Return to Transcripts main page
Connect the World
Xi Jinping Breaks Silence as U.S.-China Trade War Ramps Up; Global Markets on Edge Amid Escalating Trade War; E.U. Could Tax U.S. Tech Companies if Talks Fail; Mahmoud Khalil's Fate to be Determined Today; President Trump Departs White House for Annual Physical Exam; Tesla vs. BYD on Electric Vehicle; Israel Orders Evacuations from Parts of Gaza City; Indirect U.S.-Iran Talks in Oman; UAE Tourism Reaches More Than $128 Billion in Hotel Revenues in 2024. Aired 10-11a ET
Aired April 11, 2025 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[10:00:30]
CHRISTINA MACFARLANE, CNN INTERNATIONAL ANCHOR: Welcome to our second hour of CONNECT THE WORLD. I'm Christina MacFarlane in London where there's time
here is just after 3:00 p.m.
This hour, China's Xi Jinping finally speaks out amid a trade war with the U.S., saying China is not afraid. The fast worsening battle between the
world's geopolitical powers, threatening to wreak severe damage on both nations, sending shockwaves worldwide.
Well, the fate of a Palestinian Colombian student, Mahmoud Khalil, is set to be determined by a judge later today. A hearing will take place to
deliberate whether the government can continue to detain him and be deported, or whether he must be freed from detention. We'll speak to his
lawyer.
And Iran has set strict terms ahead of a crucial indirect talks that will hold with the United States on its nuclear program tomorrow in Oman. Tehran
said it will not accept any form of threats or any attempt to cross red lines. We will preview what's at stake at a later in the show.
First, the U.S. trade war with China is growing hotter by the day. Chinese leader Xi Jinping is speaking out, saying China is not afraid in his first
public remarks since this tit-for-tat began.
Let's just take a look at how quickly things have escalated. The U.S. introducing a 10 percent levy on all Chinese imports back in February. Mr.
Trump has now raised that to 145 percent. And true to its word, China did hit back once again. China raising its tariffs on U.S. goods by 125 percent
today.
Now, China has said that this is the ceiling for blanket tariffs, but did not rule out other countermeasures. The U.S. president expressed some
optimism yesterday that the two countries will eventually cut a deal. But White House officials say China has to pick up the phone first.
Meantime, the European Union is warning it could hit U.S. tech companies if trade talks fail. The bloc's trade commissioner is set to meet with U.S.
officials on Sunday.
Well, we are joined by CNN international diplomatic editor Nic Robertson.
Nic, so things are getting increasingly bloody between the U.S. and China. Now we have two of the world's largest economies effectively no longer
trading with each other, and no signs of an off ramp. So just how disruptive is all of this going to be?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Well, it's very disruptive. You know, a lot of market analysts are looking at this and
saying the possibility of a recession is out there. Some are even suggesting that it could be as bad as the economic hit that the world took.
The world economy took back in 2008. And back then it took real strong intervention and countries working together.
Finance ministers working together to avoid a really precipitous drop off the economic cliff, if you will. So in that economic uncertainty, you have
businesses not wanting to invest in the way that they might have before. That brings, and if it does bring this downturn in the economy that's being
suggested, that potentially puts volatility on the streets of certain countries where the economic margins are already narrow. It perhaps fuels
migration.
These are really big picture questions. And I think it's very, very hard to put your finger on the map and say where these issues will spring up first.
But undoubtedly it puts, potentially puts the world in a more fragile place where the potential for either civil unrest or between nations grows more
possible. So that's on the one side.
But I think, you know, the central issue right now is China. And it's very interesting that so quickly into this sort of tariff battle that President
Trump has brought with his view of how trade should be done with the world, that it's focused on China. And obviously, this has always been China's
fear certainly over the past decade and more that the United States is trying to cut it off from economic growth, economic development.
So for President Xi, for the Chinese population, it's going to feel more like this. So no surprise perhaps today that President Xi appealed to the
European Union to find commonality in the way that they try to work with the United States or deal with these tariff burdens from the United States.
[10:05:01]
It speaks to a divisive world. There were clearly already orbits of interest developed between basically pro-U.S. or pro-Chinese. Russia very
much in the Chinese orbit at the moment. On the one hand, you know, you have Steve Witkoff, President Trump's adviser, an envoy meeting with
president Putin today talking about Ukraine. But you get the sense that, you know, trying to draw perhaps Russia away from China leaves China even
more isolated.
And so this is where the tensions, I think, if you look in very, very broad picture and long term at what President Xi sees as the existential interest
for the Chinese economy down this path of contention with China and the United States, is the path that could lead, you know, to, let's not say
war, but it's going to lead to very, very deep and lasting tensions. And that's dangerous.
MACFARLANE: It's interesting what you say there, Nic, about the comments from China about the interest in collaborating with Europe more. I think
what we're seeing in general is this kind of realignment of global trading blocs underway. And with that, we've been hearing today that President Xi
is conducting or planning to conduct a week of diplomacy with visits to Vietnam, Malaysia, Cambodia, an indication, really, Nic, that Xi and China
are looking to capitalize on this moment if anything.
ROBERTSON: Oh, absolutely. And it's a moment they can capitalize on because it's not just the economic shock that's come. Allies of the United States,
and we're speaking here about allies in NATO and the European Union, already suffering a security shock from President Trump, not something that
surprised them necessarily, but the way it's been delivered, the way that it's being handled is counter to their interest.
Just look at the difference in narrative you have today coming out of the Ukraine support group today that was chaired for the first time by Britain
and Germany because the U.S. Defense secretary wasn't in the room. And the narrative there from both German and British Defense secretaries was that
Russia is not ready for peace, that the U.S. has an envoy in Russia trying to find the peace with Putin, that they don't feel is there.
So, you know, that countries, and this is what Xi will be thinking about and playing into, he will recognize that that countries within the European
Union and the group itself, as a trading bloc, is already disaffected by President Trump and he thinks that this is maybe an opportunity to exploit.
So, you know, the failing security confidence that Europe has in its ally the United States is going to be something that Xi for sure will try to
exploit.
And he will look at that in the same way in Asia, where, you know, both Japan and South Korea, allies of the United States, close to NATO partners
as well, have also been uncomfortable about their security perceptions under the Trump administration as well.
MACFARLANE: All right. Well, so many potential ramifications to come from this beyond, of course, global markets, as you say there.
Nic Robertson, appreciate you joining us. Thank you.
And that is the big picture from our diplomatic editor. And CNN has got global coverage of the story for you. I'm now joined by Matt Egan in New
York, Anna Stewarts with here with us in London, and Marc Stewart is in Beijing.
Matt, let's begin with you. Markets opened, what, just over half an hour ago? Give us the mood on main street today.
MATT EGAN, CNN CORRESPONDENT: Yes. Christina, the mood on main street is pretty dark right now. We just got new numbers in from the University of
Michigan on U.S. consumer sentiment. And they found that sentiment plunged by 11 percent in April to the second lowest level since records began back
in the 1950s.
Consumer sentiment is weaker right now than it was at any point during the Great Recession, which is stunning when you think about it. The only time
it was lower was back in 2022, when Americans were freaking out over record high gas prices. Of course, now it's not about energy prices. It's all
about the trade war and the turmoil in Washington, the chaos in financial markets. As we see markets are actually relatively calm today after a
really wild week and really the last few weeks have been very, very turbulent.
Just another important takeaway from this consumer sentiment report that just came out a few moments ago is that Americans are bracing for higher
and higher inflation. There was a significant increase in inflation expectations among consumers to the highest level since 1981. Consumers are
now expecting a 12-month increase in prices of above 6 percent.
[10:10:05]
I think that's a number that's going to get the attention of central bankers around the world, but especially in Washington, as they try to
decide what to do with interest rates.
And one last point here is why we pay so much attention to the mood on main street. It's because consumer spending is the biggest driver of the U.S.
economy. It's one of the biggest drivers of the world economy. And if weaker consumer confidence translates to Americans spending less, right,
buying less stuff online, traveling less often, that's going to have a real economic impact.
Now, we don't know if that's going to happen. Sometimes people tell pollsters they hate the economy and they keep shopping anyway. But
obviously that's the big thing to watch when you think about all of these concerns about a significant slowdown in the economy or even a recession.
Back to you.
MACFARLANE: Thanks.
Anna, let's turn to you because we had I think in the last hour or two this warning from the E.U. saying that it could hit U.S. tech companies if trade
talks fail with the U.S. What more can you tell us about that and the impact it's having on European markets?
ANNA STEWART, CNN CORRESPONDENT: I think the strategy from the E.U. has been pretty interesting because they're firing on two cylinders. On the one
hand, we now know that the E.U. trade commissioner is heading to Washington, D.C. on Sunday or Monday to start more negotiations with his
counterparts there. On the other side, we also have comments, as you say, from the E.U. commission president, Ursula von der Leyen, saying we are
still developing retaliatory measures.
There's a wide range of countermeasures in case the negotiations aren't satisfactory. And as we understand it, they might be looking at an E.U.
wide tax on digital services. So that would be the American big tech companies like Meta, Google, Facebook and so on. Now this would be
interesting. A few countries in the E.U. already have this tax. It's one of the things that President Trump really dislikes.
He also dislikes the taxation and also the probes and investigations and fines on these tech companies. This is always thought to be in the toolbox
of negotiations. But rather than saying that they could pull back perhaps on some of the taxation on tech companies, or they could go a bit easier
maybe on the antitrust investigations and all those fines, they're actually perhaps going to use this tool as a threat to President Trump. So I'm
curious to see how that's going to work out.
Looking a European trade there, it has been pretty choppy through the day. Stocks really struggling to find direction I'd say -- Christina.
MACFARLANE: As always in this moment. Anna, thank you.
Let's turn to Marc Stewart in Beijing. And Marc, I mean fighting talk from China today not just obviously on tariffs, but in the rhetoric as well.
Clearly Beijing in no mood to talk to pick up the phone or negotiate any longer.
MARC STEWART, CNN CORRESPONDENT: No. There has been this idea that has been thrown around by American officials that Xi Jinping should pick up the
phone and call President Trump. But I think the thing to remember is that that's just not how China operates. It would rather and it operates by
using diplomats and lower-level government officials to do the groundwork for, you know, perhaps some kind of discussion or negotiation before it
would even reach the level of a phone call between President Trump and Xi Jinping.
They prefer to work with some of these intermediaries and then perhaps arrange for a greater conversation. But today Beijing has not been shy
about expressing its views to the U.S. First of all, we heard from Xi Jinping, who made some remarks really the first time since this whole
escalation really intensified, saying that China is not afraid and there are no winners. As we've been reporting, China has now raised its tariffs
against the United States to 125 percent.
It said it will not raise them any higher, but has other tools that it could use, saying that this has just become a numbers game and that the
United States is making a joke out of itself. That's very telling.
Finally, Christina, to touch on some of the themes that Nic Robertson brought up before, this visit by Xi Jinping to Vietnam, Cambodia and
Malaysia, nations with whom China has created some very strong trade ties. This is a way to show the world that China can be a very serious trade
partner amidst all this turmoil from the United States. So it is highly symbolic, but also perhaps necessary for China.
By the way, China has relied less and less upon the United States these days for trade. It's looking to these other nations. And that's why perhaps
China is at least trying to show some confidence in all of this -- Christina.
MACFARLANE: All right. Marc, Anna, Matt, appreciate you all being with us. Thank you.
And still to come, President Trump has an appointment at Walter Reed Hospital to undergo a physical. We'll have a live report straight ahead.
[10:15:02]
And a new memo outlines the U.S. government's case for deporting a Palestinian activist and permanent U.S. resident. We'll speak to his lawyer
on today's hearing and this memo.
(COMMERCIAL BREAK)
MACFARLANE: We are seeing images like this pop up all over the U.S. These are the arrest videos of Mahmoud Khalil, Rumeysa Ozturk and Badar Khan
Suri. College campuses have been strongly targeted by Donald Trump's immigration crackdown. Hundreds of students are facing possible deportation
and over 300 student visas have so far been revoked. Immigration attorneys are saying the increasing number of revoked visas are based on relatively
minor offenses, or sometimes no reason at all.
And it doesn't end there. Students are being charged with criminal activity. Dozen pro-Palestinian demonstrators who were arrested during
protests in Stanford University are charged with felonies. And Republican Senator Bill Cassidy from Louisiana, where some of these students are being
held, is requesting Columbia University records connected to those participating in the Israel-Gaza protests, including Mahmoud Khalil.
Well, in a new memo, U.S. Secretary of State Marco Rubio details the only alleged evidence the government has in its effort to deport Khalil. The
administration previously says it based its deportation order on the Immigration and Nationality Act, which gives the secretary of state
authority to revoke a person's immigration status. Rubio alleged Khalil's beliefs statements or associations would compromise U.S. foreign policy
interests.
It continues to say his determination is based on Khalil's participation in, quote, "antisemitic" protests and disruptive activities. The
immigration attorney for Khalil says this after the memo was released.
(BEGIN VIDEO CLIP)
MARC VAN DER HOUT, IMMIGRATION ATTORNEY FOR MAHMOUD KHALIL: This is a dangerous slope and we are taking a stand on behalf of Mahmoud, and he is
taking a stand. He's decided to stay in jail and fight this case to the bitter end while we try to establish that people like Mahmoud have a
constitutional right to speak out in this country, and they should not be, the government should not be using this really bogus statute saying it's
against U.S. foreign policy interests.
(END VIDEO CLIP)
MACFARLANE: On just a few hours, a judge in Los Angeles will decide if the government can continue to hold Khalil. And joining me now is Ramzi Kassem,
he is the lawyer for Mahmoud Khalil and co-director of CLEAR, an organization that represents other students facing deportation.
Thank you so much for joining us.
RAMZI KASSEM, LAWYER FOR MAHMOUD KHALIL: Thank you for having me.
MACFARLANE: Can I first ask, given this hearing is expected in the next few hours, what you are expecting to come from today's hearing?
KASSEM: Well, the immigration judge in Louisiana where Mr. Khalil is being detained in an ICE detention facility in a rural part of the state of
Louisiana, that immigration judge has indicated that today she wants to rule on whether or not Mr. Khalil is deportable.
[10:20:12]
That doesn't mean that if she finds him deportable, he gets deported right away. There is process that takes longer, but it is highly unusual for an
immigration case to move so quickly. The government produced its evidence, as you mentioned, you know, the day before yesterday, and here we are this
afternoon going into a hearing where the judge wants to rule on the question of deportability having given our side less than two days to
prepare our case.
MACFARLANE: And on the evidence put forward by the government, what they're basically saying is that Khalil can be expelled for his beliefs alone.
Where does that sit under the evidentiary standard required by immigration law?
KASSEM: Yes. And that is a remarkably, stunning proposition, right? It's a very aggressive proposition by the government that essentially because
Marco Rubio says so a green card holder, a permanent resident of the United States, can be taken into detention and found removable simply because
Marco Rubio says so in a two-page memo and believes that for some reason, this person constitutes a foreign policy problem of some kind because of
their speech.
Now, if that is the appropriate use of this law, and we don't believe that it is, we think the law is being abused, but if that is the appropriate use
of this law, then it runs directly into the Constitution of the United States and of course the Constitution and the First Amendment, which
protects free speech, will always trump any law. And so our view is that that's not how this law is supposed to be used to punish people for
speaking up in support of Palestinian rights. And if this is an appropriate use of the law, then it is unconstitutional.
MACFARLANE: And in light of what you're saying, I think it's worth us pointing out a social media post that was posted by ICE claiming it is
their job to stop illegal ideas, this was the original post, from crossing the border. They did then delete that post and shared another one saying it
was their job to prevent electoral intellectual property from crossing the border, correcting themselves. Different wording, but similar concepts
here.
So to your point, I mean, this speaks to a broader crackdown on freedom of speech.
KASSEM: That's exactly right. And, you know, it is not what one would expect in an open society that is committed to the rule of law, that is
committed to free speech for all. And so, you know, what Mahmoud Khalil was saying and what other student activists and students who have been detained
or a threat of detention were saying was really very basic and uncontroversial that Palestinians deserve to live, that they have human
rights, too.
But even if you happen to disagree with that then you should still be concerned because what the government is doing here is basically using
immigration enforcement as a first step to undermine the First Amendment, to throw people out of the country simply because they happen to be saying
things that the current government disagrees with or dislikes, whether it's pro-Palestinian speech, speech that's critical of Israel or the United
States foreign policy, reproductive rights speech, LGBTQ rights speech.
You know, there's a long laundry list of issues that this administration disagrees with. And so this would set us on a path, a slippery slope
towards authoritarian-like rule, very different from what you would expect in an open society.
MACFARLANE: Yes. And of course, this is not an isolated case here with your client, Mahmoud Khalil. We're seeing this playing out in many other states,
and we saw Republican Senator Bill Cassidy from Louisiana signed a letter asking for all university records connected to Students for Justice in
Palestine. Interesting to note the fact that he's from Louisiana, where your other clients, Rumeysa Ozturk, is also being held.
Why are they taking this fight to other states? Under what jurisdiction?
KASSEM: Well, the government's strategy here is twofold. You know, there's a political dimension and a legal dimension. The legal dimension is that
for whatever reason, the government seems to believe that it's going to have a better chance in Louisiana immigration courts and in Louisiana
federal courts. And it prefers the case law down there in that region. And the judges in that region, that seems to be their legal, the legal strategy
to their dimension.
The political dimension to their strategy is, of course, to isolate people like Mahmoud Khalil and Rumeysa Ozturk, and Dr. Badar Khan Suri from their
communities, from their families, from their lawyers. And to hope that by putting them in these remote locations, the media attention to this outrage
will die down. The popular mobilization and opposition to this outrage will die down and dissipate, and that they'll be able to, you know, get away
with it, essentially.
So I feel like those two dimensions are certainly a play. And you see the government trying to speed up the immigration cases in courts that they
control, where they can fire the judges, and trying to slow down the federal cases that the prisoners are bringing asking for their own
liberation before, their own freedom before federal judges who are independent of the government.
[10:25:15]
MACFARLANE: Well, Ramzi Kassem, we appreciate you being with us on this day, and we hope you will come back and speak to us as this court hearing
takes place and this case progresses. Thank you.
KASSEM: Thank you for having me.
MACFARLANE: U.S. President Donald Trump is preparing to undergo his annual physical exam at Walter Reed Hospital. It's scheduled for the next hour.
The 78-year-old is scheduled to spend several hours there being evaluated by physicians.
CNN's Alayna Treene is joining me now.
Alayna, what, if anything, do we know about this annual physical exam he's about to undergo?
ALAYNA TREENE, CNN CORRESPONDENT: Well, look, this is typical for presidents to go to Walter Reed. It's normally where they are seen by their
doctors and have an annual physical. I think the key question, of course, though, is how soon are we likely to get any details? And what is the, you
know, level of detail that we are provided by this White House? Also, would we potentially hear from his physician?
Those are still questions that we have not gotten answers to. But look, if history is any indication, this, whatever we do here, I should say, was
likely to be a report that is pretty flattering but scarce on details. We know that, you know, despite the president having often attacked the former
president, Joe Biden, over his mental and physical capacity, Trump has routinely kind of skimped on the basic details of his health.
He's really kept those private and under wraps for many years now, even during his first term. Now, we do know, just to give you a sense of his
schedule, he's expected to depart in just under an hour to head over to Walter Reed for that physical. But it says on his public schedule that he's
actually going to be there for four hours, something that's interesting in and of itself. Now, part of the reason that this is so interesting, I
think, to some of our viewers is that, one, President Donald Trump is the oldest person in U.S. history to be sworn in as president.
He is three years younger than former president Joe Biden, but he was older when he took the oath of office in January than Biden was when he kicked
off his administration. The other thing, of course, is the last time we got any sort of picture of President Donald Trump's health was following the
assassination attempt on his life back in July, when he was seen at a doctor in Butler, Pennsylvania.
All to say, it's very unclear how much we're actually going to learn about what goes on in that physical today, but I am sure that we will get some
sort of statement from the White House. I don't know when, but we'll see if it includes the type of details that I know a lot of people are interested
in learning.
MACFARLANE: Well, if nothing else, a welcome pause in what has been a very busy couple of weeks for the president.
Alayna Treene, appreciate it. Thank you.
All right, still to come, the start of a very busy weekend for top Trump envoy Steve Witkoff, first face to face with Russia's Vladimir Putin, then
to Oman for high level but indirect talks with Iran. And a new evacuation order as the Israeli military tells residents in parts of Gaza City to get
out ahead of military operations.
(COMMERCIAL BREAK)
[10:30:35]
MACFARLANE: Welcome back to CONNECT THE WORLD with me, Christina MacFarlane. Here are your headlines.
The death toll from the nightclub roof collapse in the Dominican Republic has risen to 225. At least 189 other people were injured in Tuesday's
disaster. Rescuers ended their search for bodies among the rubble on Thursday. The cause of the disaster is under investigation.
Investigators are working to determine how a sightseeing helicopter crashed into New York's Hudson River Thursday just 16 minutes after takeoff. Six
people, including a Siemens executive based in Spain, along with his wife, three children and the pilot were killed.
Now the gathering in Brussels, Ukraine's allies have pledged $23 billion in new military aid. Britain's Defense chief, who co-hosted the Ukraine
contact group meeting, called it a record boost for Kyiv's defense against Russia. And U.S. Defense Secretary Pete Hegseth attended virtually.
Well, the tit-for-tat trade war battle between China and the U.S. is escalating and fueling fears of a global recession. China is the latest to
make a move. Hours ago, it raised its retaliatory tariffs on U.S. imports from 84 percent to 125 percent. Earlier today, Chinese leader Xi Jinping
broke his silence about a trade war and said his nation is not afraid to take on the U.S.
Well, Gillian Tett of "The Financial Times" and Kings College, Cambridge, joins us now live.
Gillian, thank you for your time. We also heard this morning a warning from the E.U.'s Commissioner von der Leyen, saying as we consider what comes
next, issuing a warning that it could hit U.S. tech companies if trade talks fail with the U.S. I just wanted to get your immediate reaction to
that, what that would spell for the likes of Meta, Google, and the fallout.
GILLIAN TETT, PROVOST, KING'S COLLEGE CAMBRIDGE: Well, one thing it would spell would be a significant escalation because the White House has made it
clear that it regards tech and trade and military and economic issues as all being tied together in a bundle. And if the E.U. does clamp down on
U.S. tech companies, you can expect to see more retaliation from the White House.
But the other thing it signals is that the E.U., like other regions of the world, is trying to walk a tightrope between, on the one hand, maintaining
the dialogue with the administration in America, but on the other hand, not being seen to be too feeble or look like a vassal state because they know
that Trump responds best when force is applied to force, and standing up strongly, both for the sake of their own voters, but also to ensure that
they get Trump's attention, is seen as a way to go. So this is another sign of the trade war potentially escalating in a way that's going to damage
almost everybody. And what's happening in the markets right now is extremely alarming in that respect.
MACFARLANE: Yes, indeed. And you know, when we consider what prompted Donald Trump's U-turn or his reversal yesterday on trade tariffs, I mean,
it was concern over the bond market, the fact that yields were going up. Looking at the bond market today, I mean yields are continuing to go up.
How concerning is that, you know, as we look to the fact that this was meant to try and de-escalate that situation?
TETT: Well, that's a great question because what became clear earlier this week was that on the one hand, the Trump administration keeps saying that
they're not going to overreact to stock market falls, although in the first administration, President Trump was very focused on the stock market. This
time around, the message from people like Scott Bessent, the U.S. Treasury secretary, is that, well, investors had it very good the last few years.
They can tolerate some equity market losses.
However, when it comes to the bond market, that's very different because if bond yields rise, because bond prices fall and they move inversely, then
that's not only going to make mortgages a lot more expensive and make it harder for companies to raise debt, it also really pressures the American
government in terms of its own debt plans because, remember, Scott Bessent has to sell about $2 trillion of new bonds this year. He has to rollover
about $8 trillion.
[10:35:00]
Every single 100 basis point rise in the 10-year Treasury yield basically adds about $100 billion of cost in terms of debt servicing, which, by the
way, is almost as much as DOGE claims to have saved. And we've had a 60 basis point rise already. Many people thought that 4.5 percent was the so-
called put the point at which Scott Bessent would try to intervene to make sure that yields didn't keep rising.
It was at that level on Wednesday, before the Trump did this U-turn, then it basically went down. It's now back up again at 4.5 percent. So all eyes
on what the Treasury and what the White House are going to do next about this because this really is a striking sign of people running away from
American assets.
MACFARLANE: Yes. Gillian Tett, great to have your analysis on that as we consider what comes next. Thank you.
TETT: Thank you.
MACFARLANE: Well, China's electric vehicle maker BYD has posted robust sales growth globally, gaining a major ground on Tesla. This comes despite
having zero presence in the U.S. as Beijing and Washington battle within a wider trade war.
CNN's Marc Stewart goes inside the fight for EV dominance.
(BEGIN VIDEOTAPE)
M. STEWART (voice-over): On the streets of Beijing, a fast-moving battle within a much wider trade war. As tit-for-tat tariffs drive the world's two
largest economies apart the U.S. and China are racing for dominance of the global EV sector. Leading that race, Tesla in the U.S., BYD for China. And
because of already existing tariffs, BYD isn't even in the U.S. market.
DAN IVES, GLOBAL HEAD OF TECHNOLOGY RESEARCH, WEDBUSH SECURITIES: Look, I mean, this is an arms race that's playing out. And I think the fact that
they've been able to be so successful and not be in the U.S. is just that much more impressive.
M. STEWART: As Tesla slides toward one of its worst quarters in history, BYD, which stands for Build Your Dreams, has become Elon Musk's nightmare.
What is it that BYD is doing that's really setting it apart?
IVES: The silver bullet of success for BYD has been price. Being profitable at lower cost vehicles with massive technology, and they've figured out a
formula. Others are trying to replicate and can't really do it.
M. STEWART (voice-over): BYD is comparatively affordable. An entry level model costs around $10,000 in China, one-third the price of the cheapest
Tesla.
These cars are basic but comfortable and filled with technology. And unlike Tesla, you can get it in hybrid or full electric.
(Voice-over): When it comes to sales, BYD brought in a reported $107 billion last year beating Tesla by 10 percent.
IVES: I mean if those came to the U.S. they'd be massive sellers.
M. STEWART: But here's the thing. If you want to buy a BYD in the U.S., you won't find a dealership like you can here in China. They've essentially
been locked out of the American market.
(Voice-over): Analysts point out that BYD's success is coming as Musk appears distracted in D.C. BYD founder and CEO Wang Chuanfu is also
important to his country's own leadership, which has spent billions subsidizing the EV sector.
For Beijing, BYD now serves as an example of how a strong Chinese company with a good product can thrive completely outside the U.S. But it still
relies on its home market for some 90 percent of its sales. Now, BYD must drive beyond China if it's going to put Tesla in the rearview mirror.
Marc Stewart, CNN, Beijing.
(END VIDEOTAPE)
MACFARLANE: Turning now to Gaza where Israel has ordered evacuations from parts of Gaza City ahead of military operations.
The neighborhoods lie in an area recently identified by CNN as part of a buffer zone that Israel is creating to separate Palestinians from Israeli
communities along the Gaza border. The U.N. relief agency UNWRA estimates close to 400,000 Palestinians have been displaced in Gaza just since Israel
ended a ceasefire with Hamas last month.
Take a listen to what 71-year-old man told us.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE (through translator): This is the billionth time I am displaced. I can't walk. I have pain in my back. I have high blood
pressure, I have diabetes. I can't walk. Enough terrorizing us. Enough terrorizing us.
(END VIDEO CLIP)
MACFARLANE: Let's stay on this with CNN chief national security correspondent, Alex Marquardt.
And Alex, the source involved in those ceasefire negotiations have told you that mediators are becoming frustrated by what they say are shifts in
Israeli priorities. What more are you learning?
ALEX MARQUARDT, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, Christina, the mediators have now for several weeks been trying to get the ceasefire
back in place after it collapsed in mid-March when Israel resumed its military operations.
[10:40:06]
And there's always been a debate over what Israel's higher priority is. Is it getting the hostages out of Gaza, or is it defeating Hamas, which Prime
Minister Netanyahu says Israel still needs to do? And in speaking with quite a few sources, my colleague Jeremy Diamond and I heard a lot of
frustration with how Israel is proceeding with these negotiations.
There was a major change just two months ago when, after more than a year of negotiations, Israel changed its team. Prime Minister Netanyahu put in
place his top political deputy, Ron Dermer. And in the wake of that, I'm told by a source involved in these talks, people who have been briefed on
these talks, people who work with the hostage families, is that the process has become much more politicized, that the Israeli emphasis is more on the
political side of things, rather than on ending the war and getting the hostages home.
One person who is directly involved in these conversations has told me that because of Dermer's involvement, that there has been what he said was a
significant change in momentum. There was an American I spoke with who works with the hostage families, who advocates on behalf of them, who says
that Dermer has been a big problem in terms of getting the hostages home. We did hear pushback from Dermer's office saying, well, in order for there
to eventually be a deal, you actually need someone who represents the government.
And certainly there is no one who represents Dermer -- represents Netanyahu or the government more, I should say, than Dermer does. But Netanyahu and
Dermer have real political considerations here. They have far-right members of the Israeli government who are fiercely against ending this war, who
have threatened to leave, have indeed left the coalition government over efforts to get to a ceasefire.
And so the U.S., in some ways, is actually caught between a rock and a hard place because not only are they trying to get the ceasefire back in place
in order to end the war, but there are also Americans, both dead and alive, who are still being held inside Gaza. And so the Americans are trying to
strike a deal to get those Americans out of Gaza, but also to try to get essentially a bridging proposal, as they've called it, in place, in order
to be able to negotiate a permanent end to this war.
And really, Christina, the major sticking point here has been Hamas has said they are ready to release the hostages if Israel agrees to end the
war. Israel says we need those hostages home, but they are not willing to end the war. So the mediators are getting increasingly frustrated. They're
still working very hard, but we do not appear to be on the brink of an imminent agreement, though those involved do say that some progress has
been made lately -- Christina.
MACFARLANE: All right. Alex Marquardt, thank you for that.
OK. Still to come, the U.S. and Iran are set to hold high level nuclear talks in Oman Saturday. And already Tehran is reportedly laying out major
red lines it says America can't cross.
(COMMERCIAL BREAK)
[10:45:17]
MACFARLANE: Iran is laying out strict terms ahead of crucial talks with the U.S. over its nuclear program set for tomorrow in Oman. According to Iran's
semiofficial news agency, major red lines include threatening language from the Trump administration and excessive demands over its nuclear program.
But Iran has also touted the discussions as an opportunity for lucrative two-way business and trade, and says it will give diplomacy with the U.S.,
quote, "a genuine chance."
We are joined now by Dina Esfandiary. She is the Middle East geoeconomics lead for Bloomberg Economics.
Thank you for being with us. So as we sort of consider these red lines and this messaging coming from Iran, what are your expectations for this
meeting tomorrow and the likelihood of what will come out of it?
DINA ESFANDIARY, MIDDLE EAST GEOECONOMICS LEAD, BLOOMBERG ECONOMICS: I think whether this meeting is a success or not will largely be determined
by how both sides approach it, really, what their attitude to negotiations is going to be. It's normal that both sides are setting red lines and
appear to have quite aggressive rhetoric right now. But what will really matter is what they actually do once they're sitting in the room.
MACFARLANE: I mean, U.S. are threatening military action, but if these talks prevent the U.S. from using military force, which I presume is partly
Iran's goal here, how else will the U.S. look to apply pressure on Iran? And will it come in the form of sanctions or something else? What's the
spectrum that we're looking at here?
ESFANDIARY: Well, you've said it. There aren't that many options, really. Military action is one of them. But the idea of these talks is to avoid
them. The second option is sanctions. And Trump has already implemented quite significant sanctions against Iran with his maximum pressure
campaign, which he's tightened quite significantly in the last month. So there's not that much more that the U.S. side can do, which is why they're
actually pursuing talks. You need to find a way to resolve the Iranian nuclear problem without just pressure.
MACFARLANE: And they want the complete dismantlement of Iran's nuclear program, which, let's be honest, Iran are unlikely to agree to. And to your
point, Iran are not really in a position to negotiate here. They're economically weakened, their military weakened in the region. So beyond a
delay in a sort of military bombing campaign, what is Iran looking to get out of this?
ESFANDIARY: Well, if you're sitting in Tehran, yes, you feel like you've been weakened. There's no doubt about that. But the Iranians view this as a
long game. They don't see as the -- they don't see the losses they've had in the last year and a half as the end all and be all. They think that, you
know, they've lost, perhaps to use an analogy, they've lost the set but not the game.
And so they're ready to play for the long haul. What they're going to want is they're going to want to drag out the talks if possible, or they're
going to want to ensure that they give up as little as possible on their nuclear program as part of these talks and ensure that they get maximum
sanctions lifting on the U.S. side, which is why we've been hearing the Iranian side offering up these enticing benefits to the U.S. of opening up
their market to U.S. investors.
MACFARLANE: Do you think the U.S. will be receptive to that, or even the idea of this being a long game situation?
ESFANDIARY: No, I don't think the Americans are willing to play a long game. Trump has laid down a two-month deadline in order to achieve a deal,
but there's also a lot of differences within the Trump administration. Many have asked for, as you said, the complete dismantlement of Iran's program.
But others, including Witkoff himself, the main negotiator who will be there, has been actually very measured in what he's asked for.
He's wanted something that resembles the JCPOA, a verifiable nuclear deal where Iran makes, you know, tangible concessions on its nuclear program.
And this isn't something that Iran is not willing to give. I mean, Iran has made it clear it is willing to talk about that and in fact, has done so in
the past.
MACFARLANE: Well, it's a carrot and stick, isn't it, for the United States. We'll wait to see in this opening gambit what comes from it. But for now,
thank you so much for your thoughts. Appreciate it.
ESFANDIARY: Thank you.
MACFARLANE: And we will be right back after this short break. Thank you.
(COMMERCIAL BREAK)
[10:51:14]
MACFARLANE: Tourism in the UAE pulled in more than $12 billion U.S. in hotel revenues last year. That's according to their country's economic
minister. Hotel occupancy rates rose to 78 percent last year, ranking among the highest both in the region and globally.
CNN's Becky Anderson took a deep dive into what makes the UAE such a draw.
(BEGIN VIDEOTAPE)
BECKY ANDERSON, CNN ANCHOR: Should we do it?
ANTONIO GONZALEZ, CEO, SUNSET HOSPITALITY GROUP: Yes.
ANDERSON: Let's do it. Let's do it.
UNIDENTIFIED MALE: We have the double total, so we put (INAUDIBLE). However, it's good fun.
ANDERSON (voice-over): A tasting experience in the UAE.
GONZALEZ: This looks Japanese, but it's not, right? It's a fusion. In Sushi Samba we blend Japanese, Peruvian and Brazilian, so we take the best of
each one of them. We mix it all together. It gives also the chef a lot of freedom to be innovative and mix it up and keep it interesting.
ANDERSON: Hosted by a CEO with a recipe for growth and good times.
GONZALEZ: We're very firm believers that the fundamental of the human interaction remains. We are social beings. We define good times. For most
of the cases, spending time with other people. It's not about eating or drinking or sleeping in a hotel. It's about the experience that goes around
that.
ANDERSON: Antonio Gonzalez is the CEO and chairman of Sunset Hospitality Group, which is a lifestyle and entertainment management group founded here
in the UAE in 2011.
GONZALEZ: For us, we were in the right place at the right time. So Dubai has been a hub for hospitality in the making for many years and I think
over the last 10 years it became a reality, you know? All the fundamentals in terms of infrastructure, connectivity has been there in place, fantastic
brands like Jumeirah, like one and only, which are owned by UAE. And then a welcoming factor to all the entrepreneurs who have been set up their
business here. So we were, I think, in the right sector at the right time, and we've been carrying that way.
ANDERSON: What is the UAE way of hospitality?
GONZALEZ: I think it's about quality, quality, quality. So top quality service, top quality of the food, and in our case, it's about curating an
amazing experience. So not only about what the food goes on the table and the interaction with the team, but it's also curating the music, creating
the experience and giving a social outing.
ANDERSON (voice-over): SHG's roots are firmly planted in Dubai, but as it reaches out to 25 countries and counting, the hospitality organization is a
prime example of the local to global journey that many UAE businesses are now following.
GONZALEZ: We have now close to 100 properties in 27 countries. Still, UAE is our base and our biggest market, but we have regional offices in
Singapore and also in Barcelona and we have good operations also in London, in Milan, Morocco.
ANDERSON: The hospitality industry in the UAE has grown significantly, adding almost 200 hotels in the past decade and accounting for one in nine
jobs in the country.
What comes first, the property or the brand?
GONZALEZ: That's like the chicken and the egg, right? I think the property goes first. You have to get the brand that makes sense for the property.
You cannot force a brand into a property that doesn't belong. While a property can accommodate multiple brands, it's about what is the one that
is going to optimize the value of the real estate. We have an opportunity to work with a real estate developer or a landlord.
We say, what is the best experience we can create in this space? And then we look at our brands or if we don't have it, we create a new brand for
that specific location.
ANDERSON (voice-over): With locations in Abu Dhabi and Dubai, Sushi Samba believes it's a great example of how to cater to the UAE's very different
markets.
[10:55:06]
What is the difference between Abu Dhabi and Dubai from through your lens?
GONZALEZ: You cannot compare them. Dubai is Dubai and Abu Dhabi is Abu Dhabi, and we try to avoid comparison. Dubai is very unique city. It's a
world city and it's very unique. It's the combination of expats that the business model is very unique. There is nothing in the region or probably
in the world that is comparable.
ANDERSON: And it's busy.
GONZALEZ: Yes.
ANDERSON: It's busy.
GONZALEZ: And it's getting busier.
ANDERSON: Too busy?
GONZALEZ: Yes.
ANDERSON: Too competitive?
GONZALEZ: No, no, I think there's still room for more.
ANDERSON (voice-over): Adapting and flourishing, whether in the neighboring Emirates or the next continent.
Becky Anderson, CNN, Abu Dhabi.
(END VIDEOTAPE)
MACFARLANE: I hope Becky managed to have some of that lunch.
That is it for CONNECT THE WORLD. Stay with us on CNN. "ONE WORLD" is up after this quick break.
(COMMERCIAL BREAK)
BIANNA GOLODRYGA, CNN INTERNATIONAL ANCHOR: Whiplash on Wall Street, as China hits back.
ONE WORLD starts right now.
Investors are closing out an incredibly volatile week. This as the tit-for- tat trade war between China and the United States is escalating. Plus, President Trump's foreign envoy Steve Witkoff is in Russia, where he's
meeting once again with Vladimir Putin.
And I'll speak to Wendy Sachs, the director of the new documentary "October 8th" --
END
