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Isa Soares Tonight
Trump Slaps 50 Percent Tariffs on Most Brazilian Goods; White House Ramps Up Pressure Ahead of Trade Deadline; Tsunami Threats Subsides in the Pacific Rim; Former VP Harris to Release a Book about 2024 Presidential Election. U.S. Special Envoy Steve Witkoff Lands in Israel for High Level Talks with Netanyahu; Russia Continues to Pound Ukraine with Drone Missiles Inspite of Trump's Ceasefire Demand; Trump Tariffs Deadline Looms. Aired 2- 3p ET
Aired July 31, 2025 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[14:00:00]
RICHARD QUEST, HOST, ISA SOARES TONIGHT: And a warm welcome, good day to you, I'm Richard Quest, Isa is off for this evening, I am at the helm. The
U.S. special envoy Steve Witkoff is in Israel as President Trump is urging Hamas to surrender. In Kyiv, it's heavy airstrikes pounding the capital as
Russia claims to have captured a key Ukrainian town.
The United States says it has lots of options to punish the Kremlin. And tick-tock on the clock of tariffs. Hours away from the last trade deal
deadline, and deals have been signed. I'll bring you up to date. The U.S. special envoy Steve Witkoff is in Jerusalem, where he's trying to get Gaza
ceasefire talks, at least, hopefully back on track.
He met the Israeli Prime Minister Benjamin Netanyahu, and we're still waiting to hear the outcome of those talks. We have just learned that Mr.
Witkoff and the U.S. Ambassador to Israel, Mike Huckabee, will travel to Gaza tomorrow, where they will inspect aid operations.
According to Israeli media, Israel's warned Hamas it may annex part of Gaza if no ceasefire is reached. The Foreign Minister of Israel didn't directly
answer a question on annexation, but he did say the government doesn't intend to rule Gaza or build new settlements there.
More countries are trying to pressure Israel over Gaza by stating their intention to recognize a Palestinian state. It's Portugal, latest to
announce following France, the United Kingdom and Canada. The Arab League and the European Union also declared support for a Palestinian state this
week. They want it headed by the Palestinian Authority, which currently governs the West Bank.
Only today, the U.S. sanctioned officials from the Palestinian Authority, accusing them of undermining peace efforts. Jeremy Diamond is in Tel Aviv.
So, a raft of issues, but I think Steve Witkoff being in the region, probably the most important and certainly bearing in mind he and Huckabee,
the ambassador, going, hoping to go to Gaza tomorrow.
JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Yes, that's exactly right. And it follows this meeting that special envoy Witkoff had with the Israeli
Prime Minister in Jerusalem today, which the White House characterized as a very productive meeting, one that clearly focused on the humanitarian
crisis in Gaza, a crisis that is man-made and very much borne out of Israeli policies in the region, their restrictions on aid distribution in
Gaza, most of all.
The U.S. special envoy will indeed travel tomorrow to Gaza to inspect these -- at least, one of these aid distribution sites run by the American
private -- private-American-run Gaza Humanitarian Foundation, which is the aid mechanism preferred and backed by the Israeli government. It's not
clear whether Witkoff intends to meet with any U.N. officials, as the United Nations, of course, opposes this Gaza Humanitarian Foundation model.
And it's the U.N. that has been getting the most trucks actually distributed throughout Gaza over the course of the last week as many of
those Israeli restrictions have now finally fallen. We understand that Witkoff will immediately brief President Trump on his visit tomorrow, and
according to the White House, they plan to then approve a new aid distribution plan for the Gaza Strip.
It's not clear exactly what that will be. But of course, last week we heard President Trump talking about establishing food centers in Gaza, so whether
that's an expansion of those Gaza Humanitarian Foundation sites or something else altogether remains to be seen, Richard.
QUEST: OK, so, what -- they're going to look at these distribution sites. We know it's been an unmitigated disaster since the U.N. was kicked out of
distributing aid, and we're seeing the pictures of what is a deadly free for all. But I don't know -- but, you know, I'm not sure I fully get what
they hope to achieve by going to see it all. We know what's going on.
DIAMOND: You're right, Richard. I mean, you know, what's interesting -- what was most interesting in what Karoline Leavitt; the White House Press
Secretary said about Witkoff's visit tomorrow.
[14:05:00]
She also said that he plans to meet with local Palestinians in Gaza. It's not clear if those will simply be Palestinians who will line up at one of
these sites, if these will be doctors, aid workers, something else of that nature. But certainly, it indicates that there's at least, some effort to
get a local on the ground perspective at what's actually going on as it relates to these GHF sites.
Indeed, the entire model of this kind of militarized aid distribution system has played out almost exactly in the way that the United Nations and
other humanitarian aid officials warned it would, meaning very few aid sites requiring people to walk long distances through Israeli military
positions.
And indeed, when we reported last week on the violence that has taken place in Gaza, Israeli military personnel shooting at Palestinians trying to get
aid, 60 percent of the more than a 1,000 deaths that have taken place as a result of Israeli fire aimed at aid seekers took place near those Gaza
Humanitarian Foundation sites.
QUEST: Jeremy, I'm grateful, thank you, sir. The Senate is voting against advancing independent Senator Bernie Sanders' resolutions aimed at blocking
U.S. arms sales to Israel amid the humanitarian crisis in Gaza. This comes after President Trump called for more aid to Gaza, as well as dozens of
Senate Democrats demanding expanded humanitarian aid.
In a letter to Secretary of State Marco Rubio and special envoy Steve Witkoff, the U.S. Senate Democrat from Maryland is Chris Van Hollen, he
serves on the Senate Foreign Relations Committee. Senator, I'm very grateful that you're with me. This idea of banning is hardwork, but you
know what I mean.
Banning arms sales to Israel. The retort will inevitably be it's rewarding Hamas if Israel suffers as a result of this. Now, I know, and I'll say I'll
help you out here in a sense. There's no easy ways. There's no nice answers here. There's no obvious solutions. But that is the point that if it's the
-- if the U.S. does restrict arms sales, it will be seen as a benefit for Hamas.
SEN. CHRIS VAN HOLLEN (D-MD): Well, Richard, American law is very clear. We shouldn't be using American taxpayer dollars to finance weapons
transfers to any country, ally or adversary it might be, that's engaged in violations of international humanitarian law. And what we're witnessing in
Gaza right now is that violation.
You've got the Netanyahu government using food as a weapon of war, restricting access to humanitarian assistance. It started, of course, with
the complete blockade in early March, and now they've replaced the U.N. food and aid distribution system with this GHF, Gaza Humanitarian
Foundation.
There's nothing humanitarian about it, as you just indicated. You've got, I think, four sites, people are swarming for food and they're getting killed
either by security contractors or the IDF. So, what we've said is we're not going to have transfers of offensive arms and weapons to the Netanyahu
government when they're using food as a weapon of war.
QUEST: The administration, President Trump does seem to now be coming around to the idea of putting more pressure on the Prime Minister Benjamin
Netanyahu. Too little, too late, I guess is what some -- what many would say. How can this be advanced further, do you think?
VAN HOLLEN: Well, Richard, if President Trump really wanted to address the humanitarian catastrophe in Gaza right now, he should publicly call upon
Prime Minister Netanyahu to allow the U.N. to resume its aid distribution system, right? They had 400 delivery sites. It was the Trump
administration, together with the Netanyahu government, that decided to scrap that at the end of that blockade and replace it with this private
entity that has only four sites, which are not always open.
When you go from 400 distribution sites to four sites, what is really happening is that the Netanyahu government is using this to advance policy
objectives, to use food to control the population. And we know one of their goals, of course, is ultimately to dispel Palestinians from Gaza
altogether.
QUEST: Can I turn to another area since, I mean, I have you, I just want to ask you, the Trump administration's plan to use tariffs against India
for secondary sanctions, which you'll be familiar with. Now, I know your views on secondary sanctions. Do you support this?
[14:10:00]
Is this a proper use of tariffs in your view if it's used against India for the purposes of Ukraine?
VAN HOLLEN: So, Richard, I do believe that limited circumstances, it's appropriate to use secondary sanctions. And in this case, we know that
between China and India, they are helping literally fuel Putin's war machine by buying Russian fuel -- Russian oil. We've -- for a long time
been trying to address this issue.
As you know, there was the cap on the -- we had the cap for -- price cap that has not been sufficient. So, I do support looking at other ways that
we can stop fueling Putin's war machine against the Ukrainian people.
QUEST: And this use of tariffs, bearing in mind your role in the Foreign Relations Committee -- against Brazil because of the Bolsonaro prosecution,
and of course, the sanctioning of the judge, that's a different matter in a sense. But to use trade policy in this way, as a -- as a -- as a tool of
foreign policy. This is -- we've not seen this before. This is a quantum leap.
VAN HOLLEN: I agree, I do distinguish between limited targeted sanctions or even strategically placed tariffs, you know, to protect, you know,
critical industries from these across the board tariffs that Trump is imposing, which frankly operate as a big sales tax increase on the American
people.
And as you say in this case against Brazil, simply to pursue his own sort of political -- personal political vendetta against Brazil. So, this is a
completely inappropriate use of tariffs, and the American people are the ones who are going to have to pay for it.
QUEST: Senator, I'm so grateful, thank you for taking the time in your busy day to talk to me. Thank you, sir.
VAN HOLLEN: It's great to be with you. Thank you.
QUEST: Thank you. Now, let's go back to Gaza. But of course, the senator being so well-versed on so many of the issues, we wanted to cover them all.
France is calling for the end of U.S.-Israeli-backed aid distribution system. It's calling it a bloodbath every day. Palestinians are forced to
risk their lives to get food, you heard the senator talking about it.
Gaza's Health Ministry now say more than 1,300 people have been killed while seeking aid in the past month, 91 died in the last 24 hours. Salma
Abdelaziz has more on the dangers that Palestinians face as they try to stave off looming famine.
(BEGIN VIDEOTAPE)
SALMA ABDELAZIZ, CNN CORRESPONDENT (voice-over): You're watching an aid convoy as it enters the Gaza Strip.
UNIDENTIFIED MALE: It's kids. It's children.
ABDELAZIZ: Israeli troops firing warning shots just inches away, according to the U.N.
UNIDENTIFIED MALE: Now what -- no, don't do this. Don't do this. No --
ABDELAZIZ: This aid convoy was held at an Israeli checkpoint for nearly 2.5 hours. So, by the time it is allowed to pass, thousands of people are
ready to descend. Each face here is etched with fear and desperation. Everything is quickly offloaded by the crowd, at least, one is wounded in
the chaos, and nothing makes it to the United Nations warehouses.
UNIDENTIFIED MALE: Those moving, those moving, behind you.
ABDELAZIZ: On the other side of the enclave lies another aid entry point, Zikim. Gazans call it a place of death. For most, there is an arduous
journey to get here, and then a long wait, often crouched and afraid that death may strike. Suddenly, people start running towards danger. Food has
arrived.
Our cameraman hangs back for his safety. As people returned, so do the accounts of horror at the crossing. This injured man says he's lucky he
made it out alive. "You go out to get a bag of flour for your family", he says, "but you're the one that returns in a body bag."
Amid global outrage, Israel says it is implementing tactical pauses for ten hours a day in limited parts of Gaza to allow more aid into the Strip. But
even during these so-called pauses, fathers are risking their lives to feed their children. "Three hours under fire and tanks beside us just to get
this bag", he says. "We want the aid delivered to our children safely, peacefully. Please end this siege on us and on our children."
On this day, at least, 60 people were killed trying to get food aid, according to Palestinian health officials. But the dangers don't end here.
Criminal gangs may try to rob them on the way home.
[14:15:00]
Some have armed themselves with household objects just in case. If they make it back, their families will eat tonight. A luxury here where a third
of people go one or more days without food. Everyone here is afraid, even the aid workers. CNN spoke to a local clansman(ph) who sent us this video.
He says it shows his men providing security to an NGO.
Loaded trucks speed down the road as the clansmen(ph) fired dozens of warning shots. This is seemingly the only way to ensure that cargo reaches
its destination intact. Law and order has broken down here. That's why Israel says it is now allowing airdrops. But the U.N. warns these are
inefficient, costly and dangerous.
You can see why here the goods land amid gunfire, only the strong or armed will grab a box. "I got nothing", this woman says. The man behind her adds,
"the criminals take it and sell it on the black market. This is not a solution." These chaotic, limited and deadly sites are now the only way
most can get food, children are left fighting over scraps. Many will go to bed with empty bellies tonight. Salma Abdelaziz, CNN, London.
(END VIDEOTAPE)
QUEST: Still to come, Russia has -- says it has captured a key Ukrainian town, and now you've got multiple Ukrainian cities open to Moscow's attack.
And the markets and the tariffs, it is the deadline -- significantly higher tariffs for many major trading partners who haven't done a deal. Let's
factor it all up later.
(COMMERCIAL BREAK)
QUEST: Russia claims to have captured a key town in eastern Ukraine after nearly 18 months of fighting in the area. Chasiv Yar, it sits on a
strategic high ground.
[14:20:00]
Now, we don't know. It's not been confirmed, but of course, if it was confirmed, it would give Russian forces access to multiple Ukrainian
cities. Ukraine itself says the units are holding ground in the town. Moscow is launching another overnight missile and drone attack on the
capital, Kyiv. The authorities say at least, 15 people were killed, including a six-year-old boy and his mother.
Nick Paton Walsh joins us live from Ukraine. When I read that sort of introduction, the situation sounds bad and deteriorating. Is that accurate?
NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR: Yes, I mean, we're certainly seeing a significant change in what Russia has been able to do
over the past weeks, and the speed of their advance, which for months, for years, frankly, has been incremental, and therefore, I think for many
strategists, not particularly troublesome.
What we're seeing over the last days, weeks is the culmination of multiple months of slow movements forwards, meaning that the southern town of
Pokrovsk, for example, the southeast part of the eastern frontline looks like it may in the days or weeks ahead, find itself with its supply lines
to Ukrainian troops, cut off, potentially involving a siege.
And Ukraine deciding to withdraw to its north, Kostyantynivka, in similar, slightly less urgent trouble, but still facing the same problems of a swift
Russian advance on two areas to its south. And then you mentioned Chasiv Yar, look, you know, these are all places, towns that nobody's really had
in the forefront of their mind globally for the past years.
But all put together, if indeed Russia has taken Chasiv Yar, it's been fighting for it for over a year as you said. The proof is not quite there
yet. But often in the past, we've seen Russia make these claims and then ultimately in the week or days ahead, that is often proven to be the
reality. This is all part of Russia's slow, but essentially more strategically, consequential moves over its Summer offensive that begun to
take real effect in the last week or so.
The onslaught against Kyiv -- well, look, that's 300 drones essentially saturating area defenses and finding a way through 10 of the 12 dead in
Kyiv from one particular location and apartment block that was hit, a six- year-old boy dying in an ambulance on the way to more urgent help. But here's what we saw two nights ago in a medical point near Pokrovsk.
The most imperiled Ukrainian stronghold on the eastern frontline at the moment, frankly, and it gives you a sense, I think, of exactly how intense
and well, at times deeply troubling as we felt ourselves this drone warfare can be.
(BEGIN VIDEOTAPE)
WALSH (voice-over): After dusk, the war has fallen silent, but got deadlier. This tiny military medical unit near the town of Pokrovsk, which
Russia is close to encircling, is waiting for patients in total darkness and quiet, just for survival. That bright light, we're told, is a Russian
spotter drone.
And look at how their other attack drones riddle the dark. The first warning is gunfire. Ukrainians aiming at Russian drones.
(on camera): We just have to keep every kind of light source or heat source indoors in case Russian drones are passing overhead. And that makes
it impossible, frankly, to go outside for this unit to welcome in the wounded. Instead, listening to the eerie noises in the dark, trying to work
out what's a threat and what's not.
But imagine how hard it must be for those actually at the frontlines, trying to bring wounded out with constant drones above them. Well, that one
landed so close. You can actually smell the explosive now in the night air.
(voice-over): The medics tell us, this is a quiet night in the skies, but no injured here is no relief. The fact that you haven't had patients
tonight isn't necessarily a good thing. It might mean they can't get out.
UNIDENTIFIED MALE: Yes, it's true, because (SPEAKING IN FOREIGN LANGUAGE) --
[14:25:00]
WALSH: Dawn is when the injured usually come when the changing light disrupts drone cameras. But the only patients, six men with suspected
concussion after their vehicle was hit by a drone on the road, who drove straight here. Some of the badly-wounded trapped as this video shows,
Ukrainian wounded evacuated here two days earlier by police from the frontline, their injuries infected after the long wait.
Daylight doesn't stop the hunt. We rush to our car to leave, but there's a problem. Two elderly locals hear the noise, one runs and the other braves
it out.
(on camera): So, our car won't start, and we just noticed locals running away from a drone. And so, we're trying to get out of here as quickly as we
can.
(voice-over): Our vehicle is under a tree, but SUVs are a priority target.
(CAR STARTS)
WALSH: We manage to go. The need to leave when you have to abandon your life is constantly creeping up on people here. This is Dobropillya, where
yesterday, the normal bus service ran. But today, it's canceled, and the way out is with the police in an armored van. The drones closing in fast.
UNIDENTIFIED FEMALE: (SPEAKING IN FOREIGN LANGUAGE)
UNIDENTIFIED MALE: (SPEAKING IN FOREIGN LANGUAGE)
UNIDENTIFIED FEMALE: (SPEAKING IN FOREIGN LANGUAGE)
UNIDENTIFIED MALE: (SPEAKING IN FOREIGN LANGUAGE)
WALSH: Katya(ph) explains she and her baby son truly have nowhere to go. No plan for what's next. It's happened that fast. Days before, Russian
drones struck many civilian targets like this coffee shop.
(EXPLOSION)
WALSH: But every day, the map of where police can go is changing. This is Beletsky(ph), a flame. Russian troops on its edges. Police taking out those
who, like many here, simply didn't see things changing so fast.
UNIDENTIFIED MALE: (SPEAKING IN FOREIGN LANGUAGE)
UNIDENTIFIED FEMALE: (SPEAKING IN FOREIGN LANGUAGE)
WALSH: As they leave, they use this device to intercept Russian drone signals, and recognize that one is flying above the same road they are on.
But the escape options are shrinking. Ukraine normally catches Moscow off guard, but now, Russia's Summer offensive is shifting the ground beneath
their feet, perhaps, irreversibly.
(END VIDEOTAPE)
WALSH: Now, Richard, I should point out that there's nobody we met there on those frontline positions who are breathing a sigh of relief because
President Donald Trump has changed his deadline from 50 days, from early September to 10 days, potentially August the 8th. The urgency of Russian
advances hasn't changed at all.
We've heard from U.S. Secretary of State Marco Rubio, that he believes President Trump has multiple options, banking, sectoral, potential
sanctions -- sorry about that background noise, that could potentially be problematic for Russia and its customers of energy if indeed, after August
the 8th, as many presume, will see no change in the Kremlin's policy towards this war.
But I should point out over the three-and-a-half years that we've been here, I've not really seen a pace of change of territorial control like we
witnessed over the last week or so. We're turning up in places expecting one situation and then learning, as we heard there, that the civilian bus
service at Dobropillya was canceled that particular morning and people had to get out with the police.
That's extraordinary. I think it's partly because of the drones that Russia uses and their increased range. But I think it's also a sense of their
accumulated resources here, their purpose, and the fact that this Summer offensive is being met by Ukraine, whose manpower is diminished, whose
western support is questionable, and who are ultimately, I think struggling to maintain their positions that they've held remarkably for over three
years, Richard.
QUEST: Nick Paton Walsh, thank you. After dealing with the first major anti-government protests since the start of the war, Ukraine makes a move
to restore the power of anti-corruption agencies. Earlier today, the parliament approved a bill giving the country's key agencies independence,
this after President Zelenskyy brought them under government control, sparking the protests.
The bill passing is receiving major criticism from inside and outside of Ukraine, including close allies like the European Union. Zelenskyy
initially said they did it to get rid of two agencies of Russian influence. Ukraine has long been considered one of Europe's most corrupt countries.
Tonight, the sound of -- the sound of tariffs and time is running out for the Trump administration to make all of its trade deals before the
President's self-imposed midnight deadline.
(COMMERCIAL BREAK)
QUEST: Midnight's the deadline when President Trump has said he will start to impose his tariffs, if he hasn't negotiated a deal with an individual
country. Well, there are a number of trading partners who are trying to strike 11th hour deals or otherwise will face significantly higher tariffs.
The markets at this hour, you can see the market has just gone down slightly, not hugely off, but it's very unhappy at what it's seeing. For
the next three months, Donald Trump will not raise the 25 percent tariff on certain Mexican goods. Although he is escalating America's trade war with
Canada. Just read it. Canada's announced it is backing statehood. That will make it very hard to do a trade deal. In other words, he's going to use
tariffs to punish Carney for what he says about recognizing the Palestinian State at the UNGA later this year. Canadian goods, tariffs could rise from
25 to 35 percent.
And then you have Brazil, well, we talked about that earlier, 50 percent tariffs, trying to punish the country's leadership for refusing to end the
trial of the right-wing former president, Jair Bolsonaro.
Matt Egan is with me. To a large extent, China's done, the E.U.'s done, major trading partners like Japan, Philippines have been done. So, what's
left? What's hanging out there?
[14:35:00]
HARRY ENTEN, CNN SENIOR REPORTER: Yes, Richard. Well, there are still dozens of countries that have not reached a framework agreement with the
United States. You mentioned Canada. Canada's out there. You know, even China. China is still -- they have sort of a partial framework, but there's
another deadline there. Taiwan, India, Brazil.
Look, the White House has made it clear that the countries that don't have a trade framework, they're going to have higher tariffs. The president,
he's already got a 10 percent universal tariff. He's talked about a 15 to 20 percent tariff.
We are witnessing an experiment here, right? An experiment of historic proportions with so much at stake. We have a president who believes in
tariffs. He believes they can force better trade agreements for the United States. He believes they're not going to be inflationary. He believes that
the world economy and the U.S. economy can withstand the highest tariffs in nearly a century. And all of those beliefs are now being put to the test
because we're going to have a situation where tariffs are going to go even higher.
And as you know, Richard we're -- go on.
QUEST: Well, just to put it, essentially the whole thing rests on the inflation front, it does rest on the idea that the tariff will be eaten by
the manufacturer, producer, and exporter, possibly the importer, but not passed on to the consumer. At 15 percent, that's not a bad shrewd guess, is
it? Because everybody can sort of eat 15 percent.
ENTEN: Yes, that's right. I think that if they could split it up. I mean, if it's a 5 percent increase for the consumer and 5 percent eaten by the
exporter and 5 percent by the company importing it, then maybe they all share the burden and it's not terribly inflationary. But we did just get
that inflation report out this morning that showed that PCE, the Fed's go- to inflation metric, it heated up, right? It's going in the wrong direction. It's at a four-month high. It's not nearly as bad as it was two
to three years ago, but it's not moving in the right direction that would encourage the Federal Reserve to lower interest rates. So, we're already
starting to see some glimmers of this being inflationary.
QUEST: Where do you stand? Do you think that the tariff hit as the -- I think the Fed sort of believed will be a one hit contained and therefore,
will not necessarily feed through to the wider production, although there are many who do believe that it will be an ongoing and will start a spiral?
I can't make my mind up myself.
ENTEN: Well, I think the part of the problem here is there's no precedent, right? What happens to --
QUEST: Well, 1920 -- if you weren't around doing Smoot-Hawley.
ENTEN: I was not covering that one. No, I was not. But look, the other thing that was -- what happens psychologically here, right? I mean, we're
all more sensitive to price changes than we were. Investors are, CEOs, consumers because of what just happened three years ago. And so, what
happens to a modern economy that, unlike during Smoot-Hawley, is extremely integrated. What happens three years after an inflation crisis and you have
sky high tariffs? I mean, we just don't know because it's never happened before.
Now, Jay Powell, he made it clear that he's not going to let it become a major inflation situation, but that means he's willing to raise interest
rates, which of course would be challenging, to say the least, for an economy because if you have higher prices and higher interest rates and
potentially trouble in the job market, I mean, that is not the recipe for a good economy. So, look, like I said, this is an experiment and we're all
about to find out how it's going to turn out.
QUEST: Matt, grateful. Thank you.
ENTEN: Thanks, Richard.
QUEST: Jared Bernstein is with me, former head of the White House Council of Economic Advisers. Where do you stand, Jared? Do you think the inflation
from the -- you heard my question and discussion with Matt, do you think it's one hit contained, you can see where it is, you don't need to worry
about it feeding into the wider inflationary spiral, or do you think it ignites?
JARED BERNSTEIN, FORMER CHAIR, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: Oh, it's nice to be with you. I don't think one hit is quite accurate, not
because I think inflation will spiral, but because if you watch what the Trump administration is up to, and I've done so carefully from Trump 1,
this bargaining, this leveraging, this back and forth it never ends.
This August 1 deadline is not binding by any stretch of the imagination. These deals will be ongoing for probably as long as the president is in
office. I can explain why I think that's true, but I'm quite confident in that assertion, and I think that leaves inflation pretty high and pretty
sticky, not spiraling, but not coming back down to target.
[14:40:00]
QUEST: So, last night I described a lot of these trade deals as almost garbage, mainly because besides the headline number, there's nothing else
underpinning, oh, there's a lot of talk, a lot of numbers, 650 billion, 700 billion of energy, this investment. But there's no mechanism by these
investments. There's no enforcement mechanism. And there's no finding or otherwise. What do you make of the non-tariff headline number, the actual
deals themselves?
BERNSTEIN: The tariffs themselves are real, and we can definitely confirm that by looking at the extent to which tariff revenues have really spiked
in our country. But you're exactly right with these side deals, they're a bunch of smoke and mirrors. They couldn't be flimsier. If you actually talk
to the two sides, that is the Trump side or the E.U. or Japan or whoever's on the other side of the deal, they tend to have very different
interpretations about what they agreed to.
I think the E.U. one is particularly notable because there you have the European Union from Brussels saying, well, look, I mean, there's thousands
of private companies and 27 member states, and we can't tell them what to buy or what to invest in. So, you're absolutely right that the side deals
are just nonsense.
QUEST: I wonder, this experiment, if we settle down at 15 percent, let's just give a number, 15 percent seems to be -- and we always knew that
Donald Trump wanted this. He wanted a tariff-based trade policy. Well, he's got it. But do you think long-term it changes the terms of trade with the
United States, i.e., it reduces the trade deficit?
BERNSTEIN: Typically, tariffs don't have much impact on the trade deficit. For one reason, you get retaliation from your trading partners for another
reason it can push your currency up and down. And that also has an impact on the trade balance. I think that notions that Donald Trump has somehow
now reshaped global trade are basically overheated and pretty hyperventilated.
I think what Donald Trump has done is put some real frictions in the global trading system. It's kind of like if there was grease in the wheels before
that, grease is kind of gone. And so, that makes trading a lot more clunky. It makes it more expensive. It means there'll be spillovers into consumer
prices. We've seen some of that. We've seen companies take hits all along the chain, exporters, importers, wholesalers, retailers, distributors,
consumers at the end of the chain, that's where most of the pass through occurs. All of that happens here. That's not a reshaping of global trade,
that's Trump with his, you know, weird infatuation about how our trading partners are ripping us off.
QUEST: The long-term outlook of this, as you say, it's very difficult to understand, and we've not seen it as Matt Egan said since the 1920s and
1930s. But I guess the argument does go, you know, that famous economist line, where does the 500-pound gorilla sit? Wherever it wants. You know, if
the U.S. says they want these things, everybody falls in line and sort of it all works itself out.
BERNSTEIN: Well, that's where the comment you made earlier resonant with me. This idea that 15 percent, it's kind of a slog in the sense that I just
mentioned. It creates all kinds of frictions that would be better if they weren't there. It's going to slow growth. It's going to raise prices. It's
making the Fed's job harder. But I don't think it changes the fundamental structure of global trade.
I don't think it -- in other words, by the way, the administration is not going to achieve their reindustrialization dreams because I don't think
factories are going to pick up from over there and move over here based on that, they'll start to figure out some way to eat the costs, like you and
Matt were saying, they'll pass them along down the chain.
You know, I think this is very problematic, don't get me wrong, but I don't think it's globally existentially, you know, reshaping the system.
QUEST: Finally, Jared, I was trying to get the numbers and it looks like tariff revenues, varies, it could be anywhere over the next 10 years
between, I don't know, 2.5 to 5 trillion depending on what you want to look at and what number -- what make metrics you are taking. And that, of
course, doesn't allow for tariff substitution and people going round the tariff and buying another.
But it doesn't do -- bearing in mind the one big beautiful bill is going to add even more. The tariff revenue argument is, what, a red herring or
significant?
[14:45:00]
BERNSTEIN: More red herring than significant. But tariffs are raising something like between 200 and 300 billion a year starting, you know, as we
speak. The question is, how persistent will that be? I mean, for one thing, when Trump leaves the stage, does the next president take these tariffs
down and the revenue with them?
For another thing, as countries adjust, as the tariffs themselves adjust I think it's probably folly to try to predict where we'll be on tariff
revenue from where we are right now. I think the main thing to recognize on tariff revenue is that American importers are paying way more, three, four
times more than they ever have paid before on taxes on their imports, otherwise known as tariffs, and that money has to go somewhere.
I talked about the chain a minute ago with the wholesalers, the retailers. At the end of that chain is the consumer. She's already facing higher
prices from tariffs, and I think we'll see a lot more of that.
QUEST: Jared, I'm so glad to have had you on the program. Thank you for giving time in a busy day. I appreciate it. Thank you.
BERNSTEIN: You're welcome.
QUEST: Isa is away, I'm at the helm. What could possibly go wrong? In a moment.
(COMMERCIAL BREAK)
QUEST: Millions of people across the Pacific Rim are breathing a collective sigh of relief. There's been relatively little damage reported
from the tsunami alerts that were triggered by that massive 8.8 magnitude earthquake. It all took place off Russia's far east on Wednesday. There
were few injuries, minor injuries and buildings were damaged in Russia. The quake was tied for the sixth strongest tremor ever recorded. Aftershocks
have notably up to 7.5 are expected for at least another month, according to the Russian Academy of Sciences.
The tsunami triggered mass evacuation of homes and buildings across the region, and that includes in Hawaii. CNN's Will Ripley reports from
Honolulu.
(BEGIN VIDEOTAPE)
WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Tsunami warnings across the Pacific Ocean, a massive 8.8 magnitude earthquake off
Russia's far eastern coast. Waves first slammed into Russia's shoreline towns. Panicked sea lions dove into the ocean as rocks tumbled. Furniture
shook inside homes and buildings. The tremors damaged an empty kindergarten, even forcing surgeons to hold down a patient on an operating
table. Waves also crashed into the Japanese coastline. People rushed to rooftops for safety.
[14:50:00]
The threat reached parts of South America on Tuesday. Authorities in several countries evacuated coastal areas due to fears of a tsunami. And in
the U.S., parts of the West Coast and Hawaii were on edge overnight and into the day.
CAPT. NICHOLAS WORST, U.S. COAST GUARD SECTOR HONOLULU: A lot of anxiety and stress from folks during these types of situations and the decision as
the captain of the port to shut down commercial harbors, to evacuate, to hold vessels off, that's not a decision I take lightly at all.
RIPLEY (voice-over): This ring camera video from a business in Haleiwa shows time-lapse footage, water surging from the waves. The water can be
seen getting very close to the deck of Blue Planet Adventure Company. In Hilo, the waves flooded parking lots. U.S. Coast Guard ships went out to
sea for safety.
WORST: We pre-staged these Coast Guard assets, essentially got them out of the harbor and in order to be able to quickly respond to any search and
rescue cases.
RIPLEY: This Coast Guard cutter, the Oliver Berry just returned to home port here in Honolulu. The tsunami advisory for Hawaii has been lifted, but
the National Weather Service urges people here and in other affected areas to stay cautious because strong currents and dangerous conditions may
continue for the next day or so.
Will Ripley, CNN, at the port of Honolulu, Hawaii.
(END VIDEOTAPE)
QUEST: Still to come tonight, a story that sounds like something out of a comic book. The discovery of a radioactive wasp nest at a place where
nuclear bombs were once made.
(COMMERCIAL BREAK)
QUEST: The former U.S. vice president, Kamala Harris, has announced she'll soon release a book about the historic 2024 campaign for president. It'll
be called "107 days." It will be a behind the scenes look at the shortest presidential campaign in modern U.S. history. One that ended in a crushing
defeat to Donald Trump. The book is out in September.
The announcement comes a day after Harris announced she will not run for governor of California in -- later. Those close to Harris say the decision
doesn't mean she'll run for president in 2028, but it leaves open that possibility.
A radioactive wasp nest found near a South Carolina site that once made nuclear bomb materials are being disposed of. Visuals say the radiation
levels from the nest were 10 times higher than it allowed by federal regulations, and that the radioactivity was likely left over from the site
was fully operational. The workers sprayed the nest with insect killer.
[14:55:00]
No wasps were found. But a watchdog is pressing for more information, wanting to know where the contamination came from and whether there is a
leak.
Finally, tonight, archeologists say they're in a race against time examining the wreck of an English ship that sank in a massive storm three
centuries ago. It's the Northumberland, a 70-gun warship built in 1679, wrecked on a sandbank off the coast of Kent in England in 1703. Around 250
people lost their lives.
Anyway, long buried in the sand and sediment. Parts of it were finally exposed last summer, giving experts the opportunity to carry out a survey.
Sealed chests have been found. The contents are unknown. Now, everybody's doing what they can before the ship, once again, gets buried by the
shifting sands. I want to know what's inside the chest.
Stay with us, "What We Know" is next. I'll have "Quest Means Business" in just an hour from now.
(COMMERCIAL BREAK)
[15:00:00]
END
