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The Situation Room

Sean Combs' Ex-Assistant Back on the Stand; Supreme Court Lets Trump End Deportation Protection; Trump's Tariffs Temporarily Reinstated by Appeals Court. Aired 10:30-11a ET

Aired May 30, 2025 - 10:30   ET

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

[10:30:00]

MISTY MARRIS, TRIAL ATTORNEY: SCIUTTO: -- that he will testify. And my guess would be that his legal team is telling him he's better off invoking his right to remain silent, because there is so much that can come in on cross examination that the jury would not otherwise hear.

Think about all of what we've heard in this trial. Some of that could be fair game. There's been a lot that's been excluded and the defense strategically is going to say, the risk is higher than the reward. That being said, it's important to note that the defendant ultimately has the choice to testify. The lawyer makes a recommendation, but the defendant ultimately is the one to make that call. So, I think it's highly unlikely, but if Diddy wants to do it, he's the one who ultimately will make that decision.

PAMELA BROWN, CNN ANCHOR: We shall see. So, what are you looking forward to next in this trial?

MARRIS: So, right now Mia is still on the stand. Again, this is her direct examination. It's been very, very compelling and it's really speaking to these racketeering charges and the predicate crimes. Now, we've heard about forced labor, arson, and kidnapping from various witnesses.

But what we need from prosecutors in order to formulate their argument for racketeering and conspiracy is more information on the criminal enterprise. Remember, the charge requires that racketeering activity, crimes, are being committed in furtherance of a criminal enterprise. So, I'm looking for more individuals who are co-conspirators from the prosecution's witnesses who will testify about what's called the means and methods of the criminal enterprise.

What does that mean in layman's terms? How it works, what it does, what's its purpose? We haven't gotten there yet. We've heard a lot about the crimes, but not a lot about the enterprise itself.

All right. Ms. Misty Marris, thank you so much. Wolf.

WOLF BLITZER, CNN ANCHOR: And up next, The Gap CEO, Richard Dickson, is standing by to join us live here in the Situation Room. We'll ask him about the impact President Trump's tariff whiplash is having on his company and on his shoppers.

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[10:35:00]

BROWN: We're following, breaking news out of the Supreme Court, the court ruling that President Trump can end deportation protections for people from Cuba, Haiti, Nicaragua, and Venezuela. CNN Chief Supreme Court Analyst Joan Biskupic joins us now. What are you learning, Joan?

JOAN BISKUPIC, CNN CHIEF SUPREME COURT ANALYST: Good to see you, Pamela. This is the second time this month that the Supreme Court has allowed Trump to challenge a Biden era protection for immigrants and let the Trump administration, if it desires, to start deporting people.

This case involves nearly half million people from Cuba, Haiti, and Nicaragua. These people were here under a Biden era protection program, allowing them to live and work here for about two years. And the case is still going to go through the lower courts. But for now, the Supreme Court is saying that if the Trump administration wants to start deporting people, and as I said, about a half million people had been covered under this particular protection, they can.

Now, the Justice's opinion was unsigned, no explanation for this stage and only two justices dissented, Justices Sonia Sotomayor and Ketanji Brown Jackson. But this follows, Pamela, an earlier order that the court had issued this month that also lists protection for Venezuelans, a certain group of Venezuelans who are here.

It's a signal that this court is going to continue to allow President Trump's effort to deport people especially people here under these special programs that had been part of the earlier era. And we'll just have to see how these play out on the merits.

But so far, the signals are really not good for those immigrants who would like to stay here under the protection programs that had been written into law. Pamela.

BROWN: All right. Certainly a win for the Trump administration, as you said there. Thank you, Joan. Wolf.

BISKUPIC: Thank you.

BLITZER: Very interesting decision by the U.S. Supreme Court. Also this morning, new data from the U.S. Commerce Department shows that Americans reigned in their spending last month amid President Trump's tariff rollout. The report follows a week of legal whiplash for the president's trade agenda after two key court rulings coming less than 24 hours apart first blocked and then temporarily restored his sweeping tariffs.

Joining us now for more on all of this is Jeremy Siegel, professor Emeritus of Finance at the University of Pennsylvania's Wharton School of Business. Professor, thanks so much for joining us. How does Americans rolling back on their spending amid this tariff rollout impact the U.S. economy? JEREMY SIEGEL, PROFESSOR EMERITUS, UNIVERSITY OF PENNSYLVANIA WHARTON SCHOOL OF BUSINESS: Well, it's certainly not surprising. We saw a huge drop in the deficit because, of course, of the tariffs. The actual spending did drop this month. But actually, the economy is continuing to run around 2 percent this year. I mean, the first quarter was zero, the second quarter with this low trade deficit, if you factor it in, might be up to three to four.

Now, the average is still not much better than the Biden administration. But I don't think that the full teeth of the tariffs have been felt yet in the data. We're only beginning to see some of those price increases come in, and many consumers are continuing to spend until they actually see them because they've heard so much pro and con that until they see it their spending is still going to consider continue at a moderate rate.

[10:40:00]

BLITZER: Professor, this report follows a meeting between the president and the Federal Reserve chair, Jerome Powell, who he has repeatedly pressured to lower interest rates. How should the Fed respond to this latest report?

SIEGEL: Well, I'm against, you know, the president interfering with the Fed, but this was a good inflation rate on the PCE Deflator today. I do think there is a case despite all the uncertainty for them to lower the rates, I still think it's very important that they have their independence. Of course, we don't know what the tone was between this meeting.

I think that Trump was probably very insistent, but I really believe that Powell really holds -- wants to hold his ground and did hold his ground. He fiercely believes in the independence of the Federal Reserve.

BLITZER: Which is so important. The Federal Appeals Court -- as you know, the ruling from the Federal Appeals Court, restoring these tariffs comes with a June 9th deadline, leaving a lot of investors and foreign trade partners in limbo right now. So, what kind of impact will this uncertainty have?

SIEGEL: Well, it adds that this, you know, up and down, up and down. It is not good for the economy. It's not good for business. Even some of the Republicans who are in favor of tariffs don't like the way that it is dealing being implemented.

You know, ultimately, this might have to go to the Congress for the Senate to vote on it. We'll see what the Supreme Court does. I think, ultimately, this will go to the Supreme Court and maybe, ultimately, Trump will have to say to Congress passed me the authority. But that's still quite a few weeks down the road.

I think the markets are saying, we can live with a 10 percent broad tariff. We can live with 30 percent of China. Now, this news today about, you know, China not abiding by some of the Geneva agreements is disturbing. But a 10 and 30 I think the market could live with. If it goes much above that, I think we're going to have some more downside on the market.

BLITZER: So, bottom line, Professor, what's your advice to those who are concerned about how all of this saga will impact their wallets?

SIEGEL: Well, you know, hold your ground. I mean, you know, stocks are the best long-term investment. Be diversified. Don't try to time this market. I think the fundamentals are still strong. The future is still strong for America. We're going to get through all these tariff bumps. And so, you know, hold your investments in stocks. Don't try to time the market. I think we're going to come out of this OK at the end.

BLITZER: Professor Jeremy Siegel of the University of Pennsylvania Wharton School of Business, thanks for joining us. We appreciate it. And we'll be right back.

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[10:45:00]

BLITZER: President Trump's tariffs are back on, at least for now. A federal appeals court has temporarily restored Trump's ability to levy tariffs against countries like China while it sorts through arguments.

BROWN: Let's discuss now with president and CEO of The Gap, Richard Dickson. Richard, thank you so much for being here with us. I first want to get your reaction to the news of day. The president said on Truth Social this morning that China has violated its deal with the U.S. He's saying no more Mr. Nice guy. How could this affect your company?

RICHARD DICKSON, PRESIDENT AND CEO, THE GAP INC.: Well, first of all, we're very concentrated on driving our strategic priorities. We just ended our first quarter call, which was a very good call. In fact, we exceeded expectations across all our key metrics, and we continue to just drive our strategic priorities. They're very clear, and despite a very dynamic environment that we're all dealing with, we're staying firmly on course. And our results are showing.

I mean, we had a great first quarter up 2 percent. That's the fifth consecutive quarter of positive comps for our portfolio. We gained market share for the ninth consecutive quarter, which is really indicating that our product and our playbook and our marketing are resonating with consumers. We expanded gross margin, we expanded operating margin during the quarter. We increased our EPS by 24 percent. We continue to drive a strong cash balance of 2.2 billion.

These are the fundamentals essentially of our business that we continue to concentrate on. And the queue is another proof point that our strategy is working. I remain optimistic about our future, about our resonance with consumers, yet realistic about the opportunities ahead. And as we navigate this highly dynamic environment, our job is to ensure that we execute our playbook with excellence and the Q results are showing that we're doing just that.

BROWN: So, you said highly dynamic environment. I mean, just today now, the president, just to go back to that first question, is saying China reneged on the deal. And so, now, we don't know what that means from the White House's standpoint. How is this whiplash with the tariffs and even the judge whiplash yesterday on the tariffs on, off impacting your company and planning? Can you just be specific about that? I understand the metrics are good right now as you're laying out, but uncertainty impacts businesses. How so for Gap?

[10:50:00]

DICKSON: Yes. All right. Well, look, like any business we're constantly navigating complexity. And in this case, it's tariffs. And it is our responsibility to do so without compromising the long-term integrity of our strategy. And most importantly, the customer value proposition.

As we shared yesterday on our call, we've already mitigated over half of the anticipated impact of tariffs. Now, we've done that through very thoughtful adjustments in sourcing and manufacturing and assortments. And we also shared that we remain committed to achieving the remaining impact of about a hundred to 150 million. And it's primarily weighted to the back half of the year.

As you've talked called out, China. We've been diversifying our sourcing footprint now for several years. China, as an example, used to be one of our top sourcing countries and we now expect it to be less than 3 percent by the end of the year. So, we have a very diversified footprint. We also are looking to have no country account for more than 25 percent of our sourcing.

And as we talked about our outlook yesterday, our goal, first and foremost, is to be incredibly transparent. We've been very thoughtful and purposeful around separating the outlook from the estimated tariff impact. We believe that our outlook provides a very clear perspective of the underlying health of the business, which is working. And it also calls out the estimate of the impact of current tariffs, which we all know could still change. As of a couple days ago, we had the latest news, and we know that July 9th is another milestone moment of information.

So, we're managing our business with the consumer in mind, and we're executing against our playbook with excellence, and the results are showing.

BLITZER: Richard, it's Wolf. You've said that there won't be any, quote, "meaningful price increases at The Gap." Does that mean no increase on prices at all?

DICKSON: We're approaching our pricing strategy as we always do. We consider all the various inputs and we're maintaining our value proposition for consumers. That's the most important aspect of the business that we're in, exciting our customers, creating great product, great style, and great value.

Now, based on what we know today, we do not expect there to be meaningful pricing impact to our consumer. And we've proven that our product is resonating, our promotions are more effective, and our pricing strategy is working.

So, as we monitor market dynamics, we're staying in tune and attuned not only to the shifts in the consumer landscape, but how our value proposition resonates with the broader competitive landscape. And we believe that any strong brand can win in any market.

BROWN: Let me just jump in.

DICKSON: And as we jump look ahead, we actually see the potential further market share.

BROWN: I just want to jump in because our audience may not be in the weeds on, you know, what terms like the value proposition and that kind of thing, right? I mean, just for the layman's terms, when it comes to price increases, you say there'll be no meaningful. What does that mean? How do you define meaningful? And you made clear as it stands today there won't be. But you know, doesn't that reflect the uncertainty of the environment we're in? Go ahead.

DICKSON: Well, as I said, we're remaining very diligent in monitoring the market dynamics. As we do all day long. We're literally driving our business across four brands that drive a business based on consumer propositions. We're the number one apparel specialty retail chain in the U.S. We're the number one e-commerce apparel business in the U.S. We deal with our pricing strategy on a day-to-day business, and the most important part of that strategy is to ensure that we excite and delight our consumers.

And so, we believe at this particular time, there is a value proposition out there that we can take advantage of. And if we're strong and we execute against our strategy, we believe there's opportunity for market share. And so, our job is to execute our brand strategy with great value, great product, and great pricing.

So, as we navigate this, as I said, we don't see meaningful price increases beyond what we normally manage in terms of our portfolio mix and our assortment.

BLITZER: Richard, as you know, President Trump has gone after companies like Apple, for example, demanding they bring jobs to the United States. While you've tried to move a lot of manufacturing out of China, is that something you're looking to do as well?

DICKSON: Look, I mean, we've talked about a diversified footprint, and with the majority of our product is sourced outside the U.S. we do create product in the U.S. We are an iconic portfolio of American brands. About 90 percent of our sales in the quarter were in the U.S. We have an American workforce that we're incredibly proud of over 65,000 people.

[10:55:00]

The U.S. is an incredibly important market for us. We have great vendor sourcing partners that we work with domestically and we already use a significant amount of U.S. cotton. We did also announce we planted double our sourcing of U.S. cotton in 2026. We're increasing our investment in design houses in the U.S. And we'll continue to evaluate other opportunities to continue to invest domestically.

You know, not only are we an American branded portfolio but we also have manufacturing, production, various different sourcing as well as an incredible workforce with the intent to drive our business, particularly in the U.S. It's the majority of our business.

BROWN: How much is the Trump administration's tariff policy driving Gap to do more in the U.S.? Because you've heard that the White House obviously tout that. Is that impacting Gap to turn more to the U.S. to do manufacturing?

DICKSON: Look, I think, you know, again we are, we're constantly navigating all these complexities. And it's most important that we continue our strategy. We've talked about our diversification of our sourcing footprint for several years. We've talked about the fact that China, even last quarter, we said it was less than 10 percent of our sourcing and now, it's going to be less than 3 percent.

We have a very diversified footprint, a strong and resilient supply chain, and we do plan and have always sourced American grown cotton. We plan to do -- double down actually on American grown cotton. We are investing in the U.S. in various different aspects that complement our overall diversification footprint.

So, we're very proud of our investments in the U.S. We're proud that we're continuing to invest in the U.S. We're an iconic American branded portfolio. So, we believe in the U.S. market and the ability for us to do more in the U.S. but it is on plan in the context of our overall strategy of diversification and ensuring that the company remains agile and resilient. And we're proving just that.

BLITZER: All right. Gap President and CEO Richard Dickson, thanks so much for joining us.

BROWN: Thank you.

BLITZER: And we'll be right back.

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