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Quest Means Business

Trump Agrees to Pause Tariffs on Mexico for One Month; Trump and Trudeau Spoke About Tariffs; Rubio Says He has Become Acting Director of USAID; South Africa Denies Confiscating Land, After Trump Threatens To Cut Off Aid; USAID Workers At Washington H.Q. Told To Stay Home; Trump Says U.S.-China Tariff Talks "Likely" This Week. Aired 4-5p ET

Aired February 03, 2025 - 16:00   ET

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


[16:00:13]

RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Closing bell ringing on Wall Street. It has been an extraordinary day in the markets. We

will show you all that has happened. As we come to the closing bell, though, you'll see the market is now off 120, had been nearly six, seven

hundred. One two three solid gavels, a topsy turvy market and had even had a bit of green, and the main events of the day.

Tariffs on Canada still set to take effect after President Trump paused the ones targeting Mexico.

Mark Carney, the frontrunner to replace Justin Trudeau, will be with me live on tonight's QUEST MEANS BUSINESS.

Elon Musk and President Trump are moving to dismantle the main US agency for international aid.

And the frontrunner in the race for the German chancellorship, the Bundes chancellor talks to us, Friedrich Merz says the answer to any US tariffs

must come at the European level.

Tonight, we are live back in New York. It is Monday, February the 3rd. I am Richard Quest. We have a very busy hour, you and me together and I

certainly mean business.

Good evening.

We begin tonight as Donald Trump has pulled one of his punches in the fight over tariffs. The US president says he will now delay the 25 percent tariff

on Mexican imports after he won concessions on border security. Twenty-five percent tariffs are still set to go ahead on goods from Canada, that

happens at midnight.

The president and the prime minister are reportedly speaking over the course of this hour, and China itself also facing the 10 percent tariffs.

So how did the market play into all of this? They clawed back heavy losses five to six hundred points. As soon as we knew that Mexico was off the

tariff list for the next 30 days, the market roared back up again and it has bounced around even with a tinge of green earlier on.

CNN's Jeff Zeleny reports.

(BEGIN VIDEOTAPE)

JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT (voice over): President trump backed off a trade war with. Mexico, for now, at least,

even as punishing tariffs for Canada and China are still looming.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: When you're the pot of gold, the tariffs are -- the tariffs are very good. They're very powerful.

ZELENY (voice over): Trump reached a last minute deal with. Mexican President Claudia Sheinbaum today, agreeing to a month long delay on

imposing the 25 percent tariff on all goods from Mexico, in exchange for Mexico sending 10,000 additional troops to the border, a move that eased a

chaotic fall in global financial markets.

As he signed executive orders in the Oval Office today, we asked Trump if he blinked.

ZELENY (on camera): Did you blink this morning?

TRUMP: There was no blinking. No. She is a wonderful woman, but she did agree to 10,000 soldiers on the border. I would say that's a lot.

ZELENY (voice over): Canada and China are still in Trump's protectionist crosshairs, with Trump threatening a 25 percent tax on Canadian imports and

10 percent on goods coming in from China.

Talks between Trump and Canadian Prime Minister Justin Trudeau continued throughout the day. Yet Trump kept alive blistering criticism of the

neighbor and long ally.

TRUMP: Canada is very tough. Canada is very -- you know, we are not treated well by Canada and we have to be treated well.

ZELENY (voice over): While Trump vowed to press ahead with other tariffs, he conceded the prospect of short-term economic pain through higher prices

and inflation.

TRUMP: Tariffs don't cause inflation. They cause success. They cause big success. So we are going to have great success. There could be some

temporary short term disruption and people will understand that.

ZELENY (voice over): Among Americans, that remains an open question. Among Canadians, their resentment was clear. As the star spangled banner was met

with jeers at a weekend hockey game.

Trump remained steadfast in his longstanding belief in tariffs, which the conservative "Wall Street Journal" Editorial Page blasted as "the dumbest

trade war in history."

Rupert Murdoch, whose media empire includes the newspaper, visited the Oval Office today and was on hand as Trump spoke with reporters.

TRUMP: I'm going to have to talk to him. Not only is it not dumb, you're going to see, you're going to see. Every single one of those countries is

dying to make a deal.

(END VIDEOTAPE)

QUEST: Now, I will be talking to Jeff Zeleny in a moment.

First, Valeria Leon is in Mexico City.

Thank you for joining us on QUEST MEANS BUSINESS.

Is the view that these 10,000 troops -- I mean, the Mexican president always had that in her back pocket. She always intended to make some sort

of offer. It was, in a way -- I mean, who played who in this, I am guessing.

VALERIA LEON, CNN EN ESPANOL CORRESPONDENT: Yes, Richard, the delay of tariffs on Mexican products has been seen as an important breakthrough for

Mexico's government.

[16:05:10]

After a whirlwind of last minute negotiations, Mexico's government reached this deal to delay the tariffs that the Trump administration was about to

put in place on Tuesday.

Mexico was bracing for the impact of the Trump tariffs when Mexico's President Claudia Sheinbaum unexpectedly announced that she had reached a

deal at the very last minute.

So this morning, rather than presenting Mexico's planned response to the Trump administration's tariffs, President Claudia Sheinbaum confirmed she

had a conversation with President Trump, which she described as a good conversation and a long call of 45 minutes to talk about immigration issues

and the interest that both countries have in reducing fentanyl consumption and also to secure the border.

QUEST: Right.

LEON: Also, she said --

QUEST: Let me just jump in here. What's the perception in Mexico? I know it is still early, but is the perception that she won the day or that she

caved in and capitulated and gave in to Donald Trump? How does Mexico see it?

LEON: So, it was a surprise. Nobody was expecting, actually, the Mexican government could actually reach this agreement. So it has been seen with

positive vibes between Mexicans and also Mexico's Economic minister has described it as an unusual success. And Mexico's president considered that

pausing the tariffs one month opens the door for further negotiations, so this is positive to them.

So according to this new plan, now, Mexico's economy minister will be in charge of the negotiations to further extend the one month freeze on

tariffs -- Richard.

QUEST: I am grateful. Thank you, in Mexico City, the story there.

A trade war between the US and its neighbors would be very costly. According to the Peterson Institute for International Economics, Trump's

tariffs would trim US growth by $200 billion over the next four years. Canada and Mexico arguably going into recession, both stand to lose one

percent of economic growth.

Adam Posen is the president of the Peterson Institute. He joins me now.

Adam, it is good to see you, sir. I remember not only Peterson's research in 2024, but you have done research as well on the earlier tariffs from

Donald Trump's time and in fact, Peterson has done lots of research on tariffs, and they always end up inflationary, and they always end up with a

lower economic growth. That's the gist of it, isn't it?

ADAM POSEN, PRESIDENT, PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS: That is the gist of it, Richard, and thank you for having me and referring to

our work, but it is important that your viewers understand the reason for that, and it tends to be much bigger on inflation than growth.

The reason for that is, in theory, you could have this just be a relative price shift that people just say, and this is part of what the Trump

administration has claimed could happen, that you just see this income loss and everybody says, okay, foreign goods are more expensive, foreign inputs

to my products are more expensive, I will just change.

But in reality, as we saw under both Trump and Biden, companies do have some pricing power from industry to industry, but they don't just passively

take the loss of the higher prices and households genuinely feel the loss of income, the loss of purchasing power.

QUEST: So if that's the case, I mean, we've never seen in recent times, well, in our lifetimes, the use of tariffs quite like this, since the --

arguably, in the first administration, but this is different.

This idea look at what he says, not what he does. The speed with which Colombia tariffs went away, Mexico tariffs have gone away for 30 days. Do

you believe it is a bark worse than his bite situation?

POSEN: I am not sure, to be honest, but I think he wants to maintain his maximum optionality. He thinks he is a good negotiator. As you said, this

is very different than the previous round of Trump tariffs or the ones that Biden extended because they are an order of magnitude, meaning ten plus

times bigger and they are going across so many countries and industries.

I think the bark versus bite question is more one about the long term. It may be that it is only bark in the short term, but over time, whether its

Colombia making its announcements vis-a-vis China or whether it is Canada, Prime Minister Trudeau very articulately talking betrayal, you have to

start thinking that countries will downgrade the dependability of the US, and that will have long-term implications.

[16:10:04]

QUEST: You've gone right there, Adam. I am grateful. Thank you, sir, because can they? Because the argument has always been where does the 500-

pound gorilla sit? Wherever it wants. Therefore, if you've got to do -- I mean, which country is going to choose to create greater trade relations

with China or Russia versus maintaining the relations with the US, which is the largest single market in the world?

POSEN: Richard, you're right about the gorilla. I put it about the schoolyard bully in an article on this in "Foreign Affairs" in November.

You know, you, at some point you move schools or you move lunch tables or you gang up on the bully. You don't even -- if the bully in the first

round, you let alone.

So when we talk about this, which countries, it is going to be mostly about trade between third nations, Europe and Latin America, Latin America and

Asia, Southeast Asia ex-China talking to the rest of the world. It is not all or nothing.

QUEST: Can you listen to this, to what the president said on the question of the Sovereign Wealth Fund? I beg your pardon? I thought we did have the

president saying that.

Basically, you know the issue. The president has now signed an executive order saying he is setting up a Sovereign Wealth Fund and the Treasury

Secretary, the Commerce Secretary designate, they've all said, yep, it will all be excellent, wonderful, marvelous. But of course, it needs

congressional approval, which seems to be a minor detail or maybe not bearing in mind he has Congress on his side as well.

What do you make of a Sovereign Wealth Fund?

POSEN: On the merits, I think it is sort of silly for the US because the entire rest of the world, partly due to Trump, partly against Trump, is

moving money into the US. Sovereign Wealth Funds are for countries like Abu Dhabi, Ireland, Norway, Singapore, where they are very small countries that

rack up a lot of money, a lot of additional reserves, and they have to diversify them.

In the US or in Alaska's case, right, you have a fund for the state because they are racking up a lot of money from energy, and then they need to be

able to spread it out over the generations.

The US is not a net reserve gainer, and the US doesn't really have a huge advantage to diversify. So it won't hurt. I think it is not like selling

crypto memes, but it is not terribly useful either.

QUEST: Adam, I am grateful. Thank you. And thank you for the work that your colleagues do at Peterson. The rigor of the research on tariffs is

extremely important and needed at this moment. I am grateful, sir. Thank you, Adam Posen joining me from California.

Now President Trump has delayed the tariffs on Mexico. Mexico promised 10,000 troops to the border.

On Friday, he said there was nothing countries could do to avoid tariffs.

(BEGIN VIDEO CLIP)

REPORTER: Mr. President, is there anything China, Canada and Mexico can do tonight to forestall your implementation of tariffs tomorrow?

TRUMP: No, nothing. Not right now. No.

REPORTER: Not a negotiating tool?

TRUMP: No, it is not. No.

(END VIDEO CLIP)

QUEST: Jeff Zeleny is with me.

Jeff, you and I talked so many times, but, Jeff, not a negotiation at all. Clearly, it was a negotiating tool. The price was 10,000 troops that maybe

the Mexicans were prepared to give anyway.

It seems to me, though, the issue with Canada is more personal, and arguably there is a greater degree of animus.

ZELENY: Richard, there is no question, just listen to what the president says and we do know that he, just a few moments ago, was off the phone with

Canadian Prime Minister Justin Trudeau. Their second call of the day. We do not have a readout yet of that call.

However, in the Oval Office, just a couple of hours ago, I was there asking the question of the president about Canada, what Canada could do? Again, no

specifics, but just how President Trump refers to Canada is so different and it is so personal.

Still, you know, he has not shaken the idea that Canada should be the 51st state of the United States of America, of course, that is not going to

happen, but that is kind of the underpinning to all of this here.

The president also saying that the US does not need Canada's lumber, the US does not need Canada for other trading things. He talked about the auto

market in particular.

Well, if you look at Detroit and know anything about the auto market in Detroit and in Greater Michigan, their supply chains throughout the region,

of course, the crude in Canada is refined in the Upper Midwest and other places. So there is no doubt that this is a deep connection here.

But the president, we do not know if he will blink on Canada as he did on Mexico, but it is different in that respect. It sure feels like it --

Richard.

QUEST: All right, let me push you. Push comes to shove as we say. You said the president blinked, but he will say, Mexico blinked. Now, look, I get

it, I get it, Jeff, this is a zero sum game. It matters not in a sense, but how significant, from the White House's point of view is who blinked?

ZELENY: I think it is very significant because the president obviously would say that the Mexican president caved and agreed to give or send

10,000 Mexican National Guard troops to the border to stop the flow of fentanyl and illegal migrants. But the reality is that President Trump, you

played the sound right there from Friday, Richard, saying there was nothing that he could do to negotiate, no concessions he was looking for.

Well, suddenly there was. I mean, the president clearly was watching the market reaction like everyone else. The market did not respond, both

globally and here in the US once the markets opened Monday morning. So it is unknown if that is what led to the agreement.

And again, it is just a month long delay, but there is no doubt that the president, from the bluster we heard on the campaign trail and indeed what

he was saying just a couple of days ago, he decided to make a deal. Not that that's a bad thing at all. I mean, obviously the market appreciated

that.

QUEST: Sure.

ZELENY: But with Canada, we will see. A lot of people here would not be surprised if there is a deal reached before midnight. But we are not in the

prediction business in this administration -- Richard.

QUEST: All right then, in the moment there is more to report, as always, come back and we will take you immediately.

Thank you very much, Jeff. I appreciate it.

ZELENY: You bet.

QUEST: Now, Elon Musk says it is time to shut down the US Agency for International Aid, USAID. President Trump claims the agency is wasting

foreign aid dollars.

(BEGIN VIDEO CLIP)

TRUMP: It has been run by a bunch of radical lunatics, and were getting them out. USAID, run by radical lunatics, and we are getting them out and

then we will make a decision.

(COMMERCIAL BREAK)

QUEST: President Trump has spoken to his Canadian counterpart, Justin Trudeau this afternoon, and Canada is preparing for tonight's tariffs to

come into effect.

Mark Carney is the former governor of the Banks of Canada and England, and he is a candidate to be the next prime minister and leader of the Liberal

Party in Canada.

Mr. Carney joins me now.

(AUDIO GAP)

QUEST: -- between president --

MARK CARNEY, CANDIDATE TO BE CANADIAN PRIME MINISTER: Oh, Richard, I've just lost the audio.

QUEST: Hello? Can you hear me, Mr. Carney?

CARNEY: I can hear you now, Richard. Yes, I have you back. I have you back. Sorry about that, Richard.

QUEST: No, not at all, sir.

[16:20:10]

Any idea what the president and prime minister have agreed?

CARNEY: I am afraid the call ended as I sat down in this chair, so I haven't seen the result. Obviously, we are all hoping for an agreement on

the most immediate issues around the border and fentanyl, but we don't know.

QUEST: What is it that Canada could offer do you think in -- to sort of to forestall this in a way that the Mexican president was able to offer 10,000

troops and a hardening of the border, or is that a false question?

CARNEY: Well, look, we understand the president's concern with fentanyl. It is a scourge in the United States. It is a challenge here in Canada. We are

not your supplier. We are not the American supplier, I should say. Less than one percent comes across the Canadian border relative to Mexico.

That said, there is more we can do. We proposed a number of things, including a joint strike force, so cooperation between our law enforcement

authorities, greater tracking of these gangs, more policing on both sides of the border, a series of measures that will really tighten up the border.

And obviously, we are open to any additional things that can be done. I think probably some of those were discussed with the prime minister and the

president, as well, though I have to say, Richard, that the issues around the trade dispute, if I can put it that way, raised by the US

administration, they've shifted a lot from time to time.

Sometimes, it is the border; sometimes it is the actual fact of having a deficit, which is all caused by energy in the case of the US. This morning,

the Canadian banks, the banking system was mentioned, something the banking system of which we are justifiably proud.

So it is a much broader canvas, it seems, than just the border issues.

QUEST: You say we are not going to stand up to a bully. We are not going to back down.

Now, I understand it is not mutually exclusive, negotiations and discussions and coming to a resolution, but it seems as if the president is

looking for a fight with Canada.

CARNEY: Well, we are looking for -- look, we have the most successful commercial relationship in the history of the world. We are the US' largest

client. We import more than China, the UK, France, Japan combined from the United States. We are the largest client of 35 of the 50 US states.

We are one of the largest suppliers, and I am not going to list all the areas where we are the largest suppliers, but we are an essential

complement -- you're welcome -- complement to the US economy. So it is very important to come to a resolution on that.

However, if the US is going to change fundamentally the rules of the game, if they are going to rip up the trading agreement which they have started

to do, we have got a lot of strengths. We have other options. It will take some time to develop those, but we are resolute, we will pursue those and

move in that direction.

QUEST: How offended do you think Canadians are by the way this has been put forward by the president? I listened to the current prime minister and

there was very much this how could you be doing this to us who have stood by you for so long? Then we had the booing during the National Anthem.

Now, look, whether it is disagreeable and reasonable people can disagree, but there is a deep-seated feeling of hurt as a result, is there not?

CARNEY: I would say that -- I would say offended is the right characterization. We are a proud, independent nation. We view ourselves as

the greatest country on earth. We have been insulted on multiple occasions by senior members of the administration. So yes, that is offensive.

We are not going to -- we are not going to reciprocate in those insults. What we are going to do is negotiate in good faith, try to address these

issues around fentanyl and the border. We think we have good solutions for that.

But we are going to strike good commercial deals for Canadians. We are representing Canadians. There are many places where we are complementary,

but we are not going to do anything that is not in our national interest.

QUEST: Mark Carney, I am grateful. Thank you. I note the date of March the 9th, when the leadership race will conclude that's my birthday. So if you

win, sir, I hope you'll come on and we can celebrate. I will try anything I can to get you on this program.

CARNEY: I will always remember your birthday from now on.

QUEST: Thank you, Governor. I am very grateful.

CARNEY: Very much so, Richard. Thank you.

QUEST: Thank you, sir. Thank you.

[16:25:03]

Elon Musk says he is taking a wood chipper to the federal agency responsible for US foreign aid.

President Trump agrees that USAID is too partisan and should be shut down. Its funding has been frozen and its employees have been told to stay home.

The agency supports countless programs, many of which fight disease and hunger in vulnerable nations. The new Secretary of State Marco Rubio, says

he is now the acting director of USAID. He says the agency works against US interests.

(BEGIN VIDEO CLIP)

REPORTER: Are you currently in charge of USAID or are you --

MARCO RUBIO, US SECRETARY OF STATE: I am the acting director of USAID. I've delegated that authority to someone, but I stay in touch with him. And

again, our goal was to go in and align our foreign aid to the national interests.

But if you go to mission after mission and embassy after embassy around the world, you will often find that in many cases, USAID is involved in

programs that run counter to what we are trying to do in our national strategy with that country or with that region.

(END VIDEO CLIP)

QUEST: Okay, Alex is with me. Alex Marquardt is in Washington.

Okay, I understand he is probably right, bearing in mind the new policies of the administration, a lot of existing USAID policies might be in

conflict, but you don't need to, I guess, shut it down.

ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: Well, yes and they came in with this blanket freeze on all foreign aid around the world,

with a handful of exceptions for the Israeli and Egyptian militaries and some food aid. But, Richard, I have to tell you, the past few days of

reporting on this, there is just an incredible amount of chaos and confusion.

I've been speaking with aid officials who say that even the food programs have not been able to be followed through on that. Water deliveries have

been held up, that there are medicine programs, vaccination programs that have been held up, education programs.

So even if there are these exceptions that are eventually made, waivers given eventually to these programs, there is so much confusion and fear out

there that we have seen a lot of these grind to a halt, and there will be, according to the people I've been speaking with, including today, people

who get hurt, people who get sick, and people who die.

So now what we are seeing is essentially the State Department absorbing the massive bureaucracy of USAID, bring it under the State Department umbrella.

But if you talk to anybody in the aid world, they'll tell you that the State Department simply is not equipped to carry out the missions that

USAID has been doing since the 1960s all around the world.

QUEST: Right. So we have -- this is a list, we have the US program for the distribution of antiretroviral, HIV medications. That was frozen, or at

least we believe that's not taking place. We've got the foreign aid, generally, foreign aid from the United States that's been frozen or at

least being reviewed. And now we've got USAID, which is humanitarian aid. Am I getting this right? I am trying to get an overarching picture here.

MARQUARDT: For the most part, Richard, yes, you're right. The vast majority of the aid will go through USAID. They have a $40 billion budget from an

overall foreign aid budget of $60 billion. They are the biggest supplier of humanitarian and food aid around the world and they are what they call the

implementers of all kinds of programs.

They have a big role in, say, PEPFAR, which I think is what you were just alluding to, the HIV and AIDS program --

QUEST: Yes, yes.

MARQUARDT: -- that has saved millions around the world, but it extends much farther than that.

I was speaking to a source who highlighted the fact that there are 145,000 women in Afghanistan who are part of a program to get all kinds of

treatment and support both psychological and physical, for sexual violence. So it goes well beyond simply feeding people, and there is no consistency

here because of that fear.

So while some food programs may be back up online, others may say, well, we are giving formula to a baby, does that count as food? And so there are a

lot of risks here, and there are going to be a lot of gaps going forward.

QUEST: One more -- South Africa, what was that wobble about yesterday when he decided to stop all aid to South Africa, and basically -- I mean, i know

the issue and he has been at this before, but it was a bit out of left field.

MARQUARDT: Well, I am actually not clear on exactly what that issue is, but what I will say is that there have been exceptions given every day, every

other day, to essentially allow more aid to be unfrozen.

So in the beginning, it was all aid. And then Rubio said, okay, military aid for Israel and Egypt and food can come back up online. Then they

broadened out the definition of humanitarian.

But there are all kinds of key allies, key programs that have been left out. When you look at, say, just the military allies in in Jordan, in

Lebanon, in Iraq, that helped the US fight against a variety of terrorist groups, they are not getting their military aid for now.

They're going to be all kinds of, as I mentioned, educational programs, psychological programs, things that fall outside of this definition of

humanitarian, which still isn't quite clear.

And so the onus is now put on the different countries like South Africa that you mentioned and various others to say, hey, can we get our aid

turned back on and the State Department will review each one, case by case, and of course, this is a slow-moving bureaucracy. That takes time, and who

suffers during that? The regular person on the ground who is dire need, so many of them of this aid -- Richard.

QUEST: I am grateful to you, Alex. Thank you very much, joining me there, Alex Marquardt in Washington. Companies, big and small are rethinking their

supply chains as protectionism takes hold, exactly what and how and where in a moment. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: President Trump's just wrapped up his call with the Canadian Prime Minister Justin Trudeau in the last hour. He told CNN's Kaitlan Collins the

conversation went in his with very well. He told us to watch to see whether tariffs will still go into effect tonight. The President said he will

likely speak to China about tariffs in the next day or so. He's already been on the phone with all the other leaders.

Those talks led him to delay tariffs, as we've been talking about. Now, for some U.S. companies, these tariffs will be felt along every step of the

border and nowhere is that more obvious than in the car industry, automakers, for example. Now, let's start with what we've got with cars.

So, let's just take, for example, Michigan and the where cars are there. Now the 54 percent of cars are made either from north of the border and

south of the border.

Very often, parts will cross the border backwards and forwards, at least eight times, constantly going into different parts. So, you're looking at

maybe eight different crossings of the border for one simple car between the facilities in Canada and Mexico, and that's the problem.

[16:35:06]

So, the issue really is, will tariffs be once, twice, three times, four times? How often will tariffs actually be done as a result? Shares in us,

oil makers closed lower on Wall Street. Much more than the broader market, which clawed back steep losses. You've got things like apparel brands,

Nike, Lululemon also closed lower.

Linda Schlesinger-Wagner is the founder and CEO of Skinny Tees. More -- I'm sure she won't mind me saying a small U.S. clothing business with big

ambitions and big designs and great ideas. And sources -- cottons in China. You've just done a big deal. You've just arranged the next year or so ahead

of this. How will this affect you? We're not from what we know so far, are you making plans?

LINDA SCHLESINGER-WAGNER, FOUNDER AND CEO, SKINNY TEES: I'm a little shocked that this

all happened because when I negotiated a big deal back in August, in my wildest dreams, I never thought this would happen and when we negotiated

it, of course you do the bottom, bottom dollar. So, this has caught us unaware and we're clothing and it's Michigan, so in -- made in China.

So, I feel like we will probably absorb the tariff here ourselves because we're all about the give back and our give back will be smaller but I can't

raise my prices. I just don't feel confident.

(CROSSTALK)

QUEST: Right. Well, let's -- so, give me an example of how much one of your items cost to the consumer --

(CROSSTALK)

SCHLESINGER-WAGNER: We bring it in landed. The landed price is approximately $11.00.

QUEST: Right.

(CROSSTALK)

SCHLESINGER-WAGNER: And that's all going to go up.

QUEST: So, it's roughly, say a dollar. Let's say a dollar goes on it -- your input cost is now 12. You really got to either eat that extra dollar

or you can pass it on, or pass on part of it.

SCHLESINGER-WAGNER: And what about the logistics and the supply chain? Is that going to be affected by all of this? We pay dearly for all of that. I

don't know. It's going to be a big surprise, because our goods are ready to ship in three weeks.

QUEST: Oh, really.

(CROSSTALK)

SCHLESINGER-WAGNER: I don't want to pass.

QUEST: Yes. All right. So, you've already got your contract. Your goods have been made in many cases. They're about to be put on a on -- a big,

large ship. It's not an option to suddenly find another supplier in Panama or in Chile or Costa Rica where they also make things, or indeed, where I

was last weekend in Mauritius. It's not an option.

SCHLESINGER-WAGNER: Right. It's not an option. First of all, we don't do business that way. I signed a contract. I'm not going to let these people

sit with tens of thousands of pieces for us, and we won't make our delivery. It's a problem. It's a real problem. And I will say, I'm lucky.

I've been through some Goldman Sachs 10,000 small businesses in the Edward Lowe Foundation. So, we learn about what do you do when something will but

not like this. This was never a what-if thing. I'm caught kind of with my pants down here.

QUEST: All right. But -- so, do you know, I know this is a practical question, rather than the philosopher. Do you know, actually, how this

tariff will be paid? Will it be your importer that pays it and then passes it on to you? Are you expected to pay it to the U.S. Treasury? Do you have

any idea about the mechanisms for this?

SCHLESINGER-WAGNER: Well, I'm thinking it's going to be when my goods hit the United States, and you pay your duty and all the logistics, I think

it's going to be added right onto that bill if I'm correct. I think that's where they collect the duty which, you know, people don't realize is I'm

already paying 37.8 percent on the goods I'm making to the U.S. government. So now we're going to add in. I don't know how that's going to happen.

That's an interesting thing.

I feel like they're going to add it on, but maybe not. Nowhere it's going to be another mess.

QUEST: How is -- I sort of -- I should know that this is not easy but how is it going to affect your business, in a sense, and feel free to tell me

you've got no idea?

SCHLESINGER-WAGNER: No, I think it's going to definitely affect our business. It's going to affect our bottom line if we're paying more and I'm

not passing it on to my consumer, that's going to affect my bottom line. But right now, I'm not going to -- and I'm kind of very clear about this

with my staff. We're not raising our prices. I'm just not. I'm all about quality and the pricing, and we're not raising our prices.

If it was 25 percent, I'd have no choice. 10 percent, I'll absorb personally myself and --

because we are all about the give back to the community and the state and the entire United States.

[16:40:20]

And I don't want -- I don't want to play with numbers and have people, but wow, she raised the prices and I'm not going to buy from her anymore.

(CROSSTALK)

QUEST: I have -- I have a minor request that you and I keep in close contact in the next few weeks so we can follow exactly how this is going.

Are we in agreement?

SCHLESINGER-WAGNER: That's a deal.

QUEST: That's a deal. Well, we made one deal today. That's good. Linda, good luck. Thank you. We'll talk more. Very grateful.

SCHLESINGER-WAGNER: Thank you.

QUEST: Just going to show you how the markets are and how they were during the course of the session. So, we ended off way -- I mean, the NASDAQ is

down heavily still, so the NASDAQ bore the brunt. The Dow -- the Dow was just -- you see -- what you're seeing there is a NASDAQ down because of

uncertainty worries and fears. A Dow coming came back because the worst isn't happening for industrials.

Look at the 30 and you'll make the point quite clearly. You've got -- you see there, NVIDIA still down another three percent. The NVIDIA is the one

that's going to be biting the bullet on this. And so, that is the way things are looking. That's QUEST MEANS BUSINESS. I'm Richard Quest in New

York. Whatever you're up to in the hours ahead, I hope it's profitable. Connecting Africa is next.

(COMMERCIAL BREAK)

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