Trump: Illegal Migrants Infest the United States; Angela Merkel: Europe Needs a Coordinated Approach to Migration
QUEST: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. When China's bank just strike back against Trump's new tariffs, we'll have a report from Beijing where it lies exactly what this actually means. With almost the end of the bailout here after Greece, one of the economy ministers will be with me here in New York as we continue our conversation and discussion tonight, this is CNN, and here on this network, the facts always come first. President Donald Trump says illegal immigrants are infesting the United States. In a series of tweets, Mr. Trump has defended U.S. policies that are separating some children from their parents at the U.S. border. He's calling on the Congress to change the country's immigration laws. President Trump and First Lady Melania welcomes Spain's King Felipe and the -- sixth, and Queen Letizia to the White House. The Spanish first world's first -- third, well, office meeting, King Felipe called his visit a great end to a perfect visit of his U.S. tour. China's President commended Kim Jong-un on his summit with Donald Trump. Xi Jinping met with the North Korean leader in Beijing and Chinese state TV shared Kim receiving a full ceremonial welcome, it's his third visit to China in three months. And Germany's Chancellor Angela Merkel says Europe needs to have a more coordinated approach to migration. The comments came with a press conference, following her bilateral meeting with Emmanuel Macron of France. The two leaders discussed EU reform and the migrant crisis is high on the agenda. Host team Russia has defeated Egypt in World Cup action on Tuesday. The score was 3-1, virtually sealing their place in the last 16. That's despite which I know, Mohamed Salah for the Pharaohs, Salah didn't look quite himself after a shoulder injury, although he did score a penalty. China has vowed to strike back hard against any new trade penalties by the Trump administration. And their promise to do so was within hours of President Trump putting out a statement, saying that the retaliation for the first set of tariffs would mean $200 billion war. Let me show you this rather deteriorating or rather completely deteriorating situation. So the U.S. originally says it will introduce $50 billion worth of tariffs. A comprehensive list of nuclear reactors to talk about. And China in response comes out with $50 billion with the same date of July the 6th. Now, here's the interesting part, when they did this, the U.S. put out a statement which we got last night, saying if you do this, we will do this, $200 billion. Now China has a real problem, well, but you see, China only imports $170 billion worth of stuff from the United States, so it can't actually retaliate with a full $200 billion, certainly not on top of the $50 billion that it's already done. And now, the U.S. is threatening another $200 billion on top of China. If you don't call this a trade war, I don't know what it is. Well, Beijing is accusing Washington of extreme pressure and extortionist behavior. CNN's Matt Rivers is in Beijing and sent us this dispatch.</s>MATT RIVERS, CNN CORRESPONDENT: Well, Richard, if the United States moves forward with those additional $200 billion in tariffs over the next several months, China says it's going to retaliate. So the question is how exactly will they do that? You can bet that they're going to put more tariffs on American imports yet to China, but there's a catch there. Last year, the United States only sent about $130 billion worth of goods here to China, so if the Chinese want to retaliate with the same number of tariffs, the same value of tariffs, then the United States is going to put on -- well, they can't just tariff American imports here. So what else will they do? Well, what most experts, analysts that we've spoken to here in China say that they're going to target American companies working here in China, make life more difficult for the Apples and the Ciscos and the Fords of the world that rely on the Chinese market for profitable bottom lines. The other thing they could do is whip up nationalism in state-run media to create some sort of informal boycott of American goods. We don't know exactly what they're going to do, but Richard, it's clear that the Chinese have a lot of tools at their disposal if this trade war ramps up.</s>QUEST: Matt Rivers in Beijing. I've had their problem calling this a trade war for some weeks, it looks like it, it smells like it, and now it's turning into a full scale one. Mohamed El-Erian is chief economist, adviser at Allianz, I asked him if we can now put the rest of the debate -- is this a trade war?</s>MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: I don't know if it can be put to rest, I think there's still a question mark, is this a means to an end or is this an end to itself? We've seen in the past that the rhetoric can get quite high, and the question is what then? I think the markets view it as this is more of a risk of a trade war than it was 24 hours ago. But I think the question is still open.</s>QUEST: Well, you say that, but we've already got -- we've already got the first round of tit-for-tat about to take effect. And now we've got the threatening of a further $200 billion on both sides. I mean, this is starting to get serious.</s>EL-ERIAN: Oh, it is starting to get serious, and when you do a tit-for- tat, you risk slipping into something -- so absolutely. Two qualifications and that's why you're hearing me be more conditional. First, none of this is irreversible, secondly, if the markets truly believe that this were a trade war, then stocks would be lower a lot more, the dollar would be a lot stronger and industries would be declining even more. So the market is saying, this is a warning sign, but the market yet hasn't embraced that this is the beginning of a full blown trade war.</s>QUEST: Does one unknown here, of course it is the president of the United States, in the sense that previous presidents have been very warring(ph), met -- perhaps learning the lessons of history not even to go this far.</s>EL-ERIAN: Yes, this is certainly the farthest we've been for a long time because people recognize that you can inadvertently slip into a trade war. The G7 which had not so long ago, people have forgotten was very unusual. How often do you get a congenial and a constructive grouping of like-minded people who can't even agree on a final communique. So yes, this is very different. But there are those who believe that we need a shock to the system in order to deal with up two genuine issues here. Not tariffs, but there are two genuine issues. Non-tariff barriers including the joint venture requirements and theft of intellectual property. So the question is whether the tariff threats can lead to action on these issues.</s>QUEST: If we look at the G7 at the moment, and not necessarily the</s>EL-ERIAN: Yes, and if you're sitting elsewhere, if you're sitting in Asia, you ask yourself, hey, wait a minute, I signed into a system where the core of the system which is the advanced economies act responsibly and I am the periphery is where the volatility is. Well, guess what? You have a lot of volatility in the periphery and the core itself has become this predictable. I think what we're going to see in the short term are a couple of things, Richard. One, we're going to stop romancing the synchronized pick up in global growth. That was the phrase that people embraced and now they're realizing that with the exception of the U.S., growth is going down around the world. So we're going to have very interesting differentials starting to play in. Second, there's going to be a lot more questioning about the functioning of the system. If the middle, if the core is weaker, that means the system as a whole is weaker.</s>QUEST: Where's the leadership going to come from? Because I'm getting the feeling that at the end of the day this is going to be about leadership.</s>EL-ERIAN: Yes, and people will ultimately look at some combination of the G7 or the U.S. in the leadership role. I think the irony is, all this is happening at a time when the IMF itself is not able to conquer --</s>QUEST: Right, yes --</s>EL-ERIAN: The middle. So we're going to have to look for governments to step up, and there's going to be a lot of emphasis on whether the U.S. plus somebody else or just the U.S. can do it.</s>QUEST: Are you worried?</s>EL-ERIAN: You know, my mother when I was young told me that when you don't have -- even if you don't have something to worry about, you worry. So I'm a worrier by nature.</s>QUEST: And that is a sobering thought from Mohamed El-Erian. And when we return, an old problem for Europe is returning to the fray in Greece, as Eurozone finance ministers get set to decide the next round of debt relief, the country's ultimate minister of economy is with me.