the U.S. has been saying is they believe that, for years, Russia has already been in breach of that treaty and they say that the

Russians have deployed medium-range missiles near NATO territory that they say are in breach.

[14:50:00] Now, the Russians have not acknowledged that. They denied that this is something that took place and in return blamed the U.S. for making

that treaty go away for, essentially, killing that treaty. So that something that's been going on for a while.

But you could clearly feel today that the Russians were very angry by the fact that this test happened. And that's when Vladimir Putin said that

there would be this comprehensive and symmetrical response.

Quite interesting to hear that he was saying it's going to, of course, involve the defense ministry which, of course, has the weapons that the

Russians would then possibly deploy. But then also the foreign ministry as well. So, clearly, this is something what the Russians want to put on a

full court press.

Now, whether or not, they are going to deploy anything in the not too distant future is totally unclear at this point. Vladimir Putin did not

say what exactly this response means. But something that the Russians have said in the past is that there would be tit for tat responses. That means

or seems to mean that only if the U.S. were to deploy one of these weapons, near Russia's border, that then the Russians would deploy these weapons as

well. Of course, that's something that would be a major escalation. Isa.

SOARES: Yes. No doubt about that. Fred Pleitgen there for us in Moscow. Thanks very much, Fred.

And more to come, including the astonishing claims from the former CEO of Overstock. We'll tell you why he says he got into a relationship with an

accused Russian spy. That story, next.

(COMMERCIAL BREAK)

SOARES: I want to bring you a rather unconventional story now. The former CEO of internet retailer, Overstock, says he committed political espionage

at the FBI's request.

Patrick Byrne says the FBI's directed him to pursue, "A romantic relationship with Maria Butina. The Russian woman now serving a prison

term for engaging and conspiracy against the U.S.

Now, Byrne's claims was made in a live 30-minute interview on CNN with our own Chris Cuomo. Take a listen to this.

(BEGIN VIDEOTAPE)

PATRICK BYRNE, FORMER CHIEF EXECUTIVE OFFICER, OVERSTOCK.COM: They said, and the very honorable the men and women, the men in black, they said, we

want to be clear this never happens in the United States.

We are the good guys. Oh, we're not -- we don't work like the bad guys. But we need to ask you to rekindle a romantic relationship with Maria

Butina, and discover --

CHRIS CUOMO, CNN HOST: Members of the FBI, that you're sure were members of the FBI, asked you to do this? And you know their names?

BYRNE: And I know their names. And they said these orders are coming from the personal -- this is being personally supervised by Y, and it's being --

and at the request of X, and then two months later, they said, Mr. Z has added his name to these -- the signature.

CUOMO: All right. Now, you're being - you're giving them anonymity now. But I heard you say on Fox, "If you go put a camera in Jim Comey's face,

and say the name Patrick Byrne, you're not going to like the reaction it gets."

BYRNE: That's the Z. That's Mr. Z.

CUOMO: So you believe that Jim Comey knew that you were being asked to do these things in the name of the United States government?

BYRNE: Not only knew, I was specifically told this request is coming from Jim Comey at the request of somebody, who I'm not going to name. Do not

assume it's the President. Do not assume it's the -- it was President Obama, do not assume that. That came out - -absolutely. It was out of

federal agents' lips, and all -- this is all the stuff - this is all been - -

CUOMO: And you have their names?

BYRNE: Oh, yes, this was all done -- this is -- this is the kindergarten stuff. I'm not --

CUOMO: Because I got to believe. And when they respond, they're going to say, "We like Patrick Byrne. You know, he was good in business. But this

story is a 100 percent fugazi."

BYRNE: No. They were -- they're not even going to do that. I promise you they're going to "No comment." They will not come out and deny this. They

know -- there's too much. If they come out and deny this, there's two --

CUOMO: You have anything in writing?

BYRNE: Listen, this is the silly part.

CUOMO: Well, it's not that silly, Patrick.

BYRNE: -- I'm light years behind. It's light--

CUOMO: I mean this story is so wild --

BYRNE: -- I'm light -- Chris --

CUOMO: -- That you got to have some proof.

BYRNE: Chris, I'm light years behind -- beyond all the world you're talking about.

(END VIDEOTAPE)

SOARES: Well, for the latest on this story, let's get to Alex. CNN's Alex Marquardt. He's in Washington. Alex, and Chris was spot on. This is a

pretty wild story. Take it back for us, how did this story actually play out?

[14:55:06] ALEX MARQUARDT, CNN SENIOR NATIONAL CORRESPONDENT: Isa, this really is an incredible story. And that was an incredible interview that

Chris Cuomo did there with Patrick Byrne last night.

Essentially, this started four years ago in 2015 when both Byrne and Butina ended up at a conference in Las Vegas in 2015. I mean, they started

talking about guns. We know that Butina was a guns enthusiast and they stayed in touch after that and Butina said that she -- or Byrne said that

he was invited to Russia by Butina.

And then when she started to make clear that she wanted to make inroads with the Trump and Clinton campaigns, of course, this was ahead of the 2016

election, that's when he got worried and he went to the FBI.

Now, Byrne says he has said he had previous relationship with the FBI and so he knew them. And they encouraged him to strike up what he says a

romantic relationship. He says that they green lit and encouraged a romantic relationship. And his exact quote was, "They wanted me to engage

and so I did, I went and engage. It immediately turned romantic as these things do."

I know you heard there with -- in that clip with Chris Cuomo that not only was he screened by the FBI, but he claims it was encouraged and ordered

from the highest levels from James Comey himself who, at the time, was the FBI director.

Now, the couple broke up at one point. And then as you heard there, Patrick Byrne saying that the FBI encouraged them to rekindle this

relationship.

SOARES: OK. Well, then let me ask you this then. Why did he decided to speak out about it? And secondly, what has been the FBI's response to

this?

MARQUARDT: Well, the FBI itself has not yet commented. But former officials who were involved at the time have roundly denied this. James

Comey has told CNN that this is not how the FBI works. Andrew McCabe has also told CNN he was number two. Between 2016 and 2018. He said his

allegation that his potential cooperation with the FBI was discussed at the highest levels, certainly, never happened.

What is interesting though, Isa, is that one U.S. official who we spoke with says that when Byrne went to the Department of Justice earlier this

year that they found parts of his story to be believable because he talked about operational details that few people would know.

And so what is possible is that the FBI was working with him to get information about Butina, but people close to FBI and, of course, his

former -- official say that they would never have told him to carry out a romantic relationship. Isa?

SOARES: Perhaps expect more twists and turns. Alex Marquardt, thank you very much.

And that does it for us tonight. Thank you very much for watching and thanks for having me all this week. Do stay right here with CNN. "QUEST

MEANS BUSINESS" is up next.

I will leave you with the stock market as Dow is down two percent. 559 on China trade war and the Trump tweets. I'm sure "QUEST MEANS BUSINESS" will

have much more on that. Do stay right here with CNN.

(COMMERCIAL BREAK)

[15:00:00]

END