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Quest Means Business
Trump Hikes Tariffs In The Midst Of Trade Talks; Trade Talks Between China And U.S. Appear To Have Stalled; Gaza Officials: Dozens Killed Near Distribution Points; Republicans Respond To Elon Musk's Criticism Of Budget Bill; Trump Admin Threatens Columbia University's Accreditation; Some In The U.S. Consider Leaving As Trump Policies Take Hold; British Airways CEO on Heathrow Outage In March. Aired 4-5p ET
Aired June 04, 2025 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:01:12]
JIM SCIUTTO, CNN HOST: Something of a flat day for the Dow Jones Industrials. Those are the markets and these are the main events.
Mexico and Canada prepare for retaliation should negotiations fail over steel and aluminum tariffs imposed by the U.S.
President Trump spoke with President Putin, and says the Russian leader plans to respond to Ukraine's weekend drone attacks.
And the changing nature of airline loyalty programs. The CEO of British Airways tells Richard it is fair that airlines are now rewarding spend
rather than mileage.
Live from Washington, it is Wednesday, June 4th. I am Jim Sciutto in for Richard Quest. This is QUEST MEANS BUSINESS.
Good evening to you.
Tonight U.S. President Donald Trump is finding it easier to raise tariffs than to hammer out deals, which is what he promised. His order to double
steel and aluminum tariffs to 50 percent took effect at midnight in Washington. A few hours later, he posted on social media that China's
President Xi Jinping, is "very tough and extremely hard to make a deal with." Talks between Washington and Beijing have stalled since the two
sides met last month in Geneva.
As for America's other top trading partners, well, Europe's Trade Commissioner says talks are progressing, "at pace." Not much more detail
there. Mexico's President is threatening to retaliate if her country has to pay higher tariffs on steel and aluminum.
And Canada's Prime Minister called the latest measure illegal. He says Canada is holding intensive negotiations with the U.S. side.
Joining me now is Vanessa Yurkevich.
And given that these trade deals are not coming nearly as fast as the administration has frequently boasted and promised, how are countries
adjusting?
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Well, it is difficult because they are having to do this delicate dance of negotiating
in real time while figuring out how they may respond to these higher tariffs. As you mentioned, the steel tariffs escalated yesterday to 50
percent, actually, at 12:01 A.M. early this morning, to 50 percent from 25 percent. So you have the Canadian Prime Minister saying that they are
preparing reciprocal tariffs if negotiations do not go well with the United States, that would lower those tariffs on steel and aluminum, and then you
have the E.U. as you said, saying that negotiations are moving "at pace" and you have the trade representatives saying that they are actually moving
quite quickly, but we don't know what towards exactly.
And then with China, as you mentioned, we heard from the President on Truth Social earlier this morning who said that its been extremely tough and hard
to make a deal with China, presumably trying to potentially lower some of those tariffs that are currently in place and some non-trade barriers.
So a little bit of a mixed bag. We've been waiting for this long awaited call, perhaps with President Xi of China and President Trump that has not
come to fruition. Certainly, the administration wanting to forecast as much as possible that negotiations are progressing. But at the surface, it just
looks like a lot of talking with not a lot of substantive deal and information in hand -- Jim.
SCIUTTO: Vanessa, you've been reporting that some countries have been deliberately moving their manufacturing to the Dominican Republic, in large
part to get around these new tariffs. How and how much exactly?
YURKEVICH: Yes. So we started looking into this because we were speaking to U.S. businesses that were saying we are trying to get out of China, we are
moving to other Southeast Asian countries, but we started hearing from some that they are actually looking to move their businesses to the Dominican
Republic. And experts I spoke with in the country say that, yes, in the past several months, many companies have actually been moving there,
thinking about moving there.
[16:05:10]
You have it for our viewers, there is a whole host of companies that are actually already producing in the Dominican Republic. You have Hanes,
Eaton, Timberland, Cardinal Health, World Emblem, the largest producer of clothing patches. They're breaking ground this month on a new 100,000
square foot facility.
And the Dominican Republic is mainly known for its beaches and tourism, but foreign investment into the country was up 7.1 percent in 2024. It captured
about 41 percent of all investment going into Central America, and 20 percent of that was invested in the manufacturing sector, just behind
tourism and these countries are finding that the D.R. is a very good place to manufacture because of something called free zones. These are
essentially tax free zones that companies don't have to pay income taxes or transfer taxes or import taxes, saving companies millions of dollars.
It is also really close to the United States, it just takes a couple of days to bring product on cargo vessels to the United States compared to
Asia, which takes weeks to get to the United States. And then wages are much lower even compared to Mexico, 30 percent lower, so very advantageous
for companies.
Some hurdles, though, to setting up manufacturing there, it is a small island. There is not a ton of space. So you're working against just square
footage, and because it is a smaller island, there are fewer people living there, so fewer people to train in technical experience needed to
manufacture.
And then, Jim, the reason we did this story is because people just didn't know about this manufacturing sector in the Dominican Republic. I asked the
CEO of World Emblem why he decided to move manufacturing 30 to 35 percent of his manufacturing out of China and out of Mexico to the Dominican
Republic. I asked him why, Jim? And this is the answer he gave me. He said, ChatGPT.
ChatGPT gave him the answer. So it wasn't on his radar at all, but a simple search showed him that it was possible, and when he went to visit, he
realized that Jim, this was the place that he was willing to invest millions of dollars.
SCIUTTO: That will get some folks in his advisory department asking questions if he could get that answer from ChatGPT.
Vanessa Yurkevich, thanks so much.
YURKEVICH: Thanks.
SCIUTTO: Well, the last known phone call between the leaders of the U.S. and China took place back in January, before President Trump returned to
office. The White House said on Monday that the two would likely talk again this week. Xi has so far let a trusted Vice Premier take the lead in trade
negotiations.
Joining us now to discuss Lingling Wei, the chief China correspondent for "The Wall Street Journal." Thanks so much for joining.
LINGLING WEI, CHIEF CHINA CORRESPONDENT, "THE WALL STREET JOURNAL": Thank you, Jim.
SCIUTTO: You write in one of your most recent pieces that while Xi started Trump's second term with a more conciliatory approach, that it has now
shifted. China has now shifted to playing hardball. It is interesting because I've been told by diplomats that China, to some degree, learned a
lesson from the first term, which was that if you get hit by the U.S., you have to hit back. Is that the sense here that they are saying you basically
have to answer tough with tough.
WEI: Yes, Jim, that's exactly the lesson they learned from Trump's first term trade war with China. Back then, as you remember, you know, the two
sides fought two years of trade war. And you know, in early 2020, they signed a so-called Phase One Trade Agreement and that agreement was widely
seen in China as a one-sided deal that favors the U.S. even though China didn't end up implementing the deal.
So you know, what they learned from that experience was you know, you have to punch back when the United States strikes and, what we are seeing right
now is just, you know both sides having toughened their positions and trade tensions are actually escalating.
SCIUTTO: It seems that China has struck on a particular point of vulnerability for the U.S. and U.S. companies, and that is rare earths, a
handful in particular, that are essential to high tech items with batteries, magnets, et cetera and that seems to be a chief complaint of
President Trump that he seemed to think they had an agreement to lift or relax those, but China is not doing that.
Is that deliberate on China's part to kind of you know turn the screws, as it were?
WEI: China did agree during the trade talks in Geneva in mid-May that they would resume allowing exports of rare earths and other magnets because that
was a key ask from the Trump administration. However, right after the Geneva Agreement, China started to slow walk approvals of those magnets
again and Beijing's excuse was that you know, the U.S. put out a warning, right after the Geneva talks against the use of Huawei, certain Huawei A.I.
chips worldwide.
[16:10:28]
And the Chinese side saw that as an escalation on the U.S. side. So that's why they started slow walking the approvals for rare earth exports again.
However the U.S. side explained to China, the Huawei related warning really is not a new policy, it is a restatement of existing policy.
The fact that China so quickly backed off from what they committed to do just showed that they are very unwilling to give up a powerful lever they
have found in this trade war, which is rare earth control.
SCIUTTO: You call Xi Jinping's hard line stance somewhat counterintuitive because China's economy has its own weaknesses and vulnerabilities, rising
unemployment, among other things.
Is it your view that China believes while it will take pain, it could take more pain than the U.S. can economically?
WEI: So fundamentally, Xi Jinping's bottom line has shifted and for him, this trade war is really a struggle over ideology, over two different
systems as much as over trade. So to him, his hold on power and the Communist Party's hold on power are on the line. So, you know, backing
down, it would be, you know, seen as political suicide for the leadership.
That really explains why he sort of, like, boxed himself in with this very unyielding approach to the United States, and you made a great point about
economic pressure in China.
Yes, overall economic situation is very bad in China now, but it is still tolerable. You know, we haven't seen a full blown financial or economic
crisis yet. So at least for now, you know, they are -- they still have time and they are still in what they see as a very strong position to keep
fighting this trade war.
SCIUTTO: Lingling Wei, thanks so much for helping us understand.
WEI: Thank you for having me.
SCIUTTO: Well, President Trump says he had a good conversation with the Russian President, Vladimir Putin about Russia's ongoing invasion of
Ukraine. Trump posted on Truth Social that their call will not lead to immediate peace. He said Putin vowed as well to retaliate against Ukraine
for Ukraine's attacks on Russian airfields. Trump says Putin did offer to join nuclear talks ongoing with Iran.
Nic Robertson is with me now.
And, Nic, a couple of things struck me from Trump's comments here. One is that Trump, while threatening sanctions, increased sanctions on Russia for
some time, seems to have punted on that issue once again going forward. But also, I didn't see, if not quite a greenlight to Russia retaliating, I
certainly didn't see President Trump expressing any opposition to Russia retaliating.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: The language that he used relaying what President Putin said to him, which was, "I have to
respond." That's what he says Putin said to him. "I have to respond" really invites the possibility of a rebuttal or a comment to try another method.
So, yes, that was very noticeably absent there. But I think we also heard more from the Kremlin about what happened in that phone call and the
Kremlin's view on the state of peace talks with Ukraine. The Kremlin is saying, you know to Volodymyr Zelenskyy's request for a leaders meeting
between Putin and Zelenskyy and Trump could be present and other leaders could be there. They are saying not now and the reason they are saying that
the talks -- these talks aren't working and that those leaders meet -- the leaders meeting shouldn't happen is because they are accusing Ukraine of
terrorism, and citing these two attacks over the weekend on rail infrastructure inside of Russia where civilians died. And that, it seems,
would have been very much part of Putin's conversation with Trump as well.
Of course, watchers in Kyiv and in Europe would understand that Russia, in a way, is the pot calling the kettle black because Russia, by day and by
night continues to bomb Ukrainian citizens, you know, through cities across the country.
So if that was the narrative President Trump was left with, there is a glaring absence in what he has relayed about it because absent, as you say,
was a rebuttal.
[16:15:05]
SCIUTTO: How is Ukraine seeing this now? Because they saw enormous success with their attacks inside Russia, striking assets that they say, and with
evidence that Russia has been using to strike Ukraine, those long range bombers have been firing missiles at Ukraine since the start of the --
since the start of Russia's full scale invasion.
Does Ukraine still see genuine potential in these peace talks?
ROBERTSON: It seems that this is what President Trump wants and unless they have President Trump's support, they won't stand any possibility to get his
material support for weapons and financial support in the war against Russia. So in a way, Ukraine has to sort of play by President Trump's
rules. I think clearly what Ukraine showed over the weekend is to President Trump's comments a few months ago, a month or so ago, that Ukraine doesn't
have cards to play. They've shown that they do have cards to play.
But they still, Ukraine still needs to go by the way President Trump wants to lead this, and they will undoubtedly stand there frustrated. Indeed, I
believe one of their politicians was on CNN just a couple of hours ago, critiquing President Trump and his comments about his conversation with
President Putin for not being robust enough.
So I think, look, the view from Ukraine is going to be very clear. They need Trump on side. It is not an easy task, and once again, he is leaning
into it appears the Putin narrative and they will have to find a way to counter that and it will be through their European allies.
It was interesting today, Jim. Listen, I listened into a briefing being given by the U.S. Ambassador to NATO, and he was saying, sort of contrary
to the vibe you get from President Trump, if you will, that NATO nations have to massively increase their defense spend. We've heard that before.
Okay, that's going to be a big lift.
But he said the reason to do it is because the Kremlin is rearming and NATO needs to stay ahead of the of the Kremlin's rearmament. And, you know, if
there is ever a logic being explained by President Trump's own man at NATO for a reason to be concerned about Russia, even his ambassador at NATO is
on a different track, it seems, than the President at the moment.
SCIUTTO: Yes, yes, notable. Notable disagreement, it seems, or at least contradiction.
Nic Robertson, thanks so much.
Well, this just in to CNN. The U.S. Department of Education says that Columbia University has violated anti-discrimination laws and has therefore
failed to meet the standards for accreditation.
The Trump administration accuses Columbia of acting with deliberate indifference towards the harassment -- alleged harassment of Jewish
students there. Education Secretary, Linda McMahon says she will work with authorities to establish Columbia's compliance with Civil Rights laws, yet
one more attack on American universities and Columbia is not alone.
Still to come, two Chinese researchers are facing charges in the U.S. with the Justice Department claiming they smuggled a dangerous pathogen into the
country. We will have the details coming up.
(COMMERCIAL BREAK)
[16:20:40]
SCIUTTO: A new, much criticized effort to help desperate Palestinians in Gaza, simply eat is now turning into tragedy. Palestinian authorities
report that more than 60 people have been killed in the last several days on their way to distribution sites run by the organization, GHF, the Gaza
Humanitarian Foundation. Their aid sites are now temporarily closed.
GHF is a private, nonprofit organization created with the backing of Israel and the U.S. It relies on private military contractors for security. GHF is
run by evangelical Christian leader the Reverend Johnnie Moore, an ardent supporter of President Trump.
CNN's Jeremy Diamond has the latest on what we know.
JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Well, the controversial U.S. and Israeli backed aid delivery mechanism for Gaza has shut down its
operations for today. The Gaza Humanitarian Foundation said that it was not going to be operational today as it carries out what it describes as
logistical work to improve the ability of this site to handle the large numbers of Palestinians who have been arriving at this site in Southern
Gaza.
But of course, what is in the background of this and what GHF is not saying outwardly, is the fact that it comes following three consecutive days
during which more than 60 Palestinians have been killed, according to the Palestinian Ministry of Health, while trying to get to these aid sites.
Eyewitnesses and doctors at local hospitals have said that it is Israeli gunfire that has been responsible for killing those Palestinians and
wounding hundreds more over the course of just the last three days, and that seems to be what is prompting this effort by both the Gaza
Humanitarian Foundation and the Israeli military, which has said that it is declaring these routes to that site a "combat zone" for now, to try and do
some work here to improve those routes.
A Gaza Humanitarian Foundation spokesman also told me that they have asked the Israeli military to implement three things: Measures to guide foot
traffic, a clearer IDF guidance on how Palestinians should get to these sites and when they should and should not. And also, and this is very
interesting to "enhance IDF force training and refine internal IDF procedures to support safety." And that certainly suggests that there has
been a conversation between the Gaza Humanitarian Foundation and the Israeli military about their rules of engagement and the fact that they
have fired upon Palestinians who are on their way to this aid site.
SCIUTTO: Jeremy Diamond there, reporting from Tel Aviv.
Well, preliminary results from Mexico's judicial elections show the country's ruling party gained seats on the Supreme Court. That will give
the President Claudia Sheinbaum's party control of every branch of government. Only about 13 percent of eligible voters took part in that
election on Sunday. Critics warn that putting the judiciary itself up for a vote could compromise its independence.
CNN correspondent Valeria Leon is in Mexico City, so a low turnout election, but, well, at least gains for the ruling party. How extensive are
those gains?
VALERIA LEON, CNN EN ESPANOL CORRESPONDENT: Well, despite President Sheinbaum's reassurances that the new court will be impartial in its
decision making, critics have expressed anxiety that the new Judicial Branch will be biased in the Morena Party's favor, and notably, all nine of
the Mexican Supreme Court positions are slated to be taken by candidates from Sheinbaum's ruling Morena Party.
Hugo Aguilar, a lawyer from the indigenous Mixtec community in the Mexican state of Oaxaca, is leading in the results of Mexico's first ever judicial
election. He is one of the 51 candidates running for a seat on the Supreme Court, and is expected to win the top seat as the court's president.
Aguilar has defended indigenous communities across Mexico, and he is the first indigenous lawyer in more than a century to hold the highest seat on
the nation's court, although Aguilar showed no ambition to take on this role in the past and was relatively unknown to the public, he played a key
role in helping to bring about peace in Chiapas during the conflict with the Zapatista rebels in 1996.
[16:25:07]
And this is significant in part because historically, indigenous Mexicans have faced discrimination in both public and private spheres. And today,
during her daily press conference, Mexico's President Claudia Sheinbaum talked about him. Let's take a listen.
(BEGIN VIDEO CLIP)
CLAUDIA SHEINBAUM, MEXICAN PRESIDENT (through translator): I am very pleased that the next president of the Supreme Court of Justice of the
nation will be a Mixtec indigenous person from Oaxaca, a very good lawyer.
I have the privilege of knowing him not only on issues related to indigenous peoples, but in general. He has extensive knowledge. He is a
modest, humble man. But not only that, with great intelligence and social sensitivity. So we are very pleased.
(END VIDEO CLIP)
LEON: And the reconfiguration of the judicial system is more critical than ever. The final results of the vote are expected to be published this week,
but the winning candidates won't take power until September -- Jim.
SCIUTTO: Valeria Leon, thanks so much.
Two Chinese researchers have been charged in the U.S. for allegedly smuggling a dangerous pathogen into the country. The FBI says the fungus is
a potential agroterrorism weapon capable of damaging crops and causing losses to the U.S. economy.
According to the federal complaint, the two planned to study that fungus at the University of Michigan, where one of them works.
Josh Campbell joins us now.
Josh, what do we know? Do we know how serious this threat is, or at least how serious the government believes this threat was?
JOSH CAMPBELL, CNN SECURITY CORRESPONDENT: Yes. You know, it is interesting. I mean, the A.G., the FBI Director have come out with very
intense statements, but they're not charging terrorism here and that's important to note. They are not saying that this couple was trying to use
this material against the U.S. food supply, that would constitute agroterrorism. They're charged with actually smuggling this into the U.S.
and just to describe what this fungus is, this is according to the federal criminal complaint, they say that fusarium is responsible for billions of
dollars in economic losses worldwide each year.
The toxins produced by it can cause vomiting, liver damage and reproductive defects in livestock, as well as humans. What authorities allege is that
just about a year ago, one of the researchers was stopped at an airport in Michigan. He was searched by Customs officials, and they found in a
crumpled up tissue, pieces of this fungus. He said he didn't know what it was. But then later, investigators allege that he was actually bringing it
to his girlfriend, another researcher in Michigan, where they would then study it.
Both of them have been charged federally. Those charges include visa violations, smuggling, as well as lying to federal investigators. The
Attorney General did come out with a statement. She said that the Department of Justice has no higher mission than keeping the American
people safe and protecting our nation from hostile foreign actors.
This defendant, who clandestinely attempted to bring a destructive device into the U.S. will face years behind bars. Of course, it is worth pointing
out that we don't know if this will lead to a conviction. If there will be some kind of plea, how strong the government's case will be, but that is
where we stand right now.
And then finally, I will note, Jim, and I mean, you know, more than most as a China expert, that this doesn't really fit the model of the Chinese
government. The FBI has alleged that the CCP has been actively involved in trying to exfiltrate sensitive technology from U.S. research institutions,
essentially steal it for their own purposes. We haven't really seen them trying to infiltrate material into the U.S.
So again, no indication of terrorism. That's not even on the table as far as charges right now, but authorities say because this is a dangerous
material and because it is controlled, they felt it strong enough to bring these federal charges -- Jim.
SCIUTTO: Josh Campbell, thanks so much for the details.
Well, Elon Musk is calling Donald Trump's Big, Beautiful Bill, "an abomination." The House Speaker says the President isn't happy about it. We
are going to have the latest on this remarkable break between those two men, coming up.
(COMMERCIAL BREAK)
[16:32:18]
SCIUTTO: Hello, I'm Jim Sciutto. There's more QUEST MEANS BUSINESS in a moment when President Trump's domestic agenda bill faces new doubts in the
Senate after Elon Musk calls that bill, quote, "an abomination." And the British Airways CEO tells Richard Quest there are still questions to be
answered after the outage at Heathrow Airport that brought flying to a standstill back in March. Before that, the headlines this hour.
President Trump and Putin spoke on the telephone about Russia's escalating war with Ukraine. Trump says Putin vowed to respond to Kyiv's recent
attacks on Russian airfields. Trump did not say whether he tried to discourage Putin.
A newly created program for getting aid to starving people in Gaza is now on hold. The Gaza Humanitarian Foundation has paused all aid distribution
because it says it wants to address how to handle the massive crowds they've seen there. Today's temporary suspension comes after dozens of
Palestinians were reported killed in recent days while heading to those aid centers.
President Trump has now doubled U.S. tariffs on steel and aluminum to 50 percent. The U.S. steel industry is naturally applauding the move, but
critics warn it could lead to higher prices on products such as cars and appliances. The manufacturers themselves say so.
Elon Musk's criticism of a sweeping tax -- Elon Musk's criticism of a sweeping tax and spending cuts bill has put many Republicans now on the
defensive. Musk called the bill a, quote, "disgusting abomination" on the platform he owns, X, and blasted house lawmakers who voted for it.
Senator Rand Paul, a Republican, is among the deficit hawks who says the bill does need changes. Congressional party leaders are downplaying that
public dispute. The House speaker, Mike Johnson, says the, quote, "big, beautiful bill" still has President Trump's support.
(BEGIN VIDEO CLIP)
REP. MIKE JOHNSON (R-LA): The risk of not getting it done is enormous, not just for the Republican Party, but for the country. We got to do this.
We're going to have the largest tax increase in U.S. history at the end of the year. If we fail, and all the other calamities that we've talked about.
So we've got to get it done. And I think Elon understands the weight of that, and I hope he comes around. I'd love to talk to him this week and
hope he calls him back today.
I've talked to -- I talk to President Trump, you know, all the time, multiple times a day. Obviously we've talked about this. As you know, he's
not delighted that Elon did a 180 on that.
(END VIDEO CLIP)
SCIUTTO: Not delighted. Not unusual. We know that President Trump does not like public disagreements with him.
Manu, I wonder, though, from a pure political perspective here, it looks like Republicans in the Senate just don't have the votes to get this
passed, at least based on the public criticism we've heard.
[16:35:03]
What happens now? Are they going to be taking a red pen to this bill?
MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Well, already Republicans are trying to -- were weighing changes to this bill. Even before Elon
Musk's rather scathing criticism there's some push from some of the more moderate members to pare back on some of the spending cuts, particularly
the social safety net programs. And then there are those hardliners, including the Senate GOP, who want -- who are aligning themselves with Elon
Musk and want deeper cuts.
And that is the divide that the president and the Senate majority leader John Thune will have to bridge in order to get this across the finish line
by the end of this month. Now, what's very clear also is there is ample frustration within the ranks, particularly among House Republicans, House
Republican hardliners who had essentially held their nose and voted for a bill that could drive up the federal budget deficit.
And now they're seeing Elon Musk's criticism and some of them are telling me, where were you earlier, Elon? Why didn't you raise your concerns then?
Listen.
(BEGIN VIDEO CLIP)
REP. ELI CRANE (R-AZ): My issue is why wasn't he, why wasn't he talking about this before the bill, right? Because those of us that were actually
trying to make cuts, we could have used his support and that actually might have helped us out quite a bit. And that's what frustrates me. Hey, if
you're going to be in this fight, be in this fight when we need you because we needed him.
RAJU: Musk says shame on you for voting for this bill. What do you say to him?
REP. CHIP ROY (R-TX): Yes, well, look, I said yesterday, I said as I said when I voted on the bill, I did so reluctantly. I had concerns that it
doesn't go far enough.
RAJU: Republican senators are telling me, including Senator Lisa Murkowski and the like, they want to push back the Medicaid work requirements. They
also they think it's not workable. They also want to push back the phase out of the IRS tax credits. If it comes back --
ROY: Yes, it'll be dead. It'll be dead, like so if the Senate wants to go that direction, then this bill is -- I mean, it's not even close to
passing. So they need to go further or the bill is dead. And hell, even if it bounces back as it was, I'm not sure it passes the House again. So
you've got -- they need to make the bill better. If this thing is going to move forward.
(END VIDEO CLIP)
RAJU: And that last comment coming from Congressman Chip Roy, who was one of those House GOP hardliners who was threatening to vote against this bill
that passed by a single vote in the House last month. But you heard him right there, as he said that some Senate Republicans want to push back how
these Medicaid cuts would be implemented, how the phase out of these green energy tax incentives, how that would be implemented as well, he said, if
those are watered down or pared back in any way, that it will cost some support among the House Republicans.
So that is the balancing act that you can see here. You try to fix one problem in the middle of the conference, you raise another problem on the
right flank of the conference. Can they figure that out, that balance? That's going to be the challenge in the days ahead.
SCIUTTO: You know, what's interesting, Manu, is that part of the pressure in previous votes to get Republicans to line up was Elon Musk's checkbook,
right? I mean, the threat of a primary financed by Elon Musk if they didn't vote, for instance, for Trump's appointees. What happens now? Right? I
mean, if Musk is on the other side, doesn't appear to be the same pressure there, right?
RAJU: Yes, that's a great point, Jim. It's really unclear, especially since Elon Musk said he was going to pare back his political spending. But then
he suggested yesterday on X that perhaps that the people who voted for this bill should be voted out of office. And what does that mean? Will he put
his money to try to defeat some of these members? That's what's really causing so much frustration within the ranks among these members,
Republicans who feel blindsided by Musk.
SCIUTTO: Manu Raju, thanks so much.
RAJU: Thanks.
SCIUTTO: Well, joining us now, CNN global economic analyst Rana Foroohar.
Good to have you.
RANA FAROOHAR, CNN GLOBAL ECONOMIC ANALYST: Great to see you.
SCIUTTO: Let's start with the basics here. The CBO has now scored this bill to add $2.4 trillion to the deficit over 10 years. The Republican strategy
had been to, say, the CBO, they don't know what they're talking about, right? You have, though, the guy who Trump appointed to cut government
spending, saying quite publicly now that this is an abomination because it adds a lot of money to the deficit.
I mean, Republicans can't run away from that fact here. So what -- I mean, what happens now?
FAROOHAR: Well, you know, I think you're pointing out something important, Jim, which is that there aren't a whole lot of people aside from Donald
Trump and some around him in the White House that would say this bill is a good idea. You know, you've got Musk decrying it. You've got financiers
like Jamie Dimon saying this is terrible. It's going to kill the bond. It's going to crack the bond market.
You've got the OECD downgrading U.S. growth, slashing it almost in half. Predictions for this coming year and for 2026, in part because of tariffs,
but also in part because of worries about debt and deficits. So, you know, every investor that I talk to is very, very worried about the consequences
of this bill.
SCIUTTO: The Trump, at the worst to the Trump trade war, which of course still continues, but back in April, when tariffs were at their peak, it was
the bond market that caused Trump to blink.
[16:40:03]
I mean, all the commentary, you know better than me, about nearly breaking the bond market as those yields were rising here. What -- how would the
bond market receive a bill, let's say it does pass somehow, perhaps pared down, but it passed and adds money to the deficit and to the national debt,
how would the bond market react?
FAROOHAR: So I think that you're going to probably see a correction. You're going to see stocks going down. You're going to see yields going up. It's
something that's a little bit baked in at this point. But I think that you would see a reaction. The question is what happens in three months, six
months, a year, because what this is telling us as you see the bond market react, as you see interest rates staying high is that investors have less
faith in the U.S.
That's a problem because we need people to buy our debt right now. I mean, the debt markets, the size of the treasury bill market is something like
$25 trillion higher than it was during 2008 and the great financial crisis. So there is so much more debt out there even than that period. We can't
afford to have investors spooked. And that's really what I'm worried about.
SCIUTTO: OK, so let's talk before we go about the economic effects of the ongoing trade war. There's been a bit of a lag effect, it seems, on
indicators showing economic damage, but seems to me you're beginning to see them. There was a bad jobs report today. Well below expectations. You do
already have a contraction in the first quarter here.
Do you expect to see more bad economic indicators in the coming weeks and couple of months showing the damage from the trade war?
FAROOHAR: I do, I do. I think that even if you were to see resolution in some of these negotiations, there's damage that's baked in now particularly
with small and mid-sized businesses. They're really, really feeling the pressure. You know, consumers are feeling the pressure. You're even seeing
discount stores saying, we've got to pass through some of the impact of the tariffs.
We're due for a slowdown anyway. When you add things like the trade war and the debt and deficit picture onto that, it makes me feel pretty certain
we're going to be in one by the end of the summer or early fall.
SCIUTTO: Rana Faroohar, you heard it here first. Thanks so much.
FAROOHAR: Thank you.
SCIUTTO: Well, the Trump administration escalates its fight, one of its fights, with Columbia University. Why it is now accusing the school of
violating anti-discrimination laws and what it's threatening. We're going to have a report from New York right after this.
(COMMERCIAL BREAK)
[16:45:39]
SCIUTTO: An update now to a developing story. The U.S. Department of Education says that Columbia University has violated anti-discrimination
laws and has therefore failed to meet the standards for accreditation. The White House accuses Columbia of acting with deliberate indifference towards
the alleged harassment of Jewish students.
Our Polo Sandoval is in New York.
And Polo, this is, of course, not the first of this administration's attacks on Columbia University. But just to be clear here, is it
threatening to rescind now Columbia's accreditation as an educational institution?
POLO SANDOVAL, CNN CORRESPONDENT: Jim, reading essentially between the lines here in that notice that was just issued a few moments ago by the
U.S. Department of Education, and it certainly hints that as a very real possibility if the university does not take further action to address what
the Trump administration continues to describe as its negligence here in terms of not specifically addressing the harassment of Jewish students on
campus during Palestinian protests, during or protests that occurred on the Columbia University campus.
What the DOE is effectively doing here is giving Columbia University notice that it violated that federal anti-discrimination laws, alleging that the
university falls below the standards of accreditation by deliberately acting indifferent towards harassment of Jewish students. As we know for
well over a year now, these demonstrations that played out last year, Columbia University has really been center stage for the debate about
student protests relating to the Middle East.
Now, an important reminder for viewers here is that the Trump administration had previously, just a few months ago, issued an executive
order effectively taking aim at college accreditation process, zeroing in on higher education institutions. And Columbia, certainly front and center.
Now we're still waiting to see what Columbia University will do in response to this. CNN has reached out to not just Columbia, but also the Middle
States Commission on Higher Education for a comment.
But in that announcement from the DOE, Jim, it does note that if a university fails to come into compliance within a specific period, then an
accreditor must take actions against its member institution. So back to your earlier question, Jim, when you read between the lines here, that
certainly shows that if the Trump administration, just put it in simple terms here, is not satisfied with any actions from Columbia University,
which we should note Columbia has previously announced steps to try to satisfy the Trump administration, then it could potentially move to take
action in the form of any sort of fiscal repercussions.
But make no mistake, Jim, this is certainly a significant escalation in Donald Trump's fight against Columbia University.
SCIUTTO: Listen, and these attacks are not confined to Columbia University. They're unprecedented and it seems that the legal goalposts keep getting
moved.
Polo Sandoval in New York, thanks so much.
Well, the U.K. and Ireland say they have seen an uptick now in Americans applying for passports and citizenship in their countries. We're going to
discuss what's driving that trend, exactly how big it is when we come back.
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[16:51:25]
SCIUTTO: As Donald Trump radically changes U.S. economic and foreign policy, many Americans say they're now looking for a new home. The U.K.
received almost 2000 passport applications in the first quarter. That's the most since record keeping began more than 20 years ago. 4700 people in the
U.S. filed a claim citizenship in Ireland through ancestral claims.
Anna Cooban is in London.
And I wonder, those numbers, thousands is no small number. Of course, this is a country of 330 million people. How out of whack is that with what
these countries have seen in the past?
ANNA COOBAN, CNN BUSINESS AND ECONOMICS CORRESPONDENT: Well, as you've mentioned, this is, you know, record for quarterly figures that we've seen
in Ireland, we've seen in the United Kingdom. And of course, we can't know the specific stories behind thousands of data points. And it does need to
be caveated that people often can only apply for citizenship after having spent many years already living in a country.
But just on the Irish statistics, so that specifically people who've applied for passports based on their ancestry. So if they had a
grandparent, for example, who was Irish, and they don't need to have been living in Ireland before they could apply for that. And this, the timing is
interesting. There was a surge in applications during the last quarter of last year, a period coinciding with Donald Trump's election in the United
Kingdom.
And tax and immigration advisers, people I've been speaking to who help Americans to try and move abroad, they've told me that many people have
come to them citing the need or the want to have a so-called insurance policy. So basically applying for citizenship so they can leave America if
and when they would want to.
SCIUTTO: And do you have a sense of exactly why it's happening more in Trump's second term than it did during his first term?
COOBAN: Well, it's a really interesting question because these tax, these immigration advisers, they've told me that people did want to move during
Trump's first election, but they were taking a wait and see mentality. They were going to see how things played out. They maybe thought that Trump was
a bit of a blip. They were obviously mistaken with that. And so now that Trump's been reelected, they're putting into practice ideas they've been
harboring for a number of years.
But there are specific reasons why people are applying this time around. These advisers have told me that many families have come to them in the
days after Trump signed an executive order in January, which effectively restricted access to gender affirming medical care. These families had
trans children, they said they wanted out of the U.S. because they felt personally and for their child that their rights were being compromised.
SCIUTTO: Anna Cooban, thanks so much for looking into it.
Well, the CEO of British Airways says there are still questions to be answered after a power outage in March brought Heathrow to a halt. Sean
Doyle spoke with Richard Quest at the IATA conference in New Delhi earlier this week. Richard asked him what changes he would like to see after that
incident.
(BEGIN VIDEOTAPE)
SEAN DOYLE, CEO, BRITISH AIRWAYS: I think we need to have a serious reflection as to why the U.K.'s a national hub was closed for 24 hours. And
I think we need to make sure that we don't repeat an instance like that again because we did lose power to one-third of the airport, but we didn't
operate a flight that day. And we can look at the why and how it came about. But the reality was that the airport wasn't resilient enough for
something which is so critical.
RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Are you satisfied with the report that came out?
DOYLE: I think there's still a lot of questions that need to be answered. And I do feel that we could have had some limited operations on the day. I
think we could have got aircraft coming back in for arriving passengers, and that would have left us in a better position to operate more of the
program in the recovery period. And I'm not convinced that there is enough recovery actions in the report to give us that confidence.
[16:55:02]
QUEST: Are you seeing any weakness in Trans-Atlantic bookings as a result of one, what one might describe as a perceived anti-Americanism?
DOYLE: We flagged that we did see some softness in the non-premium cabin out of the United States. But what we have seen is robust demand in premium
cabins and actually everything that we see we show that people from the U.K. and Europe are traveling to the U.S. and you know, that's based on all
the booking data that we have in front of us.
QUEST: Do you imagine you have to incentivize in the winter? That's a very posh way of saying discount the seats to fill the planes.
DOYLE: Yes. Look, I think we're a long way away from looking at the booking profiles for winter, you know.
QUEST: Really?
DOYLE: And what I would say is there's always shoulder and trough periods where we'll be very competitive. And I wouldn't expect that to change.
QUEST: I've always said that BA consumers, BA flyers have a very peculiar relationship with the airline. Everybody feels that they're your personal
boss, but it does mean that when you make a change like you did with BA, with the executive club to the club, the loyalty program, there was a huge
furor about it.
DOYLE: Yes. No, I think actually, if I look at what we've done with loyalty over the last couple of years, it's a much better program today than it was
two years ago. We reduced the charges for redeeming flights. We increased the number of seats available for redemptions, and now we've moved to spend
based here. And ultimately, you know, it's recognizing revenue rather than distance and we think that's fairer.
QUEST: The level of vilification was quite extraordinary.
DOYLE: Well, look, I think if you look at modern loyalty programs, there's nobody out there building programs based on distance anymore. You know,
it's all about the share of wallet and revenue. And I think it's fair. And I think it's a transition that the industry is making. And I think we have
to seize the bulletin and go with it. And I think it will bed in as being the right program. We're already seeing, I think, the positives of it in
terms of the behavior.
(END VIDEOTAPE)
SCIUTTO: Our Richard Quest there.
Well, let's take a final look at the U.S. markets. The Dow closed 91 points lower. It spent most of the day in the green dropping towards the very end
of the session.
Fresh data from ADP this morning showed that private employers in this country added just 37,000 jobs in May, far less than expected. The
government jobs report, that's the big one, though, that's released on Friday.
That is QUEST MEANS BUSINESS. I'm Jim Sciutto in Washington. "THE LEAD WITH JAKE TAPPER" is up next.
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END
