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Quest Means Business

Trump Touts $92 Billion A.I. Investment Package In Pennsylvania; NVIDIA, AMD Stock Jump Amid Plans To Resume China Sales; European Tourism Proves Resilient Amid Global Uncertainty; President Trump Warns Tariffs To Russia If No Peace In 50 Days; President Macron Pushes For Increased Military Spending; U.S. Inflation Accelerates As Trump's Tariffs Take Hold; China Reports Better-Than-Expected Economic Growth; French Winemakers Threatened by Prospect Of U.S. Tariffs. Aired 4-5p ET

Aired July 15, 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 in New York. It is a down day for the Dow and the

S&P, but up day for the NASDAQ. I will explain all about the reasons why it is somewhat of a bifurcated or trifurcated market, whichever way you want

to describe it. Hit the gavel and bring trading to a close on the Tuesday's session.

The sun has just set here in Bordeaux. It is a lovely weather with some 24 Celsius here in the gorgeous city of Bordeaux on the southwest of France. A

Special Edition of QUEST MEANS BUSINESS tonight, you have the markets, we have the main events of the day.

Major investments in A.I. and energy are unveiled in the United States. Companies are pledging $90 billion at a Summit attended by the President.

We will give you that in just a moment.

The threatened tariffs. You're going to hear tonight from Bordeaux's winemakers, who are bracing for a potential 50 percent tariff on E.U. wines

and the oh, so sweet allure of the French summer holiday. Bordeaux's tourism chief will be with me to discuss how the city is preparing

sustainable tourism. It is going to be a good summer.

Tonight, we are live from Bordeaux on Tuesday, July the 15th. I am Richard Quest and in France, (speaking in foreign language). I'm in business.

Good evening, and I promise you, that's the last of my Duolingo French that you will hear from me tonight. Well, maybe we will see. Let's wait till we

get further on.

Tonight we are in Bordeaux, which is a city renowned for its wines, its elegance and the charm. A city affected by economic and geopolitical

conflicts all over the place. The region's vineyards here, some of the best in the world. Let's not get into a debate on that, but they are bracing for

tariffs and to be hit by what might happen from the Trump administration.

Aerospace, Airbus, Espacial and the like, firms in the area are also on the plus side, preparing for a massive increase in defense spending by the

European Union as NATO members respond to the war in Ukraine. All of that, we will talk about over the course of the hour.

But let's begin in the United States, where President Trump has announced a massive private investment in artificial intelligence, A.I. The President

is speaking at an event in Pittsburgh. It is being held by Pennsylvania's Republican senator, you see the pictures there.

Major tech and energy executives are in attendance, and the President, President Trump says tens of billions of dollars will be invested both in

data centers and in the state.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES OF AMERICA: We're back in Pittsburgh to announce the largest package of investments in the history of

the Commonwealth of Pennsylvania and it is not even close. I don't imagine it is too close. I don't think that it is -- I don't expect it to be this

close. That's a big statement.

This afternoon, 20 leading technology and energy companies are announcing more than $92 billion of investments in Pennsylvania. And if you want we

can probably get them up. Let's talk to them, right?

(END VIDEO CLIP)

QUEST: Clare Duffy is with me. Clare is in New York.

So in many ways, this infrastructure spending, the world greatly needed builds on in a sense, the Biden's infrastructure plan, Clare, but this is

much more targeted. So how much of it is real new money?

CLARE DUFFY, CNN BUSINESS WRITER: Yes, Richard, I mean, this has been a priority for the government for some time now. They want the United States

to be ahead in A.I. infrastructure, but Trump really especially has made this a priority in the first few months of his term here.

We heard him just a few months ago with Sam Altman, the CEO of OpenAI, the head of Oracle, Softbank announcing another major data center investment

and this is continuing on from that. This $90 billion that is being invested in data center infrastructure and crucially energy resources.

Trump wants the U.S. to be a leader in data centers, but you can't do that without investing in more power resources, because these data centers are

essentially warehouses full of computers that require a lot of electricity. Trump actually said during this event today that he believes the U.S. needs

to double its electricity capacity in order to keep up with advancements in artificial intelligence.

And so he wants these tech companies to be able to build their own power centers and co-locate them with their data centers. That is what he is

hoping this $90 billion investment is going to do today.

[16:05:05]

There are a range of companies, tech companies, energy companies and investment firms that are contributing to this $90 billion investment.

I think yes, you can see some of it there and profit --

QUEST: Is he picking and choosing -- so sorry, do forgive me. I was just going to say, is he picking and choosing winners and losers? Is this an old

sort of fashion? Well, I see here, the companies who have committed to the investments on the chart are, if you will, the usual suspects. But a lot of

these companies have fallen out of favor with the President in the past.

So is there an element of pick and choose?

DUFFY: I mean, I think there could possibly be some of that. We do see some of these names clearly have made efforts over the last few months to curry

favor, develop a closer relationship with the President, but this is also a list of 20 companies that are announcing these kinds of investments of

different sizes and scales.

And so I think that you and I can imagine that the President would say to any tech company or investment firm that wants to invest in this crucial

area, "you're welcome. Go ahead."

QUEST: When you put it into the totality of, if you will, the Trump tariffs, which we will talk about in a moment, the Trump industrial policy

and the idea of this energy, which you -- which is so significant because the energy aspect is going to be pretty much based on fossil fuels or has

he changed his mind there, do you think?

DUFFY: Well, I think a lot of this is going to potentially be fossil fuels, coal powered he mentioned during this event today. But there are also some

investments in nuclear power and hydropower as part of Google's investment here. But I think a lot of these tech companies especially, are in sort of

a tricky place because they have, you know, potentially are at risk of getting hit by Trump tariffs on things like chips and computing components

that would go into these data centers.

But at the same time, they're trying to grow their data center footprint and make these big, multibillion, multimillion dollar investments in the

United States. You know, so that is a tricky position for them to be in.

But I think there probably is a hope that the more they invest in these key priorities for the White House, the less they might be subject to some of

these tariffs.

QUEST: Okay, Clare Duffy joining us from New York.

Now, there were big gains on wall street and it was two powerhouses that really led the way, or at least the gains were in particular.

From the opening bell on shares, you had NVIDIA and AMD surged and good reason. NVIDIA is the world's most valuable company. I think its $4

trillion now. Somebody will correct me if its only three. Anyway, NVIDIA says it just got assurances from the U.S. government that it will soon

resume selling its key chip to China and reportedly, AMD is on the cusp of being allowed to do the same and therefore, that propelled the market

considerably higher.

Anna Stewart is with me.

The idea that they're selling this chip, great for NVIDIA, the reason why they weren't allowed to was partially National Security, but also to

somehow hobble China. Why is the situation changed now?

ANNA STEWART, CNN REPORTER: Well, there are two arguments. First of all, this could just be a bargaining chip to -- forgive the pun -- in part of

the broader sort of China-U.S. trade negotiations. There was that truce, of course, last month. China is allowing more exports of rare earths to the

U.S. and vice versa, the U.S. is relaxing export controls.

Secondly, Richard, there was a really interesting comment from Howard Lutnick, the Commerce Secretary, just a couple of hours ago on CNBC. He

said, "You want to sell the Chinese enough that their developers get addicted to the American technology stack." Now that is an argument we have

heard time and time again from the CEO of NVIDIA, which is essentially, if you want to lead in the technology, you have to lead in the technology in

every market and this particular chip from NVIDIA, it is not the most advanced by some way.

QUEST: So when you put this together, I mean, the market is, you know, I am thinking back to dot-com boom and bust. I am thinking back to the first

wave of fourth industrial revolution. How much of this market is NVIDIA and A.I. related, if you will froth?

STEWART: Oh, so much of this -- well, so much of this is A.I. How much is froth? We won't know probably for another 10 years, will we? But in terms

of the leader, NVIDIA is the clear leader. It really doesn't have major rivals yet, and it is hard to see any rivals catching up anytime soon. So

at this stage, NVIDIA has really cornered the market and what a win.

So not only does it have all of these huge investments in the U.S., not only has it made so many sovereign deals in the last couple of months in

the Middle East and Europe and so on, but it is back in China, one of the most important markets in the world. And, you know, it lost $8 billion

worth of revenue just in the second quarter by not being able to sell. This one chip, it is all back on -- Richard.

[16:10:04]

QUEST: All right, Anna. Anna Stewart, I am grateful for you. Anna, I won't be back in New York until Thursday or Friday, so allow me, because I think

this is the last time you and -- this will be the last time you and I will speak before the event. Godspeed, my dear.

STEWART: The big deadline.

QUEST: I hope everything goes well. Everything goes well.

STEWART: Thank you. I am like a tariff deadline. It is quite a hard deadline. I will meet this one.

QUEST: It is one deadline -- that'll be your first. No, he didn't really say that to you. Anna, have a wonderful -- I look forward to talking to you

when all is well and good.

Thank you, my dear.

STEWART: Bye.

QUEST: Now, QUEST MEANS BUSINESS tonight live from Bordeaux. We will talk more about this after the break.

The president of Bordeaux Tourism is going to be here and joining me, and we are going to be talking to the co-owner of the Chateau Smith Haut

Lafitte, a vineyard just south of the city. Delighted to be here. The weather is spectacular. The food is magnifique. What more can I say? Oh, I

promise you, no more Duolingo French. Well, that's the first promise broken.

(COMMERCIAL BREAK)

QUEST: Well, the sun is setting. It is a glorious evening. It has been -- it is glorious weather here in Bordeaux and the city is getting ready for

what could be a bumper summer. The number of people visiting is likely to be through the roof, and it is -- the city is positioned to play an

important role in European security going forward.

Now the E.U. is trying to build more of its own weapons, and Bordeaux and the whole region is a major player in aerospace and engineering. The money

ripples around, along with, of course, the vineyards for which it is well known hugely.

The economy, though, when you put it all together, you've really got to ask whether the glass is half full or a glass of Chateau Margaux.

(BEGIN VIDEOTAPE)

QUEST (voice over): Give it a swirl and smell the bouquet. This is Bordeaux.

The vineyards here turn out both world class wine and impressive profits.

QUEST (on camera): Wherever I look, there is a chateau selling quality wines.

QUEST (voice over): Here grow the great reds of Medoc on the west bank of the Garonne, you can taste the plummy merlots from Saint-Emilion or travel

south to Entre-Deux-Mers for a floral white.

[16:15:10 ]

France began shipping its wine to England back in the age of King Henry II, but ever since, Bordeaux has been synonymous with what many consider to be

the finest wine on the planet.

Winemakers can't rest easy because there is increased international competition and of course, tariff threats from President Trump.

TRUMP: The European Union was formed in order to screw the United States. That's the purpose of it, and they've done a good job of it. But now I am

President.

QUEST (voice over): Bordeaux is lucky that the rest of its economy has aged like its fine merlots.

QUEST (on camera): Wine is a significant part of the local economy, but it is not the only part by any means. Tourism is a vast industry and growing

in Bordeaux as you can see during these Bastille Day celebrations.

QUEST (voice over): More than six million travelers will come here this year, enjoying a region with so many layers to explore. This region will be

crucial in Europe's efforts to boost its own defense, with huge extra spending now underway.

EMMANUEL MACRON, FRENCH PRESIDENT (through translator): Europe finds itself on the edge of a vast arc of crisis stretching from the Gulf of Guinea

through the Sahel to the Middle East and Iran. Let's be clear, we, Europeans must now ensure our own security.

QUEST (voice over): Aerospace with firms like Dassault Aviation that have given the region an industrial edge.

Thanks to the University of Bordeaux, more economic diversity is being uncorked, if you will, by the day. Students have helped make Bordeaux a

fertile ground for startups.

Indeed, Bordeaux is just like the fine wine it produces. It rewards those who look around and go beyond the first sip.

(END VIDEOTAPE)

QUEST (on camera): And if our producer, Jake writes one more pun, he will hear about it from me.

Good to see you. Brigitte Bloch is the head or the President of Bordeaux Tourism Bureau, who joins me now.

Thank you, first of all, for just letting us be here and giving us such a good time.

BRIGITTE BLOCH, PRESIDENT, BORDEAUX TOURISM BUREAU: One of the most beautiful view of the city.

QUEST: Absolutely. We are at the top of the Indigo Hotel here in Bordeaux.

So tell me, you are expecting about four million visitors this year. The issue of over tourism is always crucial and smart tourism, you've won the

award. How are you handling this? How are you finding it?

BLOCH: Well, it is not such a problem in Bordeaux because we don't have so much people at the same time, in the same place.

QUEST: Yet.

BLOCH: That's the real solution because the people stay in Bordeaux, but they enjoy the vineyards and then they enjoy the sea because we are one

hour away from Arcachon and less than one hour away from the vineyards. So it is a good solution because they can enjoy the city and also discover the

surroundings, so we have a very good position.

QUEST: At the moment, what I think I've discovered here over my week's visit is that you do have that nice balance, that elegant balance in a way

and I am wondering, what do you need to do to continue to attract that sort of that very gentle balance that you've managed to achieve?

BLOCH: Now, what we say is that what we do for the people living in Bordeaux is attractive to the tourists. I can give you an example. With the

tram, the transportation, it was very attractive for the people because we can come -- in Bordeaux, you can come with a TGV, with a train.

QUEST: Yes.

BLOCH: And then you don't need your car. You can move inside the city without any car, or you can go to the Mirambeau, which was done for the

people and that is something very nice for.

QUEST: That mirror -- that mirror outside. It is very strange.

BLOCH: Yes, but it is reflecting the very beautiful palace that you have in front.

QUEST: Absolutely. I got my feet wet. Don't worry.

As a national policy on tourism, France, of course, has more tourists, I think, than anywhere else in the world. I mean, the statistics bounce

backwards and forwards. Are you concerned that Americans may stay away now or feel that they are not welcome? Untrue, absolutely. But Americans may

feel they're just not welcome in Europe.

BLOCH: I don't think so, because we don't have this feeling. Looking to the statistics we are having in the hotels today, we are having a lot of

Americans still coming. I think they love Europe and they love France, and especially the vineyards of Bordeaux. So the amount of Americans visiting

the vineyard is very high.

[16:20:08]

So we are not afraid because we think our relations are stronger than what is happening today.

QUEST: And what about the French view of the Americans?

BLOCH: This is decreasing a little bit --

QUEST: Because?

BLOCH: I'm sorry.

QUEST: No. No, because you make a very valid point, because the numbers show that fewer Europeans aren't going -- to be going to the United States

and that means, of course, over the border from Spain to here, that means more Europeans visiting you.

BLOCH: Yes, of course. We are having the bigger part of our foreign tourists are from Europe anyway, but the American is the second most

important.

QUEST: They are the biggest spenders.

BLOCH: Yes, they are. And they love wines. They love the -- I think the atmosphere of the city, the atmosphere, the way we live. And you were

speaking about very good gastronomy and I think they enjoy that also in Bordeaux.

QUEST: So I have a question, if we can go and find that little pastry of mine.

BLOCH: Oh, the cannoli maybe.

QUEST: No, no, no, no, no.

BLOCH: Oh, no. Why?

QUEST: No, no, no, no, no cannoli. No. no. I need to ask you a simple question which will become all very clear later. Let me have a look here.

So if it is open here.

BLOCH: Oh, the chocolatine.

QUEST: Here is the picture. All right, let me put it between us. We're going to be asking lots of -- what do you call this?

BLOCH: We call it a chocolatine.

QUEST: Are you sure?

BLOCH: Yes.

QUEST: Chocolatine.

BLOCH: Yes, I am sure.

QUEST: In other words, but if I was to call this a chocolate, you'd throw me over the edge.

BLOCH: I mean, here you will not be understood if you go to -- if you go to a shop and ask for chocolate, the people will look at you a little bit

strange.

QUEST: Why is this different? It is a croissant with chocolate, whichever way.

BLOCH: Well I don't know. I think it is a tradition. You know, we have words or we have expressions. We use -- France is -- even if it is a very

centralized country, we are having a lot of different culture inside. And this is also connected with languages and expressions and that is one of

the circle of that.

QUEST: The chocolatine.

BLOCH: Chocolatine.

QUEST: How wonderful to see you tonight. Thank you so much.

BLOCH: Thank you for seeing me.

QUEST: I am very grateful. Thank you very much.

BLOCH: Thank you.

QUEST: As we continue tonight, President Trump is delivering a dual warning to Ukraine and Russia. He says there is something Vladimir Zelenskyy

absolutely should not do. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

[16:25:27]

QUEST: Hello, I am Richard Quest. There is a lot more QUEST MEANS BUSINESS for us together when France ramps up its defense spending as President

Trump pressures NATO allies to raise their targets and buy more U.S. weapons and I will speak to the owner of a French winery on how they are

coping with the threat of tariffs.

But before that, this is CNN, and here on this network, the news always comes first.

President Donald Trump is touting a multibillion dollar investment in artificial intelligence and energy at an event in Pennsylvania. The

President said that 20 technology firms have agreed to invest $92 billion in the state. The money will go towards data centers and electricity that's

necessary to power them.

The President is now ruling out the possibility of sending long range missiles to Ukraine. He also says that Ukrainian President Volodymyr

Zelenskyy should not target Moscow. It follows -- it comes as the U.S. President is giving Moscow 50 days to make a peace deal with Kyiv before

imposing economic sanctions.

Israel's Prime Minister, Benjamin Netanyahu, says his military is carrying out intense operations in Southern Syria. The Syrian government says its

troops were pursuing outlaw groups in the region. Israel has unilaterally declared the area a demilitarized zone and is accusing Syria of violating

that policy.

President Trump now says that the United States is not, I said, not looking to deliver long range missiles to Ukraine. A short time ago, he had this

warning for President Zelenskyy of Ukraine and indeed for Russia.

(BEGIN VIDEO CLIP)

TRUMP: Well, at the end of 50 days, if we don't have a deal, it is going to be too bad.

REPORTER: Should Zelenskyy get more aggressive?

TRUMP: Yes, the tariffs are going to go on and other sanctions go on.

REPORTER: Should Zelenskyy target Moscow or deeper into Russia?

TRUMP: He shouldn't target Moscow.

(END VIDEO CLIP)

QUEST: Now if Russia is worried about Donald Trump's 50-day ultimatum, it is certainly not seeming to be so and absolutely not tipping its hand. In

one quote, "We are coping, and I have no doubt we will cope," come from Russia's top diplomat, Sergey Lavrov and the coping seems to include

ongoing nightly bombings of Ukraine, even after the presidential -- the U.S. President's threat of forceful sanctions. It is the secondary

sanctions that would be most relevant here and the announcement that the U.S. will sell defensive weapons to NATO for Kyiv.

Matthew Chance is in Moscow. Matthew is with me now.

Matthew, do -- I read the comments of Lavrov and I read them of Kirill Dmitriev, and I read all of these comments, and I can't quite work out, are

they worried in Moscow in -- or they just don't believe that the United States has the capacity to do any more serious economic harm?

MATTHEW CHANCE, CNN CHIEF GLOBAL AFFAIRS CORRESPONDENT: Well, when it comes to sanctions, I think we have to remember that Russia is already one of the

world's most sanctioned countries, and it has developed this very sort of flexible, resilient system of workarounds that has managed to keep its

economy afloat quite effectively.

And so when they hear about the U.S. President promising in 50 days more sanctions or even secondary sanctions, you know, it is easy to see why they

are sort of relatively relaxed about that.

Look, there is no question that more sanctions on the Russian economy, if they come along with the current sanctions, of course, will have an impact

on the country's economy. The real question is, will that impact be sufficient for the Kremlin to stop its war in Ukraine? And I think the

answer we are getting in the public comments from Russian officials is that probably not.

QUEST: And on that very point, it does seem that nothing short of territorial gains and commitments against joining NATO or demilitarization

of Ukraine, it does seem that President Putin will stop at nothing other than that to prosecute his victory.

CHANCE: I mean, President Putin has been pretty straightforward and clear about those objectives, those military objectives. Essentially, he wants to

subjugate Ukraine. He wants to take control over the four areas of Ukraine in the east of the country that the country, that Russia has already

formally annexed, but doesn't control the entirety of.

[16:30:31]

And, you know, he wants various other things as well, which would basically mean that Ukraine no longer poses a military threat to Russia in any way in

the future. These are its maximalist goals that Russia has set out. And again, there's nothing in what President Trump said in terms of sanctions

or increased arms deliveries to Ukraine that would, you know, you know, get the Kremlin at this stage it seems to change that.

QUEST: Right.

CHANCE: They've certainly given no indication that they're going to be diverted from that course -- Richard.

QUEST: And quickly, before I let you go, this story that was around and has been around all day on which President Trump responded to this evening.

Firstly, long range missiles. You've answered that a bit. But this idea of Ukraine targeting St. Petersburg and-or Moscow, that also doesn't seem to

have had much of a scare within Russia.

CHANCE: Well, no, although I suspect if there were considerations about long range missiles being given to Ukraine so that it could strike those

cities, that would have been something that the Russians would have been concerned about. But you have to remember that Moscow and St. Petersburg

are already being targeted by the Ukrainian armed forces in sort of drone strikes that happen in some cases several times a week in those places.

Yes, they're not doing it with long range missiles. They don't have that capability. That would be an escalation. But, you know, that has now been

taken off the table, it seems, by President Trump.

QUEST: Matthew, I'm grateful. Thank you for staying up late talking to us tonight.

Matthew Chance in Moscow.

And so here in France, where President Macron is moving to increase military spending, driven partly, of course, by the war in Ukraine, the

issues of NATO and what President Trump has been demanding from Washington.

Bordeaux, this region is known for producing military aircraft, it stands to benefit. It's got -- even though not strictly speaking in Bordeaux, just

up the road an hour and a half or two hours away is Toulouse, home of Airbus and the Airbus Defense Industries.

Melissa is with me. Melissa Bell is in Paris.

Good evening, Melissa. The -- this role that President Macron is now carving out largely because France does have very sophisticated and mature

defense industries.

MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT: It does, Richard. But what are the chief of general staff and other officers within the French

Army have been warning is that given the threat, and what we heard was the chief of the general staff say that Russia could be a threat by 2030 to

countries like France, things like munitions, things like surface-to-air defenses would be running low and they simply need to speed up their

production, given, they say, the threat.

Hence 6.5 billion next two years that will be spent in 2026, 2027. Emmanuel Macron's aim is that by the time he leaves office in 2027, Richard, he

should have raised French military spending to 64 billion euros a year, which is double what it was 10 years ago.

QUEST: Right.

BELL: That's still, by the way, won't be enough to get to the 3.5 percent of GDP that the French have promised as a part of that NATO agreement

reached in June, It will take more.

QUEST: And Melissa, doing duty on all subjects. Melissa, this threat of tariffs, well, it's more than a threat, it's more than a likelihood. We've

got an existing tariff. But I'm here in Bordeaux, which you know well, where the wines are excellent, and they are concerned of course because the

U.S. market is one of the most lucrative for them. So how realistic are these threats and how worried are the French against and about these

tariffs?

BELL: I think the Europeans expressed again their frustration earlier this week after that letter over the weekend from President Trump threatening 30

percent. One of the points that was made by the European trade commissioner was, look, we haven't been negotiating for the last few months to get these

kinds of letters. 1.7 lines of tariffs have been poured over. They've reached, they thought, begun to reach the beginning of an agreement on

everything from agriculture to car parts. And then this letter.

So what they're saying is they still hope that negotiations will bear their fruit, but they're also preparing their own reciprocal tariffs, even while,

Richard, they've put aside the reciprocal tariffs on steel and aluminum as a sort of sign of goodwill, they're also preparing more than 70 billion

euros worth of reciprocal tariffs should that 30 percent go through on the 1st of August.

[16:35:13]

Preparing, they say, hoping for peace, they say, but preparing for war.

QUEST: Right. Well, on a much lesser scale, a battle of a different type. I'm not sure whether you can see me or not, but if you can't, allow me to

show you. I am showing these delightful pastries. Are you a chocolatine woman or are you a pain au chocolat? And bearing in mind if you ever want

to come back to Bordeaux --

BELL: Definitely pain au chocolat.

QUEST: -- I would think very carefully before you answer. You're pain au chocolat.

BELL: You're absolutely right. It is a thing that --

QUEST: You wasted no time.

BELL: I'm a pain au chocolat. I'm in Paris. But you're right these things matter.

QUEST: You won't be visiting --

BELL: When you walk into a (INAUDIBLE) there in Bordeaux, you go with the - - with the chocolat team.

QUEST: You do indeed.

BELL: Thee are important distinctions.

QUEST: And you won't be able to come here after saying that.

Melissa, good to see you. Good to see you. Thank you.

Now we continue tonight. U.S. inflation has risen. The question is whether or not we can explain it away from Donald Trump's tariffs. Is this the

first cuckoo of spring? The first swallow? The canary -- well, you know all the analogies. We'll talk about that in a moment.

QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Welcome back to Bordeaux. It's coming up to 20 to 11:00 at night, and it's still beautifully warm.

U.S. inflation -- talking about beautifully warm -- is heating up. Oh, come on. That was good. It's heated up to a four-month high. The prices

increased 0.3 of a percent from May. The annual annualized rate is 2.7 percent.

President Trump's tariffs on China led to a sharp increase in the price of toys. Appliances were hit by tariffs on aluminum and steel. You can see how

it feeds through, and it's likely to get a great deal worse.

[16:40:03]

Isabelle Mateos y Lago is the chief economist at BNP Paribas.

Isabelle, good evening, ma'am. Good to see you. Thank you for taking time to talk to us this evening.

ISABELLE MATEOS Y LAGO, GROUP CHIEF ECONOMIST, BNP PARIBAS: Good evening, Richard.

QUEST: Now, look, where is France in all of this? Because the economy has weakened. I'm never quite sure with the French economy, whether it's about

to go for a rip-roaring success or fall off a cliff.

MATEOS Y LAGO: Right. Well, always a direct question. Good evening, Richard. Look, the French economy has weakened compared to last year.

That's for sure. The growth momentum, you know, for the last few quarters has been very modest indeed. And we're expecting somewhere around half a

percentage growth this year, 0.5 percent, 0.6 percent. So that's a slowdown from last year.

And that's also going in the other direction than the rest of -- the rest of Europe that's been recovering and accelerating. However, I don't think

there's any reason to expect or to think that the economy is on the verge of collapse. But it's true that it's been going through some headwinds,

some political uncertainty, and then more recently uncertainty around how fiscal consolidation is going to happen. So that's causing a lot of anxiety

from households and corporates.

QUEST: Right.

MATEOS Y LAGO: But our expectation is that, you know, from 26 onwards we're going to see a rebound and the French economy will benefit from the pickup

in Eurozone growth overall.

QUEST: So can you balance off, if you will, the benefit from the increase in defense spending that President Macron has been talking about and the as

yet unquantifiable costs of the tariffs that will hit French exports?

I'm here in Bordeaux. And of course, you know, they're already talking about how it's going to hit the exports of wine and that balancing act is

going to be very tricky.

MATEOS Y LAGO: So yes and no in the sense that it's true that there are specific sectors and regions like Bordeaux where you are right now, which

could be particularly exposed in the situation of a trade war with the United States. But first of all, we're not there yet. And as you know, the

talks are ongoing and certainly on the E.U. side, the negotiations negotiators remain very hopeful to reach a deal before August 1st.

But secondly, the French economy is actually one of the least exposed to the U.S. tariffs in the Eurozone because it is predominantly a service

based economy. And so unlike an economy that like Germany or Italy, which have still a very strong manufacturing sector, much stronger than in

France, it is overall less exposed and can benefit more from a rebound in consumption and the services economy in general.

And then the rearmament effort that the entire Europe is embarking on, again, France has a strong defense industry, and so above and beyond the

decisions made in France and talked about by President Macron in recent days, France should benefit disproportionately from the broader European

rearmament effort that is -- that is just beginning.

QUEST: Right. So the one question that does puzzle me always about is how far do you -- can you assess has President Macron managed to make the

French economy more productive to sort of drag it into the 21st century? I'm thinking, of course, obviously we know about the pension reform issues,

but actually fundamental productivity gains as a result of new labor practices. Has the country economy become more productive here?

MATEOS Y LAGO: So it's a tricky question. There are different ways of looking at it. At one level you could say, well, you know, French GDP

growth has been lagging behind the rest of the Eurozone. And, you know, in good company with Germany. But certainly that's no consolation. On the

other hand, the French tend to work fewer hours or less time during a given year than most of the rest of Europe.

And so you could say actually on that, on that basis, it must mean that French workers productivity is higher. The reality is the -- President

Macron has done a lot to promote France as an A.I. center, to promote France as a -- as a high tech economy, and that's been going in that

direction. That's certainly an area of strength for the French economy.

[16:45:00]

But there's a -- there's a long way to go, and certainly further increasing productivity growth in France is critical to have better growth and social

outcomes going forward.

QUEST: I'm grateful to you for joining us this evening. Thank you very much. We'll talk more on this fascinating country. Thank you for joining us

tonight.

MATEOS Y LAGO: OK.

QUEST: Now as we look around the world at different economies, obviously we put it into perspective in terms of what's been happening in France. Now,

China, well, in China, the economy appears to be holding up in the face of U.S. tariffs, sizable tariffs. China announced an annual growth of 5.2

percent in last quarter, better than expected given the extraordinary challenges that that market has and that country has faced -- faced, I do

beg your pardon.

Kristie Lu Stout reports from Hong Kong.

KRISTIE LU STOUT, CNN CORRESPONDENT: Fresh Chinese economic data is out and it reveals resilience in the face of U.S. tariffs. Now, China's second

quarter GDP grew 5.2 percent year-on-year. That is down from 5.4 percent growth in the first quarter. But it's still above China's annual target of

around 5 percent. Analysts say that the trade war may be dragging on sentiment, but it's not the massive shock that many originally feared.

Still, China is facing some major economic challenges. Nick Marro of the EAIU tells CNN this, quote, "We will need to untangle the difference

between what the headline figure says and what companies and households are seeing on the ground. For many, this doesn't feel like an economy growing

at around 5 percent," unquote.

Now, China is facing a number of economic headwinds, including low consumer spending, low consumer confidence, high youth unemployment and ongoing

property slump. And Larry Hu of the Macquarie Group makes a link between consumer spending and China's lagging property market. He points out this,

quote, "Falling house prices have led to a negative wealth effect on consumption, as housing accounts for 60 percent to 70 percent of household

wealth. Consumption will not recover until housing recovers."

Now, in contrast, China's export machine keeps powering ahead. In fact, according to new trade data that was released on Monday, China's year-on-

year exports rose 5.8 percent in June as companies rushed to get goods out of China as the trade truce holds. But the clock is ticking. The current

pause on higher U.S. tariffs on China expires on August the 12th.

Kristie Lu Stout, CNN, Hong Kong.

(END VIDEOTAPE)

QUEST: And so, as the evening arrives and the night falls here in Bordeaux, well, often for those there's nothing quite like a glass of red or indeed

the white grape the U.S. consume as President Trump's proposed tariffs on European wine could break the bank. I'm joined by French wine maker next.

QUEST MEANS BUSINESS coming to you live from Bordeaux.

(COMMERCIAL BREAK)

[16:50:47]

QUEST: Absolutely wonderful to be here in Bordeaux just as the summer gets started. The tourists, the visitors, they're either going off towards the

coast or highly likely they're going off to enjoy a good bottle of wine on a gorgeous night like tonight. And in fact, one thing comes to mind popping

open a good bottle of wine. It varies, the cost.

Joining me to talk about it is Florence Cathiard, who's the co-owner of Chateau Smith Haut Lafitte, where you've got two vineyards.

FLORENCE CATHIARD, CO-OWNER, CHATEAU SMITH HAUT LAFITTE: Yes.

QUEST: Which are the two?

CATHIARD: The other one is in the States.

QUEST: In the States. This is this one, which is the?

CATHIARD: Which is (INAUDIBLE) Vineyard because it's our 35 years in the States, but 35 years in Bordeaux and we have been so many times now.

QUEST: Now how long have you been in Bordeaux?

CATHIARD: Thirty-five years in Bordeaux.

QUEST: Thirty-five years. So as we look at these wines, now obviously this one doesn't face tariffs going in the U.S. It's from the U.S. But this one

could be hit quite hard by tariffs.

CATHIARD: Oh, yes. Yes.

QUEST: How worried are you?

CATHIARD: Very hard.

QUEST: How worried are you?

CATHIARD: I am very, very worried. It could be a total disaster because nobody would accept taxes at 30 percent more. Yesterday I was with an

American man who owns 50 wine shops in New Jersey, and he told me for him also it would be a disaster because he imports a lot of Italian and French

wines of very good, fine wines of my label. And he said I would have to close half of my shops and fight people, you know.

QUEST: So your wines cost roughly -- how much would a bottle of this? Just roughly.

CATHIARD: So now it's $100.

QUEST: $100.

CATHIARD: Yes.

QUEST: So if you start putting 20 percent, 30 percent.

CATHIARD: Thirty, he wants to put and it would be awful because --

QUEST: Because who's going to eat that 30 percent? You'd have to take some, the importer would have to take some.

CATHIARD: Yes. Yes.

QUEST: But if you pass it on to the consumer, they won't buy.

CATHIARD: Yes. No, they won't buy because they are -- 100 is psychological, you know, level. And it would be really very, very bad. And -- but we hope

Mr. Trump has a vineyard in Virginia. His son. So maybe there is a big solidarity during winters. I am not sure. I cross fingers.

QUEST: How is the -- because I was in the fields over the last few days driving around, and we're at that point of the year for you where the

grapes are there.

CATHIARD: Yes. But --

QUEST: And now's -- now is when the magic happens.

CATHIARD: Yes, we have great expectation.

QUEST: Really?

CATHIARD: We escape the frost. We escape also the hell with the two. And even if we are in jeopardy until the last day of harvest. But we have

beautiful flowers. We had the rain, ample rains in March and April, which is good because now we have spikes heat, heat spikes.

QUEST: Do you think this could be a bumper year? One of those years, 2018, 2010?

CATHIARD: Yes.

QUEST: 1992.

CATHIARD: You are right. You're right. '92 is not so good.

QUEST: Not well.

CATHIARD: But the others are excellent. So we think it could be great. Great vintage. But the States is our number one exports country, you know.

And with the taxes it will be -- it will be bad.

QUEST: Before this came along, the story I also hear is that people are drinking less wine. They're drinking better wines.

CATHIARD: Yes.

QUEST: They're drinking better wines, which is good for you.

CATHIARD: Yes. Less is more for us. Yes.

(LAUGHTER)

QUEST: Less is more. Very well put. But what more do you want to see? How can you encourage more wine drinking do you think?

CATHIARD: We travel a lot and we invite a lot. You should come to my vineyards. Smith Haut Lafayette is one block historic. It's a beautiful

estate. It's 20 minutes from the center of Bordeaux, and we see maybe, I don't know, but personally, I see 3,000 people each year. And we receive

20,000 people that we host.

[16:55:02]

QUEST: Well, here we go (INAUDIBLE). And just before anybody thinks I'm about to sort of tuck into them, they're empty. But I promise you I'll find

a full one somewhere.

Thank you very much for joining us.

CATHIARD: Thank you.

QUEST: I'm very grateful.

CATHIARD: Thank you so much.

QUEST: Thank you very much indeed. Thank you.

A look at the markets and how they closed after the latest inflation report showed prices rose last month to a four-month high. The Dow fell 436

points, just under 1 percent. Nvidia closed up almost 4 percent. We all know the reasons. It's because they're going to be -- what are they going

to be doing? Oh, yes, they're going to be allowed to sell chips to China. Well, you may have thought I've been at the bottle already. No, they're

selling chips to China.

JPMorgan Chase closed down despite beating profit estimates. Amex was off 3.2 percent, announcing an upgrade on its airport lounges. Put it all

together and we will take a "Profitable Moment" after the break.

QUEST MEANS BUSINESS tonight from Bordeaux.

(END VIDEOTAPE)

QUEST: Tonight's "Profitable Moment."

It's been a treat and a pleasure coming to you from the Indigo Hotel, the terrace on the roof of the hotel with the spectacular view over Bordeaux.

And it's given us a chance to really get to grips. You know, I always believe, I've always believed that the best economics concerns real life.

And that's absolutely been the case when you look at what's happening here in Bordeaux.

The wine, the tariffs, the farmers, the real-life effect that will happen if 30 percent, 40 percent tariffs come in on things like wine is quite

extraordinary. You heard it on this program and at the same time you also heard the tourism chief explain how that could be bumpy years for tourists.

Yes, they'll get more from the rest of Europe, from Spain, Germany, the U.K. and the like. But the higher spending tourists from the United States

and of course Europeans won't go in the opposite direction.

This is real economics. This is real life. This is really what it's all about. And of course, you've then got the serious question of what you call

these marvelous little pastries.

Now, I caught -- hang on, I'm going to get the break there. Is it a chocolatine or is it a pain au chocolat? I don't think it really matters as

long as it tastes good. Oh, look at that.

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

profitable. Enjoy your chocolatine.

END