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The Lead with Jake Tapper

Economists Warn Prices Starting to Rise Due to Tariffs; Urgent Search Continues for At Least 160 Missing People in Texas; Musk's A.I. Chatbot Grok Posts Blatant Anti-Semitism. L.A. Officials: 31 Workers Rescued From Partial Tunnel Collapse; 10 Rescued, 3 Killed In Houthis Ship Attack. Aired 6-7p ET

Aired July 10, 2025 - 18:00   ET

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

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[18:00:00]

JAKE TAPPER, CNN ANCHOR: Welcome to The Lead. I'm Jake Tapper.

This hour, Trump's beef with Brazil, why his latest trade war is in retaliation for what he's calling a witch hunt against one of his Brazilian allies. But is that kind of interference and appropriate use of American tariffs?

Plus, the agonizing search continues for more than 150 people missing in Kerr County, Texas, after the devastating flash flooding along the Guadalupe River last week. While local officials are facing heated questions today about why so many of them slept through the flooding and why the county signed off on the camps' safety two days before the tragedy.

And an incredible escape, how 31 workers were rescued after a sanitation tunnel collapsed in Los Angeles. What caused the collapse in the first place?

Our Lead tonight, America's top money minds say it's only a matter of time until President Trump's tariffs could deliver another big blow to American consumers. Prices are already rising and inflation is at a turning point aggravated by Trump's threat today of a whopping 50 percent tariff on Brazil. Why? Well, because the president doesn't like the way Brazil's current president is treating Brazil's former president. Unlike the other 21 countries that have received tariff letters from Trump this week, Brazil does not have a trade deficit with the United States.

Meanwhile, on Capitol Hill, Republican lawmakers say they support Trump, but their constituents are already feeling quite uneasy.

(BEGIN VIDEO CLIP)

SEN. SHELLEY MOORE CAPITO (R-WV): I don't want to say fatigue so much as uncertainty. The uncertainty of this is starting to wear on people.

SEN. MIKE ROUNDS (R-SD): The folks in my part of the country are more concerned about retaliation for tariffs that are put on. We haven't seen them yet, but that's a concern they've got.

(END VIDEO CLIP)

TAPPER: Back at the White House this afternoon, the Trump administration stepped up attacks on Federal Reserve Chair Jerome Powell, with whom Trump has been hounding to cut interest rates.

CNN's Kaitlan Collins is at the White House for us. Kaitlan?

KAITLAN COLLINS, CNN ANCHOR AND CHIEF WHITE HOUSE CORRESPONDENT: Yes, Jake. Jay Powell is in the White House's sights once again. Now this time we are seeing people like the president's budget chief, Russ Vought, accusing him of potentially violating government rules by a building renovation that they are doing at the Federal Reserve headquarters here in Washington.

He wrote this letter that he sent to him accusing him of changing what exactly those renovations are going to look like and saying that the president is, quote, extremely troubled that those plans may have violated the government building rules with what they're calling an ostentatious overhaul.

I mean, Jake, you can get into the nitty-gritty of what exactly those renovations are going to look like, but what it seems to be is another avenue that the White House is using to increase scrutiny on Jay Powell, someone that the president has made quite clear he wants out of that job. But, obviously, Jay Powell has said it would be illegal for the president to remove him from that role and that he has no plans to go anywhere.

But I asked Kevin Hassett, who is another top economic adviser to the president, who has also been someone mentioned as a potential contender to replace Jay Powell over at the Federal Reserve if they are basically laying the groundwork to try to oust him, by coming up with this complaint about the renovation that is happening at the Federal Reserve headquarters.

He declined to answer our question just over here a few moments ago on the North Lawn of the White House, Jake, but obviously you're seeing what is happening here with tweets not just from Russ Vought, but other top aides to President Trump, as he has made quite clear, he does not believe Jay Powell should be in this job any longer.

And remember, Jake, what is at the center of this fight is exactly what you just mentioned with Brazil, the tariffs that the president is coming up with, which oftentimes don't always have a rhyme or reason to them. And Jay Powell has said he's concerned about what that could do to inflation. The president has said he believes that's completely just wrong here, but it all goes back to how the president is waging this tariff battle against other nations, the concerns Jay Powell has about the aftermath of that, and, of course, the two of them being at loggerheads over exactly which path the Federal Reserve should take here.

The question is, is the president searching for a way to try to oust Powell from this role that they could argue is legal? TAPPER: All right. Kaitlan Collins at the White House for us, thank you so much. And don't miss Kaitlan on her fantastic show, The Source with Kaitlan Collins, which marks two years on the air tonight. Happy birthday, Kaitlan. So, tune in at 9:00 Eastern, right here on CNN.

Right now, CNN's Isa Soares is going to explain President Trump's beef with Brazil's government that led to this massive new tariff. Take a look.

(BEGIN VIDEOTAPE)

ISA SOARES, CNN CORRESPONDENT: President Trump is using the economy as a political weapon. He's been saying the tariffs are about leveling the playing field, that there's a trade imbalance, and that the United States is being ripped off by other countries. In the case of Brazil, that is not true.

President Trump yet is imposing a 50 percent tariff on the country. The reason, you ask, a court case against former President Jair Bolsonaro, a case which he says is a witch hunt in this letter and should end immediately.

[18:05:01]

So, this is not about business but about his buddy.

The two have been friends since Trump's first term.

DONALD TRUMP, U.S. PRESIDENT: Probably because of the relationship that we have, Brazil and the United States have never been closer.

SOARES (voice over): And they've been building on that relationship ever since. In 2022, Trump supported Bolsonaro's bid for reelection.

TRUMP: So, I strongly endorse President Bolsonaro. He will be your leader for hopefully a long time.

SOARES: And even though he lost a current president, Lula da Silva, Bolsonaro came out for Trump ahead of the 2024 election in the U.S., praising their exceptional relationship when he appeared at a CPAC Convention.

TRUMP: President Bolsonaro, great honor.

SOARES: Now, back at the White House, Trump using the weight of the office to help his buddy out.

But why is Bolsonaro on trial? Well, remember when Trump supporters stormed the Capitol? Brazil had its own version on January the 8th, 2023. Pro-Bolsonaro protestors broke into Congress and the presidential palace.

I was there in the aftermath and I personally saw the damage the rioters had done, ransacking government buildings, destroying artifacts, including art pieces, even setting some buildings on fire. Prosecutors say they found a connection between the riots and Brazil's former president. And earlier this year, they charged Bolsonaro along with 33 other people in connection with an alleged plot to overthrow the government. Those accused denied the charges.

For his part, the Brazilian leader says his country has a right to reciprocate the tariffs and has refused to get involved in Bolsonaro's court case, telling Trump to do the same.

LUIZ INACIO LULA DA SILVA, BRAZILIAN PRESIDENT: This country has laws, this country has rules, and this country has an owner, and that's the Brazilian people. So, save your judgments for your own life and keep them out of ours.

SOARES: Isa Soares, CNN, London.

(END VIDEOTAPE)

TAPPER: And our thanks to Suarez for that report. CNN's resident tariff expert Phil Mattingly is with us here.

So, Phil, this tariff that the president's imposing against Brazil is extraordinary because there is no trade deficit with Brazil. So, if the United States does this because Trump wants to help a political ally, who's going through legal problems, quite appropriately, it seems, this actually could hurt consumers in the United States.

PHIL MATTINGLY, CNN CHIEF DOMESTIC CORRESPONDENT: Almost certainly on products that people care a lot about. But I think you make a really important, contextual point to start with, which is these reciprocal tariffs that were announced on April 2nd delayed, that the president is now renouncing via letters, there have been 20-plus letters. The changes in the rates have not been very dramatic. And then the president truthed (ph) out the Brazil letter, which was strange to me because Brazil hadn't even been on the initial April 2nd list.

The reason why is because of this right here, $7.4 billion. That's actually how much Brazil sends or takes from the U.S. There is not a trade deficit would be the shorter more clear way to put this right now. The U.S actually imports about $43 billion from Brazil. They export, well, $49 billion from Brazil. In other words, the national emergency of the president declared was based entirely upon trade deficits, trying to balance those out.

TAPPER: They're the ones that have a trade deficit with us.

MATTINGLY: The U.S. doesn't have a trade deficit with Brazil.

Now, what does this actually mean going forward in terms of products for consumers? Well, $1.4 billion in beef in 2024 was sent from Brazil to the U.S. Coffee, about 30 percent of the coffee sold in the United States originates in Brazil, crude oil and crude-related products. $7.6 billion. More than 50 percent of orange juice sold in the United States comes from Brazil. These are products where they have significant market share that will all be hit by tariffs based on the threat that was put out at this point.

TAPPER: I've used all four of these in the last 24 hours. MATTINGLY: I'm glad you're eating beef. That's a good thing. Americans produce beef too though, so in case you get attacked for that.

This is important to note though. These tariffs are not built all the same, right? There are very legitimate implications for some of the tariffs that have been targeted or implemented up to this point on national security grounds. There are trade deficit issues that certainly exist here. But this is probably the most expansive and aggressive example of another element, a very Trump-specific element, which is a willingness to use tariffs for things far outside the economic means, starting with, you know, when they threaten Greenland before he was even inaugurated or threatened Denmark with tariffs over the issue of Greenland, or how about Colombia, because the Colombian president would not accept migrants being sent from the United States, threatening 100 percent tariffs on foreign films, 50 percent tariffs on the E.U. to restart negotiations, 25 percent tariffs on smart phones, 10 percent tariffs on bricks countries just a short while ago. Obviously, the fentanyl tariffs that were also emergency authorized tariffs, and now, of course, the 50 percent tariffs on Brazil.

[18:10:05]

How much of this does he plan to implement? Well, most of those minus the fentanyl tariffs, he has not. He uses this though as a very clear leverage tool. The difference and I think what makes this so much different is that he's doing it for a political ally of another nation that is currently facing trial for an attempted coup.

TAPPER: Yes. And it seems tariffs, in general, foreign exporters are absorbing some of the costs.

MATTINGLY: Yes. I think this is actually a really important point right now, because the Trump administration rightly has gone out repeatedly over the course of the last several days and said, look, there is no inflation right now, or inflation-effective tariffs. All of these things you were talking about that were going to be so terrible are not actually taking place. And what you're saying is actually validating on some level what has long been the rather minority view but widely held inside the White House, that because of the inelasticity of the consumer market of the United States, this is the biggest market in the world. Every country and every country's exports wants to play here, they will end up eating the cost.

Goldman saying it's about 20 percent right now. The administration has said it's going to be much more than that. We'll see it playing out. But it's also early. And I think this is important to note because we are already seeing some effect in the most tariff-sensitive areas, things like appliances, 0.8 percent increase, toys, 1.3 percent increase, household furniture, tools, sporting goods, all have seen increases right now, not substantial. And that's a large part because there have been a lot of buildup of inventories. There are a lot of companies that are very concerned about trying to raise prices at a time when obviously the president's very sensitive to that as well.

Also of the uncertainty, in general, there is a hope that tariff rates will drop that the president will back off. Until there's certainty there, people are holding off. We're going to want to watch Consumer Price Index next week is the latest report. Jay Powell, the Fed chair, very much under attack right now, has said, look, we don't think this is actually filtered through yet. We don't know the full picture. That's what they're waiting for. And there's an expectation it's coming.

TAPPER: This is also averages on a national basis, whereas we talk to, as you know, from when you sub for me, we talk to small business owners across the country every day. And they are on a case-by-case basis, being forced in many ways, in many times to raise their prices. Specifically, it might be 0.8 as a national increase, but for one small business, it might be a 30 percent hike.

MATTINGLY: And the most important thing from those interviews, which have been fantastic that you and your team have been doing them, is how much they say I can hold on at this level without raising prices and taking a big hit for like another two or three weeks or another two or three months. They all say it's coming.

TAPPER: Yes.

MATTINGLY: We're just trying to hold off right now in the hopes something will pull back, the it's coming part is pretty much around now.

TAPPER: Absolutely. Phil Mattingly, excellent work, as always. Thank you so much.

Coming up, CNN spends a day with volunteers who are scouring for Texas flood victims, where more than 160 people are still missing, 160 still missing. Their harrowing journey, that's ahead.

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[18:15:00]

TAPPER: We turn back to our National Lead and more on the catastrophic Texas flooding. An image into CNN today shows several campers at Camp La Junta in Kerr County, sitting on their cabin's wooden beam rafters to escape the floodwaters during last week's storm. The mother of one camper told CNN that her son's counselor helped the kids get up there as water rose above their bunk beds. Thankfully, everyone from that camp was safely evacuated, but at least five Camp Mystic staff campers are still missing. And across the entire state, at least 160 people are still missing.

CNN's Ed Lavandera is in Kerrville, Texas. He spent the day with the Center Point, Texas Volunteer Fire Department as they continue their search efforts. It's horrible, heartbreaking work.

Ed, tell us what you saw on the ride-along today.

ED LAVANDERA, CNN SENIOR NATIONAL CORRESPONDENT: Well, Jake, it's fitting that you show that image from the Camp La Junta, which is in the town of Hunt. Where we were today was about 30 miles downstream, right, 25 to 30 miles downstream from there. And we spoke with some firefighters that had been working this since Friday. They told us they've actually found debris from Camp La Junta along the river bed of the Guadalupe River over there in part of their search efforts. We spent the day watching in some of these areas that are the hardest to navigate to. We've seen an incredible amount of heavy machinery having to turn in the edge of the river into roadways so they can clear out debris.

It was a stunning sight to see. And this is an area, the area around Center Point, those -- that command post is in charge of about seven miles of the river searching through that. They've been doing that since Friday. The areas that we were in, we were told by a firefighter that we were with, that several bodies have been found. In fact, bodies have been found every day since July 4th. And he talks about just this one little spot really speaks to the volume of the work that is being done all along the stretch of this river.

(BEGIN VIDEO CLIP)

LAVANDERA: And what kinds of -- what kind of debris have you guys found down here as well?

RAZOR DOBBS, CENTER POINT VOLUNTEER FIRE DEPARTMENT: Well, we've. I found signage from camp part of the hills. That's up there by Camp Mystic. That's 30 miles away.

LAVANDERA: That's staggering.

DOBBS: That's staggering. That's the power of this river. And also the mind-blowing, trying to record mind how something can make it that far down the river through all these trees.

LAVANDERA: Right.

DOBBS: You know what I mean? But there's vehicles, there's all kinds of stuff.

(END VIDEO CLIP)

LAVANDERA: And, Jake, you know, it's just more of the tedious work. In fact, Razor Dobbs, who was a volunteer firefighter with the Center Point Fire Department there, he told us that, you know, he thinks that this could very well take months to complete.

TAPPER: And you've been spending a lot of time in that community, Ed. How are people there feeling? What's the mood like now on day six of these search efforts?

LAVANDERA: Well, it was interesting. We met the gentleman you just heard from, the volunteer firefighter, Razor Dobbs, at the volunteer firefighter fire station, which had eight feet of water in it. That fire department lost all of its firefighting gear. It all got washed downstream.

[18:20:00]

But that fire station has since been turned into the command post.

And what was fascinating, Jake, is that it has basically been taken over by volunteers and an army of people who have shown up to help. In fact, there were two men who were kind of running point, navigating people and telling people which direction to go. They should go check in with this person or go check in with that person, navigating and organizing volunteers that were bringing food or volunteers that were out on search missions up and down the river.

And what was really striking was just how all of these people had just taken it upon themselves to create this command structure, if you will, and this massive operation to conduct the searches and to conduct the clearing of debris all through that community.

TAPPER: All right. Ed Lavandera in Kerrville, Texas, thanks so much.

Coming up, former Governor Andrew Cuomo has spent millions of dollars on his legal defense against his accusers. And guess who's footing the bill? You are, New Yorkers. That's ahead.

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[18:25:00]

TAPPER: In today's Tech Lead, the vanishing line between free speech and malicious thoroughly, inaccurate, biased hate speech when it's served up by artificial intelligence. Case in point, a few weeks after Elon Musk said X's A.I. chat Grok would be retrained because Musk thought Grok was too woke. Well, then Grok started pushing Nazism and appeared to endorse the Holocaust and Hitler as effective.

Joining us now, Jonathan Greenblatt of the Anti-Defamation League. Thanks for joining us. Jonathan.

So, CNN's Hadas Gold has been following the story. She tells us that while the public free-facing version of Grok was horribly anti-Semitic and doing so seemingly without being pushed, it has not responded to anyone publicly since Tuesday evening after the story blew up. However, Hadas also tells us when then she used the paid Grok 4 version today and prompted Grok to take on an edgy white nationalist tone, she got an anti-Semitic response. Again, it's the paid version and she asked it to do so, but the anti-Semitism is still being served up by Grok. What do you make of that?

JONATHAN GREENBLATT, CEO, ANTI-DEFMATION LEAGUE: I mean, it's really atrocious, Jake, but we have to keep in mind that anti-Semitism doesn't seem to be a bug, if you will, on social media. It's a feature of these services. And if Grok is building its intelligence using X as its LLM, then no one should be surprised that one day it wakes up and says it's Mecca Hitler. I mean, literally, it sounds like something from a science fiction movie.

But as you kind of reported, as Hadas has, it spewed anti-Semitism, blamed the Jews for the floods in Texas, repeated anti-Semitic memes. I mean, it was really ugly. And in a moment when we've seen this historic rise of anti-Semitism, the idea that one of the most popular social media platforms on Earth is sort of vomiting this stuff out, Jake, it's not just ugly. I think it's explosive. I think it could lead to violence.

So, it's a good thing that Elon interjected himself, that they deleted the ugliest of the posts, but they've got a lot more work to do to get this right.

TAPPER: So, this has emboldened the far right, for want of a better term on social media. Here's a post from Andrew Torba calling Grok 4 incredible. For anyone unfamiliar with Torba, the ADL identifies him as the founder and CEO of Gab. Gab is an online hub often used by extremists and conspiracy theorists. The Tree of Life's Synagogue shooter was on Gab right before he attacked the Pittsburgh synagogue in 2018.

So, this new, unfiltered Grok is pleasing the anti-Semites.

GREENBLATT: Yes. I mean, like what Andrew Torba is your fan, you've clearly done something wrong. I mean, the reality is that, I mean, Elon Musk is this extraordinary innovator and inventor. I mean, he is one of the most well-resourced people on the planet. He ought to be able to apply some of that innovation and use some of those resources to help this system stop spewing out anti-Jewish hate.

I mean, a lot of things are hard. Getting rockets into space is hard. Knocking the Nazis off your platform, that should be pretty easy. So, we want to see the company, number one, enforce real guidelines. Number two, bring in the experts, like ADL and other organizations, that understand this stuff to help them get it right.

TAPPER: I want to get your reaction to something I just read written by the executive editor of Commentary, which is a conservative magazine, Abe Greenwald. He was just publishing a story, an essay on this issue, and he wrote of Elon Musk. I don't believe he's a neo- Nazi, but I don't doubt for a moment that he gets a thrill out of the obnoxiousness of online bigotry, like so many others who have only recently come to identify themselves as right wingers, he loves to offend. Is there really any reason at this point to think that he didn't know what he was doing when he gave those, quote, Roman salutes on stage in January?

As I recall, ADL has somewhat defended Elon Musk when he gave the Roman salute that some people thought was a Heil Hitler salute. Do you think in retrospect he didn't deserve the benefit of the doubt there?

GREENBLATT: No. Look, like I know Elon and I've dealt with him before and I do think he's a bit of an edge lord who enjoys, you know, mixing it up. I think what happened there, I mean, again, that still is a little bit deceiving in the moment. He was, I think, being awkward in doing a gesture.

But what I missed at the time, Jake, and what I'll say here today is it's not so much what he intended, it's the impact that it had. It's the way that white nationalists rejoiced at seeing him do this. It's the way that literal neo-Nazis were applauding online and he failed to push back on that. He failed to correct the record. And I think that was a mistake on Elon's part, and I wish we'd called it out more clearly when it happened.

[18:30:03]

TAPPER: On another matter, the National Education Association, which is the United States' largest teacher's union, it's endorsed a proposal to cut ties with your group, the Anti-Defamation League. The proposal has not been officially adopted. It's been referred to the NEA's executive committee for consideration. What is going on there? Why are they cutting ties and what would the impact be?

GREENBLATT: Yes. Look, we've got Nazis to the left of us and socialists to the right, if I might? It's really something else. This is the largest teacher's union in the country and at their convention over the weekend, a small group of radicals sort of routed around the process to put something on the floor of the NEA to cut ties with ADL.

Now, look, let me be clear, our education materials are peer-reviewed in the gold standard, Holocaust education, anti-bias training. I mean, this is not political, but it shows you what a small group of radicals can do. And they don't like the fact that ADL is a Zionist organization, something for which not only will we never apologize for, we'll never retreat.

And so in that context, they said, well, they can no longer teach us. It's cancel culture, Jake. They can't teach our kids about the Holocaust even though they've been doing it for decades and reach millions of children.

So, here's the good news. It hasn't gone through yet. It's still got to go through their executive committee. But as I see it, and I think as all of us see it, I've gotten so many calls this week, Jake, from members of Congress, from elected officials, from public figures who are saying, this isn't just an attack on the ADL, it's an attack on the entire Jewish community, that the idea that after the rise of anti-Semitism, the NEA would literally isolate their Jewish educators, alienate their Jewish students and make the oldest anti-hate group in the country sort of persona non grata in their schools is a bizarre way to respond to bigotry. And it reeks of the kind of double standards. That's a classic trope of anti-Semitism. So, here we are yet again.

TAPPER: Jonathan Greenblatt of the ADL, thank you so much. Good to see you.

Coming up, the independent tug-of-war and the New York mayoral race. Could Eric Adams and Andrew Cuomo split voters and deliver the election to Mamdani? We'll discuss.

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[18:35:00]

TAPPER: New today in our Politics Lead, Andrew Cuomo's defeat in New York City's Democratic mayoral primary has not dashed his hopes of a political comeback. The former governor is still on the ballot for mayor in November on a different slate, not the Democratic Party. Four years after he resigned in disgrace as New York governor over multiple sexual harassment allegations, Cuomo spending millions on what some legal experts say is at times and aggressive and unconventional legal defense against his accusers, including seeking the gynecologist's record of one of the plaintiffs.

While Cuomo contemplates a formal run as an independent mayoral candidate, New York taxpayers are the ones footing the bill in this legal fight.

CNN's M.J. Lee is here with me now. M.J., tell us what you found.

M.J. LEE, CNN SENIOR NATIONAL ENTERPRISE CORRESPONDENT: Yes, Jake, $20.5 million. That is how much the state of New York has spent so far for the legal defense of Cuomo and several officials who worked with him in three lawsuits brought by women who made MeToo allegations against him. That is an eye-popping figure.

And my colleague, Sabrina Souza, and I wanted to understand Cuomo's legal defense strategy that has cost New Yorkers so much money already. So, we look through hundreds of pages of legal documents from those lawsuits. We interviewed the plaintiff's lawyers, Cuomo's advisers, legal and ethics experts, and we also spoke with several of Cuomo's accusers.

And what some legal experts told us is that Cuomo's defense team has at times used aggressive and unconventional tactics that appear intended to slow down the legal proceedings. For example, in one case, they sought the plaintiff's gynecological optometrists and family therapy records. They've also tried to probe third party accusers' romantic histories and past alleged experiences of sexual trauma, as well as their communications with members of the media.

Now, Cuomo has denied the allegations of sexual harassment and his advisers tell CNN he is not going to settle. They say that, yes, these ongoing lawsuits have been expensive and protracted but they blame who they describe as cash hungry ex-employees who decided to sue him, as well as what they see as a political witch hunt orchestrated by New York Attorney General Letitia James.

Now, as a reminder, the A.G.'s office conducted an investigation that found that Cuomo sexually harassed around a dozen employees.

TAPPER: And you spoke with some of Cuomo's accusers. What do they have to say?

LEE: Yes. You know, speaking to some of the former Cuomo employees who accused him of inappropriate behavior but the ones who never sued him, they are still being saddled with significant legal bills because they're being subpoenaed in some of these other ongoing lawsuits.

So, for example, one woman, a former Cuomo aide named Ana Liss, she told me that she had an eight-hour deposition with Cuomo's lawyer two summers ago, and she decided to not have her lawyer present for it, which no lawyer would advise that. But she did this because she could spare herself the additional legal bill. She says that her legal bills related to Cuomo so far have been around $30,000.

And then there are, of course, the accusers who did choose to sue him. One of the three, Charlotte Bennett, she recently dropped her lawsuit against him, and at the time she said in a statement, quote, I've many times believed that I'd be better off dead than endure more of his litigation abuse, which has caused extraordinary pain and expense to my family and friends. I desperately need to live my life. That's the choice I'm making today.

Cuomo's lawyer said the medical records they requested from Bennett were all pro forma and routine, and that after, and we should also note, after she dropped her lawsuit, Cuomo filed a notice of intent to sue her. Now, Bennett also separately settled a lawsuit with the State of New York for $450,000, the majority of which went towards paying her lawyers.

Now, some of the experts we talked to raised the concern that Cuomo's team's tactics are basically having the effect of intimidating and harassing individuals who have either spoken out against Cuomo or could do so again in the future.

[18:40:04]

And they said that this costly strategy has been made easier because Cuomo's legal fees in these cases are being covered by New York taxpayers. Jake?

TAPPER: Unbelievable. All right, M.J. Lee, thank you so much for that reporting.

Let's zoom out and get more into the mayoral race. Joining us now is New York Magazine's David Freedlander.

David, you've been reporting on this race extensively in the past week. We've learned that former Governor Cuomo is trying to pressure sitting Mayor Eric Adams to drop out of the race. They theoretically are both running as independents. There is a fear that they could split voters who don't want to support Mamdani, the Democratic nominee for mayor. Cuomo campaign spokesperson said in his statement, quote, Mayor Adams did not run in the Democratic primary because he knew he was anathema to Democrats and unelectable. Nothing has changed. We do not see any path to victory for Mayor Adams. Adams responded in an interview on Monday, take a listen.

(BEGIN VIDEO CLIP)

ERIC ADAMS, NEW YORK MAYOR: I said, Andrew, are you that level of arrogance? I'm the city mayor. I'm the sitting mayor of the city of New York, and you expect for me to step aside when you just lost to Zohran by 12 points.

(END VIDEO CLIP)

TAPPER: What is your take on all of this tug-of-war going on?

DAVID FREEDLANDER, POLITICAL COLUMNIST AND FEATURES WRITER, NEW YORK MAGAZINE: I mean, Eric Adams accusing Andrew Cuomo of arrogance is quite something. I don't really know quite know what to make of it. I mean, you know, Zohran Mamdani, he won the Democratic primary by a lot, by 12 points. I mean, he really crushed Andrew Cuomo there. This is a Democratic city. It feels a little bit like all these people sort of fighting over to be second place in the general election.

TAPPER: CNN's Isaac Dovere is reporting that other Democratic socialists, Mamdani is a Democratic socialist, they're feeling emboldened by his victory, and they could be gearing up to challenge various incumbent establishment Democrats in the primaries next year. One of them on their target list, Congressman Ritchie Torres, who was on CNN last night with Abby Philip, he weighed in on the possibility.

(BEGIN VIDEO CLIP)

REP. RITCHIE TORRES (D-NY): I think it's fair to say that my colleagues in the New York Congressional delegation and I, we do not care about the Democratic Socialists of America. We're focused. On defeating Congressional Republicans in the midterms and making Hakeem Jeffries the speaker of the House and reversing the catastrophic consequences of the Republican reconciliation bill. We could care less about Mickey Mouse primary challenges.

(END VIDEO CLIP)

TAPPER: Is Torres right to be brushing off the challenge? I mean, I remember AOCs surprising victory during a primary against a guy that everybody thought was going to be the next Democratic speaker of the House.

FREEDLANDER: Yes. I mean, look, politicians should always, you know, take challenges seriously. I mean, but this mayor's race seems pretty unique. Mamdani was a pretty unique candidate and Andrew Cuomo was a pretty unique candidate. You know, I think it might be some of these DSA activists, it might be a little farfetched to imagine that, you know, this would be a spillover in the Congressional races based on what happened in the mayoral race like, you know, this year kind of thing.

TAPPER: So, Ritchie Torres, Congressman Torres that we just heard from there, is very supportive of Israel. The panel on Abby's show last night posited that that's one of the reasons he is one of the primary targets of the Democratic Socialists of America. What do you think.

FREEDLANDER: Oh, I'm sure it is. I mean, Israel, you know, it -- no politician would sort of say anything negative against Israel until Mamdani. He did. You know, he was sort of like way far out on that issue and it didn't hurt him seemingly. So, you know, I think the sort of political calculation of that has changed quite a bit.

TAPPER: You spoke to Mamdani for New York Magazine following his primary victory. He talked about the backlash to his refusal to criticize the phrase, globalize the intifada. That's a week before the election. He told you, quote, what you do in moments like that is you actually just respond to what every single New Yorker has told you is their top priority, which time and again is affordability, unquote.

Do you think he's going to have a tougher time in the general election or do you think his toughest race when it comes to the mayor's race is already behind him?

FREEDLANDER: Well, I don't know. I mean, I think if Andrew Cuomo and Eric Adams and the Republican Curtis Lee are all in the race, I think Mamdani wins pretty easily. Like right now, there's sort of some conversations to get like two of them to drop out so that it's a one- on-one race and the person who will be pulling the highest, say, in September would be sort of be the standard bearer of that. But still, you know, I think it'll be an uphill for anyone. It is a Democratic city.

TAPPER: All right. David Freelander from New York Magazine, thanks so much, always good to have you on.

Coming up next Small Business Bugs, a natural tick repellent company is being stung by President Trump's tariffs. That's ahead.

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[18:48:27]

JAKE TAPPER, CNN HOST: It's time for our "Business Leaders" series, where we talk to small business owners from coast to coast about the impact of President Trump's tariffs. Some are supportive. Many are feeling overwhelmed.

3 Moms Organics is a brand of natural tick and insect repellents created when its founder was struggling with neurological Lyme disease and unable to find an effective solution on the market.

Lisa-Jae Eggert joins us now from East Hampton, New York.

Lisa-Jae, what part of your product is impacted the most by tariffs?

LISA-JAE EGGERT, FOUNDER, 3 MOMS ORGANICS: We produce -- procure everything within the United States. These tops are bought within the United States, but they are only produced in China. I have no control over where my distributor gets these tops. And it's the second most important component to our product, first being --

TAPPER: Right, the actual repellent. Yeah. The repellent itself.

EGGERT: Yeah.

TAPPER: So does -- does -- do the tariffs mean that you're going to have to raise prices. How has it hit your business?

EGGERT: You know, I'm hoping that we don't have to. But I'm so small, I can't afford that, you know, double the cost of a top. I'm -- I'm hoping that we can get something worked out. This has been very confusing time for small businesses.

I can't plan ahead, I can't -- I don't know where my margins are going to be. It's making it a little tough. And I don't want to pass that off to the consumer.

[18:50:00]

I want to keep them safe.

TAPPER: Yeah. Are you worried at all that if you do have to raise your prices, that you might lose customers?

EGGERT: You know, I hope not. We have a pretty good following. It's a really good repellent. You know, I -- we can absorb maybe some of that. I'm not sure if we can absorb it all.

TAPPER: If you could speak to your lawmakers here in Washington, D.C., if you could talk to President Trump, what would you say to them?

EGGERT: That's kind of a loaded question. I've been speaking to lawmakers in Washington, and I've asked them this. Do you really understand how tariffs are affecting small businesses across the country, or do you know exactly how it is affecting small businesses, and you just don't care? Either way, both those answers are just really unacceptable.

TAPPER: And to be clear, if you could buy that spray component from a company that that manufactures them in the United States, you would in a second?

EGGERT: In a second, in a heartbeat. But it's going to take years to get a manufacturing facility off the ground. I would love to have, you know, some time to suss that out. I'll start a manufacturing facility, but I just, you know, it's a -- it makes it really, really hard.

I have no control over where they're made. I do buy within the United States, procure everything within the United States and manufacture in the United States.

TAPPER: Yeah.

All right. Well, the brand for anybody out there that wants to support Lisa-Jae, it's 3 Moms Organics, 3 Moms Organics. The products are available online.

Lisa-Jae Eggert, thank you so much and good luck to you.

EGGERT: Thanks for giving businesses a little voice.

TAPPER: We try to do it every day. Thanks so much, Lisa-Jae.

Coming up next, a dramatic rescue in Los Angeles after a traumatic -- a traumatic tunnel collapse, 400 feet below ground. Thankfully, all 31 workers were able to make it out alive. And we'll tell you how, next.

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[18:56:37] TAPPER: Our national lead now, the dramatic overnight rescue in Los Angeles where 31 men working on a wastewater project in a massive underground tunnel were trapped 400 feet below surface, five miles away from the only entry and exit point. Parts of the tunnel collapsed.

CNN's Stephanie Elam has more on their miraculous rescue.

(BEGIN VIDEOTAPE)

STEPHANIE ELAM, CNN CORRESPONDENT (voice-over): A sigh of relief across Los Angeles Thursday after 31 workers were rescued during what officials describe as a, quote, tense and traumatic tunnel collapse.

How bad could this have been?

MICHAEL CHEE, LOS ANGELES COUNTY SANITATION DISTRICTS: It could have been very bad because we're talking about 31 human lives. But I'm very happy to say it wasn't. We're very pleased and very, very happy that all of the workers were able to get out.

ELAM: A portion of the tunnel, which is part of a wastewater project, collapsed about 400 feet below ground, roughly five miles from its only entry and exit point, briefly trapping the workers.

UNIDENTIFIED MALE: They lost their phones, so they do not have any communication with them at this point.

ELAM: The incident occurred when workers were operating a tunnel boring machine which builds a tunnel as it digs, as shown here in this instructional video from the project, the chief engineer says a section that was already completed caved in due to quote squeezing ground, a phenomenon that happens when the soil deforms during an excavation.

The Los Angeles Fire department says trapped workers managed to climb over 12 feet to 15 feet of loose soil and debris to the other side of the collapse and onto a tunnel vehicle, which took them to the exit, where they were hoisted up in a rescue cage to safety.

L.A. Fire Captain Danny Wu was one of the 100 or so firefighters who responded. He says he was expecting the worst upon arriving at the scene.

CAPTAIN DANNY WU, LOS ANGELES FIRE DEPARTMENT: Driving there in my car, my heart just sank. It was just so sad to see 31 families out there just not knowing what was going on. So I'm just -- I'm just really happy for the outcome.

ELAM: Now, officials say construction on the tunnel will be halted indefinitely.

CHEE: We have to do an assessment for safety. We have to do an assessment for structural integrity. And we have to do engineering assessments to ensure everyone's safety going forward.

ELAM: Stephanie Elam, CNN, Los Angeles.

(END VIDEOTAPE)

TAPPER: And our thanks to Stephanie Elam.

Our last leads now -- dramatic video shows when a Liberian-flagged ship sank yesterday in the Red Sea. This was after days of Houthi attacks, killing three people. European teams rescued ten people. The Houthis said they took some crew members on board, but won't say where those crew members are on -- are now.

The U.S. mission to Yemen accused the Houthis of kidnapping and called for the crew's immediate release. This is the second commercial ship that the Houthis attacked just this week, vowing to continue until Israel ends its military campaign in Gaza.

In our money lead, going once, going twice, sold for $10 million. That's how much the original Birkin bag was auctioned for, including fees. This morning after a ten-minute bidding war in a Sotheby's online auction, a private collector in Japan won the rarefied black leather bag, stains and all. The famous Hermes purse was first designed exclusively for actress Jane Birkin in 1984, but has since become the ultimate symbol of luxury.

In our Earth Matters series. Chimps may not have TikTok, but that doesn't mean they don't know about the hottest summer trends. Researchers say chimpanzees living in an African sanctuary have been seeing copying each other by wearing grass blades or sticks in their ear holes. Theres no evidence that they're doing it to scratch their ears, but instead, they seem to be doing it as a fashion trend.

If you ever miss an episode of THE LEAD, you can listen to the show whence you get your podcasts whether or not you're a chimpanzee.

"ERIN BURNETT OUTFRONT" starts now.