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Quest Means Business
Trump Speaks After He Announces Pause for Some Tariffs; Apple Shares Plummet as U.S. Hikes Tariffs on China; Trump Pauses Reciprocal Tariffs, Leaves 10 Percent Baseline in Place; Trump Speaks After He Announces Pause for Some Tariffs; Stocks Surge After Trump Announces Pause on Some Tariffs; Over 120 People Killed in Nightclub Roof Collapse. Aired 4-5p ET
Aired April 09, 2025 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES OF AMERICA: I want to thank my team, this team here, and also Scott and Howard -- incredible, and
for Energy, there is nobody like this man, and for the roads and highways. Boy, you've done well, Sean, so we appreciate it very much. Appreciate it.
And if we could, well let's see. We are signing a lot of the executive orders, and some ambassadors have been approving, and we are going to start
that process right now.
We are honored to have Gretchen Whitmer from Michigan, the great state of Michigan, and she has been -- she has really done an excellent job and a
very good person, and we are working on the Selfridge, as you know, the Air Base, we are trying to get the Air Base, open -- keep it open. And I think,
Gretchen, if you're there and Matt Hall, the Speaker of the House of Michigan, and he has been fantastic as the Speaker, I appreciate it.
We won the state, Matt --
MATT HALL, MICHIGAN STATE SPEAKER OF THE HOUSE: We did.
TRUMP: And you helped me a lot.
HALL: I did, and you made me Speaker. So thank you, Mr. President.
TRUMP: That's good too. And, Gretchen, I think everybody knows.
So we are working on that very hard, and I think it will be -- I think we will come home with a winner for Michigan. Okay?
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Okay, that's the President. We were anticipating what he might have said, but he decided
to go on his frolics of his own.
And so once the President has, if he says anything of moment or importance on tariffs, bearing in mind we have already heard considerably about what
his views on it that no other President would have done this, why he said it -- I think the key things, the key phrase is, he said "the people are
getting a bit yippy" and people are starting to get queasy.
The bond market is where his reference is, that he has been talking about. And he says you have to sometimes show flexibility. Those are the reasons.
I am going to show you the triple stack. Let's end the day and let me show you the markets as to how things have closed. So 12.616 percent, that's the
second best NASDAQ performance. The best was back in 2001. Following obviously, but so -- we've got -- that's -- there is no records today. Well
yes, I suppose arguably there is a points record on the Dow, but that's because the market isn't a much higher level than before, but actually 7.8
percent is not a record in terms of a single day gain.
But they are strong performances, and we should not deny that in any way.
Kevin Liptak is with me, I am hoping, along with Anna Stewart is with me in London. So between the two of you, we are going to pull this apart and we
are going to understand exactly what is happening. I believe Peter Navarro is going to be speaking in a moment. We will join him when he does speak.
First. Kevin, so what was this all about?
KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: I mean, it is a great question when you listen to the President's advisers and we heard from
Scott Bessent, the Treasury Secretary, immediately after the President made this announcement, he insisted that this was the plan all along, that the
President put these tariffs into place to try and get countries to come to him, to try and make these new trade deals.
But when you listen to the President himself, it was something of a different story. He said that, yes, he was looking at the bond markets. And
I can tell you behind-the-scenes at the White House, a lot of the President's economic advisers were looking at the bond markets as well,
with an increasing amount of anxiety about what that portended for the economy going forward. The President also saying that he was looking at the
stock market, described it as glum over the last few days.
And so I think taken together, you do get a sense that the President was feeling this pressure, whether it was from Republicans on Capitol Hill,
whether it was from some of the business executives who have spoken out louder and louder against these tariffs, whether it was from some of his
closest friends who had been calling the President to say, look, we need some relief here. I think it all sort of came together into this
announcement that the President said today.
But I do think it is also notable what the President said out on the South Lawn, which is that nothing is over yet. You know, we still have these 10
percent tariffs on all countries. The President didn't remove them altogether, and he is still saying that if in 90 days a country hasn't come
to him for some kind of negotiation, that these still could go into effect.
So I think the President is trying to take the wind today, and his advisers are trying to frame this as the president being a master negotiator, should
we should be clear that we are not totally out of the woods of this economic turmoil and uncertainty quite yet.
QUEST: All right, Anna Stewart, let's remind ourselves that although the higher level reciprocal tariffs are on a 90-day pause, there is this new 10
percent across the board, everybody gets 90, sorry, gets 10 percent and China gets a hundred. You tell me.
ANNA STEWART, CNN REPORTER: China now gets 125 percent. That is total. That is in retaliation to China's retaliation earlier today, which was an 84
percent tariff on U.S. goods.
[16:05:10]
And then everyone else is getting 10 percent, so bringing down the higher level. But this is only on the so-called reciprocal tariffs. So this
doesn't take into account steel and aluminum. It doesn't take into account cars. Those are still at 25 percent, and also, there was some confusion
with the Treasury Secretary Scott Bessent, earlier saying that the 10 percent would also apply to Mexico and Canada, which was quite a surprise
because they had an exemption from reciprocal tariffs.
We now understand from the White House that that isn't true. There will not be a 10 percent tariff on America's two neighbors.
QUEST: Back to you, Kevin. I listened to Scott Bessent and I just -- I listened to the President. The White House is painting this as being, as
you just said a second ago, part of the grand strategy that this was Donald Trump using maximum leverage, the Art of the Deal.
But they haven't yet answered. Well, why didn't they just do a 90-day pause when they announced it on Liberation Day, as they called it?
LIPTAK: Yes, well, I mean, I think the answer to that is that this was not actually the strategy. The President didn't necessarily predict what kind
of turmoil he was going to inflict on the global economy when he announced those tariffs last week. Of course, he did include this about week-long
grace period, if you will, for these countries to come to the White House and come to Washington to begin these negotiations.
But it is very evident just listening to the President himself, that some of the shakiness in the various markets came as a surprise to him and that
is what ultimately led him to come up with this pause.
I think the other indication that this isn't necessarily indicative of some grand strategy is that the White House hasn't explicitly said what it is
looking for from all of these countries that are now rushing to Washington to try and begin these negotiations. And in fact, when you talk to
officials from some of these places, a lot of countries are still having trouble getting their calls answered at the White House or at the office of
the U.S. Trade Representative, because, you know, negotiating bilateral trade agreements with 75 countries at the same time is a logistical
nightmare for the people who are working in the administration.
So I don't think there is actual evidence that this is all part of a grand plan, but that is certainly what they are saying today.
QUEST: Right, and Anna, this 125, obviously, Beijing is asleep and hasn't fully responded, but look at what they said overnight in terms of the
comments that they made. The only bit really we just need is "China will fight to the end."
Now, I am guessing, Anna Stewart, that, you know, because he only went from 104 to 125 percent, there is just the possibility people could say that was
an olive branch. He didn't go up to 190 percent, didn't go up to 200 percent, or am I just sort of in the wind?
STEWART: I think possibly we've all lost the plot at this stage. I couldn't say what China is going to do with that, but I was interested that in the
last hour, I think, President Trump said China wants to make a deal, they just don't know how quite to go about it.
I look forward to seeing what the response is from Beijing. Let's hope it isn't further escalation or who knows where we will be, but the trade war
is not over by any stretch.
QUEST: I am grateful. I mean, not that I am grateful the trade war is not over. Sorry, I got that the wrong way round.
Kevin, I am grateful for you, as always. We can't -- we've got to stop meeting like this. Same with you, Anna Stewart. Good to have both of you
with me.
Ron Kirk, Ambassador Ron Kirk is with me. The former U.S. Trade Rep under President Obama. We have a lot to unpack here.
First of all, let's get the big stuff out of the way. All right, so the mega reciprocals are on a 90-day hold except for China. What do you make of
that, Ambassador?
RON KIRK, FORMER U.S. TRADE REPRESENTATIVE UNDER PRESIDENT OBAMA: You know, I told somebody, the excel that you're hearing is, I think a lot of
companies obviously the markets feel like the elephant got off our chest. But the problem is the elephant is still in the room. And as you alluded to
in the previous conversation, Richard, if this made sense now, why didn't you do it a week ago?
And that level of uncertainty, if you particularly -- for multinational companies that are that maybe are thinking about making the type of
investments the President wants that isn't conducive to someone making billion dollar bets that need to have some sense of stability and what the
rules of the road are going to be. So yes, it is a welcome reprieve, but the major uncertainty is still out there.
[16:10:00]
QUEST: A 10 percent new base for everybody. Now, my guess is this is what the President is never going to change. He loves tariffs, we know that, at
10 percent. But how -- but it is actually a tripling of the average tariff rate that the U.S. had with most of the world under MFN.
So what effect does 10 percent have, do you believe?
KIRK: Well, it is going to be harmful to some of our relationships, but more so than what that rate is. And given the context and the arbitrary
nature of these tariffs, as I explained to a group a few weeks ago, it feels like somebody in the White House took the Karate Kid the wrong way
because it is kind of tariffs on, tariffs off. Ten percent is better than 30, but it still is an escalation.
And Richard, as you and I have talked, my major concern is countries just don't know if they can take the United States at our word anymore. Can they
trust us?
And also even an escalation of 10 percent, it will be challenged as a violation of our covenants and our trade agreements under the WTO, and when
the United States behave this way, we certainly give license to other players to do the same. So it is still going to be a disquieting period.
QUEST: But now, let's just say the master of the art of the deal here, at the end of the day, the U.S. is the largest market, and even if you can't
trust the U.S. in quite the ways you could, you still want to play in this massive market. So does it really matter that, you know the argument that
Howard Lutnick put in that this is the biggest customer, therefore --
Well, so you don't like us, you don't trust us, whatever. You're still going to go along with us because we are the largest market. And anyway,
what else are western democracies going to do? Cozy up to China?
KIRK: Well, it remains to be seen. I mean, if you listen to some of the responses of leaders around the world, they certainly are exploring other
options. And if Secretary Lutnick believes that, then we should act that way.
Made in America is one of the most treasured brands in the world. People do want to do business with us, but part of that is their belief that we are
guided by some fundamental principles of fairness, of application of the rules of law, and while I think we are their preferred destination, there
are other competitors out there that have looked on that our success with envy over the last forty, fifty years that are willing to step into the
breach.
And I just think that's a very risky bet for our country to make. And I don't know that a 90-day reprieve for other world leaders to presumptively
come and bend the knee to this administration is going to be enough to alleviate those concerns.
QUEST: Ambassador, I am grateful for you. We love having you on the program. We love talking to you and hearing your perspective sort of born
of great experience. Thank you, sir, for joining us. I appreciate it. Thank you.
KIRK: Richard, thanks for having me.
QUEST: Now, QUEST MEANS BUSINESS.
Apple stands to be hit hard by the U.S. trade war moving supply chains to the U.S. would cost a lot of money and time, but maybe getting out of China
at 125 percent -- we will discuss it in just a moment. Now, where is the bell?
(COMMERCIAL BREAK)
[16:16:17]
QUEST: As Anna Stewart was telling us, the 90-day moratorium on tariffs does not apply to China, which gets an increased tariff rate to 125
percent. Bad news, of course, for Apple, much of the iPhone's makers supply chain is located there, and that is something of which investors are aware.
The shares have fallen incredibly over the last few days. They rebounded, but arguably not nearly as much as they would have -- one might have
expected because Apple can't easily re-shore its supply chains and consumers would be hit hard if it did.
Dan Ives says the price of an iPhone would soar to $3,500.00 dollars if it was built in the U.S., three times the current price, and he said it is
extremely expensive and time consuming to move the supply chain here to the U.S.
Samsung makes its phones in nations subject to much lower tariffs. Clare Duffy is with me.
Can Apple shift production to countries either at the 10 percent, well, at least for the 10 percent tariff rate?
CLARE DUFFY, CNN BUSINESS WRITER: Well, look, Apple has in the recent years been in the process of trying to shift some of its supply chain away from
China. After COVID, we saw a big push towards doing this, moving production to places like India and Vietnam. So this process has already been underway
for Apple.
I think the question is how much of that can they do and how quickly can they make it happen? And does that accomplish the goal that the White House
has stated, which is to implement these tariffs so that you have this sort of Golden Age resurgence of U.S. manufacturing? And that is the thing that
analysts say is really unrealistic, that just because you implement tariffs doesn't mean that companies are going to move production back to the United
States.
And Dan Ives really clarifies why there, a U.S. made iPhone could cost three times the price, $3,500.00 and he says, if you were to say, okay, we
will take the $3,500.00 iPhone if Apple moves production to the U.S., it would take three years and cost about $30 billion for Apple to move just 10
percent of its supply chain to the U.S.
So I think there is a question of can Apple move production elsewhere? Sure. But it is probably not coming here.
QUEST: Okay. So now let's look at what Apple can do. You know, the iPhone has a tariff of 125 percent. I don't know whether you've actually managed
to work out what that now means for the cost. One assumes, excuse me, one assumes that Apple is going to eat a certain element of that tariff.
DUFFY: I think that's the question, how much will Apple eat versus passing along raised costs to the consumer? I also think that for a company like
Apple, in this moment of so much uncertainty, there really is, you know, you potentially get into a position where there is just decision paralysis.
We are not going to change anything because it is hard to know from one hour to the next what the policies are going to be.
And so I think we may end up in a position where the company tries to see if it can weather a quarter or two and let these policies run their course,
and maybe there will be a reversal, or it can convince Trump to exempt it from some of these tariffs.
QUEST: Samsung, now the tariff was going to be 15 percent, I think on South Korea or 20 percent, whatever it was. It was going to be higher, but now
the South Korea tariff is 10 percent because it is on the base level like everybody else. Does this give Samsung much of a -- well, of course against
Apple it does, but can Samsung weather a 10 percent tariff rate?
DUFFY: I think for all of the smartphone companies, there is a real concern that whether the tariff is 10 percent or 125 percent, these are companies
that have already been struggling with slower upgrade rates. Consumers don't upgrade their phones as often as they used to, because the upgrades
just aren't enough to justify the cost of doing it every year.
[16:20:10]
So all of these companies have been trying to find ways to convince consumers to upgrade, and whether you have a 10 percent price increase or a
hundred percent price increase, consumers are already hesitant to pay more to upgrade their phones, and these companies bottom lines are suffering for
that.
And so I think, you know, sort of regardless, these companies are looking to be at risk because of these tariffs.
QUEST: It will be interesting to see if Apple does what Volkswagen is planning to do and actually put on the sales receipt tariff charge, or, you
know, government imposed charge so that people know that's the amount, that will be interesting.
DUFFY: I would be surprised if they did just given how much effort the company and Tim Cook in particular, the CEO, have put into developing a
closer relationship with Trump, but you never know.
QUEST: Good to see you. Thank you for bringing that to us and keep an eye, the moment you see those phones starting to go up in price, I expect to
hear from you.
DUFFY: We will talk.
QUEST: Thank you.
China is using the words of Ronald Reagan to argue against U.S. tariffs. Now, the former Republican President had a very different view on trade and
tariffs than Donald Trump. I will show you exactly how in just a moment.
(COMMERCIAL BREAK)
QUEST: So markets, as I've shown you, have welcomed the report in the reciprocal tariffs, but we do now have a new baseline 10 percent duty
that's likely to remain in place and everyday consumers could soon begin to see the effects.
So bear in mind, hang on a second, just bear with me while I get the QUEST MEANS BUSINESS shopping basket out. There we go.
Now you're aware of this. This is a basket that we are following quite closely, and we bought all sorts of common items that you're likely to buy.
The olive oil, the rice, the toothbrushes made in China, toilet paper.
There is the list, by the way, and we are going to be checking this list. It breaks down to food, clothing, electronics and other essentials that we
have and you can see the prices.
[16:25:18]
They are most price sensitive. The produce takes time to grow, but these things can't be moved to the United States easily in many cases, like
coffee.
So Tom O'Brien is the founder and CEO of food importer, Global Resources. Tom, you can't see me. I have a shopping basket of bananas, strawberries,
coffee and the like. We chose things that people are going to see -- you know, that people buy and will see quite soon and quite quickly. Things
like bananas.
When do you think -- at the new rate of 10 percent can importers like yourself can, pardon the pun, can you eat it?
TOM O'BRIEN, FOUNDER AND CEO, GLOBAL RESOURCES: Great pun. Ten percent is not much on cheap commodities like this. So we went through the first round
of tariffs in Trump's first term and a lot of those tariffs are shared. Right?
We will talk with our producer in Colombia or China, hey, can you guys take some of this. we will take some, and if we have to, a small increase to the
customer.
But food products coming from China at 125 percent, there is no way that anyone could eat that type of tariff increase.
QUEST: But what are we looking at here? In terms -- let's stick with foods for a moment. So it is the importer who pays it, so the importer who has
got to -- when the stuff comes off the boat, essentially, the importer pays it and I assume then there is a haggling between everybody, as you just
said, as to you cut your price to me, you cut my -- I will cut my price to the next person, and so forth.
O'BRIEN: That's correct.
I actually cut the check to pay the tariff. So, if the tariff -- if the product arrived today and those tariffs were still on before the
announcement from two hours ago, I would be the one paying the tariff and you hope you have good relationships to make sure they share that burden
with you.
QUEST: How difficult -- you're just the chap I've been wanting to talk to, actually, because how difficult has it been just knowing what you have to
pay and you know, if the President says something in the morning and changes in the afternoon and you've got something coming off a boat the
next day. Are CBP pretty good at saying, nope, the tariff is this. Nope, here is your bill.
O'BRIEN: For stuff that's on the water, there is nothing you can do. You can't turn around the boat, you're one container of thousands. So in the
short term, you're stuck with that price and in the long term, the original tariffs -- Latin America was spared compared to Asia. So for us, in a long
term planning, we start looking to Latin America, what do they produce that Asia also produces and try and buy from there.
The second component, we are also exporters. So we hope long term that everybody removes their tariffs. You know my business is 85 percent U.S. it
is very difficult to get customers in other countries because of their tariff barriers. So in the short term, this is no doubt disruptive. But
hopefully in the long term, we can get to an even playing field.
QUEST: So, it is interesting and this China tariff of 125 percent, stuff on the water you're stuck with, but would you -- if this tariff remains for
any length of period, would you expect essentially all imports, unless absolutely vital from China to dry up?
O'BRIEN: Yes and no. We don't have fixed assets so we can buy from anywhere. The companies that do have fixed assets in China are going to be
very tempted to re-originate their product. That means taking it to a third country. Now you say, it comes from Vietnam, or maybe it comes from
Malaysia. And you go into the U.S. without the tariff.
This is going to be very tempting, and I imagine lots of companies are going to get in trouble for doing this, because they will be on the radar
of U.S. Customs Enforcement.
QUEST: Overall, give me a gut sense of how difficult the last three months have been for you.
O'BRIEN: It is very disruptive. I told my team this morning that you work with our customers. We don't anticipate the tariffs being on long except
for China. It seems very clear that China is the goal and the rest of the country -- the rest of the world is not.
QUEST: I am grateful to you, sir. Thank you for joining us. We will talk more. I find it fascinating to understand the plumbing of world trade, if
you will, because that's essentially what you're doing. You are keeping things moving and I am grateful that you've taken time to talk to us. Thank
you, sir.
Now --
O'BRIEN: Thanks.
QUEST: It is QUEST MEANS BUSINESS. You don't get a day like this every day. Thank goodness.
The President's tariff policies have caused high economic uncertainty, geopolitical uncertainty is not far behind. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Now the president, Donald Trump, was speaking a few moments ago in the Oval Office. He went through the various new tariff rates and pauses.
Let's listen to see what he said.
(BEGIN VIDEO CLIP)
UNIDENTIFIED REPORTER: Mr. President, where does the TikTok deal stand given what we've seen, you know, the tariffs in China?
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Well, it's totally going on, but obviously, I would say right now China is not exactly thrilled about
signing it. We have a deal with some very good people, some very rich companies that would do a great job with it. But, we're going to have to
wait to see what's going to happen with China. So --
UNIDENTIFIED REPORTER: Is this about (INAUDIBLE)?
TRUMP: No, it's on the table very much. I think China is going to want to do it, actually.
UNIDENTIFIED REPORTER: Mr. President, can you explain more of what you believe is the end game with China? Are you waiting for President Xi to
blink? How do you think this is all going to be resolved?
TRUMP: No. No. No. Look, for years we've been ripped off and taken advantage of by China and others, in all fairness. But by China, that's the
big one. And it's just one of those things. You know, we're making $2 billion a day right now, this country, $2 billion a day with tariffs. And
they were making $2 billion a day. We'll be making more now when you see what happened today, I don't know if it's still there. You know, this is --
I looked an hour ago, but we were up like close to 3000 points. Nobody has ever seen a day like that. I think that's a record, isn't it, fellas?
UNIDENTIFIED MALE: Definitely.
TRUMP: Is that a record? Who would have thought we're going to have a record like that after watching, but because the geniuses of the world,
they get it. Our country is very strong. We were left a very, very weakened country, both economically, financially, because of all of the tariffs and
all of the other companies just raiding us and ripping us off. And also at the border, where 21 million people were allowed to come in. Many of those
people were criminals. And -- but the people that do this for a living, some of them are very smart and some of them aren't smart at all.
[16:35:07]
But these guys are very smart, and my group is very smart. My whole group is smart. And you've done so amazing on the border. I read the other day
that there were nine people, and hundreds of thousands two years ago with Biden and we had nine, we had it down to nine. And they were all let in for
medical reasons. They were in bad shape. We let them in for medical reasons, not even for anything else.
So you've been amazing. But that's a big thing. I think it's one of the greatest, one of the greatest problems that I've never seen anything like
it. Open borders. The whole world was emptied out. Prisons from all over the world, from the Congo, in Africa, from Africa to Asia. A lot in South
America. But it wasn't just South America. Prisons emptied out. And I set it outside with the drivers before.
But El Salvador has been amazing. The job that the president has done. He's coming to see me next week, and we look forward to that. But that's really
been amazing.
Yes, please.
UNIDENTIFIED REPORTER: Mr. President, the E.U. also announced increases in tariffs today. Why not treat --
TRUMP: Bad timing for them. That's bad timing.
UNIDENTIFIED REPORTER: Why not --
UNIDENTIFIED MALE: They didn't put them in.
HOWARD LUTNICK, COMMERCE SECRETARY: No, they threatened them. But they picked a later date, which our expectation is it's going to be later still.
TRUMP: OK, good. I'm glad that they held back.
(CROSSTALK)
UNIDENTIFIED REPORTER: Mr. President, are you watching the markets?
UNIDENTIFIED REPORTER: If this was the strategy all along to bring them to the table, why did you instruct or advise, or maybe they did it on their
own some of your top aides to say this is not a negotiation, to hold the line, that they were going to hold the line, that they were not going to
hold the line, that you were not going to change your mind? TRUMP: Well, a lot of times it's not a negotiation until it is. And that
happens. And, you know, I said outside that you have to have flexibility to do it right. And that's what we have. We brought everybody to the table.
And it may not be a negotiation. It may not last. I mean, you know, things may be as that I think are not fair to us.
Look, we've been ripped off by essentially everybody for 35 years. This is not just a new thing. And Roger Penske just left. He's a great gentleman.
Great man actually. And he said no other president would have had the guts to do this. And I believe that's right. They wouldn't have done it. They
should have done this a long time ago. A long time ago. They should have done it. I started it with China.
I took in hundreds of billions of dollars in tariffs and taxes from China in my first term, and we had the greatest economy. We were up 88 percent on
the stock market. That was the greatest ever in the history of our country. But it had to be done. Something that had to be done.
UNIDENTIFIED REPORTER: Mr. President --
(END VIDEO CLIP)
QUEST: Right. Let's leave that for a moment. Jim Sciutto is with me.
Jim, can you hear me?
JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY ANALYST: I can.
QUEST: Yes. Jim Sciutto, right. The 125 percent on China. So there was 104, so they've got 21 percent more that they've just put on. Would you expect
China to match tit-for-tat on that other 21 percent tonight or overnight?
SCIUTTO: At some point certainly. I mean, Richard, the thing here is that China views its economy, its economic interests as countries do, right, as
a national security interest. This goes to the stability of the country, its wealth, its power, its ability to finance its military, et cetera.
China will not be bullied on that by an American president, right? You have added layers to that beyond national security.
It goes to the legitimacy of the Chinese Communist Party, their essential trade off with the Chinese people is that you may not have political
freedom, but we will bring you wealth and economic strength. And he has to deliver that, right? And then the final point I would make, right, is a
nationalistic one, that every nation has patriots. America does, Canadians do. In the midst of this trade war, China does as well.
And there are enormous political pressures inside that country for the Chinese president not to be seen as caving to the U.S. president or making
deals on the U.S. president's terms, especially if the Chinese perception is President Trump's desire is to weaken China. Right?
QUEST: Right.
SCIUTTO: That is their --
QUEST: So --
SCIUTTO: That is their perspective, perhaps understandable, going into this.
QUEST: But so when they say we will fight to the end, you know, they have a greater capacity for pain, mainly because they don't have a midterm
election to follow through with in two years' time. But I don't -- but I wonder, is there a potential that they will see he only put another 21
percent, is this an olive branch?
SCIUTTO: Right.
QUEST: Do we just allow this -- I just don't know, I don't know.
SCIUTTO: Listen, it's possible. And of course it does cut both ways, right?
QUEST: Right.
[16:40:02]
SCIUTTO: Because on the one hand, to your point, there are no midterm elections. It is not a democratic system.
QUEST: Right.
SCIUTTO: On the other hand, China arguably has greater economic weakness at this point. It's got provincial debt issues. It's got an economy that's
come down from enormous growth peaks to perhaps flat growth, maybe even lower than flat growth. It's hard to measure given the system is so closed.
So it cuts both ways in that sense. But I think we have to be conscious.
And this is not just limited to China. Right? If you speak to Canadian officials, they say the fundamental relationship is changed. It's not going
back. We don't trust the U.S. as a trading partner the way it used to be, and we're going to be looking for other parties. It doesn't mean we're
going to stop trading with the U.S., but there's no going back. And partly that's driven by Canadian national security concerns, economic concerns,
politics and nationalism as well. Right?
QUEST: Yes.
SCIUTTO: Canadians don't want to be pushed around any more than Americans do. And I think, you know, anyone who imagines that there's some sort of
magical brilliance here that is going to turn countries 180, right, in response purely to the pressure and instincts, as President Trump was
saying there, I just don't know that they're reading those countries right.
QUEST: Jim, an hour and 20 before you. Time for you to go and have a cup of tea and sharpen the pencil.
SCIUTTO: Will do.
QUEST: We'll see you in an hour and 20. Thank you, sir.
It is QUEST MEANS BUSINESS. What a busy day. In just a moment we're going to tell you about the roof collapse at the nightclub in the Dominican
Republic. We'll be there to tell you the developments and the number of people who are now known to have died, in a moment.
(COMMERCIAL BREAK)
QUEST: The markets skyrocketed on the news of the pause, the tariff pause. I've called it a relief rally, if you will. The Dow had its largest single
day point gain ever, but that's obviously because it's a much higher elevated level. The Nasdaq -- well the S&P was up. The Nasdaq had its
second best day in percentage terms. The best, in case you want to know, the 3rd of January 2001.
Vanessa Yurkevich is at the New York Stock Exchange, on the floor.
Good to see you, Vanessa. What's the gut feeling from the traders as the day came to an end?
[16:45:00]
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Yes, well, they thought it was a good day because the Dow ended up almost 3000 points. They
said how could that not be a good day? But they very much understand that this is going to be a bumpy road ahead. You have some traders who have more
confidence, more optimism about the president's plan, and then you have others that I spoke to that said that this day alone and this past week
alone really did not need to happen.
But of course, ending the day in the green is obviously good news for the traders here on Wall Street. But you know, they know that damage has been
done. We're not back to where we were a week ago, or even at the start of the president's first term. We're down about $1 trillion -- excuse me, $11
trillion in market value from the start of President Trump's second term and $6 trillion in the last week.
And they also pointed out, you know, people's 401(k)s, retirement accounts, and businesses just really not having a good sense of certainty about what
their outlook looks like. You know, Richard, I think you've pointed out throughout the day that tariffs are not off the table just because we have
this 90-day pause.
QUEST: Yes, that's the point. Yes. Yes.
YURKEVICH: Right, exactly. And there are still so many tariffs in place. Yes, we drop down to that 10 percent universal base level. We ratcheted up
on China to 125 percent. But you have the auto tariffs, the steel and aluminum tariffs in place. And that is still playing out in the business
outlook here. And investors really just saying that tomorrow is a new day, Richard. They don't know what to expect.
QUEST: Yes. I know. And Vanessa, I guess that's the point that's interesting, isn't it? That at what point does the relief rally give way to
the reality market, that it's still pretty awful? And the largest trading partner still has 125 percent tariffs.
YURKEVICH: Yes, I mean, exactly. And that's why they said tomorrow is a new day. They were happy with where things ended today. But of course tomorrow
could be different. And you know, I've been talking to traders here who have been on the floor for decades. Right? They've been here since the
'80s. So they've seen things and they went through COVID and they're saying that this has been the most volatile week that they've ever seen, because
it is so tied to the news.
It is tied to the news. It is tied to a Truth Social post. And things have just been going up and down and sideways. And they said that that's just a
new way that the market is performing now. And it's unusual, obviously, because it's so much driven from what's happening in Washington. But
really, I mean, they wipe the slate clean every single day when they're coming to work. And they just -- they do not know what to expect.
The word uncertainty has probably been used a thousand times in the last week. And I'll say it again, because that is how a lot of people here still
feel, Richard.
QUEST: Vanessa Yurkevich, I'm grateful to you, ma'am. Thank you very much. Busy days. Gosh, lord.
Jason Draho is the head of Asset Allocation for the Americas at UBS Global Wealth Management.
Besides a strong drink at the end of the day, what on earth do you make of the last six hours?
JASON DRAHO, HEAD, ASSET ALLOCATION FOR THE AMERICAS AT UBS GLOBAL WEALTH MANAGEMENT: Well, it's certainly been unprecedented. We have never seen
anything quite like what's happened really over the past week. But if we try and put a, you know, stay sober for at least a little bit longer and
assess kind of where we are now, in some way, where we are now with the tariffs is similar to what investors would have thought prior to the
liberation day announcement of tariffs last week.
Everyone expected tariffs to go higher. They didn't expect them to go that high. It's been pulled back, it's kind of back to where the base case was
for the markets last week. So positive today. But in the context of what was expected a week ago, it kind of puts us back in that baseline.
QUEST: In this market, assuming that, you know, we'd seen bonds selling off. We'd seen weakness in gold. Now both of these things were highly
unusual in the circumstances which suggested that there was strain within the financial system. What did you make of the bond market?
DRAHO: Well, that was really the interesting story this week, is the bond yields rising at a time when there was rising concerns about a recession.
Normally it yields, would fall, people would flight to safety. Bond yields should decline. The fact they're rising suggests there's more concerns
about perhaps inflation, about stagflation, concerns long term maybe deficits are going to be larger because to offset the tariffs they have to
run bigger, you know, kind of spending cuts or spend increases tax cuts going forward. So bigger deficits.
And this concern about investors globally perhaps just not wanting to buy U.S. treasuries as much. So I think it was actually the bond yields rising
in the past 24 hours or 48 hours more so than equity selling off. That was the real catalyst for Trump making this pivot. And during that, you know,
the comments this afternoon he kind of alluded to stress in the bond markets.
QUEST: Because we don't really fully understand the motivation of that bond market move other than seeing that higher rates which, you know, would have
cost, it's costing everybody more. But actually the mechanisms of it, we don't really fully understand yet.
[16:50:07]
DRAHO: There could be multiple factors. I mean, certainly it's speculation exactly what's driving it. Sometimes there could be just investors de-
risking and selling it. There could be technicals in the marketplace that drives yields lower. The reality is yield is going higher. Not good for the
stock market. Not good for the economy and certainly not good from the perspective of President Trump.
QUEST: So your title has asset allocation. Your job title has asset allocation in it. Tell me about asset allocation in this environment
bearing in mind the uncertainty. What should it be?
DRAHO: Well, what we often tell our clients to prepare for and navigate these kind of environments is make sure you have a long term plan, because
there's no way you can anticipate moves of like what's happened today or what's happened over the past week. So if you think about where you should
be allocated in terms of stocks, bonds, commodities, other asset classes in your portfolio, we'd say by and large right now this is not a time to be
making sort of big tilts and bets relative to that long term allocation, sort of thinking about, you know, tack close to home, you know, close to
shore. Don't make big allocations because you get whipsawed.
No one can predict these kind of things. So it doesn't mean selling risk assets. It just making sure you're allocated relative to your long term
objectives. I think that's the best way to kind of have peace of mind to kind of deal with this, this extreme volatility.
QUEST: But if you want the safety of that fixed income, or I'll grant you the moves on fixed income are nowhere near as volatile or as draconian as
you'll see on an equity. But they are there. They're still there. So even fixed income can give you a nasty bout of indigestion.
DRAHO: That's absolutely right, which is why even just last week, as this was going on, we were suggesting people, you know, go relatively short
fixed income, like, you know, buy things that are less than five-year maturity in terms of bonds because as rates go higher, you get whipsawed
and that there's a flight to safety, which, look, this is the other side of that. So not really taking a lot of interest rate risk or like kind of
extending too far sort of maturity, high quality. That's kind of the best place to hide because it's just not going to be whipsawed nearly as much as
if you buy a 10-year bond, for example.
QUEST: You can plead the Fifth on this next question. Is it your feeling that this is -- got some still way to go, that, you know, that the
uncertainty is still there, the tariffs could come back, we've got a new 10 percent tariff for everybody, China 125 percent? We're not out of this yet.
DRAHO: The way I would think of it is that we've probably just passed a local peak in uncertainty, but maybe not passed the kind of universal peak,
you know, the global peak. Things could get worse. But at least for the moment, there's a time to maybe -- for cooler heads to prevail, for
negotiations to take place, to make sure we don't get back to the edge, just like we did the past week.
QUEST: I'm grateful, sir. How kind of you to join us. Thank you.
Now, one story I do need to update you with the number of people who died when the roof collapsed at the nightclub in the Dominican Republic is very
sharply higher. 120 people are now known to have died when the venues ceiling caved in during a merengue concert on Tuesday. Among them are two
former Major League players, Octavio Dotel and Tony Blanco.
Stefano Pozzebon is in Santo Domingo.
Hopefully you can hear me amongst the background noise. The 120, Stefano, this is heartbreaking.
STEFANO POZZEBON, CNN CONTRIBUTOR: It is, Richard. It is truly a tragedy here in Santo Domingo. And unfortunately, what we are seeing behind me and
around me is the moment of anguish. It's the hour of pain because most of the people behind my back are the relatives, the friends, the loved ones of
those who were inside the nightclub when the rooftop collapsed at around 1:00 a.m. local time on Tuesday morning.
I don't know if you can see behind these trees is where the entrance of the nightclub used to be. The operations have been going on for more than 24
hours, almost definitely more than 36 hours, because the authorities still believe that there are tens, if not thousands of people who are still alive
inside that debris. And that's why we're seeing cranes, operation excavators, trucks moving out the debris and the search and rescue teams
combing through the stones, the rocks and whatever is left of that rooftop.
But unfortunately, here, just like you said, it's a community that today is reeling. The president of the Dominican Republic, Luis Abinader, has called
for three days, Richard, of national mourning. However, it's clear that the wound caused by this historic tragedy will take so much longer to heal if
it could ever heal for good, Richard.
QUEST: Is there any preliminary understanding of what happened, the reason why?
POZZEBON: Not from a (INAUDIBLE). Every time we've been in contact with the Dominican authorities and with also other teams from other countries that
have been sent here to try to bring their relief and help.
[16:55:03]
They told us that the focus right now is to try to save as many people as possible, as quickly as possible. It's too early to say. There has been
speculations on local media about overweight, about renovations, waterproofing of the roof gone wrong and that might have caused the
collapse. It must be said that the rooftop -- that the venue was not packed at that moment. According to its -- according to the authorities, the
nightclub had a capacity of about 700 people. And authorities have told us that around 300 or a little more than 300 were inside when the band of
Rubby Prez was singing.
So it's not a matter of over-capacity. It's just a tragedy. And people here are still asking those questions and are not getting the answers, Richard.
QUEST: When you have them, come back to us. Thank you. Stefano, joining us from Santo Domingo.
Now the markets. I'm just going to show you quickly how we've ended up since there was a pause. The triple stack gives the best. It's the second
best Nasdaq performance. It's the best Dow number. Nearly 3000 points. And you don't see that very often. Even the one or two laggards J&J and Verizon
which had been down earlier, all put in a performance. Everybody was up. Best of the day, Nvidia up nearly 19 percent.
QUEST MEANS BUSINESS, "Profitable Moment."
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." Very profitable one way and another. If you look at the way the markets have closed, the relief rally that
everybody has seen is quite remarkable bearing in mind what carnage there could have been as these tariffs came into play instead. Best, second best
on the Nasdaq, highest points on the Dow, et cetera, et cetera, et cetera. But we mustn't get too excited because for the simple reason that China,
which is still the U.S.'s largest single trading partner has managed to end up with 125 percent tariff rate.
The new general tariff rate for everybody else, for 10 percent, and we've still got auto tariffs, steel and aluminum tariffs and 90-day Sword of
Damocles on everything else. So no way at all can we say that we are out of the woods. I guess all that's happened so far is that there is a park bench
on the way, a bit of respite, and that's why this relief rally is extremely welcome. But it's going to take those negotiations and a lot more diplomacy
before we can truly say that things are back to normal, if indeed there ever will be, bearing in mind the damage that's been done.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see
you tomorrow.
END
