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Quest Means Business
Trump vs. Harris: What's at Stake for the Global Economy; WTO Chief: We Need to Re-Imagine Global Trade System; Businesses, Consumers Facing High Economic Uncertainty. Tariffs and Elections 2024 Explained; Interview with Canadian Foreign Minister Melanie Joly; Apple Debuts Latest Earnings Ahead of Busy Season. Aired 4-5p ET
Aired October 31, 2024 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:10]
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Closing bell ringing on Wall Street. Ugly day on the street with the market down quite
sharply. Tech stocks taking a brunt of the beating with them off sharply, and the closing bell as you'll see, the gavel in a second or three. The Dow
is almost off the worst of the day.
And here we go, one -- that's right, start them young, oh, we've got an extra gavel there. I think that young lady is definitely destined for great
success in the future.
Those are the markets. The market is now closed, these are the main events of the day.
America's choice and the consequences for the rest of the world, a special look at global trade and tariffs in this edition of QUEST MEANS BUSINESS.
The head of Trump's transition says Elon Musk will be a government adjacent without a formal position.
And Apple gives us the first glimpse of how its AI products are selling. We've got results from Apple.
Tonight, live from Dubai on Thursday. It is October 31st, Halloween. I am Richard Quest, and in Dubai, as elsewhere, I mean business.
Good evening. Five days to go, and the US election remains exactly where it seems to be knife-edge, even stevens, and the consequences for the global
economy could be enormous.
So tonight on this program, trade wars, tariffs and protectionism. It is all on the ballot on Tuesday, and that is our bailiwick on the general
economy.
Throughout the hour, I am going to explain what it means for the US and for you and me and the entire global economy.
You're going to hear from the director general of the World Trade Organization. We will have with us the Canadian Foreign minister, think of
the bilateral trade across the northern border; the president of the Council on Foreign Relations, Michael Froman, a former US trade
representative, one of the leading experts on tariffs who tells us how much it is going to cost ordinary Americans, every American, if Trump tariffs
come into force.
We begin though with the polling and the latest CNN polling that shows the polls are within one percentage point in the two main battleground states.
Donald Trump holds a narrow lead over Harris in Georgia. The vice president has a similarly small advantage in North Carolina, but frankly, you know, I
know they are both within the margin of error and with this race so close, everyone is facing high levels of uncertainty about their economic future.
Joining me now, Julia, Julia Chatterley.
Julia, I am wondering, this uncertainty that we've just seen in the market before we talk wider issue, are we seeing -- is it tech related on results
or are we now starting to see the market just basically having a dose of the collywobbles?
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, "FIRST MOVE": All of the above. You confirm what you like here, Richard, and the explanation for what is
going on with markets, I think you can talk about the earnings as we've discussed, the AI effect, the brilliant interview that you did with
Masayoshi Son by the way, on valuations, which I think was fascinating, but we are at peak uncertainty with this election. No one knows who is going to
win, and anyone that tells you they do is lying, quite frankly and I think financial markets are reflecting that as well.
Yes, we've got the jobs number tomorrow, which could be a mixed bag, too, but I do think it is about the election and I think it is about how quickly
we get a result.
We know investors dislike uncertainty and everything at this moment, be it the result, be it the fallout from the results, and the reaction from
individuals beyond that, all of this is playing, and never mind the policies and those are quite exciting as we both know too, to your point on
the theme of the show today -- tariffs, trade wars, you name it, all up for grabs and deep uncertainty.
QUEST: All right, so let's talk about it. What would you hope tonight in this program we try to get to the bottom of because to you and me who have
covered tariffs, the argument seems to be sort of well-rehearsed and the jury has decided, tariffs do raise costs for ordinary people, and yet this
argument seems to be de novo for many people this time around.
CHATTERLEY: Trade is a dirty word wherever you are, because there has been a backlash against globalization. People and governments have done this now
for years, they've blamed in someone else for the problems that they faced within their own economies and we know that with higher prices in the
United States.
[16:05:00]
So both of these candidates are talking about greater protectionist policies, we know that. But I was just at the IMF and the World Bank
meetings last week and the general consensus, I think, is that the Harris campaign and her administration will be pretty much similar to what we've
seen from the Biden administration. They kept Trump's tariffs on China and they've added a few select ones on their own.
The Trump campaign and his promises are the absolute wildcard. Just to give you a sense, tariffs rose from around -- I've got the numbers -- 1.4
percent to 2.8 percent between 2016 and 2019, weighted average by trade tariffs, okay, what he is talking about is 20 percent tariffs on incoming
goods, 60 percent tariffs on China. We can't even begin to imagine the impact.
So, Trump, you always have to distill down the rhetoric from the actions, Richard, so to answer your question, in an incredibly long winded way,
what's realistic from a next Trump presidency in terms of tariffs? What will be the impact? You were just showing a chart of the IMF's forecasts of
immigration policy and potential tariff impact and it hobs their growth forecasts.
It could be quite frightening. Forget the rhetoric, what's realistic --
QUEST: I need to jump in here --
CHATTERLEY: Go on.
QUEST: I am jumping in here because I need to ask you, last week when you were at the IMF, was it one of those moments where people say one thing to
your face and another thing publicly about this election, and do people believe that if Donald Trump was elected, he would actually introduce those
tariffs? Or is it all hot air and bluster?
CHATTERLEY: All of the above. You know what these meetings are like, what people are willing to say on camera is totally different from what they
will tell you privately, and that I think you can actually get them on camera a moment like this. People best avoid interviews.
I think there is a palpable concern about what the next administration means in a whole range of sense, whether that is foreign policy, whether
that's trade policy, you name it. But I think for the global economy and the economic outlook, this is the wildcard. There is a difference between
his rhetoric on what he does and practice.
The former president, we've seen that in the past, but I think again, like the election result, anyone who tells you they know what he is going to do
is kidding themselves and lying to us.
Good luck with that.
QUEST: Got a busy week ahead. Thank you, Julia. As always, good to see you.
CHATTERLEY: Thank you.
QUEST: "First Move" coming up in a couple of hours. Thank you.
Donald Trump has threatened the new scale of tariffs. Julia just gave us an idea of the 20 percent across the board. He puts tariffs on 14 percent of
total imports during the first four years in office, it was around $380 billion worth of goods, now tariffing everything that the US buys from
abroad and the World Trade Organization has a warning. It said lower income households could face the highest burdens.
Ngozi Okonju-Iweala is the director-general of the WTO. The director- general is with me now. I will say it before you have to say it. And it is this, the Americans will choose who they want, you will live with whatever
the result is, and you will accommodate accordingly.
I get that, Director General, but the reality is, I imagine you're quite terrified at the thought of 20 percent tariffs across the board.
NGOZI OKONJU-IWEALA, DIRECTOR-GENERAL, WORLD TRADE ORGANIZATION: Well, Richard, I think you said it well and we've -- like other organizations,
we've tried to do work that shows that protectionism rise in tariffs really whichever way you look at it, detrimental to world output.
Since 2018, the tariffs came on board in 2018, we've seen trade between China and the US grow 30 percent more slowly than their trade with the rest
of the world and we've also seen that rise in protectionism is leading to like-minded countries trading more with each other than with countries that
are not so like-minded.
So we see that protectionism and tariffs have some negative impacts on world output and on world trade, but that being said, I think that here at
the WTO, what we are focusing on is what do we need to be doing in order to make sure that we keep 75 percent of world trade that is going on now,
under TWO terms, and I want to really stress that, that in spite of all the problems that we are facing now, which I am not minimizing, we still have
75 percent of world trade going on, on WTO terms. That's a lot.
How do we keep that steady? How do we keep that going? And that is what we are focusing on. And how do we reform ourselves at the WTO so that we can
be fit to deal with 21st Century issues. That's really what we are focused on, because like you said, we cannot control the way that votes go in the
US.
[16:10:05]
QUEST: But the real problem is, you heard Julia, who you know well. You heard Julia say at the moment, trade is a dirty word. People feel they've
lost out on trade and the ability of you to reform the WTO, some would say, it is taking too long.
OKONJU-IWEALA: No, Richard, I mean, give us a break.
First, you know, I am not sure I agree with Julia about trade been a dirty word. How can something you depend on for 75 percent of your goods be a
dirty word? But I understand where you're coming from.
Look, let's be clear. There are two things that are happening with globalization. One is for 75 years, it has delivered, lifted 1.5 billion
people out of poverty, but we've forgotten that. We've taken it for granted. It is like the air you breathe. We no longer realize we are
walking into a store and buying the goods we want at whatever price. It is not to be taken for granted. We've done that. So we've forgotten.
The second thing is that globalization did not benefit everybody. We should also be very clear about that. There are poor people in rich countries and
poor regions that did not benefit. Either they lost jobs, not necessarily due to trade, it can sometimes be due to technology and there were poor
countries that didn't benefit.
And so these things not being dealt with are leading to discontent. I think these are the two reasons we see a backlash against trade today, but can I
say one more thing, Richard, trade is also sometimes blamed for policies that do not emanate from trade.
We have some macroeconomic policies where sometimes there is too much savings in one country and they are not consuming enough; sometimes there
is too much consumption and that there is not enough savings -- the macroeconomic imbalances and it is blamed on trade. We also need to deal
with those.
You need to deal with trade issues, but you need to do deal with macroeconomic issues at the same time.\
QUEST: Okay, and the difficulty is five days to go, the election is going to mire us in whatever happens probably for some days, if not weeks
afterwards.
How worried are you that other countries will take the advantage of introducing their own protectionism if they feel it is now acceptable?
OKONJU-IWEALA: I am worried. I have to say that, Richard. I am worried because we are seeing increasing signs of fragmentation of trade, and so
this is what we are counseling against that tit-for-tat kinds of approaches do not really work. What we want WTO members to do and they're doing,
remember that WTO provides a forum where members can talk to each other to resolve disputes, we would like them to utilize more of those approaches
than tit-for-tat.
Because the negative spillovers of tit-for-tat measures on the rest of the world as well as on the countries carrying them out can be quite important.
QUEST: I am grateful you joined us tonight. Thank you very much. You and I will talk many times, many more in the days, weeks, and months ahead.
OKONJU-IWEALA: Thank you.
QUEST: Good to see you. Thank you for staying up tonight and talking to us from Geneva.
All right, five days to go and both candidates, Kamala Harris and Donald Trump are fighting for votes, the same small number of swing votes in the
swing states, the undecided of Arizona and Nevada. They are locked in an unlikely tit-for-tat themselves about garbage and protections for women.
The Trump campaign is doubling down on comments made by President Biden, where some allege he called all trump voters garbage. The White House
denies that is what the president said, saying the president was speaking specifically about one comedian who made racist jokes at that Madison
Square Garden Trump rally.
Vice President Harris is slamming her Republican rival saying Trump claims he will protect women, whether they like it or not are offensive to
everybody.
Lucy Kafanov is in Albuquerque, New Mexico, and is with me now.
Where are you -- well, I know where you are. What's happening and what do you expect to happen?
LUCY KAFANOV, CNN CORRESPONDENT: Well, Richard, the Trump airplane is still here. It has not taken off, but he just wrapped up a speech for an
enthusiastic crowd here. You know, you touched on the comments that Vice President Harris made about Trump's remarks about women being offensive to
"everyone." And of course it is not everyone because when you're speaking at events like this, you know, this is the already converted pro-Trump MAGA
crowd, he can do no wrong for them.
And so, there is not a lot of offense even by women in a crowd like this taken towards those remarks.
[16:15:03]
And I should also note that he has spoken frequently about his desire to supposedly protect women at campaign stops all across the nation. Of
course, he took it a step further by saying whether they want it or not at that Wisconsin rally yesterday.
But here in New Mexico, look, this is a deeply blue state. Donald Trump kicked off this rally by falsely claiming that he won the state twice, that
is simply not the case. He again spread election lies about a rigged election process.
He also was trying to turn out the vote here, but keep in mind that this in a state that Trump lost by more than 100,000 votes four years ago. So there
is not a plan to try to flip this state. In fact, what's more critical for the Trump campaign here is to boost his numbers with Latino voters.
This is a heavily Democratic state, but it is a heavily Hispanic state. Hispanics and Native Americans make up the majority of the voters here, and
so he is trying to increase his inroads with this population.
He is also trying to boost a Republican challenger for a very competitive House seat, the outcome of way which could lead to getting the House
getting this election.
QUEST: Lucy, I am grateful, in Albuquerque, well, it was inappropriate music that Trump is playing at this moment, "Time to Say Goodbye." I think
the last thing we're going to be hearing is him saying goodbye, whatever happens over the next few days.
Grateful for you in Albuquerque. Thank you.
It is QUEST MEANS BUSINESS, tonight, coming up, tariffs is what we are talking about. Long history in the United States. We are going to be
talking to somebody who has studied the tariffs and says they will cost thousands of dollars for the household, and we will put a bit of
perspective into why, how, where these tariffs ever came from.
(COMMERCIAL BREAK)
QUEST: President Donald Trump proudly calls himself the tariff man. Like many other presidents, he and others have turned to protectionism. When it
comes to tariffs and protectionism from the Smoot-Hawley Act to the tariff of abominations, the tax on tariffs has a long history in the United
States.
[16:20:08]
(BEGIN VIDEOTAPE)
QUEST (voice over): For the United States and tariffs, it was love at first sight. Go back to 1789. The new Constitution was implemented and the
nation's first major law was the Tariff Act. It put a duty of up to $0.50 per ton on foreign ships. It was just the beginning.
The US put tariffs of up to 45 percent on some European imports in 1829. Washington hoped to protect domestic manufacturing. Even then, it was
controversial. The southern states called it a tariff of abominations because they relied on imports for their economy.
By the 20th Century, it was tariffs galore, until it all backfired.
The Stock Market crashed, ushered in the Great Depression of the 1930s. The Smoot-Hawley tariffs made it much worse, leading to a collapse in world
trade.
REPORTER: World attention is centered in Washington --
QUEST: It seemed after that, everyone had learned their lesson about tariffs. The west promoted free commerce after World War II.
HARRY S. TRUMAN, FORMER PRESIDENT OF THE UNITED STATES: Our foreign relations, political and economic are indivisible. We cannot say that we
are willing to cooperate on the one -- in the one field, and are unwilling to cooperate in the other.
QUEST: It was called the GATT, the General Agreement on Tariffs and Trade, which aimed to reduce economic barriers across the world.
For decades, high tariffs were a thing of the past.
RONALD REAGAN, FORMER PRESIDENT OF THE UNITED STATES: Protectionism I said cost consumers billions of dollars, damages the overall economy and
destroys jobs.
QUEST: Even Ronald Reagan had a protectionist streak. He put a quota on Japanese cars coming into the US and a tariff on its motorcycles.
Targeted tariffs were in vogue, going after specific industries. That's how it was for the next three decades, until Donald Trump revived the idea of
widespread duties.
More and more US politicians are now taking protectionist stances. Mr. Trump's philosophy it seems has had staying power.
(END VIDEOTAPE)
QUEST (on camera): Now, to understand how tariffs could hit consumers, and in fact, the general economy perhaps we should take a second or two to just
show you how they actually work.
Imagine a foreign shoe company, it makes its products abroad and then exports them to the United States. Once those goods arrive, the importer
pays the tariff to the US Treasury. They pay literally attacks on the tariff.
Then the company's leadership that's bought them must decide whether to eat the cost or pass it along to the consumer, or more likely, some combination
in reality, because what happens is the consumer will pay a little bit more, the margins on the profits for the retailer will be lower because
they can't make as much and the exporter will be disincentivized to send things to the United States in the first place.
The Peterson Institute says, consumers bear the brunt for Donald Trump's tariff plans it could cost the typical US household more than two-and-a-
half thousand a year. The White House says that's probably likely to be more than four thousand.
Mary Lovely wrote that report at Peterson, senior fellow at the institute. Mary is with me now.
I mean, I read the report and look, we've all been around this long enough.
What I can't understand is, and I am not asking for a political answer here, but how can people still make the argument that widespread tariffs
actually pay for themselves and is not a tax on consumers.
MARY LOVELY, SENIOR FELLOW, PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS: I frankly don't know how they can still make the argument because the
evidence points consistently in the opposite direction, that is that it is the buyer who pays the tariffs.
We know this now with great certainty because we've just been through this enormous experiment, which is called the Trump era trade war and we saw in
our own customs records how prices changed and largely the prices that buyers on the American side paid rose one for one with the tariffs.
[16:25:09]
QUEST: But this argument and I am being fair to both sides, this argument is that the tariff that the importer pays or the exporter pays, by the
importer, that tax that is paid will bring more money into the government and therefore will help pay for social spending, will help bring down the
deficit.
LOVELY: Well, it is a small portion of what is needed. We could perhaps talk about President Trump's claim that it could replace the income tax,
which of course it cannot, but what we saw last time was that most of that money basically all and then some went to support farmers who were hurt by
retaliation from China in response to the US tariffs, and we certainly expect that there will be retaliation to the type of broad-based tariffs
that former President Trump is proposing this time around.
QUEST: So, do you justify -- if you do -- I mean, explain maybe that, you don't have to justify, if you can explain to me this. How do for example,
the Democrats didn't lift those tariffs. Most of those tariffs remain in place, which slightly negates the argument that they were offering in the
first place against them when they were introduced.
LOVELY: Yes, that has always been a bit of a question because when Joe Biden was a candidate, he quite accurately criticized the Trump trade war
tariffs; however, once an office, I think he found it very difficult to reform those tariffs, partly because tariffs create their own constituency.
Some firms do benefit, they are a minority of firms, but they do receive protection and they'll argue to keep the tariffs.
And secondly, there is a widespread view in the US that we need to decouple or de-risk from China and these tariffs did have the effect of reducing
direct imports from China.
QUEST: I know Peterson is not against tariffs per se, targeted tariffs have a -- targeted tariffs have a place in a well-balanced trade policy, would
you agree?
LOVELY: I would agree. Certainly. We have seen in the United States longstanding so-called administrative protection system, which includes
things like countervailing duties to counteract unfair subsidies or anti- dumping to prevent dumping of low-priced goods in the US market or even safeguards to allow for orderly adjustment in the United States.
All of those tools are still present and they require a certain process to ensure that they are used appropriately and not subject to corrupting
influences.
In fact, one of those tools, different tools, Section 301 was used under the Trump administration to get behind the tariffs.
QUEST: Our dear old friend, Section 301 which I am pretty certain we will hear a great deal more of if President Trump wins.
Mary, depending on the result, one way or another we know that we will be looking forward to talking to you a great deal more. Thank you very much --
in the future.
LOVELY: Thank you.
QUEST: Now, this is QUEST MEANS BUSINESS. Tonight, we are all about tariffs, explaining, understanding and giving you some idea of what might
come next.
Good evening to you.
(COMMERCIAL BREAK)
[16:31:50]
QUEST: Hello, I'm Richard Quest. Tariff QUEST tonight. There's more in a moment.
The Canadian foreign minister will join me to discuss the situation in Ukraine following their conference and the prospect of a trade war with
Donald Trump on the bilateral trade issue. The AI rally is being put to the test again. Apple reports earnings. All of it is only after the news
because as you'd expect this is CNN, and on this network, the news always comes first.
At least 158 people are now known to have died in Spain's worst flooding disaster in modern history. Towns are underwater and thousands of people
are without power following the heaviest rainfall that Valencia has seen in decades. The authorities warned that the number of people dead is likely to
rise. Dozens of people missing and the military have been called in to help with the rescue operation.
U.S. Secretary of State Antony Blinken is condemning the latest ballistic missile test by North Korea. It's believed to have achieved the longest
flight time yet for an ICBM. Japan's Defense Ministry says it flew for nearly an hour and a half and then fell outside Japan's exclusive economic
zone.
Russia is seeking to fine Google an amount so large most people don't even know the word to describe the number. Apparently, Google owes the Kremlin
more than two undecillion rubles. That is two followed by 36 zeros. It's more than the value of the entire global economy. How did it happen?
Because it accrued exponentially after Google refused to pay fines for blocking pro-Russian channels on YouTube. a Kremlin spokesman said the sum
is filled with symbolism.
Elon Musk's court case about the $1 million voter sweepstakes is now in the hands of a federal judge. Mr. Musk, who's been campaigning for Donald
Trump, was originally ordered to appear in court in Pennsylvania today. His lawyers have filed a motion last night that pauses the case until a federal
judge decides to take it on or send it back to the state. They say -- his lawyers say the case is a publicity stunt.
Meanwhile, Mr. Musk stands to be involved in a potential Trump administration. Donald Trump's transition chair Howard Lutnick has outlined
how Musk might contribute.
(BEGIN VIDEO CLIP)
HOWARD LUTNICK, TRUMP TRANSITION CHAIR: I am a recruiter at a different level than most people you will ever meet. And so I just recruit him and if
there's one single inch of daylight, they're going to serve, and I have got the greatest people. I have someone who is a CEO of $100 billion company,
tech company. He says, OK, I'll go redo tech. You saw my relationship with Elon Musk at the rally, right? So I brought Elon Musk into it. Elon Musk's
ability to do DOGE. He and I worked that out together and we structure that.
KAITLAN COLLINS, CNN ANCHOR: But would he actually come into the government? Because, I mean, he'd have to divest, it would be quite tricky
financially for him.
LUTNICK: He's not coming to the government. He can't sell SpaceX and Tesla.
COLLINS: He's not going to --
LUTNICK: No.
COLLINS: So what person --
[16:35:01]
LUTNICK: He's not going to be adjacent to it. Think adjacent to it and writing software for the government, and then giving the software to the
government. Helping the government. It's going to be amazing.
(END VIDEO CLIP)
QUEST: No matter who wins next week, tariffs are likely to continue because both sides are putting them forward. The Biden administration, for
instance, continued many of the measures that were put in place by Donald Trump despite criticizing them at the time. Mr. Biden relented on those
tariffs against the European Union. He dropped the penalties on items like steel and aluminum or aluminum as some might say.
But President Biden did tightened screws on China, increasing tariffs on electric vehicles, solar cells, and chips. The Treasury secretary, Janet
Yellen, justifying the bill fast, says they are unnecessary tool against China.
(BEGIN VIDEO CLIP)
JANET YELLEN, U.S. TREASURY SECRETARY: I think the main reason for that is that we look to China to address the practices that were emphasized in the
301 action which went to issues of unfair competition and China really did not address any of those issues and until China made a meaningful attempt
to respond to the 301 Unfair Trade Practices, President Biden felt we should not reward China by lowering the tariffs.
(END VIDEO CLIP)
QUEST: There's that phrase, the 301. Again, the omnibus tariff.
The man you're looking at on the screen is very familiar with section 301 and omnibus tariffs. He lived them, eat them, breed them, and slept them in
his previous career as the former U.S. trade representative, the USTR. Michael Froman there. He's the president now of the Council on Foreign
Relations. He joins me, Ambassador Froman, from San Francisco.
Sir, you have more experience than most of us and decent when it comes to tariffs. Are you worried that both parties, but one worse than others, but
both parties have tariff on the agenda?
MICHAEL FROMAN, FORMER U.S. TRADE REPRESENTATIVE: Well, Richard, first of all, great to be with you. Look, I think tariffs ultimately raise the costs
that the end-user, whether it's a consumer buying consumer product or a manufacturer buying an input for their production ultimately pays for that
product. There may be cases where it's justified and targeted tariffs. For example, if we're engaging in industrial policy and subsidizing our
electric vehicle industry here, you may want to put tariffs on to prevent imports from China from undermining that policy, while the industry is
still getting up on its feet.
But broad-based tariffs like former president Trump has proposed and like your previous guest talked about will increase the cost to the average
American family by an estimated $2600, and that's just the direct cost. There's the indirect cost of the retaliation and other countries follow in
the U.S. example and imposing tariffs of their own for their own reasons.
QUEST: So what I -- I'm trying to sort of understand both sides here, but I can't understand the justification that seems to have been accepted by the
Republican Party that somehow these tariffs will pay for themselves and beyond because it is essentially a tax paid to the government and therefore
it's going to help cut the deficit.
FROMAN: Yes, I think history has shown the tariffs are not a particularly good way to raise revenue potentially compared to the income tax. It's no
substitute for the income tax. And of course, when you get punitive tariffs put on, you don't actually import the product. And so you don't actually
get any tariff revenue. So if you impose 100 percent tariff or 60 percent tariff, let's say on everything coming in from China, we are going to end
up importing less from China.
That's the goal of the tariffs. But if you import less from China, you're also not going to be collecting the tariff revenue and there's no
comparison between adding tariff to comparing it, for example, to income tax. It's one reason why the U.S. never really relied on tariffs after the
first 100 years or so of its existence and move to an income tax.
QUEST: I read your essay on the next president and the trade-offs in U.S. economic policy. If we -- and I realized maybe democracy is the biggest
issue that's being played out here. But if we just stick to U.S. economic policy, what is your fundamental biggest point in this election to help our
dear viewer elsewhere in the world understand what's likely to happen here.
[16:40:02]
FROMAN: Look, I think whoever gets elected next week is going to have to deal with some of the trade-offs between the different approaches to
international trade and economic policy. There may be cases where it makes sense to impose tariffs. We may want to reduce our dependence on China for
imports, but all the steps that we take, for example, to reduce our dependence on China to create resilient supply chains, to diversify our
supply chains, they all come at a cost. They all raise the cost ultimately. Otherwise, they would have been likely done in the first place.
And so we're trading off efficiency against other important values like resilience, redundancy, and national security. That's a totally legitimate
trade off to make, but it's not free. And we should be having the conversation with the American people saying, how much more are we willing
to pay for the products that we depend on in order to enhance our national security and ensure that our supply chains are resilient. And having that
kind of conversation I think is going to be a key focus for any future president.
QUEST: Ambassador, you've always been so generous with your time at USTR, at Mastercard, and hoping now at the Council we can continue to look upon
you as a friend of QUEST MEANS BUSINESS to join us for our conversations. I'm very grateful to you, sir.
FROMAN: Thanks for having me.
QUEST: Thank you.
Now Canada is warning that the longer the war in Ukraine goes on, the worse the situation. In a moment, Canada's foreign minister Melanie Joly joins me
to more about this.
(COMMERCIAL BREAK)
QUEST: The United States says it expects North Korea to deploy its troops into combat against Ukraine in the coming days. U.S. Secretary of State
Antony Blinken says that would make Pyongyang's forces a legitimate military target.
The U.S. now estimates about 8,000 North Korean troops have arrived in the Russia's Kursk region across the border from Ukraine. You can see it all on
the map in front of you. Ukraine estimates that nearly 20,000 of its children have been deported and taken to Russia since the war began nearly
three years ago. Now Canada's foreign minister is working on a plan to bring them back.
Melania Joly made her pitch to a gathering of international leaders in Montreal this week. The Canadian Prime Minister Justin Trudeau warned that
the global impact of the war is worsening over time. And the foreign minister is now with me from Montreal.
[16:45:03]
The difficulty is getting -- forgive my blunt language. The difficulty is getting the children back if Russia will not cooperate with you in that
regard. So what is plan B?
MELANIE JOLY, CANADIAN FOREIGN MINISTER: Well, first and foremost, plan A has always been to bring back all the children and we know that according
to Ukraine, there's around 20,000 of them, and 978 have been able to come back. Now, that's why we organized this important Montreal conference and
that's why now we have the Montreal Pledge, which is clearly identifying countries that will negotiate to get these children out of Russia and bring
them back to Ukraine.
We now have the clear commitment of Qatar, of South Africa, and the Holy See, and also, we have identified two countries that will be playing the
role of transit countries when children leave Ukraine and go -- leave Russia and go to Ukraine. These countries will be safe pathways. And so
therefore, Qatar and also Lithuania will be playing that role. So this is a step in the right direction, and I must say every child that we will be
getting back to Ukraine is a victory in itself.
QUEST: OK. On the question of the wider war, as -- the calendar is important here, you know that better than me as we go into winter. A friend
of mine, a war correspondent there says that the dynamics of this war have changed because of the use of drones. It's more dangerous, it's more
difficult, it's more brutal.
How can you continue -- how can the West, if you will, continue to support Ukraine at a time when economies are strained, times are getting difficult,
and it's winter?
JOLY: So first and foremost, I must say, Richard, that for us we always thought that was important for Ukraine to one day be part of NATO. And
that's why we thought that making sure that Ukraine is part of NATO is really important. Now the issue is, how can we make sure that we support
Ukraine at a time where there is -- I'm sorry.
There is a transition period and this transition period is between the invitation with NATO is -- needs really security assurances from Canada and
from other countries and so that's why we signed security arrangements with Ukraine. We did tell, the G7 did so, and many G20 countries did so. And
that's why it helps us in the long term because we have military and also micro financial commitments with Ukraine.
I'm sorry, there was a technical difficulty beforehand, and so that's why I was reacting to what was happening in my room. Sorry, Richard. I'm
following.
QUEST: No, no, no, no, I was just concerned that it was all right with you. Glad that it is.
JOLY: Yes, it's all good. Thank you.
QUEST: And we're talking tonight. QUEST MEANS BUSINESS tonight is all about tariffs as well. You have the largest bilateral relationship, country to
country, besides, say, the European Union, but yours is vast. Please, just a straightforward question. How worried are you if Donald Trump is elected
across-the-board tariffs will really hit Canadian-U.S. trade?
JOLY: So first and foremost, we will make sure that we respect the American people's will, and were of course following the election. But I won't
answer a hypothetical question. What I can tell you, though, is that our Trudeau government has been dealing with many American administrations
throughout the nine years we've been in power. The Obama one, the Trump one, and also the Biden one. And so we have experience.
We've been able to renegotiate the NAFTA agreement which is indeed are free trade agreement, between Canada, U.S., and Mexico. And we're always there
to defend our national interests, but also to work with the U.S. who's a strong friend and ally.
QUEST: You know, I'm old enough minister to remember the negotiation of the first NAFTA. I think I remember being in Miami when it was first announced
all those years ago, which shows that whatever the environment is, trade is resilient and you have to be pragmatic.
[16:50:12]
As I get it. I mean, that really is the way governments have to look at this on both sides, isn't it? There has to be an element of pragmatism.
JOLY: (INAUDIBLE).
QUEST: You'll live with what comes your way.
JOLY: As always. Of course. And that's diplomacy. And actually it's funny you used the term pragmatic because I am a pragmatic and I presented a
pragmatic diplomacy vision. And when it comes to trade, of course we will make sure that we defend our national interests. We have 36 states in the
U.S. that have, as their first exporter, Canada as a destination. So we're intrinsically linked. And of course, we know that the success of the U.S.
is the success of Canada and the success of Canada is the success of the U.S. So we'll continue to work on this very important bilateral
relationship.
QUEST: Minister, next time we speak it has to be in Ottawa, Toronto, Montreal. We have to do it on your side of the border next time.
JOLY: I really hope so. Thank you.
QUEST: Minister, thank you.
QUEST MEANS BUSINESS tonight. Apple has released its latest earnings. We'll tell you if it's a big bet on AI and how it's paying off in a moment.
(COMMERCIAL BREAK)
QUEST: Apple shares, the earnings, mixed bag. Shares are down after hours. The tech giant reported strong sales of the iPhone, but missed expectations
for products like iPads and Apple Watch. Does that matter?
Good that La Monica is with me.
Paul, make sense of these results, please.
PAUL LA MONICA, BARRON'S SENIOR MARKET ANALYSIS WRITER: Yes, Apple had a pretty solid quarter, Richard, but I think there are concerns about China's
sales did miss there and they were down a little bit. You mentioned the sluggish sales of the watch and other accessories. IPad sales were actually
decent but again below forecasts. I think the big question is just with Apple sprinkling its artificial intelligence, Apple intelligence service,
you know, throughout, you know, for the new Apple iPhone 16, how strong will sales be in the incoming quarters?
IPhone sales were up 5.5 percent from a year ago, which is better than expected, but not gangbusters.
[16:55:04]
So I think investors are taking a pause and wondering where is the excitement right now at Apple. If it's not AI, where it's going to come
from.
QUEST: Yes. Will we be able to determine if AI is being imbedded, can we ever bring out the AI effect in Apple's results? I supposed they'll sell
more of X, Y, Z, but it's not as if there's a specific piece of kit that will tell us AI is boosted by Y or maybe I'm missing something.
LA MONICA: No, I mean, as of right now, it looks like Apple is not going to make AI, the intelligence aspect, a line item in the earnings if you will.
So you really are looking for what iPhone sales and iPad sales and other hardware what their growth trajectories look like because of AI becoming a
bigger part of the newer products. Hopefully for Apple, with the holidays approaching, you would expect that the next quarter's results will be
stronger for the uptake of new iPhone sales, iPads, the watches, et cetera.
But it's all about AI and we've seen that clearly with all the other big tech companies, Microsoft, Meta, Amazon, and, you know, reporting their
earnings this week.
QUEST: Paul, I'm grateful to you, sir. Thank you very much indeed. Paul La Monica in New York.
LA MONICA: Thank you.
QUEST: And we'll have a "Profitable Moment" on tariffs after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." I'm in Dubai, which of course is the home of -- one of the homes of free trade, the Jebel Ali Free Trade Zone.
But now tonight, and we've talked about tariffs and trade a great deal because one of things I've never understood is this justification that
somehow tariffs will raise enough taxes to lower the deficit and to increase public spending. That's the argument of the Trump administration.
Tonight, we've shown again and again that tariffs are attacks on consumers. It is slowed down in industry, tit-for-tat tariffs are retaliatory, and
eventually you go down a spiral as you heard tonight from Ngozi at the WTO. But as everybody again and again has said this is a decision the American
voters will make whether those tariffs will come in because when I was in Riyadh this week at the FII, the one thing I heard again and again is
whatever comes our way, we will live with it. And that's the message I supposed tonight on tariffs.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Dubai. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see
you tomorrow.
JAKE TAPPER, CNN ANCHOR: Just five days, that's right, five, count them, five days until election day. You know what that means? It means the sweet,
sweet symphonic tune of CNN's election music. Thank you.
The focus of both campaigns are shifting out west tonight through a handful of crucial battleground states with both campaigns hoping to boost turnout
especially among Latino voters. For Vice President Kamala Harris, it's a rally getting underway in Phoenix right now. We're going to listen to some
of her remarks live in just a minute, but -- and I'm also going to be joined by the state's Democratic senator, Mark Kelly, for his thoughts on
the race.
Vice President Harris next heads to Nevada for two more campaign rallies, including one with singer and actress Jennifer Lopez. Will J. Lo sing
unlike Beyonce at the Texas rally? Well, we shall see --
END
