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Quest Means Business

Trump Meets with Indian Prime Minister Modi; Trump: Ukraine will be Involved in Negotiations; Trump Speaks with Zelenskyy after 90-Minute Call with Putin; Trump Meeting with Indian Prime Minister Narendra Modi; Emmanuel Macron Gives a Tour of the Elysee Palace; Trump Announces Plan for Sweeping Reciprocal Tariffs. Aired 4-5p ET

Aired February 13, 2025 - 16:00   ET

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

[16:00:10]

RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Closing bell ringing on Wall Street. Automotive ringing the bell. And we will have a

gavel in a second or two. Strong day for the Dow. It went up. And interestingly, it went up even as we got news of tariffs and economic news.

More and more and more of that.

So there we go. One, two, three. The very sharp rise just around the time we started hearing more about tariffs. We will talk about it over this

program because those are the markets and the events that you and I are going to chew over.

Reciprocal tariffs: President Trump unveils his vision for widespread use against US trading partners. During this hour, the Indian Prime Minister

Narendra Modi is at the White House. We may hear from the two leaders.

And President Macron plays tour guide. He shows me the delights of the Elysee Palace, along with Le Champs. We are there for the ride.

Live tonight from Dubai on Thursday, February the 13th. I am Richard Quest and yes, I mean business.

Good evening.

In the last two hours, we've heard the details of Donald Trump's tariffs as he kicked the policy into overdrive with a plan for sweeping reciprocal

duties on countries across the globe.

The announcement has called for a comprehensive plan to restore fairness to US trade relationships. The administration says the duties likely not take

effect until April, when there have been studies and there have been some careful looking at where and how.

So a range of countries, from Brazil to India to the EU, it is all according to the White House, example of trading partners in their view,

not treating the US fairly.

The announcement was made only hours before the Indian Prime Minister Narendra Modi was at the White House, which is happening even as we speak.

Now, the meeting will be a showdown in many ways between the titans of tariffs. The self-proclaimed Tariff Man, Donald Trump, tonight he waxed

lyrical about how wonderful they were, called India the Tariff King in his first term. Both leaders have long been proponents of high import duties

for different reasons, and now find themselves on the opposite ends of the table.

Mr. Trump spoke about India's tariffs a short while ago.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: India traditionally has the highest, just about the highest tariff country. They charge more

tariffs than any other country. And I mean, we will be talking about that.

But again, whatever they charge us, we are charging them. So it works out very well. It is very -- it is a beautiful, simple system and we don't have

to worry about we are charging too much or too little.

But traditionally India is right at the top of the pack, pretty much. There are a couple of smaller countries that are actually more. But India is a

very, very big -- they charge tremendous tariffs.

(END VIDEO CLIP)

QUEST: You have to admire the president, Kevin Liptak. You've got to admire -- there he is talking about tariffs and going to be sitting next to the

man who charges the most. I mean, he doesn't spare the foreign leaders' blushes.

But on this tariff thing, this is -- this has a much different feel doesn't it? This has a feeling of grand economic policy, not knee jerk reaction.

KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Well, I think so, just given the fact that the president has been talking about this for so long, he has

been talking about this idea of levying these reciprocal tariffs for weeks now, and now is the day that he is putting them into effect.

I don't know that it was a coincidence that he is doing it on the day he is receiving a visit from Narendra Modi here at the White House. I do think

Modi will want to avoid some of these harsh tariffs and we've already seen India trying to soften some of its positions, reduce some tariffs, for

instance on motorcycles, on Harley Davidsons, which has been a fixation of President Trump's dating back to his first term.

You also hear Modi talking about reducing some tariffs on American bourbon and pecans, which notably are all produced in American red states, those

states that vote for Republicans.

So you can already see how he is trying to avoid some of the most harshest reciprocal tariffs from the president, but to be sure, he won't be able to

avoid all of them if President Trump goes through with this plan, and I think that is a big if.

He has laid out a plan to do tariffs, he has instructed his advisers to come up with tariff rates for all kinds of products around the world. But I

think we should note, the president has talked about tariffs before, including on Mexico and Canada, only to back off, saying that they would be

delayed as he works on a deal.

[16:05:12]

Is it possible he does that this time around? I think it is.

QUEST: I am not sure I agree with you, Kevin. I think that -- I think that potentially on this one, I think it is a negotiating strategy, but I think

it is a negotiating strategy with a win-win where, if you like, all the tariffs would come down.

LIPTAK: Yes, I think you're right that it is a negotiating strategy, and of course, we will have to see what the president does in the end. I think one

of the items that he announced today was a fiscal review, and I think that's actually pretty critical. It is going to be conducted by his budget

chief, because behind-the-scenes here at the White House, certainly the president is all for these tariffs.

But what his aides are looking at is inflation, and when you look at the inflation numbers that have come out in the United States this week, it

shows it heating up.

For a candidate who made the center promise of his campaign, lowering prices for Americans, potentially raising prices through tariffs just

doesn't comport. And so I think, you know, he is giving himself time to see how that inflation plays out over the next, say, month, say two months. And

I think we will see this develop as time goes on.

But I think you're absolutely right. This is a negotiating tactic. His first negotiating partner today, Narendra Modi, the Tariff King in his

words.

QUEST: Which will give us a perfect example of how it plays forward. Grateful to see you, Kevin. Interesting times we are in.

LIPTAK: Yes.

QUEST: Paul Krugman is with me. The Nobel Prize winning economist, he joins me now. Now, Paul, right, well, what do you make of it? Reciprocal tariffs

on a general wide scale, it seems -- I mean, provided it is not 20 or 30 percent, but it is you know, matching tariff for tariff, it seems a fairly

fair way to readjust US terms of trade.

PAUL KRUGMAN, ECONOMIST AND COLUMNIST, "THE NEW YORK TIMES": Well, you know, there are only a few countries out there that have significant

tariffs on US products, India is one of them, although India has, you know, Indian tariffs are vastly lower than they used to be, but they're still

significant. Brazil still has significant tariffs though, again, they've liberalized a lot.

The European Union has practically no tariffs on US products. You know, basically wealthy countries have very low tariff rates on each other. But

the announcement from the White House suggested that they're going to basically -- they're going to call anything they feel like a tariff. So

they might call value added taxes, tariffs. And if they do that, then we are on a full scale trade war with the European Union.

They are not tariffs, but the White House decides to call them tariffs and they are a major source of revenue on the other side of the Atlantic, then

we are in you know, we are in crazy territory.

So I don't -- I have no idea. The amazing thing about all of this, I mean, if you want to break in, but the -- there isn't any coherent argument here,

and there doesn't even seem to be a clearly defined interest group. This is just that Donald Trump has a thing about tariffs and has decided that he is

at least going to talk loudly about imposing tariffs and what he actually does, God knows.

QUEST: Now, on that point, looking at the list, we've got tariffs, we've got taxes, VATs, we've got non-tariff barriers. Unfair. We've also got

exchange rate deviations and unfair limitations. So we are very much looking at the non-tariff environment. You know, the non-direct environment

or protection of barriers, which as you say takes you off to the races.

KRUGMAN: Yes, I mean a VAT is really is just a sales tax. And of course, a sales tax that, you know, the administration is complicated to describe,

but essentially it is a sales tax on everything, which includes imported goods. So it is a tax that US exports face.

So if you decide to call a national sales tax, a tariff because among other things, it taxes our exports. Then, as you say, we are off to the races.

This is essentially -- I don't think this is a set of criteria that will determine what happens. This is a list of things that will give Trump an

excuse to impose whatever tariff he feels like imposing on anybody he feels like imposing it on.

QUEST: The inflationary effect, if there are small increases to meet, as you say, EU tariff rates, it is negligible in terms of inflation, but if we

get the sort of 25 to 30 percent that we were having for Canada and/or Mexico, or 10 percent for China across the board, then the number we saw on

inflation yesterday is already worrying. Are you concerned?

[16:10:07]

KRUGMAN: Well, a bit.

Now, if the inflation numbers, you know, if you're really an inflation maven, you looked at yesterday's CPI then you look at today's PPI and the

two of them combined actually make you fairly relaxed about the PCE, which will be coming in later in the month, which is what the fed actually looks

like.

So this is -- it is not -- the inflation numbers per se, so far are not a big deal. But the inflation is clearly not dead. It is not something that

is safe, and we are talking about anything like 25 percent tariffs on a wide range of trading partners on a wide range of goods. It is going to add

two to three points of the price level.

And so that is -- that is not something to, you know, that would -- and at the same time, you have Trump saying, demanding that the fed lower interest

rates. Well, that ain't going to happen if you're going to hit prices with all of these tariffs.

QUEST: So, stay with me because I want to move on to our next area of discussion, which you have been writing about, but just a bit of

background, the White House has started firing probationary workers at two agencies, federal agencies. Scores of people have been dismissed.

Donald Trump and Elon Musk say they're going after waste and fraud and this is how they put the case.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I'm going to ask Elon to tell you a little bit about it, and some of the things that we found, which

are shocking billions and billions of dollars in waste, fraud and abuse.

ELON MUSK, DIRECTOR, DEPARTMENT OF GOVERNMENT EFFICIENCY: What we are finding is that a bunch of the fraud is not even going to Americans. So I

think we can all agree that if there is going to be a fraud, it should at least go to Americans.

(END VIDEO CLIP)

QUEST: Now, some of the examples of the frauds have been flat out wrong. For example, the president claimed the US spent millions of dollars on

condoms for Hamas. Musk admitted that was inaccurate. An attorney who specializes in government contracting said Musk is being disingenuous,

telling "The New York Times:" Fraud and corruption are illegal and what DOGE has identified so far are payments that this administration disagrees

with or views as wasteful. Calling these things fraudulent or corrupt misrepresents the finding.

The White House responds to that by citing a congressional report estimating up to $500 billion of fraud. Paul -- Paul Krugman, you have been

writing about this that actually, in many cases, we are getting just blanket -- there is fraud, there is corruption, but there is no evidence,

no evidence that we could sort of hang your hat on.

KRUGMAN: No, the only solid evidence we have is some clear evidence that DOGE has no idea what it is doing. Somebody saw a line item that had aid

for sexually transmitted diseases in Gaza and didn't read the rest of the paragraph, which said Gaza province of Mozambique, not the Gaza Strip.

So, I mean, and these -- we are trusting these people, people who can't tell Africa from the Middle East to find waste and fraud in the government.

If they have been known, it is actually kind of amazing, they have managed to come up with a single concrete example of fraud that that DOGE has

identified, it is all just we don't like stuff.

QUEST: So to the core point that the administration says we have to move fast, we have to prevent the inertia. We have to stop people from stopping

us doing this.

Therefore, yes, mistakes will be made, but they are worth it for the greater good of cutting government waste. What do you say to that?

KRUGMAN: If they were going after anything, that might even be a plausible source of government waste, then, you know, we could have that discussion,

but they aren't.

I mean, so far, it is almost all about payroll. And if anybody looks at the federal budget, you find out that payroll is a, you know, six percent of

total federal spending and a lot of those are clearly jobs that need doing, that if you were, you know, there is one really known area where the

government is spending a lot that it shouldn't, which is on Medicare Advantage Plans, where it is overpaying and that is something like $80

billion a year of wasteful spending that we know about, which somehow hasn't been touched at all.

So all of this is, you know, as I said, when I first started writing about this, they're going where the money isn't, which makes it fairly clear that

the goal here is not actually to control waste. The goal is to find a way to fire people we don't think are loyal to shut down agencies whose mission

we don't approve of, even though they've been duly authorized by congressional legislation.

I see no hint that waste and fraud are actually on the agenda at all.

[16:15:10]

QUEST: I am grateful to you, Paul, and we look forward to talking over the next few years as we as we work out exactly what is happening where. Thank

you.

Paul Krugman, join me tonight from New York. Grateful.

Now, Donald Trump says Ukraine will have a seat at the table when it comes to making peace with Russia.

European officials say there will be no security on the continent unless their voices are heard, too.

QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Donald Trump says Ukraine will be involved in peace negotiations with Russia. It follows Ukrainian President Volodymyr Zelenskyy saying he

will not accept a peace deal struck without Kyiv's involvement.

Our Kaitlan Collins got this statement from the president.

(BEGIN VIDEO CLIP)

KAITLAN COLLINS, CNN ANCHOR AND CHIEF CORRESPONDENT: Will Ukraine have a seat at that table for those negotiations?

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Well, I mean, they're part of it. We would have Ukraine, we would have Russia, and we will have

other people involved, too. A lot of people, a lot of forks in the -- a lot of forks in this game.

(END VIDEO CLIP)

QUEST: One of those forks and one of those other people, arguably the Europeans where officials are warning the United States that they do need

to be involved.

Germany's Defense minister has accused the administration of making a concession to President Putin by ruling out Ukraine's membership in NATO.

So the Defense Secretary of the US, Pete Hegseth, walked back that comment in Brussels and now, says nothing is off limits.

(BEGIN VIDEO CLIP)

PETE HEGSETH, US DEPARTMENT OF DEFENSE SECRETARY: I want to be clear about something as it pertains to NATO membership not being realistic outcome for

negotiations, that's something that was stated as part of my remarks here, as part of a coordination with how we are executing these ongoing

negotiations, which are led by President Trump.

All of that said, these negotiations are led by President Trump. Everything is on the table in his conversations with Vladimir Putin and Zelenskyy.

(END VIDEO CLIP)

QUEST: Alex Marquardt is in Munich, where the Munich Security Conference is taking place. We will spare the Defense Secretary's blushes that he had to

do such a volte-face, bearing in mind he did actually make policy yesterday and went in completely the opposite direction today.

But one gets the feeling, Alex, one gets the feeling that yesterday he was speaking the truth of what the administration believes is going to happen.

That's actually what they think.

[16:20:10]

ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: Yes, Richard, you could see when Pete Hegseth made those comments yesterday at NATO that

this was scripted. This was his first outing on the international stage. There was no mistake there. He was not speaking off the cuff. He was not

speaking with reporters. That was very much, I believe, what he intended to say.

And even as he walked it back today, you heard President Trump in the Oval Office just a short time ago saying, oh, I thought that Hegseth's comments

were absolutely fine, and I think most importantly, you heard President Trump saying, that Russia will never allow Ukraine to become a NATO member,

to which we are almost certainly going to hear howls from the Europeans and other pro-NATO corners.

Because of course, Russia doesn't have a say in that, Russia is not a member of NATO. In fact, Russia is the primary adversary of NATO.

And so, what we are expecting to see in the coming days, the Munich Security Conference starts here tomorrow, are the general contours of what

a plan could look like. And Richard, I think the major questions are what will security assistance continue to look like from the US to Ukraine? Will

they continue to send weapons, and what will the security guarantees look like for Ukraine, so that Russia cannot just turn around and invade Ukraine

just a few more years down the line.

Because right now, it does appear like President Trump is giving Russia these concessions without getting too much in return. You're going to have

a lot of people here in Munich asking why those concessions were not held for the actual negotiations themselves -- Richard.

QUEST: But the cat is out of the bag, Alex. Let's be blunt about this. The US is not going to continue in the way it has been. Europe really has got

to get its act together and is somewhat shambolic at doing so. And the way in which -- I mean, at the end of the day, that phone call rehabilitated

Vladimir Putin in a way that nothing else really could in such a short period of time.

MARQUARDT: And President Putin has played this quite well this week, first, with the release of Marc Fogel, that American schoolteacher, and then

almost certainly leaning on the Belarusians the next day to release three more people, including one American citizen.

The Russians are going into these negotiations with the US and with Ukraine, in a position where they have now curried favor with President

Trump, and one of the ways that he likes the most and that's the ability to say, I have now brought Americans home.

Of course, the Ukrainian fear right now is that they are getting left out in the cold, not just that they're going to get the short end of the stick

on any deal, but that they might not even be at the table at all.

There is certainly a sense among Ukrainians that the Russians and the Americans are barreling towards a deal, without much say from the

Ukrainians. Now, you do have President Trump today saying, of course, the Ukrainians will be at the table, to which you can imagine, Kyiv might say

something like, oh, gee, thanks. It's only our country that is at stake.

And I think these are going to be a few days of very important meetings between the Europeans and the American delegation, because so much is being

heaped onto these Europeans when it comes to continued support for Ukraine, continued security guarantees and assurances for Ukraine, because the US

essentially is saying right now, as you say, Richard, that the table is set. It is now for the Europeans to take up the mantle, to take that

leadership. That is what we are hearing from Washington right now -- Richard.

QUEST: In a sentence or two, can you identify somebody, and I don't mean Mark Rutte as head of NATO because he is sort of independent in a sense.

Can you identify a European leader that, if you will, the rest will coalesce around?

MARQUARDT: Well, I think the -- well, President Macron, of course, fancies himself; the German Chancellor Scholz, although he may not be in office for

too much longer. And then, of course, the Brits are going to be the main ones who are going to be lobbying the Americans for more support in the

coming months and years.

QUEST: Alex Marquardt, grateful for you, sir. Thank you.

We will talk more from Munich.

Matthew Chance has been getting reaction from the people in Kyiv on the announcements.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN CHIEF GLOBAL AFFAIRS CORRESPONDENT (voice over): As the Trump administration talks peace in Ukraine, Moscow is pressing hard on the

frontlines.

This is the latest fighting in war ravaged Donbas, where Russian forces have been advancing relentlessly. No wonder many Ukrainians feel skeptical

of Trump's brash diplomatic push.

YULIA KAZDOLBINA, KYIV RESIDENT: There is a lot of noise and Trump sends the signal that he wants to end the war, but I don't think Russia is

interested in ending it. And so, unfortunately, no matter how much we want peace, I don't think it is possible.

VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT: Thank you very much.

[16:25:00]

CHANCE (voice over): There is also alarm that Ukraine is being sidelined.

President Zelenskyy was left meeting the US Treasury Secretary in Kyiv this week as President Trump spoke directly with Vladimir Putin, the Kremlin

strongman. Trump and Zelenskyy spoke afterwards.

But for Ukrainians, Washington's priorities are worryingly clear.

NATALIA STECHEN, KYIV RESIDENT: I think Trump and Putin have a good relationship, and it is bad for Ukraine because, we can't talk about war

and about Ukrainian people and about our situation without our president or our people.

CHANCE (voice over): At this makeshift memorial to fallen soldiers in Kyiv, poignant reminders of the sacrifice Ukrainian troops and American

volunteers have already made.

But Trump's recent remarks that Ukraine may someday be Russian, and concessions on NATO membership and territory have left many Ukrainians

feeling bereft and betrayed.

(OLEKSANDER speaking in foreign language.)

CHANCE (voice over): "Why did these guys die? And why did they even defend these territories?" asks Oleksander (ph). "That's why I don't think it's

acceptable," he says. "We should not give up our land."

But in this new era of Trump-Putin diplomacy, Ukrainian hopes and expectations no longer take center stage.

Matthew Chance, CNN, London.

(END VIDEOTAPE)

QUEST: Moments ago, we've seen the Indian Prime Minister Narendra Modi arrive at the White House, where he is meeting President Trump.

Over the course of the next few hours, we are going to hear -- they will be in the Oval Office, of course, then there will be a press conference

between the two, and I am guessing that tariffs certainly will be on the agenda.

We will have more in just a moment.

(COMMERCIAL BREAK)

[16:30:05]

RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Hello, I'm Richard Quest. A lot more QUEST MEANS BUSINESS together. We're going to discuss President

Trump's plans for reciprocal tariffs. I'll be joined by the White House trade adviser, Peter Navarro. And you'll see my tour of the Elysee Palace

with the French President Emmanuel Macron. All of that only after the news because this is CNN and on this network, the news always comes first.

The U.S. Senate has voted nearly along party lines to confirm Robert F. Kennedy, Jr. as the next U.S. Health and Human Services secretary. The lone

vote from the Republicans against him was from Senator Mitch McConnell, a polio survivor. A Senate panel has also advanced the nomination of Kash

Patel, President Trump's pick to lead the FBI, getting ready for his final confirmation vote.

Scores of people have been fired from two U.S. government agencies. It's part of the administration's plan to cut the size of the U.S. federal

workforce. Sources say the dismissals are taking place at the Department of Education and the Small Business Administration. Until now, those workers

have been placed on administrative paid leave.

Israel says a rocket was launched from Gaza today and fell inside the Palestinian territory. It says it launched and struck the launcher site in

response. We cannot confirm whether a rocket was indeed fired. Israel has threatened a new war on Gaza if hostages aren't returned by Saturday. Hamas

now says it will meet the deadline.

Returning to our top story. Moments ago, the Indian prime minister arrived at the White House. Narendra Modi is trying to avoid being the subject of

tariffs. He and Donald Trump are expected to address reporters in the next hour or so. We'll bring you that event when it happens of course.

India has the highest tariff rate amongst any major world economy, imposing an average of 14 percent across all goods, slightly less on a weighted

basis. It includes numbers as high as 20 percent on clothing and goes up to a whopping 52 percent for sugars and confectionery. Transport at 28

percent.

Prime minister Modi appears ready to be conciliatory. He recently lowered tariffs for smartphone components and on foreign motorcycles, moves that

would benefit the companies.

Kaushik Basu used to be the chief economic adviser to the government of India, previously served as the chief economist at the World Bank, now

professor of international studies at Cornell.

Good to see you, sir. Thank you for joining us. Why does India have such high tariffs? Is it blunt and basic protectionism, or is it basically

revenue raising?

KAUSHIK BASU, FORMER CHIEF ECONOMIC ADVISER TO INDIAN GOVERNMENT: Thank you very much for having me. It's a complicated story, but historically India's

tariffs used to be much higher so it has been brought down, paradoxically that may sound, to where it is. I feel a little bit of pressure to lower it

further is worthwhile simply because trade is valuable. And the protectionist spirit, which used to be very high in India historically,

which has come down subsequently, is the direction in which to go.

So it's not that we should bargain about this item versus that item. That's never a good way for the government or governments to intervene in market.

But a general lowering is a good idea anyway.

QUEST: Right. But Donald Trump has always loved tariffs, and he's described India and Prime Minister Modi as the tariff king. Do you think that Modi

has arrived with a bag of concessions? Because I doubt that that might even work, considering the U.S. president has made it clear there will be no

exceptions to his tariff regime.

BASU: You know what? That seems to be troubling the United States is the fact that it runs a trade deficit with India, which is quite large, $46

billion. So that is the problem that is triggering a lot of this discussion. But whereas the -- as far as the tariffs go, India has used

this policy across the world without discrimination against countries. So I feel, yes, there can be a valid useful discussion on this.

But much more important would be to try to send some of India's import demands to United States and the best product I can think of is oil, where,

as you probably know, it was because of U.S. sanctions against Russia in '22 after the Ukraine war started, rather poorly designed, I have to say,

the U.S. sanctions were, that there were countries that were not buying from Russia, but other countries like India was buying an Indian oil

imports from Russia went through the roof.

[16:35:20]

In fact, India now imports roughly the same amount, $46 billion, which is the deficit with U.S. is the oil purchase from Russia. Diverting some of

that --

QUEST: So --

BASU: -- is really a way to bridge this gap.

QUEST: Is it realistic? Is it realistic to -- I mean, there's a perversion in what we're talking about, bearing in mind global politics at the moment,

but essentially substituting Russian purchases, which were controversial to begin with, with U.S. purchases of oil and gas. Is that realistic?

BASU: You know, I think it's possible because this speaking of buying from Russia, where last year India overtook China. There does need to be some

correction. And this was, I feel, the design of the sanctions which caused it. So correcting that now is worthwhile. What is not worth it and would be

a mistake on the part of United States, is to try and not have a deficit vis a vis any country. If trade is balanced with every country. It's like

going back to the world of barter. We don't want that. There will be deficits, some surpluses with some, and you accept that.

QUEST: Good to see you, sir. We'll talk more. Thank you. Giving us great insight. I'm grateful. Thank you.

In just a moment, we'll be talking to Peter Navarro, who is the U.S. for the White House administration. Arguably besides the president greatest

tariff triumph. We'll talk to Peter Navarro in just a moment or two.

Now, every great city has a great building, and it symbolizes its grandeur. Here in Dubai, of course, it is the Burj Khalifa, which is the world's

tallest building, visible from just about anywhere. It is absolutely majestic in its awe inspiring size.

Last week in Paris, it's the Elysee Palace representing the French state. It was bought in 1753 by LOUIS XV's mistress, the Marquise de Pompadour.

It's been home to French aristocrats and heads of state ever since. Nowadays, French President Emmanuel Macron and his wife Brigitte call it

their home, along with a few furry le chiens. The president was kind enough to show me around with the dogs.

(BEGIN VIDEOTAPE)

QUEST: Look at that. What happens if the dogs go on this thing?

EMMANUEL MACRON, FRENCH PRESIDENT: No, they don't. They don't go. (INAUDIBLE), please. Respect the instructions. And normally you shouldn't.

No, no.

QUEST: I can see who's the boss. And this one is a piece we -- that's the tapestry made by --

QUEST: Do you get involved? Do you choose?

MACRON: Definitely. And in fact, we go with the Mobilier National and some of our museums in order to choose the pieces which will be put here.

QUEST: What do you use these rooms for? I mean --

MACRON: This is the salon for, I mean, some meetings or after dinner, after lunch, and to have some special events. And here was in fact the room of La

Pompadour. Because originally this palace was made by aristocrats in the 18th century. And the king a few years later bought it for La Pompadour.

And she had her room here. She was not so happy at the end of her life. And here it was completely recreated by contemporary artists and designers.

QUEST: Do you enjoy the big event?

MACRON: I think I like the energy that this event can create and the links it can establish and the situation it can unlock.

QUEST: Yes, that's the key to it. What's it like when you walk in here the first time as president?

(LAUGHTER)

QUEST: You know, the first time you come in and you -- what's it like?

MACRON: You mean on a daily basis or the very first time I entered?

QUEST: Let's say the very first time you entered and you suddenly realized it's all, you know, it's all mine to screw up.

MACRON: I can tell you that the very first days, in fact, you don't totally realize. And you're not totally lucid. After that, you know the place and

you discover each time new aspects. And what I do prefer is probably this, the fact that you have something out of age.

QUEST: Yes.

MACRON: Even when you put this time of pieces, this is, the fact that it can more long, more solid than anything else.

QUEST: Yes.

[16:40:07]

MACRON: The importance of time. I love this one.

QUEST: If you could take one piece home with you when you're finished, you can take one, I imagine I can give you one piece in the whole place. Which

one would it be? Would it be?

MACRON: It's very difficult. I would take a -- you know what, I would just take my pen and start again.

QUEST: Thank you very much.

MACRON: It's much better than anything else. The rest will stay here.

(END VIDEOTAPE)

QUEST: President Macron showing me around the Elysee Palace last week.

Now Peter Navarro is President Trump's senior counselor for trade and manufacturing. It's been a year or two since we have had a nice chat

together, Peter, but you join me now. I'm grateful.

PETER NAVARRO, WHITE HOUSE SENIOR COUNSELOR FOR TRADE AND MANUFACTURING: A year or two. It's been like five years. I remember the last time I saw you,

if you remember this, I was on that beautiful set you had in New York. That was just spectacular. And we always have a fun conversation. So it's good

to talk to you again, sir.

QUEST: Right. Well, I'm looking forward to this. Reciprocal trade, you said.

NAVARRO: Yes, sir.

QUEST: It's the most fair thing in the world. If they're cheating us, you said that shouldn't be allowed to happen. Now today's policy is -- it's not

just tit-for-tat, is it? This is about changing fundamentally the terms of trade with which you do business around the world.

NAVARRO: It's about a historic structural readjustment of a trading system that simply doesn't work, particularly for America. We run, Richard,

trillion-dollar trade deficits every year. As the great Warren Buffett has pointed out, that's just shipping our assets off shores and getting us

deeper into debt. That doesn't work. And it's all a product of a global trading system which takes advantage of us.

President Trump will not tolerate that. What we have are two things going on here. We have the lowest tariffs in the world here in America. Nobody

can ever accuse us of that. Anything less than that. Lowest tariffs. But we also have the lowest non-tariff barriers. And so in the VAT tax, President

Trump called that specifically out today. Europe's VAT tax acts not just as a high tariff in addition to Europe's high tariffs. It's also an export

subsidy.

It's like it becomes very difficult for the U.S. to compete. And President Trump, what's going to happen here with this fair and reciprocal plan is

he's going to calculate equivalent reciprocal tariffs based on countries, customized for each country, depending on how big they're cheating us. And

they're either going to stop cheating us, which we would love, or we're going to impose those tariffs.

QUEST: But now it's -- I was talking to Paul Krugman earlier in the program. He said so far, so good but the wide dragnet that you've got --

it's almost like trolling because I'm looking at the executive order, tariffs, VATs, non-tariff barriers, unfair limitations, exchange rates.

Essentially, you can take anything and say it's an unfair terms of trade. And that's more, I mean, that could cause a much wider intent than you

really mean.

NAVARRO: No, not at all, Richard. And let me ask you this. Is it fair for the E.U. to charge us a 19 percent VAT that acts as a tariff on autos over

and above the 10 percent tariff they have already, and an export subsidy? Is that fair? Is it fair for China to manipulate its currency, to lower the

currency, to gain trade advantage? Is it fair, as the president pointed out today in the press conference, for Japan to have regulatory standards so if

you drop a bowling ball on a car and it doesn't meet that standards, we can't sell a Ford in Tokyo?

So, yes, it's like they're cheating us every which way but lose. It's time for that to stop. We don't cheat anybody. They cheat us.

QUEST: What are you going to do with those countries that have arguably -- and I say that arguably -- legitimate need for some sort of tariff, i.e. a

poorer country that needs them for revenue raising, that's relatively insignificant but in U.S. trade terms? There are some cases where tariffs

do serve a legitimate economic purpose for a poor country. Will you still tariff them?

[16:45:01]

NAVARRO: To be clear, we love tariffs. We love tariffs. This is a country that was built on tariffs up to 1913. We had our government run on tariffs

only. After they imposed the Income Tax Act going forward that we lost that. We're a nation, and President Trump loves Hamilton. He loves

McKinley. Mckinley is the president ran on a platform of I'm a tariff man running on a tariff platform.

We understand that tariffs can be an important source of revenue for countries. And they're going to be a very important source of revenue for

this country. But what we won't tolerate is cheating, Richard. And it's just, I mean, I want to stress how important these non-tariff barriers are.

They are arguably far more important in many countries than the tariffs themselves.

Of course, as I said, it's like fingerprints. Every country has a unique set of tariff and non-tariff barriers. We're going to clean that up.

President Trump, he wants to have a global trading order, which is fair to us and therefore fair to everybody. And I think we'll be better off for

that. I believe that president believes that. We can't keep doing these large structural imbalances.

I mean, we did, Richard, we did steel and aluminum tariffs last week. And why did we have to do that to protect our steel and aluminum industries?

It's because the globe has a global overcapacity of about 50 percent in steel because China and the E.U. and Brazil and Korea can't control

themselves. Instead, their governments massively subsidize these industries. And then they dump into this market. No, they're not going to

do that. So we got to stop this kind of stuff.

QUEST: Peter, we have to stop here for the moment. I'm going to ask, next time we speak face to face in Washington. Do we have a deal?

NAVARRO: Oh, absolutely. I'd be delighted to come to your shop any time. It's just down the street here.

QUEST: Thank you.

NAVARRO: We call Pebble Beach here at the White House. It's easy, but, you know, I had to beg for a heater on this place here. I don't know what's

going on here, but we'll get it right the next time.

QUEST: Thank you very much. It's good to see you, Peter Navarro.

NAVARRO: All right, my friend. Take care.

QUEST: Joining me from the White House. Thank you. And you, sir.

This is CNN. It's QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

[16:50:39]

QUEST: What a busy day. Protected areas are crucial in the conservation of wildlife, but it often takes years of research and gathering data before a

case for protection can be made. So today, on "Call to Earth," we're going to visit the Pacific coast of Costa Rica, where two marine biologists did

just that. As a result their work helped create a first of its kind sanctuary for one of the ocean's most peculiar creatures.

(BEGIN VIDEOTAPE)

ANNA STEWART, CNN CORRESPONDENT (voice-over): In southern Costa Rica, between rainforest and ocean, sits one of the world's rarest sites.

Golfo Dulce is one of the only tropical fjords in the world, and its warm waters provide the perfect breeding and nursing ground for a host of

extraordinary marine animals. Chief among them the endangered scalloped hammerhead shark.

ANDRES LOPEZ, CO-FOUNDER, MISSION TIBURON: The scalloped hammerhead shark, Zygaena Lewini, is a migratory species. The hammerhead have two stages.

One, in the coastal water, when these are juvenile, grow in the shallow waters with a lot of nutrients, with a lot of food. When they grow, they

make big, big movements, like 1,000 kilometers. It's a big migration.

STEWART: Scientists estimate that the global population of scalloped hammerheads has fallen by more than 80 percent in the last 75 years. And

while thousands of baby sharks are still born in the nursing grounds of Golfo Dulce each year, overfishing and habitat degradation pose a serious

threat to the species' long-term survival.

In 2009, Ilena Zanella and Andres Lopez founded Mision Tiburon, a non- profit that promotes ocean conservation through the identification and protection of critical shark habitats around Costa Rica.

ILENA ZANELLA, CO-FOUNDER, MISION TIBURON: We started with a dream. Both of us, Andres and I, we are both marine biologists. We met at the university

and then we saw a gap in the research and in conservation of this threatened species. So we decided to do something for them. After several

years of tagging sharks and on-board observation of fishing operations, with our data, in 2018, the government of Costa Rica declared the shark

sanctuary of Golfo Dulce in order to protect this important and unique nursery ground for the scalloped hammerhead shark.

STEWART: These government protections make Golfo Dulce the first shark sanctuary in the world to be focused on a nursing ground, and has helped to

stem the tide of illegal fishing. But there is still work to be done restoring the coastal mangroves, vital as birthing habitats for the

hammerheads.

JAVIER RODRIGUEZ, FORESTRY ENGINEER, MISION TIBURON: It's important for the hammerhead sharks to have healthy mangroves because they use them on the

first stages of life. So it will help the sharks to get the size they need to get to the ocean.

STEWART: With the help of the local community, Mision Tiburon are cutting back other plant species detrimental to the forests' growth and planting

new mangroves in their place.

ZANELLA: The involvement of the communities in our work is key. We have been involved the community, stakeholders in all of our components, from

the research, education and the restoration programs. So for us, it is a great honor. Have a lot of collaborators, volunteers and a lot of people

engaged with our project.

STEWART: With their unique shape and 360-degree vision, the hammerheads may look like creatures plucked from another universe. But as the work in Golfo

Dulce continues, Mision Tiburon are optimistic that these other worldly predators will continue to exist as real and permanent residents of planet

earth.

(END VIDEOTAPE)

QUEST: Wow. Let me know what you're doing to answer that call. It is the hashtag "Call to Earth."

(COMMERCIAL BREAK)

[16:56:42]

QUEST: Tonight's "Profitable Moment." So we really are off to the race with tariffs one way and another. This time reciprocal tariffs from the

administration. But these are different to the tariffs we've had before. They're not just hit you over the head with 20 percent or 30 percent

designed for fentanyl or immigration or something like that. This time it's designed, as you heard from Peter Navarro on this program, for the general

trade, changing the terms of trade for the United States to create, if you like, an equal playing field. If somebody is charging us tariffs, we'll

charge them the same.

Now that's all fair and good. But Paul Krugman, the Nobel Prize-winning economist, said on this program, as you would expect, he said, hang on, it

depends how wide you have the trawling dragnet. Well, if you read it, just about any form of restraint of trade or non-tariff barrier is included,

which means that the tariffs that are going to be put on in some cases, like the E.U., will be 2 percent, 3 percent, 4 percent, 5 percent,

elsewhere it could be considerably larger.

It's hard not to justify in some sense what they're doing with these tariffs because it seems very fair. And indeed, if they are properly

executed, that's exactly what will happen. There will be a major shift in U.S. terms of trade. And because some of these things won't be that big,

it's unlikely to be massively inflationary, certainly not 20 percent or 30 percent. This is an interesting economic experiment that we haven't seen

for decades if maybe a century.

And that's QUEST MEANS BUSINESS for this Thursday night. I'm Richard Quest in Dubai. Whatever you're up to in the hours ahead, I hope it is

profitable. I'll be in Tokyo next week. I'll see you then.

(COMMERCIAL BREAK)

END