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Hasbro CEO Warns of Higher Toy Prices This Fall, Blaming Tariffs; Judge Blocks Trump's Order to End Birthright Citizenship Nationwide; Judge Holds Hearing on DOJ's Plans for Kilmar Abrego Garcia; Musk Updates Grok Chatbot, Says A.I. Should Be Maximally Truth Seeking. Aired 1:30-2p ET

Aired July 10, 2025 - 13:30   ET

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

[13:30:00]

FREDRICKA WHITFIELD, CNN CO-ANCHOR OF "CNN NEWS CENTRAL": -- behind toys and games like Monopoly and Play-Doh. We'll discuss next on "CNN News Central."

JESSICA DEAN, CNN CO-ANCHOR OF "CNN NEWS CENTRAL": President Trump's trade war could hike toy prices just in time for the holidays. Hasbro's CEO Chris Cocks says prices could start rising this fall because toys and games like Candy Land and Play-Doh typically take three to five months to hit store shelves after they've been ordered.

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CHRIS COCKS, CHIEF EXECUTIVE OFFICER, HASBRO: A typical toy, if you took that same toy with the same process to manufacture it in the U.S., just given U.S. labor costs, that toy would be 80 to 90 percent, the cost would be labor. And so, it would be somewhere in the neighborhood of 50 to 60 percent more expensive to produce here. Yeah, so like if you buy an action figure for, or a doll for $10, you would have to charge $15 to $18 just to maintain the same absolute profit dollars for the company.

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[13:35:00]

DEAN: The president himself made a similar warning when he said just a few months ago, tariffs might raise prices, but American kids might just have "two dolls instead of 30." Jerry Storch is joining us now. He's the CEO of Storch Advisors and the former CEO of Toys "R" Us. Jerry, thanks for being here with us. I really appreciate it. We just heard from Hasbro's CEO there, tariffs he thinks are going to drive up toy prices by about 50 to 60 percent. Do you agree with his assessment?

JERRY STORCH, FORMER CHIEF EXECUTIVE OFFICER, TOYS "R" US: No, I don't think that's exactly what he said. He said if you move the manufacturing to the U.S. and you were dealing with labor intensive products, that's how they'd have to increase the prices. But they're not going to do that. They already make about half their products in the U.S. The rest are made overseas. Plenty of other manufacturers make even more overseas, mostly in China.

And so when you're dealing with a tariff in the range that has been imposed on China, Vietnam, we know those numbers, what we're going to see is that it's just a little too high not to pass on some price increases. There's going to certainly be something borne by the manufacturer, something borne by the brand. But eventually, it'll make its way to retail, I think we're going to see kind of high-single- digits -- I'm sorry, high-single-digit to low-double-digit increase in prices on those products manufactured overseas.

So there's no doubt that there'll be some increases. Everyone's going to try not to, but something that costs $25 now might go up to $30. It's that kind of a range. Again, what he was talking about was if you actually did move the manufacturing to the U.S., what would happen?

DEAN: Yeah. And so look, so what do you do? If you were CEO of Toys "R" Us, obviously you guys were selling toys that were being made by another company. But, what would you do if you were in that situation right now?

STORCH: Look, the first thing you want to do is try to plan this out. And that's where I think the administration had done (ph) themselves a disservice in meeting (ph) their own objectives. There's been so much uncertainty about this process, we kind of watched the negotiation unfold. And that's inconsistent with the kind of planning you want to do as a retailer or a manufacturer. So even if you wanted to start moving product to the U.S., you really don't know what you're dealing with. You don't know what the tariffs are going to be. They seem to change every month, and you really don't know for how long that's going to be in effect.

So you try to do some planning, but in the end of time, most likely you're going to keep things right where they are. On the margin, you move a little bit into the U.S. where that's affordable, not labor intensive products like Hasbro was talking about, but products where the manufacturing can be automated, you'll move to the U.S. But the rest, you are going to keep where they are, try to negotiate with the suppliers, do the best you can, and there'll be some price increases passed on to consumers. You can automate a lot. Lego operates an entire factory in Denmark. Talk about very expensive place for manufacturing, and when you go and see it, there are a lot of robots there making those little plastic bricks.

DEAN: Yeah. And so, what's the timeline for that? You just laid it out. Eventually, it sounds like, based on what you and others are saying, they are going to have to charge a little bit more. When does that start to happen? Is it on pace for that holiday season or is it just truly unknown at this point?

STORCH: Well, obviously, there's a lot of unknown because as we said, things are constantly changing. Having said that, I think it certainly is on pace for the holiday season. And again, I don't want people to panic. You're going to be able to buy your child a toy for the holiday. Again, the increases I expect to see are high-single-digit, low-double-digit price increases. When you talk about a 20 or 30 percent tariff, please keep in mind that's on the cost to the manufacturer of their product in China. Then they add their margin to that, the retailer adds their margin to, it's not exactly the same as a 20 to 30 percent sort of sales tax, if you will, because that's, it's on the cost of manufacturers.

So that's why I'm saying I think it's high-single-digit, low-double- digit, won't be great, but most people will still be OK because parents prioritize toys for their kids when it comes to holiday season.

DEAN: Yeah. And so, what's your advice, to people out there? I mean, obviously, it would be different if you own a, say a small toy store or a big one, or if you're a parent, what should people expect?

STORCH: Well, sure. I mean, if you know what you want, you should buy it now. We've been trying for, gosh, it seems like a century. I haven't been in business that long, but we've been trying forever to get parents to buy toys earlier, particularly hot toys. And we're going to know what those are pretty soon as it starts to emerge, what's going to be the hot toy for the season? So buy them early when the prices are lower. As we get later in the season, the combination of shortages of products, which certainly all this pandemonium of tariffs has created more a probability of shortages because the manufacturers, supply, nobody knows when to buy anything.

So, you're going to run out of products more than you have in years past. So buy it early, get lower prices now before all the tariffs are passed through, and be sure you have the toy for Christmas. So, this is the right time to be doing it. Amazon's got prime days, still two more days for that.

(LAUGH)

[13:40:00]

Target has got a week, so Walmart's going to -- this is the time, buy it now or buy it just after back to school starts, early September, when you really know what the hot toys are going to be.

DEAN: Yeah.

STORCH: But don't wait until December, or you are going to pay.

DEAN: Don't procrastinate. That's the takeaway. Find a good hiding spot and celebrate Christmas in July. Jerry Storch, thank you so much. We really appreciate it.

STORCH: My pleasure

DEAN: Happening now, a key hearing in the case of Kilmar Abrego Garcia. Could he once again be deported even before his criminal trial takes place? A judge wants answers from the Trump administration and we're going to have the latest from court. That's next.

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DEAN: We're monitoring developments into major immigration cases. A federal judge has now issued a nationwide block to President Trump's order to end birthright citizenship.

WHITFIELD: And right now, in Maryland, a federal judge is hearing arguments about the detention and a possible second deportation of Kilmar Abrego Garcia. He was recently returned to the U.S., months after being mistakenly deported to El Salvador where he was held in a maximum security prison.

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CNN's Priscilla Alvarez and Katelyn Polantz are closely following both of these cases. So Priscilla, first to you, what is happening with the Abrego Garcia case?

PRISCILLA ALVAREZ, CNN CORRESPONDENT: Well, this hearing started only moments ago, and right now, the judge is hearing from a senior Immigration and Customs Enforcement official. This was a move that the judge took earlier this week to hear directly from Homeland Security officials as to what the plans were for Abrego Garcia moving forward. As you mentioned, he was returned to the United States after being mistakenly deported, returned by the way after the administration had multiple times said that he would not come back to the United States.

Now, he's in Tennessee and he's held there on pretrial detention because he's facing criminal charges of human smuggling. But the question remains, what happens to Abrego Garcia if he were to be released from pretrial detention? And the judge did not feel that she got sufficient answers as to the what next, earlier this week from the Justice Department. This has consistently been a tense standoff between the federal judge and the Justice Department. This case now has gone on for months, and every time in that courtroom, there are standoffs and there are frustrations that are expressed by the judge.

Just to give you a preview to that last, or earlier this week, she said when trying to figure out, again, the what's next, "It's like trying to nail Jell-O to a wall to figure out what's going to happen next week." So you can see there that building up to today, there are so many questions as to what is to happen to Abrego Garcia, primarily not only if he is deported, which the Justice Department said they would do, but also where does he go? Does he get deported to a third country? And what they're trying to avoid here and what his attorneys are saying they're trying to avoid here is the exact same situation that landed him here in the first place, which is being deported somewhere that he shouldn't be.

So this is all getting underway now, but it is critical because we are hearing directly from a Homeland Security official for the first time in this case.

DEAN: OK, so while all of that's happening, Katelyn, a federal judge today blocking Trump's order to stop birthright citizenship. What more do we know about that?

KATELYN POLANTZ, CNN CRIME AND JUSTICE CORRESPONDENT: Yeah, so what we have now is the courts figuring out what to do after the Supreme Court looked at this on its first pass, this birthright citizenship executive order. The judge in New Hampshire, a district level judge, so a trial level judge, what he said is it's not even a close call. I'm putting a hold on this policy and that means that babies born in the United States after February 20th, or that haven't been born yet, they're going to be citizens even if they're born to immigrants, mothers and fathers who are in the U.S. either temporarily or illegally, or one parent is here in that way and the other parent is not here at all. So those babies, they will be citizens, they'll get birthright citizenship. That's the judge's determination here.

But this ruling is on pause because there's going to be more appeals here. The last time this went up and back in the courts, up to the Supreme Court, the Supreme Court said no nationwide injunctions. You have to figure out a way to apply this to a specific group of people, a class. That's what that group of babies is, born on February 20th or after of this year, that's the class. So the judge is interpreting the Supreme Court, we have a new order in place. It blocks the Trump administration policy, but like many of these things, there will be more court proceedings.

DEAN: There's always more to come. All right, thanks to both Priscilla and Katelyn Polantz. We really appreciate all that reporting. And still ahead, Elon Musk unveils a new version of the A.I. chatbot that's stirring up a lot of controversy. Details on that next.

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WHITFIELD: Elon Musk's xAI Company has updated its artificial intelligence chatbot to the latest version, Grok 4. Musk claims it is the smartest A.I. in the world, but this comes after the bot recently made disturbing posts that were sometimes anti-Semitic, violent or obscene. CNN Media Correspondent, Hadas Gold is joining us now. You have been covering this. I mean, what's the latest with this Grok 4? What are you seeing?

HADAS GOLD, CNN MEDIA CORRESPONDENT: Yeah, so Musk unveiled this new version of Grok that does a lot of things and it has made a lot of improvements, but I wanted to test out some of its responses, especially over the last few days and the controversy over these anti- Semitic posts that Grok was making on its X account, because you can talk to Grok both privately, but also up until about a couple days ago, you could tag Grok in your X post and the bot would respond in an X post as well.

So I should note, Grok is no longer responding in those X posts. So if you ask Grok 4, which is a paywalled version as of now, something about Jews, just a direct question, and then it will answer in a balanced and honest and non-hateful way. But when I prompted the bot to take on the tone of an edgy white nationalist and tell me whether to be careful around Jews, that's when the rhetoric started to get very hateful and very anti-Semitic.

I should note, this was not a scientific test, and Musk has acknowledged that there are problems with Grok and researchers actually say that there are issues across a lot of large language models that you can kind of cajole them and edge them into becoming anti-Semitic, into becoming hateful. Now, Musk has acknowledged these prompts he's written on X will redo (ph) the following, that they're fixing a system prompt regression that allow people to manipulate Grok into saying crazy things. In the live event last night, Musk didn't comment directly on the controversy over these anti-Semitic posts, but he did have some comments about what he wants his A.I. to be. Take a listen.

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ELON MUSK, CHIEF EXECUTIVE OFFICER, XAI: The most important thing for A.I. is to be maximally truth seeking.

[13:55:00]

So this is very fundamental, that you can think of A.I. as this super genius child that ultimately will outsmart you, but you can still in -- you can instill the right values and encourage it to be sort of truthful, I don't know, honorable, good things like the values you want to instill in a child.

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GOLD: And obviously, this is all new technology and people should be careful when they're using these A.I. chatbots because they are developing at a rapid pace and there are still issues, of course, to be worked out. And as I noted, researchers are saying that this is an issue across all large language models and across all A.I.s. Fred?

WHITFIELD: All right, Hadas Gold, thank you so much. All right. Straight ahead, CNN's new reporting about FEMA's response after the deadly flooding in central Texas. Sources tell CNN that critical help from FEMA was slowed down because of new cost controls put in place by Homeland Security Chief Kristi Noem.

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