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Quest Means Business

Trump's Oval Office Meeting with Ramaphosa Turns Confrontational; Speaker Johnson Aims for Vote on Trump Agenda Bill Tonight; Iran Says it will Attend New Round of Nuclear Talks with U.S.; Radio Chatter and Drone Footage Appear to Show Russian Killing in Ukraine; OpenAI to Acquire AI Device Startup in Reported $6.5 Billion Deal; Target Cuts Full-Year Sales Outlook Amid Tariff Pressure. Aired 4-5p ET

Aired May 21, 2025 - 16:00:00   ET

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

[16:00:09]

JIM SCIUTTO CNN ANCHOR AND CHIEF NATIONAL SECURITY CORRESPONDENT: There you hear it. The closing bell ringing on Wall Street where stocks tumbled

today. Why? Rising U.S. Treasury yields spooking investors. They are worried the new budget bill would further increase the size of the U.S.

deficit and debt.

Those are the markets. These are the main events.

In an Oval Office meeting, President Trump ambushes the South African President Ramaphosa by repeatedly repeating widely debunked claims of White

genocide there.

Vladimir Putin makes his first visit to Kursk since Russia claims to have recaptured that region from Ukrainian forces.

And OpenAI teams up with legendary iPhone designer, Jony Ive.

Live from Washington. It is Wednesday, May 21st. I am Jim Sciutto in today for Richard Quest and this is QUEST MEANS BUSINESS.

Good evening.

Tonight, South Africa's President said his meeting with Donald Trump went very well. This, after a very public confrontation inside the Oval Office,

Donald Trump presented Cyril Ramaphosa with unsubstantiated claims of White genocide, alleging that White South African farmers are being murdered in

numbers and driven from their land. CNN has looked at South African Police statistics and found no evidence to support those claims.

Ramaphosa noted that most murder victims in South Africa, in fact, are Black. Nevertheless, President Trump displayed a stack of articles to make

his case.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES OF AMERICA: Look, these are articles over the last few days. Death of people. Death, death. Death.

Horrible death. Death.

You're taking peoples land away from them.

CYRIL RAMAPHOSA, SOUTH AFRICAN PRESIDENT: We are not. We are not.

TRUMP: And those people, in many cases, are being executed. They're being executed. And they happen to be White and most of them happen to be farmers

and that's a tough situation.

(END VIDEO CLIP)

SCIUTTO: Kristen Holmes is at the White House now, and as you know, CNN has factchecked these claims of thousands of deaths. The facts don't back it up

and you've heard some pushback there in quite diplomatic terms from the South African President.

How does the White House view this meeting? Do they feel that they know South Africa better than the South African leader?

KRISTEN HOLMES, CNN NATIONAL CORRESPONDENT: Well, we don't have any idea of whether it actually ended in terms of the conversations between the two of

them, but the White House was very pleased with the way that it played out on camera and here is why.

This was a setup. If you look at how exactly this played out, there was clearly a plan here to confront the South African President in front of

these cameras. And Jim, you know, just as well as anyone that this is not what these bilateral meetings usually look like, particularly in front of

the cameras. Generally, it is just a brief moment where the cameras come in. They say gracious things about each other. They do a little wave,

introduce each other, and then the cameras leave and that is where the real negotiating begins.

We saw about an hour play out of tense back and forth between the South African delegation and President Trump, and that is what I am told they

wanted to do.

If you want to go back through the meeting, one of the things that they did is they brought in a giant screen and played a video of a political party

in South Africa, referring to killing White farmers, killing farmers, saying that this was evidence of White genocide.

Now, we heard from the South African officials saying that part of this video they'd never seen, but the other part of this is an opposition

political party, that this is not the law of the land, that this is not part of the actual government, but that this is a sect, offshoot of a

political party that has these beliefs and they were trying to show that this was a propaganda video for that -- for that -- for their politics.

Donald Trump also talked to other members of the delegation who defended South Africa. Even one of his, you know, appeared to be heroes, Ernie Els

was there talking about South Africa and bringing up this issue of the farmers.

So they wanted to put on a show today, and they did to get a point across. Now where it ended, we are not really sure, but it was, for some moments,

incredibly tense and uncomfortable in that meeting and as we watched the South African President, he was incredibly gracious.

He was clearly staying on message repeating talking points over and over again and it was clear that he had been really well prepared and briefed

for a sit down with trump. He was talking about golf. He was ingratiating himself with the President, saying how wonderful Trump had been during

COVID, talking about how he was taking golf lessons because Trump told him to, but he was definitely not prepared for this kind of ambush.

[16:05:09]

SCIUTTO: Yes. Goodness. Quite a tense moment in there.

Kristen Holmes at the White House, thanks so much.

Well, as we noted, Donald Trump has amplified claims of violence against White South African farmers and he has done so for years. At today's

meeting, notable pushback came from South Africa's Agriculture Minister, John Steenhuisen. He is an Afrikaner, White Afrikaner, member of the pro-

business Democratic Alliance. He told President Trump there is no White genocide and that he joined the Ramaphosa government to keep more extreme

parties out of power.

Larry Madowo joins us now live from Nairobi.

And, Larry, you've done a good job of sharing the facts on what the actual numbers are there, for instance, that between April and December, there are

just about 30 murders at farms in South Africa, only seven of them were farmers, and many of the workers tend to be Black.

So can you share the facts here? And then, if you don't mind, share the reaction from where you are to seeing that Oval Office moment.

LARRY MADOWO, CNN CORRESPONDENT: Jim, the short answer is that we have found no evidence of White genocide in South Africa. Yes, there are very

high numbers of murders across South Africa, but as the South African billionaire, Johann Rupert mentioned at that Oval Office meeting, they are

across the board. And because the majority of South Africans are Black, the majority of the victims of these crimes are also Black.

From April to December 2024, there were 36 farm murders, only seven of the victims were farmers. That's according to South African Police statistics.

So we found no evidence of any widespread killings of White farmers.

But what you saw there, the 1,000 cars and the 1,000 crosses that President Trump presented, is a long standing stunt pulled by AfriForum, this is a

White Afrikaner lobby group that some criticize is a White Supremacist organization and they've just told CNN a short while ago that they're very

pleased with how this meeting went, because it shows that the issues in South Africa cannot be swept under the table.

Today was a gift to White Nationalists in South Africa because their talking points were repeated from the bully pulpit of the White House by

the President of the United States.

And the reaction in South Africa has been bewilderment, astonishment, maybe even anger. They're very happy that they think President Ramaphosa carried

himself well and he is a skilled negotiator.

This is the man that led the negotiations for Nelson Mandela's ANC. These talks that ended apartheid. So he knows how to negotiate. I met him last

week. I saw how he can carry himself in high pressure situations.

There has also been reaction from Julius Malema. He is the man you saw in one of those videos President Trump played. He was singing "Kill the Boer,

kill the farmer." This is an anti-apartheid song from the 1980s that's become popular again because he keeps using it, and it is a very

inflammatory song. There are even Black South Africans who don't agree with the use of that song.

The context is that it was used during apartheid to fight against the system of White minority rule, but he has brought it back.

Julius Malema was expelled from Ramaphosa's party about a decade ago, and he leads the far left radical economic freedom fighters. What they want is

full land expropriation without compensation. So they want South Africa to go a lot further than the law of President Ramaphosa signed in January,

which allows the state to seize land only if it is unused. It is deemed to be equitable, just and in the public interest.

Malema would want to go a lot further than that, and that is why it has become this rallying call that South African White Afrikaner groups have

been pointing out to, and now it has made its way all the way to the White House -- Jim.

SCIUTTO: Yes, it is notable that the President, President Ramaphosa in pushing back against President Trump noted exactly your point there, that

there are laws for the nation taking land back with a legal process and perhaps referencing Donald Trump's own attempts to take back land, for

instance, on the southern border.

Thanks so much for bringing us up-to-date, Larry, and giving us the facts. Appreciate it.

Well, the U.S. House Speaker says he is hoping to bring the sweeping spending bill of Republicans to a vote later tonight, even though it

continues to face opposition from inside the Republican Caucus. Some Republicans concerned about how much it would add to the deficit and those

concerns echoed on Wall Street. The Dow fell sharply because Wall Street was watching the debt markets, where there was lower demand for bonds

because of concern over the growing U.S. deficit.

The nonpartisan Congressional Budget Office said yesterday the bill would increase the deficit by $3.8 trillion over a number of years. Some

Republicans are claiming the CBO, though it is nonpartisan, cannot be trusted.

(BEGIN VIDEO CLIP)

REP. ANDY BARR (R-KY): Well, look, first of all, the CBO score is wrong. The CBO has been wrong repeatedly.

It was wrong when they scored the first Trump tax cuts. They were wrong by over a trillion dollars. Why? Because the CBO doesn't do this scoring

dynamically.

(END VIDEO CLIP)

[16:10:06]

SCIUTTO: Well, the fact is, other groups have also said the bill, as it stands, would grow the U.S. deficit.

The Tax Foundation published its own analysis last week. Its researchers expect the deficit will increase by $3.3 trillion, not far off where the

CBO stands.

Daniel Bunn is the president and CEO of the Tax Foundation, and he joins me now. Thanks so much for taking the time.

DANIEL BUNN, PRESIDENT AND CEO, TAX FOUNDATION: Thanks for having me.

SCIUTTO: Now you make it your business --

BUNN: I think it is the bill that you're talking -- go ahead.

SCIUTTO: I said you make it your business to go through these bills with a fine tooth comb, see what works. You call it the good, the bad and the not

so good. But let's just start on the debt here. The bond market seemed to think this is going to add to the U.S. national debt. Do the numbers show

that?

BUNN: Absolutely. I think the risk here that we are looking at is that lawmakers are not doing enough to make sure that the U.S. fiscal situation

would be improved relative to where it stands today.

One of the challenges here is that extending the tax cuts does cost a lot of revenue relative to current law, where the tax provisions would expire.

I think the bill certainly does a lot of work to make sure there is certainty to avoid a massive tax hike next year. But that requires some

fiscal responsibility certainly on the spending side and there are other ways that the bill could be improved to make sure there is growth that

supports the priorities that the president has laid out.

But the real challenge here, as you say is the overall deficit impact and the spookiness that we saw in the bond market today.

SCIUTTO: You identify the continuation of the basic tax levels as part of the good in your analysis. Among the bad, you talk about other things that

you call political gimmicks and carve outs, among them, tax exemptions for overtime pay and tips, as well as a deduction for the auto interest -- auto

loan interest. Tell us why you consider those unnecessary and too costly.

BUNN: So one of the things that you look for when you're looking for good, principled tax policy is you're looking for opportunities to broaden the

tax base and lower the rates and make sure that you're adopting neutral policies that affect as many taxpayers as you can and these policies do the

opposite of that.

They narrow the tax base for very narrow parts of the population, and they increase the cost of the bill in ways that are unnecessary in my point of

view. This is the type of legislating that requires a cleanup effort afterwards and instead of having to require future lawmakers to clean up

the code, they should take the opportunity now.

SCIUTTO: Can you help clear up a big picture question here, because you will often hear from Democrats that the 2017 tax bill and this one as well,

that the lion's share of benefits will go to the wealthy and corporations in dollar terms. Is that true?

BUNN: So that is true to the extent that the tax burden already just because we have a very progressive tax code, already leans heavily on

wealthier individuals and companies. So if you are interested in cutting taxes, as this bill does, then certainly you will have benefits that are

going to higher income taxpayers. There are certainly different ways to design tax bills to mitigate some of those distributional concerns. But

because our tax code is so progressive, if you're doing across the board tax cuts, then certainly the dollar value will lean more towards the higher

income individuals.

Now, if you think about after tax income and changes that we would see in the economy, there is a different way to think about distributional tables

that I would be more interested in. But when you're looking at the dollar value, you're absolutely right.

SCIUTTO: Finally, before we go, to balance this out, all right and you know, the dream of a balanced budget bill is one that we haven't seen for,

you know, dogs years, right, in Washington. But to pay for this, is this bill anywhere close to paying for itself? And where would you -- obviously,

since it is adding to the deficit and the debt, it is not -- but where would you find that? I mean, how would they find that or is it just not

possible in the current form?

BUNN: So that's a great question. On the spending side, if you're not talking about looking at reasonable changes to Social Security, Medicare,

and Medicaid, even defense spending, then you're not talking about real money.

On the tax base, there are certainly things that you can go further on. The way this policy treats the SALT deduction is absolutely a budget blowout

and unnecessary term, another $150 billion added to that line item in negotiations today. And there are other things on itemized deductions that

I think would be good for base broadening and good for tax revenue. But right now, this bill does not meet the mark.

[16:15:09]

SCIUTTO: Daniel Bunn, thanks for walking us through the numbers.

BUNN: Thank you for having me.

SCIUTTO: Coming up, a new round of talks between the U.S. and Iran over Tehran's nuclear enrichment program and tensions continue to flare up in

the occupied West Bank as Israeli troops fired warning shots at a diplomatic mission.

(COMMERCIAL BREAK)

SCIUTTO: Iran says it will attend a fifth round of nuclear talks with the U.S. The expected meeting in Rome on Friday, as part of ongoing

negotiations aimed at curbing Tehran's enrichment program in exchange for sanctions relief. The U.S. has yet to confirm its attendance at this round

of talks.

This comes as new CNN reporting finds that the U.S. has new intelligence suggesting Israel is making preparations for possible strikes on Iranian

nuclear facilities. U.S. Secretary of State Marco Rubio was asked about CNN's reporting today, said he would not comment on intelligence matters.

Joining us now is Trita Parsi. He is the executive vice president of the Quincy Institute for Responsible Statecraft. He is also author of "Losing

an Enemy: Obama, Iran and the Triumph of Diplomacy."

Thanks so much for joining.

TRITA PARSI, EXECUTIVE VICE PRESIDENT, QUINCY INSTITUTE FOR RESPONSIBLE STATECRAFT: Thank you for having me.

SCIUTTO: First of all, just a reality check, if we can, on these talks. They are meeting again. A meeting is a good thing, right? I mean, at least

they're talking because there are a lot of circumstances where they weren't talking at all.

Can you see them getting to a deal, the U.S. and Iran, getting to some sort of agreement ultimately?

PARSI: I absolutely can. And in some ways, Trump may actually have a better chance at getting it because he is willing to put more on the table. Trump

seems to have an attitude that he is not really in love with American sanctions, sees them as being a punishment against American companies, and

as a result, he is willing to put primary sanctions on the table, which offers Iranians more, which means that he can also ask more.

However, there is a difference between asking more and asking for everything. Pushing for zero enrichment has never succeeded. In fact, it

has given the Iranians more time to advance their program and then delayed the kind of realistic restrictions that can be put on it. And so if that is

the position, it seems like its shifted that way, then I don't think it is going to work.

SCIUTTO: Is it clear to you what the U.S. position is? Right? Because you saw -- I mean, when Steve Witkoff, he seemed to say out loud, perhaps the

quiet part seeming to open the door for some civilian nuclear program. Then that was pulled back. There were certainly some upset on the right, not

just inside the Trump administration on the Hill, but also in Israel. Do you think that is still an open question for this President?

[16:20:03]

PARSI: I think it is an open question. They've actually had several different positions at the table, which, let's be frank, at a negotiation,

that's fine. The difference is time is very limited. You have snapback sanctions deadline at the U.N. in October. Once that happens, if the

Iranians go through with their counter threat, which is that they would walk out of the Nonproliferation Treaty altogether, kick out all of the

inspectors, then we are going to have a major escalation, which is not at all conducive towards getting a deal.

SCIUTTO: Now, you know that Israel's standard for what is a good deal is different, even from America's standard, perhaps here. And I was told by an

Israeli source that if they believe the U.S. is making a bad deal, in their view, that they might very well choose to strike Iranian nuclear facilities

and I am aware of the military limitations of what Israel has and what it doesn't have.

But can you see that as an outcome that that perhaps Trump, in Israel's view, gives too much and Israel strikes?

PARSI: I cannot see it. I think that the Israelis see certain value in making the threat, but given the exchange of fire that has taken place, the

vulnerability the Israelis have, and that was even with America's support, the idea that they would act against Trump and that they would do so

without having America's coordination to defend Israel in case of an almost certainty of an Iranian counterattack, I find that very unlikely.

Making the threat, however, may have some utility for the Israelis, but I don't see it as something that they would do because it would cost them a

lot.

SCIUTTO: On, you know -- on the -- how rough an Iranian response would be, you made a point when we were discussing earlier, and I was there in

October during the Iranian missile barrage. What struck me as I was watching the missiles get intercepted in some fall was that some were

getting through. I mean, I saw it to my left, you know, a half mile from the hotel that I was in.

There was a general view that, oh, this was defended extremely well. You believe that actually, it showed Israeli vulnerabilities?

PARSI: Absolutely, because at the end of the day, this was a barrage of missiles aimed at over whelming the defense systems. It did so. Several of

the missiles went through clearly everything from the arrow to the patriot to the David Sling, Iron Dome, et cetera was not sufficient.

But even worse, the Houthi missile that struck Israel a couple of weeks ago was a single missile, and that went through all of those systems, including

the American THAAD system, which is state-of-the-art, so the Israelis have clear vulnerabilities on that front.

For them to attack Iran without having America's support, with their existing vulnerabilities, I find that unlikely.

SCIUTTO: Final question. There is a question about whether the U.S. would join an Israeli -- if you get to that point, if Israel decides to strike

and at what degree? I mean, there are a number of degrees, right? You could provide some support, intelligence support, say not bombers and not bunker

buster bombs, et cetera. Can you see a scenario where Israel calculates that if it attacks, the U.S. will be in regardless to defend an ally?

PARSI: The thing, though, is for the U.S. to defend an ally in this specific case, there needs to be coordination.

SCIUTTO: Right.

PARSI: Because there needs to be readiness on the American side.

SCIUTTO: You can't just do that.

PARSI: You can't just do that and expect -- and there is a big difference. The Israelis made these threats a lot -- ten, fifteen years ago when Obama

was negotiating this. Back then, the Iranian missile capability is not what it is today. So the timelines, readiness, et cetera were not as -- didn't

require as much as it requires today.

I think, to be frank, what the Israelis may be trying to do here is not necessarily to attack Iran, but to make it as difficult as possible for

Trump to get a deal, because there is hardly any type of a deal that the Israelis actually would be happy with.

SCIUTTO: It is hard to believe it was ten years ago that we were talking about and watching those negotiations play out for the JCPOA.

Trita Parsi, thanks so much.

PARSI: Thanks for having me.

SCIUTTO: Well, the Israeli military says it is now investigating a series of warning shots its forces fired at foreign diplomats visiting the

occupied West Bank.

(VIDEO CLIP PLAYS)

SCIUTTO: That incident happened near the Jenin Refugee Camp. The IDF says the group deviated from a route approved by the Israeli Army.

CNN's Jeremy Diamond has more.

(BEGIN VIDEOTAPE)

JEREMY DIAMOND, CNN CORRESPONDENT: Well, quite a remarkable situation unfolding in the occupied West Bank today. Israeli soldiers opening fire in

the direction of a diplomatic delegation, a group of diplomats from more than 20 countries were in Jenin, going around the Jenin Refugee Camp to get

a sense of the humanitarian situation on the ground, when suddenly Israeli troops began firing what the Israeli military is describing as warning

shots.

In one of the videos from the scene, you can hear at least seven shots are fired by these soldiers who aimed their weapons above the diplomats, who

were all gathered in one area.

[16:25:07]

Now, the Israeli military says that yes, the diplomats did coordinate their plans for this visit today, but they claim -- the military claims that

these diplomats went to an unauthorized area and that's why those troops fired those warning shots. What they don't explain is why using live

ammunition was necessary to convey a point that could have been conveyed with words.

What is clear, though, is that this has sparked quite a diplomatic uproar already. We have seen France and Italy both summon the Israeli Ambassadors

to their countries for a formal explanation. The European Union, for its part, calling for an investigation by the Israeli military into this

incident.

Now, also today, we have heard from the Israeli Prime Minister directly as these ceasefire and hostage deal negotiations are still underway. The Prime

Minister making clear that he is willing to go for a temporary ceasefire that secures the release of some hostages under the right conditions. He is

also making clear, though, that he will not end the war, at least not unless Hamas agrees to his litany of demands, some of which have become

clear red lines for Hamas.

The Israeli Prime Minister saying that he would only end the war if Hamas releases all the hostages, but also if it disarms, if Gaza is

demilitarized, and a new condition that he added to the list today is if Trump's voluntary migration plan for Gazans is carried out effectively, the

mass displacement of a large share of Gaza's two million plus population.

The Israeli Prime Minister also talking about the recent Israeli strike targeting Mohammed Sinwar, Gaza's -- Hamas' de facto leader in the Gaza

strip, the Prime Minister saying that it seems that Sinwar was probably killed in that strike. Still, no official word from the Israeli military.

Jeremy Diamond, CNN, Jerusalem.

(END VIDEOTAPE)

SCIUTTO: Russia's President has made his first visit to the Kursk region of Russia since Moscow claimed to have completely recaptured it from Ukrainian

forces. Russian state media report that Vladimir Putin on Tuesday visited the Kursk Nuclear Power Plant, which is currently under construction.

President Putin's visit came a day after his phone call with the U.S. President Donald Trump, which we should note ended without Russia once

again agreeing to President Trump's ceasefire in Ukraine. Russia made no concessions.

Turning to the battlefield now, CNN has obtained intercepted radio chatter and drone footage, which appear to show the capture -- to capture rather

Russian orders to execute a group of Ukrainian soldiers, even though those soldiers had just surrendered. Ukrainian officials say the chilling

exchange provides further evidence Russian superiors are ordering their troops to kill Ukrainians in violation of international law.

Nick Paton Walsh has that exclusive. As a warning, some of these images are graphic.

(BEGIN VIDEOTAPE)

(UNIDENTIFIED MALE speaking in foreign language.)

TRANSLATION: Arta, listen to me . As who the commander is. Take the commander and kill everyone else.

NICK PATON WALSH, CNN CHIEF INTERNATIONAL SECURITY CORRESPONDENT (voice over): Before even this moment of surrender, the fate of these six

Ukrainian troops was sealed. Ukrainian drone images from the southern front last November show the horror that comes after defeat.

A Russian hiding in the bushes shoots one Ukrainian in the head. Ukrainian officials gave CNN intercepts of Russian radio orders from their commanders

to their troops here.

(UNIDENTIFIED MALE speaking in foreign language.)

TRANSLATION: Take them to the road.

WALSH (voice over): We can't verify them independently, but they help paint a chilling picture of what appeared to be executions, to order of a plan to

kill prisoners given from above.

(UNIDENTIFIED MALE speaking in foreign language.)

TRANSLATION: Get the (bleep) out. Take the senior one. And get rid of the others.

WALSH (voice over): The Russian in the bushes seems to fit a mask and then emerge. He is joined by another Russian. They talk. There is no visible

threat from their prisoners and one captive Ukrainian seems to gesture at them.

But nothing changes his fate. Shot in the head, calmly. Another Ukrainian gets up, presumably the commander, and takes off his armor. But the voice

on the radio is impatient.

(UNIDENTIFIED MALE speaking in foreign language.)

TRANSLATION: Did you take them down? That's a question.

WALSH (voice over): The commander is led away. In total, six times the order to kill was given according to the intercepts.

WALSH (on camera): A forensic study for CNN, the files and audio found no reason they weren't authentic, and a western intelligence official

described them to us as "credible."

We have geolocated the footage of the killing to this tree line just outside of Novohrodivka in Zaporizhzhia region, where fierce fighting raged

late last year.

Ukrainian prosecutors say the executions of surrendering Ukrainian troops by Russians are increasing. They say they opened eight cases in all of

2023, 39 for all of last year, and in just the first four months of this year, 20.

YURIY BELOUSOV, OFFICE OF THE PROSECUTOR-GENERAL OF UKRAINE: It's a well- coordinated and well-planned policy and execution of prisoners of war, as well as other war crimes which have been committed in Ukraine. I think that

goes up to the president of Russian Federation, who, for example, when it was the example of Kursk area, when there were -- when he conducted like a

military meeting or something and when he said that we should treat them as terrorists, and everyone knows how Putin treats people who they call

terrorists. So it's almost synonym for us to execute.

PATON WALSH (voice-over): The U.N.'s special rapporteur on extrajudicial killing told CNN the executions would not happen in such numbers and

frequency without orders or at the very least consent from highest military commanders, which in Russia means the presidency.

Another video supplied to CNN by a Western intelligence official shows a similar scene, also from Zaporizhzhia. Ukrainians are surrounded and

surrendering to Russians with red tape on their helmets. But two others join them, white tape on their helmets. They appear to use their radios and

then a white helmet opens fire. As the smoke clears, a red reloads his weapon and shoots another Ukrainian in the head.

There's no radio intercept here, but a Western intelligence official told CNN the order to kill likely came from the white to the red. Killings aimed

at hitting Ukrainian morale, but also cynically just at easing Russian logistics.

This affects the morale and psychological state of our guys, he says. We have facts when the Russian military and political leadership directly gave

verbal instructions not to take prisoners and to shoot those captured on the spot because it complicates military logistics from their point of

view.

A stark window into Moscow's mindset. Surrender means nothing and mercy is not an option.

Nick Paton Walsh, CNN, Kyiv, Ukraine.

(END VIDEOTAPE)

JIM SCIUTTO, CNN INTERNATIONAL ANCHOR: An important story. I should note that even as Russia claims to have recaptured all of Kursk, last week

Ukraine said it is still pursuing the ground war inside Russia and is, quote, "continuing active operations in the Kursk and Belgorod regions."

Coming up, OpenAI is now betting big on hardware. We're going to tell you about the multi-billion-dollar deal the company just announced with the

designer who helped shaped the ubiquitous iPhone.

(COMMERCIAL BREAK)

[16:35:53]

SCIUTTO: OpenAI is now making a push into hardware with a deal reportedly valued at more than $6 billion. It is teaming up with a familiar face. The

former Apple chief design officer Jony Ive to acquire his artificial intelligence device startup, which is called IO. Ive is, of course, the man

behind the design of the iPhone. OpenAI is now hinting at a new device of its own that will be, it says, revolutionary.

(BEGIN VIDEO CLIP)

SAM ALTMAN, CEO, OPENAI: Jony recently gave me one of the prototypes of the device for the first time to take home and I've been able to live with it.

And I think it is the coolest piece of technology that the world will have ever seen.

(END VIDEO CLIP)

SCIUTTO: Well, he's a salesman.

Clare Duffy is in New York.

I mean, is the idea here, it's like an A.I. iPhone? I mean, what else is going to distinguish it? I guess we don't know yet.

CLARE DUFFY, CNN BUSINESS WRITER: Yes, Jim, I mean, that video was very highly produced but very light on details about what this is actually going

to entail. But Jony Ive is really a legend in the tech world. He was pivotal to the current generation of personal computing devices, most

notably the iPhone, but he was also involved in his 30 years at Apple in the design of the Mac, of actually Apple's spaceship looking headquarters.

So he really is an icon in this space, and he is now working for OpenAI to design the next generation of hardware and of the technology that will

interact with to access artificial intelligence.

What I've heard from experts is that the way that they expect that A.I. is going to evolve, that technology generally is going to evolve, is that

technology is going to become more ambient. It's going to be built into the built environment. It's going to be built into wearables, and you're just

going to be able to sort of talk out loud and have the A.I. respond, rather than having to spend so much time interacting with the screen and accessing

A.I. through chatbot apps.

So it's likely that that's the sort of thing that they're working on here, although, again, this announcement was pretty light on details. And I also

think it's notable that they are making this huge bet. I mean, $6.5 billion is what this deal is reportedly worth at a time when OpenAI is really

trying to figure out how to better commercialize their A.I. technology, especially with individual consumers, how to get people to pay for it,

because it's happening at a time when A.I. is becoming increasingly expensive to deliver.

These are servers that are really expensive to run.

SCIUTTO: Right.

DUFFY: So OpenAI is trying to figure out how to make money on this technology.

SCIUTTO: Yes, it's funny. The more you talk about it, the more it sounds like that movie "Her," right, where you just have this thing you're kind of

talking to all the time.

DUFFY: That's totally it.

SCIUTTO: Well, we'll see. We'll see when it gets there.

Clare Duffy, thanks so much.

Well, Target says that weak demand and tariff uncertainty are likely to cut into its sales this year. Shares in the retailer fell more than 5 percent

on that new guidance and earnings. Same store sales fell almost 4 percent in the first quarter. Target now expects an overall decline in sales this

fiscal year.

Vanessa Yurkovich is in New York.

And Vanessa, I wonder, what are the various inputs here? I mean, tariffs for sure, but there are also boycott issues, right?

VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Yes, there are sort of two stories playing out right now. And as you mentioned, sales

slumped in the first quarter down nearly 4 percent. The value of the stock in the past year down 37 percent. Ultimately what is playing out is sort of

two tales of this company. There's a cultural aspect and then of course, there is a financial aspect among all of this economic uncertainty that

we're seeing right now.

But customers essentially pulled back shopping at Target, and if they were shopping at Target, they were spending less money there. Target is a place

that people go for mainly more non-essential items. So it's not like a grocery store, not like a retailer like Walmart that has more of a grocery

variety. This is where people sometimes spend discretionary money.

So according to the CEO, Brian Cornell, he is saying that ultimately Trump's tariffs are playing a role in some of the sales pullback that

they've seen. They produce, excuse me, they sell about 50 percent of products that are produced overseas. And then 25 percent of that is from

China.

[16:40:0020]

That is the country right now that is seeing the highest tariff rate. So the CEO saying that they are trying to diversify supply chains. They're

trying to switch out products, but ultimately they may have to raise costs. And another factor that's playing out right now is that in the beginning of

this year, Target rolled back some of its DEI initiatives, including cutting programs like hiring goals for minority employees and also cutting

this racial justice executive committee that they had in place.

Then in March, there was a 40-day consumer boycott, and that actually had an impact on sales. And it was noted in this earnings call. Also worth

noting, though, that this company has been trying for a while to get on better footing. But all of this tariff uncertainty is likely going to play

out also into the second quarter. And then there's the question of whether or not Target actually lost customers that they're not even going to be

able to bring back.

So today we saw on Wall Street, the stock price again down 5 percent on this news. It's been a challenging time for this company. And the outlook

according to the company isn't looking much brighter -- Jim.

SCIUTTO: Understood. Vanessa Yurkevich, thanks so much.

Well, Wall Street sold off over concerns that Congress will approve a budget that puts the U.S. even deeper into debt. The Dow fell 816 points.

The S&P 500 and Nasdaq both fell about 1.5 percent. You can see the results in the Dow components. Red across almost the whole board.

Nvidia down nearly 2 percent. The CEO called U.S. chip export controls a failure. Walmart lost 1.5 percent. Its competitor, Target, as we were just

saying there, cut its outlook. UnitedHealth Group at the bottom down nearly 6 percent.

And that, my friends, is QUEST MEANS BUSINESS. I'm Jim Sciutto in Washington bringing you all the news here. Coming up next, "MARKETPLACE

EUROPE."

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