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Quest Means Business
France and Denmark Advance After Scoreless Draw; General Electric's Size Shrinks, Stock Climbs; GE Spins Off Healthcare Business to Reduce Debt Mountain; Uber Regains its License to Operate in London; U.S. Warns Countries to Quit Iranian Oil; India Spares Harley-Davidson from its Retaliation Tariffs; Toyota Revamps Corolla to Attract Millennials; Aston Martin Unveils New Supercar
Aired June 26, 2018 - 16:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN INTERNATIONAL HOST: Closing bell ringing on Wall Street. Very hit-and-miss day for the Dow Jones Industrials, but they
have eked out a small gain over the course of the session. Oh, that was a very wimpy sort of blub-blub-blub of the gavel, but it was a wimpy sort of
day. The Dow has just given back most of the gains of the day, but the day is over, trading is finished. It's Tuesday, the 26th of June.
Tonight, Harley Davidson versus the President of the United States. Donald trump is warning of taxes like never before. First, investors sold GE, now
GE is selling most of its investments.
Lionel Messi hits on in Russia, late joiner from Argentina at the World Cup, we'll put that into perspective for you. I'm Richard Quest live from
the world's financial capital in New York City where of course, I mean business.
Good evening. Tonight, Donald Trump is revving up his spat with Harley- Davidson. The US President says Harley is using retaliatory tariffs as an excuse. Gentlemen, the sort of noise these machines make, most impressive
indeed. Thank you, Lucky and thank you, Gary.
On the important part of the story, President Trump threatening it will be the beginning of the end for Harley-Davidson, these magnificent machines,
if they surrender and move production overseas. This American icon has suddenly become a symbol for Donald Trump's trade war strategy.
(START VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Harley-Davidson is using that as an excuse, and I don't like that, because I've been very good to
Harley-Davidson and they used it as an excuse. And I think the people that ride Harleys are not happy with Harley-Davidson, and I wouldn't be either.
(END VIDEO CLIP)
QUEST: So, these machines, Harley-Davidson, well, they are as American as apple pie and arguably more so. But they have already been made overseas
for years. If you look at the map, the international plans for Harley- Davidson, well, you've got Brazil up in Manaus, you've got India where they are made in Bawal, Thailand, and Australia, they are made in the southern
coast in Adelaide.
Just last year, two weeks into the Trump presidency, the Harley executive team were some of the first guests that Donald Trump welcomed to the White
House. Today, he said they had surrendered, they had put up the white flag, they've given in. Back then, he went out of the way to thank Harley
for making things in the United States.
(START VIDEO CLIP)
TRUMP: Harley-Davidson is a true American icon. One of the greatest. So, thank you Harley-Davidson for building things in America. And I think I
know you are going to expand. I know your business is doing now doing very well and there is a lot of spirit right now in the country that you weren't
having so much in the last number of months that you have right now.
(END VIDEO CLIP)
QUEST: What a difference a couple of years make. He loved them then, and now today, he says they've surrendered and quit and if they move, their
aura will be gone. What we do know for sure is that Harley has become collateral damage in this trade war. Seriously, look at the stock price.
It's down some 30% since Donald Trump took office. A straight line down from 57 to 41.
And it's easy to understand why. Weakening sales, even though there's a growing economy in the United States, but they are paying more for higher
steel because of the tariffs that have just been introduced and the Harleys exported from the United States to the US will attract a 20% extra tariff,
36% in total along with of course out to India where it's a 50% tariff. Put it together, Clyde Fessler is former Vice President at Harley-Davidson.
He is the man widely credited with the rebranding of these suburb machines. He spent 25 years with the company. He joins me now on the phone from
Rapid City in South Dakota.
So, sir, do you subscribe to the President's view that the aura of these machines will have gone if they start manufacturing more overseas as they
have been?
CLYDE FESSLER, FORMER VICE PRESIDENT, HARLEY-DAVIDSON: Well, that's a mouthful of information that really has to be explained. Harley-Davidson,
it's 115 years of existence has for the most part been a domestic company shipping to Canada, the United States and Mexico. In the 1980s during the
turnaround, we became an international company and with better quality and shipping motorcycles and exporting them to different areas throughout the
United States and the world.
[16:05:10]
FESSLER: And now comes the third phase of Harley becoming a global corporation, and a global manufacturer like Mercedes Benz, like Honda, like
BMW have plants all over the world. The difference here I think is really the heartbeat and the soul of Harley-Davidson which is the twin- engine,
and potato, potato, potato, and that engine, the tool up for that engine and make it abroad would be very, very expensive.
So if I was Harley, yes I would start assembling some motorcycles overseas, but the heartbeat, the engine will be made in Milwaukee.
QUEST: So, Harley-Davidson is well and really stuck in the middle, isn't it? Because it's paying higher prices for steel because of the tariffs on
incoming steel, and it's being hit by the tariffs to Europe. It's not surprising that they have made this decision.
FESSLER: Well, back whether I was in Harley-Davidson and director and managing director of Europe, we put together a strategic plan on how we're
going to increase our market share in Europe. And at that time, we were selling about 4,000 motorcycles a year.
Last year we shipped over 45,000 motorcycle to Europe and the surrounding region. So Europe is very important to us as far as our overall global
strategy, but as the engine and the heartbeat are still made in Wisconsin where the technical skills are, I don't see the impact that much.
QUEST: So a hard question to ask, but how do you feel about the US President threatening Harley-Davidson? And that's what it was, a
straightforward threat, that if you quit, he said, "They had surrendered, they had quit, they'd put up the white flag, and they would be taxed
heavily for doing so." How do you feel about that?
FESSLER: There is a lot of information there that has got to settle down over a period of time. I don't think those ideas are practical. We are
still going to it be a US-based company manufacturing. And, by the way, I've been retired for Harley-Davidson for 15 years. I'm not a spokesperson
for them. So I have to emphasize that. You are getting my personal opinion.
I think Donald Trump's heart is in the right place. I think his methods are a little bit unusual. But if you look at what's happened on the
international basis since World War II, all of our politicians have given away America to the rest of the world. Now, we have a businessman in
charge and he's making a business out of it, and he'll negotiate a little bit differently when you are a business person than when are you a
politician.
QUEST: Sir, thank you for joining us. I've got two Harleys in the studio with me. I wish I could tell you which model they were so you could tell
me something about them, but unfortunately - a Harley 103, it looks like. But anyway, thank you for joining us, sir.
Later in the program, I'll be speaking to the foreign editor at the "Times" in India about how Prime Minister Modi is using Harleys as an olive branch
in the trade talks. Gingerly walking past the price of these machines by the way, in the tens of thousands of dollars, gingerly walking past on Wall
Street, Harley-Davidson ended the session relatively flat, and so did the broader market. You can see the numbers for yourself.
After a rough start, US investors appear to have halted to selling for now, Walgreen's which joined the Dow, ended the day roughly 1% lower. It's its
first day trading on the Dow whilst the trade war simmers, Donald Trump is heading a win in America's highest court.
So, let's turn our attention to the travel ban, which was overturned or the travel ban has now been deemed legal by the US Supreme court in a 5 to 4
decision. It's the third version of the ban that restricts entry to the United States from seven countries. They are primarily Muslim majority
countries.
Jessica Snyder joins me from Washington. Jessica, the President's initial reaction was, "Wow," it was swiftly followed up by a great victory. And
indeed it was. But we have to remember, it was the third iteration of this ban, so I'm guessing, you know, they should have got it right eventually.
JESSICA SNYDER, JUSTICE CORRESPONDENT, CNN: Yes, you have it just about right, Richard. The President celebrating, nonetheless, even though you
are right, this was the third version of this travel ban. It was interesting to watch the President celebrate here. We saw a very brief
"wow" on Twitter initially this morning. Then the White House released a statement calling it vindication, the Supreme Court ruling in their favor.
And then, the President spoke out about it shortly thereafter calling this a big win for America as well as the Constitution. But you are right, this
was the third version of the ban that was put into place about a year ago.
[16:10:10]
SNYDER: The Supreme Court ruled just a few months after that that it could go into effect while this whole appeals process went through, and now of
course today the Supreme Court is saying, "Yes, it is within the President's authority this ban is okay." The President can enact it.
QUEST: And the President is getting some wins in really, isn't he? I mean, he Supreme Court, the immigration, although he had to sign the
executive order, his popularity numbers are rising, maybe not to stratospheric levels, but there is a strong argument to be made that the
wind is in the sails.
SNYDER: Well, it's interesting some of the latest polling shows the approval rating among Republicans in favor of the President at a whopping
90%, so people within the President's own party strongly agree with what he's doing whether it's protecting borders, whether it's keeping immigrants
out from these seven select countries as part of this travel ban, so you are right, the wind may be in his sails right now, and of course, with
today's vindication as he called it from the Supreme Court, even more so.
QUEST: Jessica, thank you for that. Much appreciate it.
SNYDER: Thank you.
QUEST: So, let's talk about the number of tourists visiting the United States. On this program, we've said before, it's actually falling. Trips
to the US are down 4%. Global trips are up 7%. US Travel Association not surprisingly represents America's travel industry and is somewhat concerned
about this.
Jonathan Grella is their Executive Vice President for Public Affairs and joins me from Washington. The reality is you are in a difficult spot here,
aren't you? Because when I travel, and I travel more than most, what people say is, "Look, love America, love Americans, but why would I want to
go there when I'm not made to feel welcome?" And to some extent the Supreme Court has reinforced that today.
JONATHAN GRELLA, EXECUTIVE VICE PRESIDENT FOR PUBLIC AFFAIRS, US TRAVEL ASSOCIATION: Sure. Security must come first, and without security there
could be no travel, of course. But it's imperative that we send a welcome message around the world. We spent the last year and a half talking about
who can't come to America, now it's time to talk about who can come to America, and we should.
QUEST: Okay, how do you do that? Because you can have campaigns, you can have slogans, you can have cutesy symbols. But when the Supreme Court
rules that a travel ban is legal, and when visitors at CBP checkpoints feel unwelcome, and when there is a story about a Canadian woman on the West
Coast who accidentally crossed the border and was locked up for two weeks, you've got a hard sell on your hands.
GRELLA: No question, Richard. The bottom line from our perspective is that words do move markets, but policies matter of course as well. We
should market America to the rest of the world through brand USA, so need to renew our commitment to that. This administration has embraced the visa
waiver program referring to it as the gold standard. We couldn't agree more with that, s0o there are a lot of things in terms of words and deeds
that we can do to ensure that we are committed and competing. And that's a really important word here, competing for global market share.
Richard, you pointed to the fact that there is a global travel boom going on. Unfortunately, our share is slipping, and we need touchdowns, not just
field goals.
QUEST: Okay, but I still don't quite understand how you are going to do it. I'm sorry to belabor the point. But the reality is, as I say, are you
going to have an ad campaign? Are you going to have freebies? What are you going to do?
GRELLA: Well, its holistic approach that's needed. So it's a combination of the bully pulpit being used with a more balanced ledger between the
security message about who is not welcome here, but also saying that legitimate travelers are welcome to the United States as well as marketing
the world through brand USA. Also, getting more visa waiver countries in the program, ensuring that we have proper resources for customs and border
protection, and that we are using every link in the chain possible to attract travelers to our country when the rest of the world certainly gets
the message that the competition is fierce and they need to leave no stone unturned in welcoming and competing for international travelers.
QUEST: Jonathan, good to see you. Thank you, sir, for coming in today. Busy day. Thank you.
GRELLA: Thank you.
QUEST: Appreciate it. As we continue after the break, Uber stays in business in London after a court rules that ride sharing firm has made
enough reforms and is fit for the London roads. And it was do or die for Argentina at the World Cup. Lionel Messi's team scrapes the knockout
stages after a dramatic win against Nigeria. We'll have the update from Russia in just a moment.
[16:15:13]
Two pivotal World Cup matches have just wrapped up in Russia. Argentina scraped through to the last 16 after beating Nigeria 2-1. Lionel Messi
scored an early goal, but Nigeria soon equalized. It was a nail biting second half with Argentina eventually sealing the deal in the 86th minute.
There you go. Iceland managed a good challenge against the group leader, Croatia, but a 2-1 loss event puts an end to Iceland's World Cup dreams.
There, they've finished it.
Amanda Davies is in Moscow. Daniel Politi is in Buenos Aires for us. All right. Amanda, forgive me, I'm going to go to Daniel first, because I need
to know the ecstatic. Daniel, what was it like? How nail biting before? How effervescent after?
DANIEL POLITI, JOURNALIST : Definitely, I mean, it was a roller coaster of emotions here where we're watching the game in this public plaza, and
the first 15 minutes, everyone was very excited and it looked like the Argentina curse had been lifted that we had seen in the past few games, and
then in the beginning of the second half, it was extreme depression until Marcus Rojo came with that incredible kick and whole plaza lit up and there
was celebration from then on.
QUEST: All right, Amanda, so they get through, Amanda, just, but this is turning into the sort of story of this World Cup. Those that should are
struggling to could.
AMANDA DAVIES, CORRESPONDENT, CNN: Yes, absolutely. I have to say that was 90 minutes of football that really does make you want to sit in a dark
room and kind of think about what has just happened. It was epic. And Argentina, as you said, heading into this tournament really one of the
favorites, but have disappointed up to this point, and for a very long time, you thought the only thing Lionel Messi was going to be celebrating
this week was his 31st birthday, but he stepped up. He scored when it mattered, and then even when Nigeria got on top of them during the second
half, Nigeria, a team by their coach's admission, a team building for actually four years time in Qatar, not for this World Cup, they were really
giving Argentina run for their money.
But Messi, we saw at halftime, put in this team talk that was of like gladiatorial proportions and he literally dragged this side, kicking and
screaming into the second round. Quite epic.
[16:20:12]
QUEST: Daniel, do you think the nerves and the hearts in Argentina can stand the strain of the quarter finals in the next round?
POLITI: I think so. I mean, I think suffering is a bit of Argentine national sport. Everything has to be done with suffering and with a big
epic story behind it. So, it really does feel like this is even sweeter because of that.
QUEST: Right. Daniel - thank you to Daniel. Amanda, stay with me. I've got one more question for you, Amanda, and it really is the idea that
England, not Germany, will lose to Brazil in the finals. Now, this is Goldman Sachs using the same quantum computing and analytics that they use
for markets, say that the firm has made a new prediction. What do you make of it? Do you buy this?
DAVIES: So they genuinely think England is going to get to the finals?
QUEST: Yes.
DAVIES: I have to say the number of messages I got from football people, some pretty close to the England team, after that pretty emphatic victory
the other day. They are pretty confident. But we have to say England has not played the big teams in this tournament yet. I would love, absolutely
love to be here to see England reach the final of a World Cup. It happens once in a lifetime if you are lucky, doesn't it. But the biggest test so
far to come against Belgium. So let's take victory over Belgium at the weekend later this week first. And then, I'll come back to you.
QUEST: Here's the deal, if they get through to the World Cup final, Amanda, dinner in any restaurant in London for you and me and friends, and
I'm paying, how about that?
DAVIES: That sounds wonderful. As long as we can get a day off for the final as well, Richard.
QUEST: We will. Thank you. Stefan Szymanski is Professor of Sports Management at the University of Michigan and author or "Soccernomics." He
joins me from Michigan. You heard that, you heard it. How do they make this? How do they make this up, people like Goldman Sachs? How do they
work out using the same formula that have failed to predict markets to predict football?
STEFAN SZYMANSKI, PROFESSOR OF SPORTS MANAGEMENT, UNIVERSITY OF MICHIGAN: Well, I think it's exactly the same problem. There are things that are
systematic about markets and there are things that are systematic about football. So we know that the bigger countries tend to do better. Richer
countries tend to do better and more experienced countries tend to do better.
But there are so many other random factors that can influence the outcome of these games. And when you get to a knock out tournament, it's really
down to just a lot of luck and coincidences that happens on the day that it really is not predictable. So throwing out these forecast is fun and we
should enjoy it, but we shouldn't take them very seriously.
QUEST: What do they base it on?
SZYMANSKI: Well, there are any number of ways you can do this. So you can look at the past. You can look at historical results and try to
extrapolate from those. You can look at other factors that determine form, like the quality of the players in leagues around the world. You could
look at economic factors. You could look at social demographics, so there are many things you can throw in here in order to try and come up with a
forecast. But, again, they all capture a small part of a very complex reality.
QUEST: But don't you think it's interesting, I mean, obviously there is a hefty element of fun involved in this, but don't you think it's interesting
that somebody like Goldman or any of these big companies, do decide to have some fun and do decide to put this out. It's obviously a bit of publicity,
it's a bit of fun, but these are serious people and they are having a bit of a go at it?
SZYMANSKI : Right. But I think this is the way we should take a market forecast from analysts in general, which is they are in the game to make a
forecast. And you remember the successes and you forget the failures. There are so many forecasts out there. They are only going to remind you
of the ones that turn out to be right, so that's why actually, you cynically - I mean, once you treat all market forecasts in the same way.
QUEST: Finally, if we take a look at how Portugal struggled and we take a look at those countries, Germany has had a difficult first round, if we
look at the way Argentina today scrapes through, this makes - on the business side, this makes for a better World Cup, doesn't it? It makes
for a more engaged World Cup. People are watching more, and it's good for the sport.
SZYMANSKI : Well, the problem with the World Cup in many ways has been the dominance of European and South American teams over many, many decades, and
the failure of the other countries to really get a look in. And sadly that doesn't look very different. If anything, this World Cup, the Europeans
are looking more dominant than ever.
[16:25:08]
SZYMANSKI : So in terms of globalization, we may be getting some close games, but we're not really getting that international spread of results
that you might hope for to make it truly global.
QUEST: Good to see you, Stefan, thank you, as always helping us understand what's happening. Thank you.
SZYMANSKI : Thank you.
QUEST: If you need to take on top of the day's business headlines, you want a 90 seconds briefing, and it has to be our daily briefing podcast,
updated twice a day before and after the bell. You can ask Alexa or your Google home drive. Try this, in fact I think I must try this regularly,
CNNMoney flash briefing. You don't even have to say, "please." It's every weekday.
After the break, bit by bit General Electric is getting smaller and smaller and investors seem to like it. Today the stock price grew bigger
and bigger. "Quest Means Business."
Hello, I'm Richard Quest. There is more "Quest Means Business" in just a moment. Uber has its day in court and gets its license back to operate in
London. It's a short analysis, but we'll tell you exactly what it means. Toyota is rebranding one its most famous models, the Corolla/ it wants to
attract millennials. No more oldies like me with all of that.
You are watching CNN and on this network, the facts always come first. The US Supreme court has upheld Donald Trump's travel ban in a 5 to 4 ruling.
It found that the President has authority under immigration law to restrict entry to the country. Mr. Trump's travel ban includes citizens from Iran,
North Korea, Syria, Libya, Yemen, Somalia, and Venezuela.
A Sudanese teenager convicted of killing her husband as he raped he for a second time has had her death sentence overturned. Noura Hussein instead
will serve a five-year jail term and the family will pay a hefty fine. Her story spotlighted the issue of marital rape in Sudan where the offense is
not a crime.
Thailand's Deputy Prime Minister says 12 missing boys and their football coach may still be found alive. They have been missing since Saturday and
they're believed to have been trapped in a flooded cave complex. Rescuers say water levels are constantly rising as the region is being hit by heavy
rain.
The French President Emmanuel Macron has met Pope Francis at the Vatican. The private meeting went considerably longer than scheduled. According to
the Vatican, they discussed migration, the environment and the future of Europe. It was Mr. Macron's first official visit to the Vatican.
Now, we've already told you about Argentina. Meanwhile, France and Denmark have officially advanced to the next round of the World Cup. They made a
scoreless draw making France win Group C. Australia and Peru miss out and head home. So GE continues to get ever smaller, yesterday, we told you how
it was shrinking in size, today, on the first day in 110 years, GE is not in the Dow and the company has become even smaller.
The company wants to reduce its debt mountain and it's doing so piece by piece. Today, the stock was up 8 percent, so it seriously seems to be
working, but the breakup of GE has been just about everywhere. Today, GE will spin off its healthcare business, and it's selling a stake in the oil
and gas company Baker Hughes that it only bought recently.
That's gone. Yesterday, it said goodbye to its distributed power business which generates power in remote areas. It was a part of its core business,
gone. As for the other parts of GE, it sold off its century-old mail division some months ago. No longer will its big engines be delivering
goods across the United States and it has yet to find a buyer with light bulb unit which of course was originally started by Thomas Edison.
They invented the light bulb and now it's on its way out. GE has already got rid of "Nbc Universal", the network, television network and its
appliance business. Remember GE was in the fridges, in the stoves in every home in America and much of GE Capital has all but gone too.
What's left of GE? What's left? It will focus on aviation, power and renewable energy, it makes jet engines, power turbines, renewable energy,
but is that valid for GE? Clare Sebastian is here. Can a small -- has GE become too small when it's left just this?
CLARE SEBASTIAN, CNN: Well, I think that is the new strategy, Richard, they have to shrink because they've got so much debt, they've tripled in
the last, you know, four or five years. It was up to 77 billion. These latest divestment and spin off, that is supposed to reduce the debt by 25
billion by 2020.
But clearly, there's still more they need to do, and I think the next shoe to drop could be that storied dividend that we've already cut last year for
the second time since the great depression --
QUEST: But when they took on all this debt, they knew they were taking it on, so was the strategy flawed? What went wrong? They knew they had that
debt, how did they expect to service it. Admitted there was some downturns --
SEBASTIAN: Right --
QUEST: A new oil industry and some of the areas didn't perform as well.
SEBASTIAN: I think history has shown that was a strong strategy, they grew too quickly and in too many different desperate areas. There was a GE's
website that said former CEO Jeffrey Immelt who was widely seen as one of the most successful CEOs in his time run this 125 industrial company like a
start-up.
He did $100 billion worth of deals, yields have started to divest a few things by the end of a tenure. But it was just too much, too soon and the
industry -- the business couldn't sustain it.
QUEST: And yet, the idea of selling off the healthcare -- I mean, we're told that is the future of America.
SEBASTIAN: Right --
QUEST: The MRI was invented by GE, its core, is that a sign of a desperation of times that they would sell that off?
SEBASTIAN: I think it is, Richard, this is one of the best performing units of the business last year, it was 16 percent of revenues, it was what
was seen by many to be part of that core strategy going forward, that along with aviation power and renewables.
Healthcare was seen as crucial. I think this took many people by surprise today, but this is it --
QUEST: Sure --
SEBASTIAN: To find out how brutal the situation is to them.
QUEST: The current CEO Flannery --
SEBASTIAN: Yes --
QUEST: The previous CEO Immelt --
SEBASTIAN: Yes, tech --
QUEST: And Jack Welch before him -- well, Flannery can't take any blame. So it's between Welch who built -- I mean, it became known as the house
that Jack built.
SEBASTIAN: Right --
QUEST: GE --
SEBASTIAN: Yes.
QUEST: So it's between Welch and Immelt, who gets the blame?
SEBASTIAN: Well, I think --
QUEST: Who will be viewed -- who will history be at least kind about?
SEBASTIAN: It's possible that I think it would be Jack Welch because I think there were more of the big acquisitions that happened under him and
Jeffrey, you know, I said so right now --
QUEST: And our executive producer just a second you said Jack Welch said Immelt in my year.
SEBASTIAN: Well, I think it's up for debate, it's up for debate. And Jeffrey Immelt took over I think four days before 9/11, he had a lot of
difficult decisions to make and he did end up getting --
QUEST: Right --
SEBASTIAN: Rid of "Nbc Universal" and the appliance business and various other things, but you know, history will be the judge of this --
QUEST: Thank you, keep an eye on what they're doing in the future, please.
SEBASTIAN: Got it.
[16:35:00] QUEST: That's what I think. Uber has retained its license to operate in London after it promised a number of changes. Now London -- in
London is Samuel Burke, by the time the court, the Magistrate Court which was the appeal court from the original TFL's decision made its decision.
You pretty much guessed that's where it was going to go. Sighs of relief from Uber?
SAMUEL BURKE, CNN BUSINESS & TECHNOLOGY NEWS CORRESPONDENT: Without a doubt, but Richard, QUEST MEANS BUSINESS is all about the winners and the
power players. And there are two big winners here, number one, Dara Khosrowshahi; the new CEO.
His strategy is working. He is worth every single penny and the London mayor told us as much so on this program, he said there's a whole new style
of leadership, a whole new way of communicating. The other big winner here is the London Mayor Sadiq Khan.
Now, not British politics, so I'm not going to get into it. But he is the mayor, one of the biggest most important cities in the world. He made a
huge gamble, Richard, here. Can you imagine if Uber had lost their license? How many people would have been upset here, how many tourists
would have been upset here?
He gambled it off, revoked their license and then got them to the court, they changed their way, so everybody comes --
QUEST: Yes, I know --
BURKE: Out here a winner.
QUEST: You say the CEO sort of is the big one, and yes, he certainly saved it. But really, all he did, and I'll say all is get the company to behave
properly. I mean --
BURKE: Yes --
QUEST: It's -- you know, they were behaving egregiously and he put a stop to --
BURKE: Well --
QUEST: It.
BURKE: Exactly, you make it sound so simple, but it's not something that Travis Kalanick was able to do when he was CEO. We're just putting up on
the screen there some changes that Uber has made prior to this court decision and the reasons that you see on your screen for instance, limiting
drivers work hours.
This is the reason why they run the case. But back to your point, Richard, what we really see here is Travis Kalanick's strategy of being as
aggressive as possible served the company incredibly well until it didn't. Once they were established in these markets, that attitude did not serve
them the Khosrowshahi attitude, it's serving them quite well in London today.
QUEST: And the victory in London can be used by him in other cases around the world in the sense of, look, we -- I mean, come on, it's not Paducah,
it's London. We proved to London that we were good people and London liked us and allowed us to do it. It's going to be a very powerful argument.
BURKE: And Lord knows they've had problems everywhere, from London to Paducah. They can use this model in the big cities, in the little cities,
and absolutely, that's what they're going to do. They've conceded some of the biggest places under Khosrowshahi, they're not going to be in China.
There's a lot of places where they've divested, so they've dot --
QUEST: Right --
BURKE: Their markets now, they know what they have to go and do and repeat exactly what they did in London.
QUEST: Have you ever been to Paducah?
BURKE: No, have you?
QUEST: Several times because of -- I think we need to send this assignment for Burke off to Paducah. Thank you Samuel. After London, I'll send you
to Paducah, now, tell me about your career. Coming up, a new trade warning from the U.S., stop importing Iranian oil by November or face the
consequences -- anything.
(16:40:00] (COMMERCIAL BREAK)
QUEST: Harley-Davidson may be a pressure point in the Trans Atlantic trade war, for India, it's been a peace offering. And New Delhi is exempting the
motorcycles from the $241 million in retaliatory tariffs it's putting on U.S. goods.
It comes at a time just as U.S. trade officials are in India to ease the trade tensions. The president of the United States said it's time to
negotiate.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I was the one that explained to Harley about a 100 percent tax in India where they had a tariff of 100
percent, and I got it down to a much lower number. I think it's 50 percent which is far too much.
But they were paying a 100 percent tariff. Now, Prime Minister Modi brought it way down, but it's still way too high. Now, I will say this
John, other countries are negotiating, and without tariffs, you could never do that.
And if they don't want to negotiate, then we'll do the tariffs.
(END VIDEO CLIP)
QUEST: America's relations with India both on trade and strategic grounds are growing in importance especially as tensions rise with the traditional
allies. U.S. Ambassador to the United Nation Nikki Haley is India, it's a two-day trip to advance ties between the two large democracies.
And next week, the U.S. Secretary of State and Defense will meet their Indian counterparts for the Two Plus Two Dialogue Summit. Chidanand
Rajghatta is the foreign editor of the "Times of India" and joins me now.
And let's just look at Harley-Davidson and the decision of India to exempt the Harleys from the new range of tariffs. Was that strategic or did just
somebody decide it was a good idea?
CHIDANAND RAJGHATTA, TIMES OF INDIA: I don't know if there's any strategic involved in it. I think it's a small piece of the whole action. The sort
of dispute is absurd, Richard, let me put this in context. U.S. global trade $5 trillion, Harley-Davidson revenue is 5 billion.
Harley's revenue is out of India, something like 5 million. It's Trump change, it's not something a president of a country should get exorcised or
and stop talking -- the number of motorcycles Harley sells in India is absolutely low and particularly in the higher categories.
Harley is basically as rarity(ph) push, it's for most Indians. He complains that the Indians sell thousands of motorbikes in the United
States and at zero duty. Have you seen any Indian motorbike in the United States? I haven't, I've lived here for 25 years.
And I think they sell something like a thousand motorcycles mostly in the lower range. So this whole dispute is blown out of proportion. And today,
we have a situation where the president was, you know, sort of lobbying for Harley literally, you know, made it a --
QUEST: That's right --
RAJGHATTA: Talking point. Harley walks out of the United States, Harley says we're going to go elsewhere and manufacture. I just find the amount
of energy is invested in this, and I can think of only one reason. He probably sees the Harley rider has his key demographic, that's his voting
base and he's made it a sort of talking point.
QUEST: The decision by India though to retaliate, tit-for-tat on the -- obviously, the steel and aluminum tariffs when 240 million of there. And
how dodgy is it for India in terms of, you know, they want to walk this fine line, they have to retaliate, but the last thing the Modi government
wants is doing the barest minimum necessary so that they don't incur further wrath.
RAJGHATTA: Absolutely, I mean, look, the thing is it's a dollar-to-dollar retaliation like China then, so the Indians I think have retaliated against
-- among the items. I remember as almonds, they're biggest buyer of California almond. So California almonds, Washington apples, the end
result is look, this is a loose-loose recipe.
And the way the president has, you know, dragged it out in public and made it a public sort of talking point all the time beating the --
QUEST: Right --
RAJGHATTA: Countries over their head. You -- first of all, I said it on your last show, it just provokes you know -- it brings pride on the table,
the smallest country in the world and it will be a proud country, whether it's you know, forget China and India, even smaller countries --
QUEST: Right --
RAJGHATTA: So you are just -- this can't be negotiated back channel, and in many instances, the U.S. allows the trade surplus or suppose a trade
deficit for other reasons. And with India, it's very clear the eight years of Obama, eight years before that of Bush was all aimed at giving India --
QUEST: Right --
RAJGHATTA: Enough leverage or help it grow as a hedge against China. What happened to that policy now? You know what --
QUEST: OK, so what does India -- what does Modi want from this U.S. president?
[16:45:00] RAJGHATTA: I think that any country and particularly India is willing to negotiate. The India Commerce Minister was in town a week ago
and he told Americans you're worried about 23 billion of trade deficits. I mean, it's one-tenth -- one-fifteenth with what you have with China.
Why are you beating us up? India is a growing economy, it's going to buy 1,000 civilian airplanes within the next decade. It's going to buy a ton
of American energy already -- there's plenty of energy going out of Houston into India. It's going to buy --
QUEST: Sure --
RAJGHATTA: Arms by the billions, you know, this trade deficit will be some billion five years, ten years from now, and I don't see why the president
is getting so exorcised or you know, this particular item, particularly Harley. And like I said, the only reason I can think of is that he sees
you know, mid America as a demographic and all the Harley riders rolling into town, they're rolling thunders --
QUEST: Thank you --
RAJGHATTA: That's his demography.
QUEST: Good to see you, sir --
RAJGHATTA: Thank you very much --
QUEST: Thank you. Now the U.S. has tightened the screw on Iran urging other countries to stop importing its oil. Food prices surged today up
more than 200 and quarter percent for Brent and West Texas even more after the State Department issued a warning which could impact global energy
supplies.
It comes after Donald Trump's decision to pull out of the Iran nuclear deal and reimpose sanctions. Michelle Kosinski is at the State Department. The
issue here is whether or not there will be repercussions for those who do not -- I mean, I'm thinking of the secondary --
MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: Right --
QUEST: The secondary sanctions that came out in the list that the United States did where you've got companies saying I'm not touching Iran with a
10-foot pole --
KOSINSKI: Yes --
QUEST: Will there be the same for those that continue to buy Iranian oil?
KOSINSKI: Yes, and we're already seeing that starting with companies especially European companies shying away from doing business with Iran.
Companies stopping and big companies -- we saw some big French companies stop doing business with them.
On as well as with oil, and then we knew that this deadline was coming up even before the pull up. So in April, one month before the U.S. pulled out
of the Iran nuclear deal, we saw Iran produce record oil sales, record exports. The next month in May, we saw that drop.
So countries know that these repercussions are coming and that's exactly the point the U.S. wanted to get across today. So typically, lately and
dealing with the State Department, there wasn't a ton of information. For example, they danced around the answer to the question or -- well, you
know, there seems to be no support for this among European allies.
You know, by the things you're saying is that I mean that they're working with you, it wasn't really an answer to that question. They were asked
about exemptions, they didn't want to talk about that. What about talking to Turkey and China about reducing their oil imports from Iran?
They further -- you know, those conversations really haven't happened yet. But what they wanted to get across was they are going to sanction U.S.
allies that will continue to buy oil from Iran.
QUEST: So when do we expect to start seeing some of this? Because you know, what we've seen of course with the tariffs is that the threats are
made, but with tariffs, we're seeing them come into effect, it's not just a negotiating ploy.
So for the --
KOSINSKI: Yes --
QUEST: State Department and the Commerce Department and the Energy Department to remain that credibility, they're going to have to act on
them, so --
KOSINSKI: Yes, I mean, there's a possibility that there will be exemptions, they're not ruling those out which I think was very telling.
They try to take the hard lines, saying, you will be sanctioned if you keep doing business with Iran after November 4.
But when you ask about the exemptions, they don't even want to talk about it.
QUEST: Right --
KOSINSKI: So they know that there's still a possibility, we know that they want to take a hard line, so it just remains to be seen what kinds of
exemptions they give. It's surprising, you know, you always felt like the timeline would be a lot longer here like there's grace period for cutting
off imports from Iran.
I mean, it's a big deal to try to --
QUEST: Right --
KOSINSKI: Reconfigure where you're getting all your energy from and that's why we're seeing the markets already moving.
QUEST: And it's moving considerably indeed, up to 2 percent to 3 percent, which is big where they have been falling over the last couple of days on
increased production. Thanks, good to see you, thank you.
KOSINSKI: Me too --
QUEST: Michelle Kosinski. As we continue tonight, the bestselling car in history, it's a (INAUDIBLE) and a turnaround. Toyota is hoping a makeover
will get the millennials to think twice about a car that when you had a Corolla, everybody yawns.
[16:50:00] (COMMERCIAL BREAK)
QUEST: Harley-Davidson isn't the only automaker struggling with an image problem at the moment. Toyota is trying to get millennials to rethink its
top selling car for Corolla, it's beyond a new sporty makeover. It's luring and tempting to young drivers.
Toyota is trying to shake the Corolla's reputation in Japan as a nailed a generation. I think that means me. Peter Valdes-Dapena joins me now.
What have they done? What have they changed? I mean --
PETER VALDES-DAPENA, SENIOR AUTOMOTIVE WRITER: Well, everything. I mean, they've completely re-engineered the car from the top down. Right now, by
the way, the Corolla, there are many different versions around the world.
Here in the U.S., Toyota sells two different cars called the Corolla that have nothing to do with each other, they're unrelated. So they want to
make them all on one platform again, and in re-engineering it, they've also tried to make it a little bit sportier and more fun to drive.
QUEST: So when --
VALDES-DAPENA: So --
QUEST: You change the name -- all right, at least, I know the Corolla is the bestselling car --
VALDES-DAPENA: Indeed --
QUEST: Entire of all time. But if it has an image problem and your aim or perceive and you're aiming to go for a younger generation, keep -- call it
something else.
VALDES-DAPENA: Well --
QUEST: Camuda(ph) --
VALDES-DAPENA: I think Yaris which is even a smaller car, but here's the thing, Corolla has an enormous amount of cache attached to it. Toyota and
Corolla sells based on its image of reliability, Toyota doesn't want to lose that. So you want to hold on to that.
But really, they've quite -- changed the look of the car --
QUEST: Oh, what --
VALDES-DAPENA: Look at the interior --
QUEST: Yes --
VALDES-DAPENA: And they say they've improved the ride and handling to make it a bit sportier or more exciting. But yes -- I don't -- I think there's
just too much riding on the Corolla name in terms of dependability and reliability which is so important that they want to save that.
QUEST: Aston Martin near the side of this --
VALDES-DAPENA: Yes --
QUEST: Three hundred thousand for a new vehicle, it has an Italian name. It's the most powerful car that they've made at this particular price point
--
VALDES-DAPENA: Yes --
QUEST: Other machine a little more expensive.
VALDES-DAPENA: This is the most powerful regular production car, so we're excluding cars, it's all for over a million dollars, they've done some of
those. So -- but if you're just an ordinary quite wealthy person and you want a car you can drive every day, this is the car for you, the DBS
Superleggera, Superleggera means super light in Italian.
It's made with carbon composites and aluminum, 715 horsepower, turbo charged D12 engine and based on my experience with other Aston Martin
models, it should be quite fun to drive.
QUEST: So will it be popular? I mean, this is on because it has got competition --
VALDES-DAPENA: Indeed --
QUEST: Others even with the Ferraris of the lower end. So it does have -- will that be the competition for this vehicle?
VALDES-DAPENA: Yes, I think again, would be the operandum of Maserati with this kind of horse power, this kind of price you're getting into
Lamborghini territory, Ferrari territory. But Aston Martin offers a very different and unique sort of experience, it's a very British kind of super
car.
It's a little bit more -- driving Aston Martin is a little bit more a laid back. You palms don't get quite as sweaty as they might driving a
Lamborghini or Ferrari --
QUEST: It's all elastic leather, you know.
VALDES-DAPENA: That nice leather smell.
QUEST: Finally, tough question, I'm going to give you the keys to one of them. You can have the new Corolla or the new Aston Martin to borrow for
the weekend. And which one would it be?
[16:55:00] VALDES-DAPENA: That would be tough, I don't know, man. I think I'd have to go with the Aston Martin. I thought long and hard about it, I
think I have to go with the Aston Martin on that one.
QUEST: Good answer, good to see you, thank you. We will -- come on, would you take the Corolla for the weekend if you had an Aston? Yes, I'll take
the Corolla, somebody has to take it. After the break, we'll have our profitable moment.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, Harley-Davidson made a reasonable decision when they decided to move production overseas to account for the
higher tariffs being imposed by Europe. Today, they were threatened by the United States president who said he would introduce taxes against them.
He said they had surrendered. He called them they had given up, they had put up the white flag. The reality is they made the decision about which
they have no choice. Yes, Harley may have been the company that the president loved just a few years ago.
But now they are facing very difficult extra thousands of dollars on these bikes owned by Gary and Lucky. It's not surprising that they decided to
shift production. Anyway, they've been making bikes overseas for decades, reality is as long as the engine is still made in Wisconsin, it's still a
Harley.
And that's QUEST MEANS BUSINESS for tonight --
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