>>> HELLO, EVERYONE.

AND WELCOME TO AMANPOUR AND COMPANY.

HERE'S WHAT'S COMING UP.

>> IT IS CLEAR THAT THE HARDLINERS ARE STILL CALLING THE SHOTS THERE IN TEHRAN.

>> IRAN NAMES ITS NEXT LEADER.

THE HARD-LINE SON OF THE LATE AYATOLLAH.

THE U.S.

CALLS HIM AN UNACCEPTABLE CHOICE AND ISRAEL PROMISES TO TARGET ANY SUCCESSOR PICKED BY THE REGIME.

I ASKED ABOUT ISRAEL'S ONGOING ATTACKS ON IRAN AND WHERE THIS CONFLICT GOES NEXT.

THEN, OIL PRICES SURGE AS A DRAWN-OUT WAR IN THE MIDDLE EAST LOOKS EVER-MORE LIKELY.

JASON FURMAN JOINS ME.

ALSO AHEAD.

>> OFTENTIMES, YOU KNOW, YOU HAVE PRODUCT ON THE WATER, AND YOU HAVE NO IDEA HOW MUCH IT'S GONNA COST WHEN IT GETS HERE.

>> ENTREPRENEURS DEBBIE AND SARA TELL MICHEL MARTIN ABOUT HOW TRUMP'S TARIFF WHIPLASH IS CHANGING THE CALCULUS FOR SMALL BUSINESS IN AMERICA, AND COULD RISK SQUEEZING THEM OUT ENTIRELY.

>>> AMANPOUR AND COMPANY IS MADE POSSIBLE BY THE ANDERSON FAMILY ENDOWMENT, JIM ATTWOOD AND LESLIE WILLIAMS, CANDACE KING WEIR, THE THE SYLVIA A. AND SIMON B. POYTA PROGRAMMING ENDOWMENT TO FIGHT ANTISEMITISM, THE STRAUSS FAMILY FOUNDATION, THE PETER G PETERSON AND JOAN GANZ COONEY FUND.

CHARLES ROSENBLUM, KOO AND PATRICIA YUEN, BARBARA HOPE ZUCKERBERG, AND FROM VIEWERS LIKE YOU.

>>> WELCOME TO THE PROGRAM, EVERYONE.

I'M IN NEW YORK SITTING IN FOR CHRISTIANE AMANPOUR.

THE COUNTRY'S NEXT SUPREME LEADER IS THE SON OF SLAIN LEADER AYATOLLAH AND IS KNOWN FOR SHARING HIS FATHER'S HARDLINE STANCE.

IT'S A CHOICE THAT BOTH THE U.S.

AND ISRAEL HAVE SAID THEY WON'T ACCEPT.

ISRAEL IS LAUNCHING WIDE-SCALE ATTACKS ON CENTRAL IRAN AND HEZBOLLAH INFRASTRUCTURE IN LEBANON.

THESE WERE THE SCENES IN TEHRAN AFTER THE WEEKEND AFTER ISRAEL TARGETED OIL FACILITIES IN THE CAPITAL.

FIRES SPREAD TOXIC FUMES ACROSS THE CITY.

OIL RAINED DOWN ON PEOPLE AND BUILDINGS THERE.

IRAN IS CONTINUING TO RETALIATE, LAUNCHING ATTACKS ON GULF NATIONS AND ISRAEL.

THE FOREIGN MINISTER JOINED ME EARLIER TO REACT TO ALL OF THESE LATEST DEVELOPMENTS.

>> MR.

FOREIGN MINISTER, THANK YOU FOR TAKING THE TIME TO SPEAK TO US.

AN IRANIAN BALLISTIC MISSILE HAS STRUCK INSIDE ISRAEL BRINGING THE TOTAL KILLED IN THE COUNTRY TO 11.

ISRAEL IS SEEING FEWER MISSILES PER SALVO COMPARED TO THE NUMBER ISRAEL HAS SEEN IN THE 12-DAY WAR LAST SUMMER.

IS IT ISRAEL'S ASSESSMENT THAT IRAN'S ARSENAL OF MISSILES AND MISSILE LAUNCHERS HAS BEEN SEVERELY DEGRADED AND THUS THE REASON FOR THE FEWER MISSILES?

OR IS THERE CONCERN THAT PERHAPS IRAN IS HOPING TO DRAG THIS WAR OUT LONGER FOR A WAR OF ATTRITION AND HOLDING BACK THE NUMBER OF MISSILES THEY ARE SENDING AND LOBBING AT ISRAEL?

>> FIRST OF ALL, UNFORTUNATELY WE HAVE MORE CASUALTIES BECAUSE WE HAD TWO CASUALTIES THIS MORNING.

SECONDLY, THERE IS NO DOUBT THAT THE ABILITY OF THE IRANIANS TO LAUNCH ON ISRAEL AND GENERALLY SPEAKING ALSO ON ITS NEIGHBORS DECREASED BECAUSE WE HUNT SO MANY OF THE LAUNCHERS AND DID SOME OTHER THINGS THAT IT'S REALLY GOING DOWN.

FROM OUR POINT OF VIEW, WE HAVE ANOTHER CHALLENGE IN TERMS OF HEZBOLLAH FROM LEBANON LAUNCHING MISSILES AS WELL.

BUT ALTOGETHER, OF COURSE, THEY WILL CALCULATE THE NUMBERS OF MISSILES THAT ARE THROWING ON US AND ON OUR NEIGHBORS.

BUT THERE'S NO DOUBT THERE IS A DECREASE IN THEIR ABILITIES TO DO SO.

>> I WANT TO GET TO YOUR FIGHT WITH HEZBOLLAH TO YOUR NORTH IN JUST A MOMENT.

BUT TO STICK WITH THIS POINT OVER THE WEEKEND, THE IDEA OF CHIEF OF STAFF AMIR TOLD ISRAEL AND THE ISRAELI PUBLIC TO BE PATIENT AND PREPARED FOR THE WAR TO, QUOTE, TAKE A LONG TIME.

HOW LONG IS A LONG TIME?

>> IF YOU WANT TO BE SUCCESSFUL, YOU ARE SIMPLY NOT TELLING THE OTHER SIDE HOW MUCH TIME YOU ARE READY TO FIGHT.

BASICALLY, WE HAVE AN OBJECTIVE, AND WE HAVE ENOUGH PATIENCE AND ENOUGH AMMUNITION IN ORDER TO DO SO.

SO IT IS VERY IMPORTANT TO WORK ACCORDING TO THE PLAN WE HAVE WITH OUR AMERICAN ALLIES, AND I'M SURE THAT WE WILL BE SUCCESSFUL.

WE ARE ALREADY SUCCESSFUL.

WE ARE WORKING AGAINST A VERY MAD REGIME.

TODAY THEY, AGAIN, TARGET TURKEY.

THEY TARGET BASICALLY ALL U.S.

ALLIES IN THE MIDDLE EAST.

AND THINK WHAT THEY WOULD HAVE DONE IF THEY WOULD HAVE NUCLEAR UMBRELLA.

THIS IS WHAT THEY ARE DOING WHEN THEY ARE IN INFERIORITY, WHICH IS CLEAR.

BUT THINK WHAT THEY WOULD HAVE DONE IF THEY HAD NUCLEAR WEAPONS.

THEY'RE ALREADY USING WARHEADS.

IT'S VERY IMPORTANT TO UNDERSTAND THAT IS NOT ONLY THEY TARGET CIVILIANS, BUT THEY USE THE WAY TO MAXIMIZE CIVILIAN CASUALTIES.

AND THIS IS, OF COURSE, A WAR CRIME.

>> AND YET THE REGIME IN IRAN, THOUGH PERHAPS MORE FRAGILE, STILL HOLDS.

IN FACT, IRAN'S ASSEMBLY OF EXPERTS JUST NAMED THE SUCCESSOR.

YOU'VE MADE IT CLEAR THE ULTIMATE GOAL IS REGIME COLLAPSE.

SO IS HE NOW A TARGET FOR ISRAEL?

>> YOU'LL HAVE TO WAIT AND SEE.

BUT IT IS CLEAR THAT HE CONTINUE THE VERY EXTREMIST AND MAD POLICIES OF HIS FATHER.

HE'S A HARDLINER.

HE IS ANTI-AMERICAN.

HE'S ANTI-WESTERN.

AND YOU CAN SEE ALREADY THE CRACKS INSIDE THIS REGIME, AND I'LL GIVE YOU ONE EXAMPLE THAT DEMONSTRATED THAT DURING LAST WEEKEND, WE HAD HEARD THE IRANIAN PRESIDENT SPEAKING ABOUT THAT.

THEY APOLOGIZE IN FRONT OF THEIR NEIGHBORS, AND THEY WILL NOT ATTACK THEM AGAIN IF THEY WILL NOT BE ATTACKED FROM THE STATES.

BUT EVENTUALLY, YOU HEARD THE SPEAKER OF THEIR PARLIAMENT SAYING NO, WE WILL CONTINUE TO ATTACK.

AND ON THE GROUND, THEY CONTINUE TO ATTACK THEIR NEIGHBORING STATES.

SO YOU CAN CONCLUDE FIRST YOU HAVE CRACKS, WHICH ARE ALREADY OPEN.

AND SECOND, IT IS CLEAR THAT THE HARDLINERS ARE STILL CALLING THE SHOTS THERE IN TEHRAN.

AND FRANKLY, WITH THESE PEOPLE, YOU CANNOT DO ANYTHING SERIOUS IF YOU WANT TO SOLVE CONFLICT.

AS WE SAW IN ALL THE EFFORTS THAT THE U.S.

HAD DONE BEFORE JUNE AND BEFORE THIS ATTACK DURING THAT TIME.

>> WE KNOW THE PRESIDENT DIDN'T WIELD MUCH POWER EVEN PRIOR TO THESE STRIKES BEGINNING LAST WEEK.

BUT YOUR POINT IS NOTED.

I DO WANT TO ASK YOU ABOUT A POINT THAT YOU HAVE MADE YOURSELF, AND THAT IS THAT IRANIANS CANNOT TOPPLE THE REGIME WITHOUT SOME KIND OF HELP FROM THE OUTSIDE.

THAT WAS YOUR QUOTE, YET U.S.

INTELLIGENCE PREDICTS THAT EVEN A MASS MILITARY ASSAULT FROM THE SKIES WON'T CRUMBLE THIS REGIME.

SO WHAT IS ISRAELI INTELLIGENCE KNOW THAT PERHAPS THE U.S.

DOESN'T?

>> YOU KNOW, PREDICTIONS ABOUT THIS KIND OF THINGS NEVER WORKS.

BUT I SAID THIS REGIME CAN CHANGE DURING THE CAMPAIGN, BUT WE CAN SEE THAT ALSO AFTER THE CAMPAIGN.

AS MUCH AS I THINK THAT WHAT WE HAD SAW ON THE STREETS OF IRAN DURING DECEMBER, DURING JANUARY WAS A RESULT OF OUR PREVIOUS ATTACKS ON JUNE.

AND THAT CRACKED THE IMAGE OF POWER OF THIS REGIME INTERNALLY AND EXTERNALLY.

SO THIS IS VERY IMPORTANT TO GIVE THE PEOPLE OF IRAN THE CONDITIONS TO ACT.

AND YOU DO THAT BY SYSTEMATICALLY DECREASING THE POWERS OF THE REGIME, WHICH IS A VERY REPRESSIVE REGIME, ATTACKING REVOLUTIONARY GODS, ATTACKING BESIEGE, ATTACKING ALL THE REPRESSIVE APPARATUS.

THIS IS WHAT WE DO.

AND I THINK THAT EVENTUALLY WE SAW THE PEOPLE OF IRAN WANT TO FIGHT FOR THEIR, UH, FREEDOM TO REGAIN THEIR FREEDOM.

AND THEY PAID HEAVY PRICES FOR THAT.

BUT NO ONE WAS THERE.

IT IS CLEAR THEY COULDN'T DO THAT ALONE.

I THINK THAT THIS OPERATION CAN CREATE THE CONDITIONS FOR THAT.

BUT AT THE END OF THE DAY, AS YOU QUOTED, IT CAN BE DONE WITHOUT THE IRANIAN PEOPLE THEMSELVES.

>> AND DOES THAT INCLUDE ATTACKING IRANIAN FUEL DEPOTS?

AS YOU KNOW, AXIOS IS REPORTING AFTER ISRAEL STRUCK 30 IRANIAN FUEL DEPOTS THIS WEEKEND, IT WENT BEYOND WHAT WASHINGTON HAD EXPECTED, SPARKING PERHAPS THE FIRST RIFT AT LEAST PUBLICLY BETWEEN THESE TWO ALLIES.

AN ISRAELI OFFICIAL SAYS THE U.S.

REACTION WAS LITERALLY, QUOTE, WTF.

AND THAT A TRUMP ADVISOR SAYS THE PRESIDENT DIDN'T LIKE THE ATTACK BECAUSE IT SPOOKED OIL MARKETS, WHICH WE'VE SEEN SKYROCKET IN THE LAST 48 HOURS ALONE.

ARE YOU NEEDLESSLY FRACTURING THE MOST IMPORTANT RELATIONSHIP THAT YOU NEED AND DEPEND UPON FOR THIS WAR?

>> WE HAVE VERY GOOD COORDINATION WITH OUR FRIENDS FROM THE AMERICAN ADMINISTRATION BOTH IN THE POLITICAL AND MILITARY LEVEL, AND WE ARE NOT HANDLING THAT IN THE MEDIA.

WHAT I CAN SAY ON THE THING ITSELF IS WE STRUCK SEVERAL FUEL STORAGE COMPLEXES USED BY THE IRANIAN MILITARY FORCES.

SO IT WAS THE PURPOSE OF THESE STRIKES WAS TO HURT IRANIAN MILITARY ACTIVITY.

AND WHATEVER WE SHOULD SAY, WE SAY BETWEEN US AND OUR FRIENDS FROM THE AMERICAN ADMINISTRATION.

IT'S A VERY TIGHT, CLOSE COORDINATION AND COOPERATION.

>> DID YOU HEAR CONCERN FROM THE AMERICANS?

>> RIGHT AWAY, I WANT TO EMPHASIZE THE FACT THAT THE WAR OF IRAN, YOU CAN SEE WHEN THEY ALSO TARGET STATES WHICH ARE NOT OUR FRIENDS LIKE TURKEY OR QATAR.

FROM IRANIAN PERSPECTIVE, IT'S A WAR AGAINST ALL AMERICAN ALLIES IN THIS REGION.

BECAUSE THE U.S.

PRESIDENT HAD REALLY DONE HERE SOMETHING WHICH IS VERY GREAT.

HE DECIDED TO ACT.

WE HAD A LOT OF TALKS IN THE PAST WITH REGARD TO PROLIFERATION OF NUCLEAR WEAPONS.

I CAN REMIND YOU THAT DURING THE '90s, PRESIDENT CLINTON WARNED NORTH KOREA NOT TO DO IT, BUT THEY HAD DONE IT.

BECAUSE EVENTUALLY THERE WAS NO ONE TO BACKWARD MISDEEDS.

WHAT PRESIDENT TRUMP HAS DONE HERE IS GREAT FROM A HISTORICAL POINT OF VIEW AND ALSO FROM THE POINT OF VIEW OF AMERICAN LEADERSHIP IN THE WORLD.

>> IS THERE CONCERN, THOUGH, WITH ACTIONS LIKE THESE, I KNOW ISRAEL SAYS IT STRUCK THESE FUEL DEPOTS BECAUSE THEY WERE BEING USED BY THE IRGC.

IS THERE CONCERN GIVEN THE IMAGES WE'VE SEEN OVER THE SKIES OF TEHRAN, THIS TYPE OF STRIKE TO THIS DEGREE AND EXTENT, IS THERE CONCERN THAT IN YOUR ATTEMPT TO HELP THE IRANIAN PEOPLE, IT COULD IN FACT BACKFIRE AND TURN THEM AGAINST ISRAEL AND THE UNITED STATES AND THEIR EFFORT TO TOPPLE THE REGIME?

>> I DON'T THINK SO.

I WE KNOW WHAT WE DO.

I THINK WE ARE COORDINATED WITH THE UNITED STATES, WHICH IS OUR GREATEST ALLY AND PARTNER TO THIS IMPORTANT WAR BY THE COURAGEOUS DECISION OF PRESIDENT TRUMP.

AND WE WILL ACT WITH WISDOM, AND WE WILL ACT IN ORDER TO, AMONG OTHER THINGS, WHICH I MENTIONED WITH REGARD TO THE NUCLEAR PROGRAM, BALLISTIC MISSILES PROGRAM, AND OTHER THINGS, WE WILL CREATE THE BEST CONDITIONS FOR THE IRANIAN PEOPLE TO REGAIN THEIR FREEDOM.

BUT EVENTUALLY, IT WILL BE DEPENDENT ON THEM.

THIS IS SOMETHING THAT MUST BE CLEAR AS WELL.

>> U.S.

INTELLIGENCE SAYS IRAN CAN STILL ACCESS HIGHLY ENRICHED URANIUM.

THERE ARE REPORTS THAT THE U.S.

IS EVEN CONSIDERING SPECIAL GROUND FORCES TO SEIZE THAT ENRICHED URANIUM, PERHAPS EVEN ALONGSIDE ISRAELI GROUND FORCES.

IS THAT AN OPTION?

>> I WILL SAY THAT IT IS EXTREMELY NOT WISE DURING WAR TO HINT OR TO SAY WHAT OPERATIONAL MOVES YOU'RE GOING TO DO.

I WON'T SPEAK ABOUT THESE ISSUES.

I WILL ONLY SAY WE ARE DECISIVE TO ACHIEVE OUR OBJECTIVES.

AND FROM MY IMPRESSION, THE AMERICAN ADMINISTRATION IS NOT LESS DECISIVE THAN US.

>> LET ME TURN NOW TO THE FIGHT AGAINST HEZBOLLAH, WHICH HAS ENTERED THIS WAR AS WELL BY LAUNCHING STRIKES INITIALLY AT ISRAEL, AND NOW ISRAEL THEN RESPONDING.

THE DEATH TOLL IS IN THE HUNDREDS NOW.

YOUR NORTH COMMAND SAYS THAT HEZBOLLAH IS FIGHTING COMPLETELY INDEPENDENTLY OF TEHRAN.

IF DEGRADING IRAN TO THIS POINT HAS NOT DETERRED HEZBOLLAH, WHAT IS YOUR EXIT STRATEGY IN LEBANON?

DOES THAT INCLUDE SENDING GROUND FORCES INTO LEBANON?

>> AGAIN, FIRST OF ALL, THE COORDINATION, THE OPERATIONAL COORDINATION BETWEEN IRAN AND HEZBOLLAH IS LESS IMPORTANT THAN THE FACT THAT THEY WERE JOINING THIS WAR BY AN IRANIAN DEMAND, AND IT ONLY DEMONSTRATES THEY ARE NOT LOYAL TO LEBANON.

THEY ARE WORKING AGAINST THE WILL OF THE LEBANESE PEOPLE AND THE WILL OF THE LEBANESE GOVERNMENT.

AND THEREFORE, IT IS CLEAR WE WILL ACT, WE WILL ACT STRONGLY AS MUCH AS WE DO.

WE WILL DO WHAT WE HAVE TO DO.

BUT WE WILL NOT LOSE THE UNDERSTANDING THAT OUR MAIN OBJECTIVES ARE IN IRAN.

AND THIS IS VERY IMPORTANT BECAUSE IN WARS, YOU ALWAYS HAVE MAIN FRONT AND SECONDARY EFFORT.

OUR MAIN FRONT WILL CONTINUE TO BE IRAN.

BUT I CAN ASSURE YOU THAT HEZBOLLAH CAPABILITIES WILL BE, THEY WERE ALREADY DEGRADED DURING THE WAR IN 2024.

BUT THEY WERE DRAMATICALLY, WILL DO THAT IN A MORE DRAMATIC WAY DURING THE NEXT DAYS.

AND THIS IS VERY IMPORTANT TO THE SECURITY OF OUR NATION.

BUT IT IS NOT LESS IMPORTANT TO THE LEBANON'S FUTURE.

BECAUSE AT THE END OF THE DAY, IF LEBANON WILL NOT DISMANTLE THE HEZBOLLAH, IT WILL REMAIN UNDER A DEFACTO IRANIAN OCCUPATION.

THEY ARE NOT FREE.

THEY ARE NOT SOVEREIGN WHEN HEZBOLLAH CAN DO WHATEVER THEY WANT TO DO THERE.

AND THEY CANNOT ENFORCE DISCIPLINE.

SO AGAIN, THE GOVERNMENT OF LEBANON SPOKE ABOUT THAT, THAT THEY WANT TO DISMANTLE THE HEZBOLLAH.

IT WAS THEIR DECISION.

BUT THEY DIDN'T DO THAT EVENTUALLY.

I HOPE THAT WE WILL DEGRADE THE CAPABILITIES AND THE FORCES OF HEZBOLLAH TO THE EXTENT THAT THEY WILL BE ABLE TO DO THAT BECAUSE IT'S IMPORTANT FOR OUR SECURITY.

IT'S ALSO IMPORTANT FOR LEBANON'S FUTURE.

>> ONE OF ISRAEL'S TOP OBJECTIVES NOW, IS IT THE ASSASSINATION, THE ELIMINATION OF ASASAH?

>> WE NEVER DECLARE OPERATIONAL STEPS OR ACTIONS.

FOR THOSE KINDS OF THINGS, YOU WILL HAVE TO WAIT AND SEE.

>> OKAY.

MR.

FOREIGN MINISTER, I KNOW WE ARE TIGHT FOR TIME.

IF I COULD GET ONE MORE IMPORTANT QUESTION IN HERE BECAUSE THE AMERICAN PUBLIC IS VERY CONCERNED ABOUT WHAT WE'RE SEEING IN TERMS OF GAS PRICES GOING UP, OIL PRICES GOING UP, U.S.

SERVICE MEMBERS BEING KILLED.

YOU HAD YOUR CHIEF OF STAFF TELL THE ISRAELI PUBLIC THIS WAR WILL BE A LONG WAR.

PRESIDENT TRUMP TELLING THE AMERICAN PUBLIC IT WILL END WHEN HE AND PRIME MINISTER NETANYAHU AGREE TO IT ON THEIR OWN TERMS.

WHAT DOES THAT TIMELINE LOOK LIKE?

IS ISRAEL PREPARED TO PULL OUT OF THIS WAR?

>> WE'LL COMMUNICATE WITH THE U.S.

NOT THROUGH THE MEDIA.

WE HAD A MUTUAL DECISION.

WE THOUGHT IT IS IMPORTANT, IT IS HISTORIC, AND I JUST WANT TO SAY ONE THING.

SEE WHAT IRAN IS DOING NOW TO ALL ITS NEIGHBORS IN THE GULF, QATAR, TURKEY, UAE.

IMAGINE WHAT THEY WOULD HAVE DONE IF THEY EVENTUALLY GOT NUCLEAR WEAPONS.

SO THIS IS, THIS IS THE KIND OF REGIME WE ARE SPEAKING ABOUT.

IT'S THE MOST EXTREMIST REGIME ON EARTH.

AND IT IS TO PREVENT FROM THIS KIND OF REGIME TO HAVE THE MEANS TO TOTALLY CHANGE THE REALITY NOT ONLY IN THE MIDDLE EAST BUT FAR BEYOND THAT.

THEY ALWAYS WORK AGAINST AMERICAN INTERESTS.

AND RIGHT NOW WHEN THEY'RE ATTACKING, ALL THESE STATES ARE ATTACKING AMERICAN INTERESTS.

SO I BELIEVE IT WAS THE RIGHT THING TO DO WHEN YOU GO TO A WAR, YOU ALWAYS HAVE PRICES.

IT'S TOUGH TO BE IN WAR, BUT SOMETIMES IT'S MORE DANGEROUS NOT TO ACT THAN TO ACT.

AND I'M SURE THAT IN THIS CASE, WE BOTH HAD THE RIGHT DECISIONS TO ACT.

AND I PRAISE BOTH LEADERS, PRESIDENT TRUMP AND PRIME MINISTER NETANYAHU, FOR LEADING AND BRINGING THESE TOUGH DECISIONS AND ALSO TAKING BOTH NATIONS TO DO WHAT THEY HAVE TO DO NOW IN IRAN.

>> MR.

FOREIGN MINISTER, THANK YOU SO MUCH FOR YOUR TIME.

WE REALLY APPRECIATE IT TODAY.

>> THANK YOU SO MUCH.

>>> REPORTING ON THE GROUND IN TEHRAN.

WE SPOKE EXCLUSIVELY TO THE FOREIGN POLICY ADVISOR TO THE SUPREME LEADER.

FRED AND HIS TEAM ARE OPERATING IN IRAN WITH THE PERMISSION OF THE IRANIAN GOVERNMENT BUT MAINTAIN FULL EDITORIAL CONTROL OVER THEIR REPORTING.

>> IRAN HAS A NEW SUPREME LEADER.

WHAT DOES THAT MEAN FOR YOUR MILITARY EFFORT AND THE CONFRONTATION WITH THE UNITED STATES AND ISRAEL?

>> THAT MEANS THE SYSTEM IS QUITE FUNCTIONING.

>> SO THE UNITED STATES SAYS IT'S DRASTICALLY DEGRADED THE IRANIAN MILITARY.

HOW MUCH LONGER CAN YOU DO THIS?

>> THAT IS ONE OF THE FALSE NARRATIVES THAT THE UNITED STATES GOVERNMENT IS PRODUCING.

THE IRANIAN MILITARY IS QUITE STRONG, AS YOU SEE, BECAUSE THEY HAVE THE ARMS THEY NEED, WHICH ARE PRODUCED IN IRAN.

AS A MATTER OF FACT, WE ARE NOT DEPENDENT ON ANY OTHER COUNTRY FOR WEAPONS AND ARMS.

>> SO YOUR SIDE IS READY FOR A LONG WAR IF THE UNITED STATES AND ISRAEL CHOOSE THAT?

DO YOU CONSIDER THIS AN EXISTENTIAL THREAT TO THE ISLAMIC REPUBLIC?

>> IT IS AN EXISTENTIAL THREAT TO THE ISLAMIC REPUBLIC, AND THEREFORE WE HAVE TO GO IN FULL MIGHT LIKE WE ARE DOING NOW.

>> WILL YOU SEEK A CEASE-FIRE WITH THE UNITED STATES AND ISRAEL AT THIS POINT IN TIME?

>> I DON'T SEE ANY ROOM FOR DIPLOMACY ANYMORE BECAUSE DONALD TRUMP HAS BEEN DECEIVING OTHERS AND NOT KEEPING HIS PROMISES.

AND WE EXPERIENCED THIS IN TWO TIMES OF NEGOTIATIONS.

WHILE WE WERE IN NEGOTIATIONS, THEY DISTRACT US.

>> HOW DOES ALL OF THIS END THEN?

IF YOU SAY THERE'S NO ROOM FOR NEGOTIATION, PRESIDENT TRUMP SAYS HE WANTS COMPLETE SURRENDER, WHAT DOES THAT LEAD TO?

>> THERE'S NO ROOM UNLESS THE ECONOMY PRESSURE WOULD BE BEEFED UP TO THE EXTENT THAT OTHER COUNTRYIES WOULD GUARANTEE THIS TERMINATION OF AMERICANS AND ISRAELIS AGAINST IRAN.

>> FINALLY, WHAT IS YOUR MESSAGE TO PRESIDENT TRUMP AS WE SIT HERE AS THE WAR IS GOING ON?

>> THAT MEANS THAT WHAT IS IMPORTANT FOR US IS THE END OF THIS GAME.

AND WE ARE READY TO CONTINUE WITH THAT GAME.

>> THE END OF THIS GAME, YOU MEAN HOW THIS WAR WILL END?

>> THE END OF THE GAME WOULD BE THE TIME THAT AMERICAN AND ISRAELIS WOULD COME TO THE UNDERSTANDING THAT THIS STRATEGY IS NOT WORKING.

AND AFTER STOP THEIR ACTIONS AGAINST IRANIANS.

>> THE UNCERTAINTY IS HITTING CONSUMERS WITH GAS PRICES UP 16% FROM LAST WEEK.

PRESIDENT TRUMP SAYS IT'S A SMALL PRICE TO PAY, BUT NOT EVERYONE AGREES.

THE IMF CHIEF IS WARNING POLICYMAKERS TO PREPARE FOR THE UNTHINKABLE.

FRANCE SAID, QUOTE, WE'RE NOT THERE YET.

JASON FURMAN WAS CHAIR OF THE WHITE HOUSE COUNCIL OF ECONOMIC ADVISORS.

HE JOINS ME FROM CAM BRIDGE, MASSACHUSETTS.

OIL SKYROCKETED, THE HIGHEST SINCE FOUR YEARS AGO.

REGULAR GASOLINE ACROSS THE UNITED STATES COSTS 46-CENTS MORE A GALLON THAN IT DID A WEEK AGO ACCORDING TO AAA.

GIVEN THE AMOUNT OF GLOBAL OIL THAT IS READILY AVAILABLE FOR THE MARKETPLACE, ARE YOU SURPRISED AT THE RAPID SPIKE THAT WE'VE SEEN IN JUST THE LAST 10 DAYS ALONE?

>> I'M NOT THAT SURPRISED BY IT.

CLOSING THE STRAIT OF HORMUZ HAS BEEN THE EVENT PEOPLE HAVE BEEN TALKING ABOUT AND SPECULATING ABOUT FOR DECADES.

IT'S FINALLY HERE.

YES, THE WORLD IS MAKING A LOT OF OTHER OIL.

PART OF WHY THE PRICES GO UP NOW IS PRECAUTIONARY.

AN EXTRA SETTING ASIDE OF RESERVES NOW IN CASE THIS DISRUPTION LASTS LONGER.

AND IF IT DOESN'T, PRICES WILL COME BACK DOWN AGAIN.

>> WHAT DOES A SUSTAINED ENERGY SHOCK OF THIS MAGNITUDE LOOK LIKE?

HERE WE ARE 10 DAYS IN.

ECONOMISTS LIKE YOURSELF SAY THIS IS NOTHING TO PANIC ABOUT YET.

WHEN DOES THAT TURN TO PANIC?

>> FOR THE U.S.

ECONOMY AS A WHOLE, WE'RE SOMEWHAT HEDGED.

WE'RE A SMALL NET OIL EXPORTER.

WE PRODUCE A LOT OF OIL HERE.

THE PROBLEM IS CONSUMERS ARE NOT HEDGED.

UNLESS YOU HAPPEN TO BE A CONSUMER WHO ALSO OWNS AN OIL COMPANY, WHAT YOU'RE FACING ARE THE HIGHER PRICES AT THE PUMP, AND YOU'RE NOT BENEFITING FROM THE OTHER SIDE OF THE EQUATION.

IT'S A REALLY UNEQUAL IMPACT THIS IS HAVING ON THE U.S.

ECONOMY AND AMERICAN FAMILIES.

>> EXPLAIN HOW THAT WORKS.

BECAUSE FOR MANY AMERICANS, ESPECIALLY OLDER AMERICANS IF YOU GO BACK TO THE CONFLICT IN THE MIDDLE EAST FROM THE LATE '70s TO THE EARLY '90s AND EVEN 2003 AND THE WAR IN IRAQ WHERE WE SAW OIL PRICES AND GAS PRICES FOLLOW IN LOCK STEP BY SKYROCKETING, HERE AT THE SAME TIME THEY'RE HEARING THE UNITED STATES IS THE WORLD'S LARGEST OIL PRODUCER AT THIS POINT.

THAT THERE'S PLENTY OF OIL ON THE MARKET HERE.

WE'RE GETTING REASSURANCE FROM THE ENERGY SECRETARY, THE PRESIDENT ON DOWN.

SO EXPLAIN WHY BECAUSE OIL IS FUNGIBLE, THIS IS STILL SOMETHING THAT THEY'RE GOING TO HAVE TO DEAL WITH, AT LEAST IN THE SHORT TERM WHEN THEY GO FILL UP THEIR CARS.

>> YEAH.

WHETHER YOUR COUNTRY IS A NET OIL EXPORTER LIKE THE UNITED STATES IS OR CANADA IS IN A REALLY BIG WAY OR IT'S A NET OIL IMPORTER, THE PRICE IS STILL SET ON A GLOBAL MARKET.

IF AMERICAN BUSINESSES CAN SELL THEIR OIL FOR MORE MONEY IN ANOTHER COUNTRY, THEY'RE GOING TO SEND IT THERE RATHER THAN HERE.

SO WE ARE SUBJECT TO THE EXACT SAME PRICE FLUCTUATIONS.

WE PROBABLY WON'T HAVE ANYTHING LIKE THE 1979 SHORTAGES.

THIS ISN'T GONNA BE LIKE ODD NUMBERED LICENSE PLATES GET GAS ONE DAY, EVEN NUMBERED GET THEM THE NEXT DAY.

BUT THERE'S NOTHING AMERICAN CONSUMERS CAN DO TO HIDE IF THE GLOBAL PRICE OF OIL GOES UP AS IT HAS.

>> I MENTIONED ENERGY SECRETARY CHRIS WRIGHT TRIED TO ALLEVIATE SOME OF THESE CONCERNS OVER THE WEEKEND.

HERE'S WHAT HE TOLD OUR JAKE TAPPER ON SUNDAY ON STATE OF THE UNION.

>> GASOLINE TODAY IS STILL $1.50 CHEAPER THAN IT WAS IN THE MIDDLE OF THE BIDEN ADMINISTRATION.

BUT YOU'RE RIGHT, WE WANT IT BACK BELOW $3 A GALLON, AND IT WILL BE AGAIN BEFORE TOO LONG.

>> WHAT DO YOU MEAN BY TOO LONG?

HOW MUCH LONGER?

>> LOOK, YOU NEVER KNOW EXACTLY THE TIMEFRAME OF THIS.

BUT IN THE WORST CASE, THIS IS WEEKS, NOT A MONTHS THING.

>> DO YOU AGREE WITH THAT, JASON?

DO YOU TAKE IT AT FACE VALUE?

AND WE DO KNOW THAT HISTORICALLY WHILE GAS AND OIL PRICES CAN SKYROCKET QUICKLY, THEY DON'T NECESSARILY COME DOWN AT THAT SAME PACE.

>> YEAH.

THAT'S RIGHT.

AND YOU KNOW, THE GASOLINE PRICES HE WAS REFERRING TO DURING THE BIDEN ADMINISTRATION IS AFTER RUSSIA INVADED UKRAINE.

THAT ALSO CAUSED GLOBAL OIL PRICES TO INCREASE.

THE AMOUNT OF DISRUPTION HERE IS LARGER THAN IT WAS AS A RESULT OF THAT CONFLICT.

AND THE OPEN QUESTION WHICH NO ONE KNOWS THE ANSWER TO IS HOW LONG WILL IT LAST?

THE FACT IS THERE'S NOT VERY MUCH A U.S.

ENERGY SECRETARY CAN DO RIGHT NOW TO BRING DOWN OIL PRICES.

IT WOULD REQUIRE I'M NOT AN EXPERT IN THIS BUT A MORE COHERENT SET OF WAR OBJECTIVES ON THE BEHALF OF THE PEOPLE WHO ARE, YOU KNOW, ORGANIZING WHAT IS GOING ON IN THE MIDDLE EAST.

THERE'S NOT MUCH YOU CAN DO TO PATCH UP AFTER THAT.

>> AS WE HEARD LAST WEEK FROM PRESIDENT TRUMP, WE ARE EXPECTING TO HEAR FROM THE LEADER TONIGHT, BUT AS OF LAST WEEK WHEN ASKED IF HE WAS PREPARED TO TAP INTO THE OIL RESERVE, HE SAID NO.

WE HEARD THE SAME FROM G-7 LEADERS AS WELL.

WHEN WOULD BE AN APPROPRIATE TIME TO DO THAT, JASON?

BECAUSE PRESIDENT BIDEN DID IT UNDER CIRCUMSTANCES THAT WERE NOT AS EXTREME AS THE UNITED STATES POTENTIALLY ENTERING A WAR.

>> YEAH.

I ACTUALLY THINK PRESIDENT BIDEN MIGHT HAVE BEEN WRONG TO DO THAT.

IT MIGHT HAVE BEEN BECAUSE IT WAS AN ELECTION YEAR HE WAS THINKING ABOUT IT.

>> THIS IS ALSO.

>> THIS IS ALSO A MID-TERM ELECTION YEAR.

I'M SURPRISED THAT THE ADMINISTRATION ISN'T MORE FORWARD-LOOKING AND ENTHUSIASTIC ABOUT IT.

I WOULD WANT TO SEE MORE OF A SUSTAINED PRICE ABOVE $100 A BERYL RATHER THAN JUST FLIRTING WITH THAT NUMBER AND THE FUTURE MARKETS ARE STILL PROJECTING THAT PRICE WOULD COME DOWN.

SO A LITTLE BIT MORE EXPECTATION OF A SUSTAINED HIGHER PRICE THAN WE HAVE RIGHT NOW.

AT THAT POINT, IT WOULD BE APPROPRIATE TO USE IT TO STABILIZE THE PRICE.

>> CAN YOU RESPOND TO WHAT PRESIDENT TRUMP POSTED ON TRUTH SOCIAL LAST NIGHT WHEN HE WROTE SHORT-TERM OIL PRICES WHICH WILL DROP RAPIDLY WHEN THE DESTRUCTION OF THE IRANIAN NUCLEAR THREAT IS OVER IS A SMALL PRICE TO PAY FOR USA AND WORLD SAFETY AND PEACE.

ONLY FOOLS WOULD THINK DIFFERENTLY.

AS A FORMER ADVISOR TO A PRESIDENT, IS THAT THE TYPE OF LANGUAGE OR MENTALITY THAT YOU WOULD SUGGEST THAT HE RELAY TO THE AMERICAN PUBLIC?

>> I MEAN, THERE WAS A PIECE OF IT THAT WAS HONEST, WHICH IS HE IS ADMITTING THERE ARE HIGHER GASOLINE PRICES RIGHT NOW BECAUSE OF HIS FOREIGN POLICY CHOICES.

THAT'S SCREAMINGLY OBVIOUS.

SOMEBODY SHOULD GET CREDIT FOR ADMITTING THE OBVIOUS.

THE FALLING RAPIDLY, TO ME, IS NOT WHAT I WOULD FORECAST HAPPENS.

EVEN IF OIL PRICES FALL RAPIDLY, THE GASOLINE IN SOME SENSE HASN'T FULLY CAUGHT UP WITH THE OIL PRICE INCREASE WE'VE SEEN.

IF YOU LOOK AT FUTURES MARKETS, THEY'RE PRICING IN AN OIL PRICE INCREASE EVEN A YEAR FROM NOW AS A RESULT OF THIS CONSISTENT WITH GASOLINE BEING MAYBE 40-50- CENTS A GALLON MORE EXPENSIVE THAN IT WOULD HAVE BEEN ABSENT THIS.

THAT'S ASSUMING EVERYTHING GOES RIGHT OVER THE NEXT YEAR.

>> AS I NOTED IN THE INTRODUCTION, THE IMF MANAGING DIRECTOR WARNED A PROLONGED CONFLICT COULD DRIVE UP GLOBAL INFLATION AND ADVISED POLICYMAKERS TO THINK OF THE UNTHINKABLE AND PREPARE FOR IT.

HOW DO GOVERNMENTS PREFAIR FOR THE UNTHINKABLE?

YOU'VE BEEN IN THAT VERY SITUATION.

>> YEAH.

I MEAN NORMALLY THE INFLATION DUE TO AN OIL SHOCK IS SOMETHING POLICYMAKERS SHOULD IGNORE.

THEY SHOULD LOOK THROUGH IT BECAUSE THERE'S NOT A LOT ECONOMIC POLICYMAKERS CAN DO.

YOU DON'T WANT TO RAISE INTEREST RATES IN ORDER TO BRING DOWN OIL INFLATION.

IT'S NOT THE CAUSE OF THAT INFLATION.

RIGHT NOW IF YOU'RE SITTING AT THE FED, THOUGH, YOU'RE NERVOUS.

INFLATION HAS BEEN ABOVE TARGET FOR FIVE YEARS NOW.

WHAT IF PEOPLE GET USED TO THAT?

WHAT IF IT BECOMES SELF- FULFILLING?

FOR THE FED, THIS WILL MAKE IT HARDER FOR THEM TO CUT INTEREST RATES AND GIVE THE ECONOMY THE HELP IT NEEDS BECAUSE WE CAME INTO THIS WITH INFLATION ALREADY BEING TOO HIGH.

>> AT THE SAME TIME, JASON, WE GOT A WEAKER THAN EXPECTED JOBS REPORT ON FRIDAY.

THE U.S.

ECONOMY LOST 92,000 JOBS, THE UNEMPLOYMENT RATE TICKED UP SLIGHTLY.

FROM THAT PERSPECTIVE ALONE, HOW WOULD YOU RATE THE HEALTH OF THE U.S.

ECONOMY ESPECIALLY AS THE PRESIDENT CONTINUES TO PRESSURE THE FED CHIEF, THE OUTGOING, AND THEN THE FUTURE INCOMING THAT HE WANTS LOW RATES?

>> YEAH.

THIS IS A REALLY CHALLENGING SITUATION BECAUSE YOU SEE THE SIGNS OF WEAKENING IN THE JOB MARKET, AND YOU SEE INFLATION.

ONE SAYS YOU SHOULD CUT RATES.

THE OTHER SAYS YOU SHOULD RAISE RATES.

THE FED I THINK IS DOING THE RIGHT THING BY STANDING FIRM AND NOT MAKING ANY CHANGES RIGHT NOW.

OF COURSE PRESIDENT TRUMP HAS HIS OWN VIEWS ON THE QUESTION.

AND HE WANTS TO MAKE THEM KNOWN ON TRUTH SOCIAL, THAT DOESN'T BOTHER ME THAT MUCH.

WHEN HE TRIES TO FIRE OR INVESTIGATE PROSECUTING PEOPLE TO GET HIS WAY, THAT'S A MUCH, MUCH BIGGER AND MORE DAMAGING THING FOR THE U.S.

ECONOMY.

>> I THINK THAT CASE IS STILL ONGOING.

I'M NOT SURE IT'S BEEN DROPPED THUS FAR, THOUGH THERE HAS BEEN A LOT OF PRESSURE FROM MEMBERS OF THE PRESIDENT'S OWN PARTY, EVEN THREATENING THEY WON'T CONFIRM KEVIN WARSH UNLESS HE DROPS THAT INVESTIGATION.

STICKING WITH THE HEALTH OF THE U.S.

ECONOMY, YOU HAVE CALLED THE LABOR SLOW DOWN NORMALIZATION.

WHAT HAPPENS TO YOU WHEN YOU FACTOR IN WAR AND THEN CONSUMER SENTIMENT WHEN THEY ARE, PERHAPS, WORRIED ABOUT A SLOW DOWN AND PERHAPS MORE JOB LOSSES?

AND THAT COUPLED WITH RISING GAS PRICES WHEN YOU'RE LOOKING AT THEIR BEHAVIOR OVER THE NEXT FEW MONTHS.

>> YEAH.

THAT'S A BIG WILDCARD.

LAST YEAR, CONSUMER SENTIMENT MEASURED BY THE UNIVERSITY OF MICHIGAN WAS BELOW WHAT IT WAS DURING THE FINANCIAL CRISIS AND THE GREAT RECESSION.

EXTRAORDINARY.

IT'S COME UP A LITTLE SINCE THEN.

I'M SURE WHEN WE SEE THE NUMBERS FOR MARCH, IT WILL BE EVEN LOWER THAN IT WAS LAST YEAR.

CONSUMERS ARE ROCK BOTTOM, INCREDIBLY SOUR.

SO FAR, THAT'S WHAT THEY TELL POLLSTERS, BUT THEN THEY GO OUT AND SPEND MONEY AND KEEP THE ECONOMY GOING.

THE QUESTION IS HOW LONG CAN THAT LAST?

IF YOU LOOK AT THE 1990 GULF WAR, WE HAD A BIG RECESSION.

WE HAD A RECESSION IN 1991 THAT IN PART WAS CAUSED BY CONSUMERS JUST BEING NERVOUS ABOUT WHAT WAS GOING ON IN THE MIDDLE EAST, WHAT WAS GOING ON WITH OIL.

PSYCHOLOGY, DOES THAT STILL MATTER?

WE'RE GONNA FIND OUT.

>> SOMETHING ELSE THAT YOU'RE INTERESTED IN, ADAM SMITH THE WEALTH OF NATIONS WAS PUBLISHED 250 YEARS AGO.

THE ANNIVERSARY COMES AS THE U.S.

GOVERNMENT HAS BECOME MORE INVOLVED IN TECHNOLOGY, MEDIA, OTHER SECTORS OF THE ECONOMY.

THIS IS A REPUBLICAN ADMINISTRATION AS WELL.

HOW IS SMITH'S MESSAGING RELEVANT TODAY SOME 250 YEARS LATER?

>> YEAH.

I HAVE A PIECE IN THE NEW YORK TIMES ABOUT THIS.

AS AN ECONOMIST, THIS IS THE MOST EXCITING 250th ANNIVERSARY THAT'S HAPPENING THIS YEAR.

WHAT ADAM SMITH DID IS HE SAID THE ECONOMY SHOULD BE ABOUT PEOPLE.

IT SHOULD BENEFIT PEOPLE.

THAT SOUNDS REALLY OBVIOUS.

AT THE TIME, PEOPLE WERE TRYING TO ORGANIZE THE ECONOMY TO BENEFIT KINGS.

EVEN NOW, SOME ECONOMIC POLICY IS ABOUT BENEFITING MAYBE THE GOVERNMENT, BIG CORPORATIONS, OTHER ORGANIZATIONS.

IF YOU PUT PEOPLE AT THE CENTER, THEY CAN DO AMAZING THINGS, AND OFTEN DO AMAZING THINGS WITHOUT A LOT OF TOP- DOWN ORGANIZATION.

I THINK THAT IS JUST AS RELEVANT TODAY AS EVER.

>> IT IS A REALLY INTERESTING AND THOUGHTFUL PIECE TO READ.

I ENCOURAGE EVERYONE TO READ IT IN THE NEW YORK TIMES.

THANK YOU SO MUCH.

GOOD TO SEE YOU.

>> THANK YOU.

>>> NOW UP TO $175 BILLION OF REFUNDS COULD BE GIVEN BACK TO BUSINESSES THAT PAID IMPORT TAXES AFTER THE SUPREME COURT RULED PRESIDENT TRUMP'S GLOBAL TARIFFS ILLEGAL LAST MONTH.

BUT FOR MANY SMALL AMERICAN COMPANIES, THE DAMAGE HAS BEEN DONE.

SOME OWNERS ARE DOUBTING WHETHER THEY CAN REALLY CLAIM THEIR MONEY BACK.

FOUNDER OF COPPER COW COFFEE AND CEO SPEAK TO MICHEL MARTIN ABOUT HOW THEY'VE BEEN NAVIGATING THE UNCERTAINTY THIS PAST YEAR.

>> THANKS.

DEBBIE AND SARA, THANK YOU FOR TALKING WITH US ONCE AGAIN.

>> THANK YOU.

>> SO PEOPLE MAY REMEMBER THAT YOU JOINED US LAST APRIL WHEN THE TRUMP ADMINISTRATION'S TARIFF SCHEME, TARIFF PROGRAM WAS FIRST ANNOUNCED.

AND YOU TALKED ABOUT JUST WHAT CHAOS IT KIND OF UNLEASHED.

SO I JUST WANTED TO KIND OF GO BACK TO THAT AND JUST ASK, WHAT DO YOU REMEMBER, YOU KNOW, FROM OVER THE COURSE OF THE YEAR?

LIKE WHAT STANDS OUT FOR YOU?

DEBBIE, DO YOU WANT TO START?

>> SURE.

I THINK IT'S FUNNY BECAUSE I'M SURE SARA FEELS THE SAME WAY.

MY COMPANY HAS LIVED VERY MANY DIFFERENT LIVES DRIVEN BY THE TARIFF NEWS.

WHEN WE CAME ON TO THE SHOW LAST, WE HAD JUST BEEN ANNOUNCED THAT VIETNAM WOULD HAVE 47% TARIFFS.

IT HAS TAKEN ON MANY DIFFERENT VALUES SINCE THEN.

OFTENTIMES, YOU HAVE PRODUCT ON THE WATER, AND YOU HAVE NO IDEA HOW MUCH IT'S GONNA COST WHEN IT GETS HERE.

IT'S BEEN A REALLY, REALLY DIFFICULT THING WE'VE ALL HAD TO DEAL WITH SINCE WE WERE ON THE SHOW LAST.

>> SARA, WHAT ABOUT YOU?

FOR PEOPLE WHO REMEMBER AND ALSO ENJOY HER PRODUCTS, HER PRODUCT IS BASED IN VIETNAM.

THAT'S THE WHOLE POINT.

IT'S A VIETNAMESE COFFEE, SHE KNOWS THE FARMERS, THAT'S THE WHOLE POINT.

SARA, YOU SOURCE FROM CHINA AND SOME FROM JAPAN AND PERU.

WHAT'S THE YEAR BEEN LIKE FOR YOU?

>> I'D SAY IT'S BEEN WHIPLASH AFTER WHIPLASH.

AFTER SURVIVING THE INSANITY THAT WAS APRIL AND MAY AND BEING ON WHAT'S APP AND PHONE CALLS WITH OUR SUPPLIERS THROUGH ALL HOURS OF THE NIGHT, WE STARTED TO SHIFT OUR FOCUS AND SAY OKAY, ARE THERE OTHER VENDORS IN OTHER PARTS OF THE WORLD?

YOU KNOW, WE LOOKED AT EUROPE AND TURKEY, SOUTH AMERICA.

COULD THEY BE POTENTIAL NEW PARTNERS TO US?

AND ALL THESE THINGS TAKE AN EXTRAORDINARILY LONG AMOUNT OF TIME.

MEANWHILE, THERE'S MORE TARIFF PRICES HAPPENING.

YOU KNOW, THERE WAS A QUESTION ABOUT WHETHER EUROPE WOULD FACE NEW TARIFFS WITH REGARDS TO GREENLAND AND WHAT WOULD HAPPEN THERE.

SO I WOULD SAY THE UNCERTAINTY REALLY NEVER EASED UP.

AND I THINK WE'VE BECOME SOMEWHAT ACCUSTOMED TO LIVING WITH CONSTANT ANXIETY AROUND THESE TRADE RULES CHANGING POTENTIALLY OVERNIGHT.

>> YOU KNOW, SOME PEOPLE STILL THINK OF NEW YORK AS THE CENTER OF FASHION IN THE UNITED STATES, THE GARMENT DISTRICT SORT OF AS IT WERE.

REMIND PEOPLE WHY YOU SOURCE FROM ALL THESE DIFFERENT PLACES.

>> YEAH, OF COURSE.

ACTUALLY, WHEN I STARTED MY BUSINESS BACK IN 2013, I PICKED NEW YORK IN PART BECAUSE THERE WAS A GARMENT DISTRICT AND FACTORIES WITH SEWERS.

ONE OF THE MANY WONDERFUL THINGS THAT HAPPENED OVER THE PAST DECADE IS MY BUSINESS GREW, AND WE REACHED KIND OF SMALL, MEDIUM-SIZED BUSINESSES.

AND THE GARMENT DISTRICT SIMULTANEOUSLY HAS SHRUNKEN OVER THE PAST 10 YEARS.

WHILE SMALL BATCH PRODUCTION STILL DOES HAPPEN, IT REALLY WAS NOT AT THE LEVEL OR VOLUME OR I WOULD SAY QUALITY THAT WE WANTED TO OFFER AT MY COMPANY AND THEN LE FLEUR.

WE STARTED WORKING WITH FACTORIES OVERSEAS.

A LOT OF THE NATURAL FIBERS WE LOOK TO MANUFACTURE IN EUROPE.

WHEN WE'RE LOOKING AT SYNTHETIC FIBERS OUT OF JAPAN, WE LOOK TO SOURCE THEM OUT OF ASIA.

AND THAT IS REALLY HOW MUCH OF APPAREL MANUFACTURING WORKS TOGETHER.

THERE'S LITTLE CLOTHING THAT AMERICANS PURCHASE TODAY THAT IS ACTUALLY MANUFACTURED IN AMERICA.

I THINK THERE WAS A SPLIT MOMENT WHERE WE THOUGHT IS THE LONG-TERM VISION HERE, MAYBE IT WILL WILL TAKE 20-30 YEARS, BUT IS THE GOAL TO BRING APPAREL MANUFACTURING BACK INTO THE UNITED STATES?

THAT WOULD COST LITERALLY 10s OF BILLIONS OF DOLLARS TO DO, BUT IS THAT THE LONG-TERM STRATEGY?

I THINK THE WHIPLASH WE'VE SEEN IN THE TARIFFS HAS QUICKLY SHOWN THAT IS NOT GOING TO BE THE CASE.

SO WE DID NOT EVEN CONSIDER BRINGING ANY MANUFACTURING BACK TO THE UNITED STATES.

OUR PATH FORWARD WAS OKAY, WHERE ELSE IF NOT CHINA AND VIETNAM, WHERE ELSE ARE WE GOING TO?

BECAUSE AMERICA DOES NOT HAVE THE RESOURCES TO BE ABLE TO ESTABLISH THE MANUFACTURING WE REQUIRE.

>> REMIND US OF THE STORY OF YOUR BUSINESS.

THERE'S A REASON WHY THAT YOU GOT INTERESTED IN SINGLE-ORIGIN VIETNAMESE COFFEE.

>> MY FAMILY IS HAVE VIETNAM.

I SAW AN OPPORTUNITY AS WE SEE COFFEE GETTING MORE AND MORE EXPENSIVE, HARDER TO GROW, THAT VIETNAM BEING THE SECOND LARGEST PRODUCER IN THE WORLD ACTUALLY HAS A CERTAIN VARIETAL THAT MAKES IT MUCH MORE EASY TO GROW ORGANICALLY.

AND HOW EXCITING THAT WOULD BE TO BE ABLE TO COME INTO THE U.S.

AND BRING SPECIALTY ORGANIC COFFEE AT A MUCH MORE AFFORDABLE PRICE.

I REMEMBER WHEN THE TARIFFS WERE ANNOUNCED, IT WAS ALL OF THOSE KIND OF SAVINGS WE WORKED FOR THE LAST NINE YEARS TO CULTIVATE FELT REALLY ERODEED.

AND IT'S BEEN SUCH A WHIRLWIND EVER SINCE BECAUSE OUR BRAND IS FOCUSED AROUND A SINGLE-ORIGIN STORY.

IT ALWAYS FELT LIKE IT WAS THIS UNLIMITED SUPPLY.

IT'S OKAY THAT WE'RE LIMITING OURSELVES TO A SINGLE ORIGIN.

BUT THEN ONCE YOU HAVE SUCH A HIGH TARIFF ON THERE AND THERE IS SO MUCH BACK AND FORTH ABOUT WHAT IS THE VIETNAMES GOVERNMENT DOING IN RESPONSE?

IS COFFEE GOING TO BE EXEMPT?

WE WOULD HEAR THAT COFFEE MIGHT BE EXEMPT, MAYBE IT WON'T BE.

SINCE WE DON'T GROW COFFEE HERE, WE DO A LITTLE BIT IN HAWAII, BUT IT COULDN'T PUT A DENT IN THE AMOUNT AMERICANS DRINK.

SO IT HAS TO BE IMPORTED.

IT'S REALLY HARD BECAUSE IT FEELS LIKE THESE POLICIES ARE BEING PUT INTO PLACE, AND THEN HOW IT ACTUALLY AFFECTS SPECIFIC INDUSTRIES THAT IT DOESN'T MAKE SENSE TO HAVE A TARIFF IS ALWAYS AN AFTERTHOUGHT.

>> YOU WERE TELLING US AT ONE POINT IT WAS THREATENED AT LIKE ALMOST 50%.

>> YES.

>> I MEAN, SORRY, I KNOW IT'S A PAIN POINT HERE.

WOULD THAT HAVE SHUT YOUR BUSINESS DOWN?

>> IT WOULD HAVE BEEN LETHAL.

WE WOULD HAVE HAD TO SHUT DOWN THE BUSINESS.

IT WOULD HAVE BEEN SUCH A DISADVANTAGE COMPARED TO ANY OTHER COFFEE GRIND COUNTRY IN THE WORLD.

>> SARA, YOU'VE SAID THIS A COUPLE TIMES IN DIFFERENT VENUES THAT UNPREDICTABILITY IS THE ENEMY OF BUSINESS GROWTH.

>> 100%.

>> COULD YOU JUST SAY MORE ABOUT THAT?

>> SURE.

I'LL SPEAK DIRECTLY TO FASHION AND APPAREL, WHICH IS WHAT I KNOW.

ANY PIECE OF CLOTHING THAT LET'S SAY WE RELEASE IT ON OUR WEBSITE OR PUT IT IN THE STORES TOMORROW.

IF YOU THINK ABOUT HOW LONG IT TOOK THAT PRODUCT TO GET TO THAT POINT, WE PROBABLY STARTED DESIGNING THAT PRODUCT ANYWHERE FROM 12-18 MONTHS BEFORE.

AND IN ORDER TO ACTUALLY EVEN GET TO THAT POINT WHERE WE'RE THINKING ABOUT DESIGNING THAT PRODUCT OR HAVING TO GO TO FABRIC SHOWS AND PICK OUT THE RIGHT FABRICS, WE'RE HAVING TO GO TO FACTORIES AND MAKE SURE WE HAVE THE RIGHT FACTORY PARTNERS, IT IS REALLY AT LEAST A YEAR TO TWO-YEAR PROCESS JUST LEADING UP TO THE FACT THAT WE ARE DECIDING TO MAKE THAT PIECE OF CLOTHING.

LET'S JUST SAY IT'S A SHIRT.

AFTER WE HAVE THE FACTORY IN PLACE AND WE'VE DECIDED WHICH FABRIC WE WANT TO USE, THEN WE PUT IN THE FABRIC ORDER.

SAY THAT IS BEING MANUFACTURED IN ITALY AND THAT MAY TAKE ANYWHERE FROM TWO TO FOUR MONTHS.

THEN THAT FABRIC TAKES ANOTHER TWO MONTHS TO GET ON A BOAT AND GET TO WHERE YOU'RE MANUFACTURING.

LET'S SAY IN THIS CASE IT'S TURKEY.

AND THEN IT TAKES ANOTHER TWO MONTHS TO MANUFACTURE THERE, AND IT TAKES ANOTHER FOUR WEEKS TO SHIP TO OUR WAREHOUSE IN NEW YORK, AND THEN IT TAKES ANOTHER TWO WEEKS TO GO TO THE STORE.

SO YOU CAN SEE JUST HOW LONG THAT SUPPLY CHAIN IS.

AND I MEAN, THAT IS REALLY ONE OF THE BIGGEST CHALLENGES OF I THINK ANY MANUFACTURING INDUSTRY THAT DEALS WITH PHYSICAL PRODUCT.

BECAUSE THAT LEAD TIME IS SO LONG, WHEN THESE THINGS CHANGE ON A DIME, YOU REALLY HAVE NO WAY TO COURSE CORRECT.

SO IF WE KNEW THAT THE TARIFFS WERE GONNA BE IMPLEMENTED IN TWO YEARS TIME, WE CAN WORK BACKWARDS TO SAY WE KNOW THIS COST IS GONNA BE THERE, SO LET'S TRY TO FACTOR THAT IN.

WHEN IT GETS IMPOSED UPON YOU AND STARTING IN 30 DAYS OR STARTING IN TWO WEEKS, THE PRODUCT IS ALREADY MADE, ALL THE INVESTMENTS HAVE GONE INTO THAT PIECE OF CLOTHING.

IT'S TOO LATE SO YOU HAVE TO RELEASE IT AND TAKE THE HIT ON THE MARGIN AND ULTIMATELY A LOSS.

>> YOU WERE TELLING US THIS CRAZY STORY OF A SPRING LINE LAST YEAR?

>> OUR MAY COLLECTION.

>> ALMOST GOT WIPED OUT.

>> DISAPPEARED OVERNIGHT, 70%.

POOF.

IT WAS A HARD-HIT COLLECTION BECAUSE SO MUCH OF THAT WAS COMING IN FROM CHINA AND VIETNAM.

CHINA AT ONE POINT, THE TARIFFS WERE 154%.

SOMETHING THAT WOULD HAVE COST $100 TO MAKE SUDDENLY WAS GONNA COST $354 TO MAKE.

AND THAT SIMPLY WAS NOT FEASIBLE.

SO WE COULDN'T EVEN BRING IN THE PRODUCT.

A LOT OF OUR FACTUALLY PARTNERS, I MEAN TO THEIR CREDIT, THEY WERE PHENOMENAL PARTNERS TO US.

AND I THINK THEY SAID TO THEMSELVES LET'S PLAY THE LONG GAME HERE BECAUSE THIS IS NOT GONNA BE FOREVER.

THERE WAS A LOT OF TALK OF WHO'S GONNA CALL CHICKEN FIRST.

AND SO A LOT OF OUR FACTORY PARTNERS WERE WILLING TO HOLD ON TO THE PRODUCTS, SOMETIMES FOR SIX MONTHS, SOMETIMES UP TO A YEAR.

AND WE REALLY WORKED TOGETHER TO OVERCOME THIS CRAZY, CRAZY PART OF OUR COMPANY HISTORY.

>> DEBBY, WHAT ABOUT YOU?

THE FARMERS YOU WORK WITH, THE PEOPLE YOU WORK WITH IN VIETNAM.

WHAT KINDS OF CONVERSATIONS ARE YOU HAVING WITH THEM?

DO THEY FEEL LIKE THEY'RE CAUGHT IN THE MIDDLE?

DO THEY FEEL LIKE THEY'RE BEING PUNISHED FOR SOMETHING THEY DON'T UNDERSTAND OR DIDN'T DO?

>> SIMILAR TO SARA, WE'VE BEEN IN BUSINESS FOR NINE YEARS.

YOU KNOW, THESE ARE MANY, MANY YEARS LONG RELATIONSHIPS WE HAVE WITH THE FARMS.

AND HOW WE HAVE HAD TO HAVE THOSE CONVERSATIONS ABOUT WE ARE IN THIS POSITION, WE NEED TO FIGURE OUT HOW WE'RE GOING TO MAKE THE COSTS WORK, HOW WE GET PRODUCT TO OUR CUSTOMERS.

WHAT'S HARD FOR US IS THAT STILL THE MAJORITY OF FOOD AND BEVERAGES SOLD IN STORES, WE HAVE A GREAT E-COMMERCE BUSINESS, BUT WE'RE IN EVERY SINGLE WHOLE FOODS, WE'RE NATIONAL TARGET, AND WE HAD SOLD IT IN AT A CERTAIN PRICE.

AND ALL OF THAT HAS BEEN SHIPPED.

AND YOU CAN'T IN TERMS OF SHIPPED, IT'S ALL BEEN DECIDED.

IT'S ALL BEEN AGREED UPON.

AND YOU'RE NOT REALLY SURE BECAUSE YOU'RE NOT SURE IF THIS IS TEMPORARY.

IF YOU INCREASE A PRICE AND THEN DECREASE IT, THERE'S PENALTIES FOR THAT WITH THE WAY THE WAREHOUSES WORK.

I THINK IT'S BEEN REALLY HARD FOR US TO THINK ABOUT IF WE INCREASE OUR PRICE, HOW MANY CUSTOMERS ARE WE GONNA LOSE?

WHETHER THAT'S SOMEONE WALKING INTO THE STORE OR LOSING YOUR PLACE ON THE SHELF.

AND BEING ABLE TO TRY TO JUST BASICALLY FOOT THE BILL IN THE SHORT TERM SO THAT YOU CAN KEEP THAT STANDING, NOT REALLY SURE WHAT'S GONNA HAPPEN TOMORROW.

WE HAVE NO IDEA HOW MUCH A SHIPMENT IS GONNA COST WHEN IT LANDS IN THE PAST YEAR.

THAT'S SOMETHING THAT HAS BEEN REALLY INTERESTING, THAT MY WHOLE TIME WORKING IN VIETNAM, IT'S ALWAYS FELT LIKE THE U.S.

MARKET HAS BEEN CONSIDERED RELATIVELY THE GOLD STANDARD.

SOMETHING THAT EVERYONE WOULD LOVE TO PARTICIPATE IN, PARTICULARLY IN COFFEE.

THAT SENTIMENT IS REALLY CHANGING.

WHILE WE HAVE REALLY STRONG RELATIONSHIPS WITH OUR SUPPLIERS TODAY, WHEN WE'VE TRIED TO ONBOARD SOME NEW SUPPLIERS, WE'VE HAD PEOPLE SAY CATEGORICALLY THEY DON'T WANT TO WORK WITH AMERICAN COMPANIES.

THEY'RE TERRIFIED OF THE VOLATILITY AND HOW THAT HURTS THE OPTIONALITY FOR BUSINESSES TO BE ABLE TO GET THE BEST MANUFACTURING, QUALITY, PRICING FOR OUR CUSTOMERS.

>> THEY SAY TO YOUR FACE WE'RE NOT DOING THAT?

>> LITERALLY.

I'VE LITERALLY HAD MANUFACTURING SAY GIVEN ALL OF THE TARIFF, GIVEN ALL OF THE TARIFF NEWS, THAT WE ARE NOT INTERESTED IN EXPANDING INTO THE U.S.

MARKET.

>> WOW.

JUST TO BE CLEAR FOR SOME PEOPLE WHO STILL MAY NOT GET THIS, YOU PAY THE TARIFFS.

IS THIS CORRECT?

>> YES.

>> YOU ARE THE ONES WHO PAY THE TARIFFS.

THE TARIFFS HAVE TO BE PAID BEFORE YOUR PRODUCTS COME INTO THE COUNTRY.

>> EXACTLY.

>> YOU DON'T HAVE TO TELL ME.

I WOULD BE INTERESTED, HOW MUCH DO YOU THINK YOU PAID IN TARIFF FEES?

>> HUNDREDS OF THOUSANDS IN TARIFFS LAST YEAR, UNEXPECTED.

THAT'S PEOPLE'S SALARIES.

THERE'S A LOT OF THINGS.

IT'S THE MARKETING SUPPORT THAT WE NEED TO BE ABLE TO GET A SMALL BRAND OUT THERE THAT'S NEW.

THERE'S A LOT OF THINGS THAT WE REALLY HAD TO MAKE HARD CHOICES AS THOSE TARIFFS STARTED TO REALLY ROLL IN.

AND WE KEPT EVERY DAY BECAUSE WE'D HEAR RUMORS THAT COFFEE WOULD BE EXEMPT, BUT WE PAID THOSE TARIFFS FOR I BELIEVE IT WAS SIX MONTHS.

>> SO THAT BRINGS ME TO MY NEXT QUESTION.

THE SUPREME COURT STRUCK DOWN THE PRESIDENT'S TARIFFS, TARIFFS PROGRAM IN ITS CURRENT FORM.

WITHIN HOURS, THE ADMINISTRATION SAID THERE WOULD BE THIS NEW ACROSS THE BOARD TARIFF USING A DIFFERENT TRADE LAW.

INITIALLY, 10%.

SIGNALING IT COULD RISE.

BUT SOME COMPANIES ARE ALREADY ASKING FOR REFUNDS.

DEBBIE, ARE YOU GOING TO ASK FOR A REFUND?

FedEx, I CAN NAME FedEx BECAUSE THIS IS A PUBLIC ISSUE.

FedEx HAS SAID THEY WANT THEIR MONEY.

>> OH, WE WANT OUR MONEY BACK.

THAT WAS ONE OF THE FIRST CALLS WE MADE.

WE SPOKE TO OUR LAWYER.

YOU KNOW, WE SAID WHAT DO YOU THINK THE CHANCES ARE?

LET ME BE CLEAR.

I'M NOT HOLDING MY BREATH.

I THINK WE SAW THIS WITH ERC DURING COVID.

IT ULTIMATELY TOOK TWO, THREE YEARS.

AND I KNOW THAT PROCESS WAS AN ABSOLUTE DISASTER.

AND I'M NOT SURE WE'RE EVER GONNA SEE OUR TARIFFS BACK AGAIN, BUT I'M WITH DEBBIE ON THIS ONE.

WE WERE ESTIMATING THAT WE PROBABLY SPENT SOMEWHERE BETWEEN A MILLION AND TWO MILLION TARIFF DOLLARS.

THAT HAS COST US JOBS.

WE'VE HAD TO ELIMINATE ROLES AND PASS ON SOME OF THE COST INCREASE TO THE CUSTOMER.

IT HAS BEEN NET NEGATIVE.

>> UH-HUH.

>> AND I'M JUST, I JUST WANT TO KIND OF PUT THAT INTO VERY, VERY CONCRETE TERMS BECAUSE I THINK, YOU KNOW, THE THOUGHT COMING OUT OF THIS WERE THE TARIFFS WERE GONNA SUPPOSEDLY FUND SOMETHING INCREDIBLE.

AS A CONSUMER, I HAVE NOT FELT THE BENEFITS OF THE TARIFFS IN MY DAY-TO-DAY LIVING.

>> DEBBIE, IS THE SAME TRUE FOR YOU?

>> SO MANY OF US VIEW THE TARIFFS AS POTENTIALLY TEMPORARY.

A LOT OF US HAVE JUST KIND OF FOOT THE BILL.

THE SAME WAY IF YOU'RE A SMALL FAMILY AND YOU HAVE SOME TYPE OF BIG CRISIS HAPPEN, DO YOU SELL YOUR HOUSE RIGHT AWAY?

NO.

YOU SPEND YOUR SAVINGS AND ASSUME THAT THINGS ARE GONNA GET BETTER.

AND I THINK A LOT OF GREAT BRANDS ARE GOING TO BE AT A BAD CROSSROADS AND I THINK PEOPLE ARE GOING TO HAVE TO RAISE THEIR PRICES AS WE LOOK INTO 2026.

YOU'LL SEE PRICES RAISE A LOT FROM THESE TARIFF DYNAMICS.

>> YOU HAVE FIGURED IT OUT.

THE FACT IS, YOU'RE BOTH STILL HERE.

YOU'VE KEPT YOUR BUSINESSES GOING.

AND YOU KNOW, YOU'VE HAD NEW SORT OF PRODUCTS COMING OUT.

SOME PEOPLE MIGHT LISTEN TO YOU AND SAY YOU GUYS ARE FIGURING IT OUT.

SO, YOU KNOW?

SHORT-TERM PAIN, LONG-TERM GAIN MAYBE.

>> I WOULD SAY, YOU KNOW, OUR TEAMS ARE EXTRAORDINARILY RESILIENT.

AND I AM SO PROUD OF THEM AND PROUD OF US FOR HOW WE'VE MET THE MOMENT.

AND IT'S BEEN A REAL CHALLENGING YEAR.

BUT WE'RE HERE AND WE'RE STILL STANDING.

I AM SO PROUD OF THAT.

I WILL ALSO SAY RESILIENCE IS NOT A STRATEGY.

RESILIENCE IS NOT WHAT GROWS THE COMPANY.

WE'RE HERE TO SCALE BUSINESSES.

WE'RE HERE TO ACHIEVE, YOU KNOW, MORE PROFITABILITY TO BE ABLE TO HIRE MORE PEOPLE AND REALLY GROW THE BUSINESS AND DELIVER REALLY FABULOUS PRODUCTS TO THE CUSTOMERS WHO LOVE THE BRAND.

YOU KNOW, THAT'S THE DREAM.

THE DREAM IS NOT SURVIVAL.

AND SO I THINK THE TARIFFS OVER THE PAST YEAR HAVE JUST BEEN, IT FEELS KNEECAPPING.

AND HAS CERTAINLY DELAYED THE DREAMS THAT I'VE HAD FOR THE BUSINESS FOR AT LEAST A YEAR IF NOT LONGER.

>> DEBBIE, WHAT ABOUT YOU?

>> I AGREE.

I THINK IT'S IMPOSSIBLE TO HAVE A STRATEGY IN THIS AMOUNT OF UNPREDICTABILITY.

AND I THINK THAT'S GONNA STIFLE INNOVATION, WHETHER THAT MEANS WITHIN COMPANIES LIKE SARA AND MY OWN WHERE WE HAVE STRIPPED DOWN OUR TEAMS DUE TO ALL OF THESE TARIFF COSTS TO BE ABLE TO JUST FIGHT ANOTHER DAY.

ALL THE WAY TO PEOPLE NOT BEING ABLE TO START NEW COMPANIES AND BRING NEW IDEAS TO LIFE BECAUSE IT'S SUCH A DIFFICULT ENVIRONMENT TO BE ABLE TO START AND GROW A BUSINESS.

>> DEBBIE AND SARA, THANK YOU SO MUCH FOR TALKING WITH US.

>> TAKE CARE.

THANK YOU.

>> THANK YOU.

>>> AND FINALLY, A BRAND-NEW DAY, A BRAND-NEW SEASON OF THE SUNRISE PIANO CONCERT BY THE BLACK SEA.

BASKING IN THE GOLDEN GLOW, HUNDREDS GATHERED ON THE WATERFRONT IN ODESSA, UKRAINE LISTENING TO GENTLE MELODIES PLAYED BY THIS PIANIST.

AFTER A FOUR-MONTH BREAK FROM HIS WEEKLY PERFORMANCES DUE TO THE HARSH WINTER, HE'S RETURNED.

IT'S A RARE REPRIEVE FROM THE WAR IN UKRAINE.

FEELING THE HEALING POWER OF MUSIC, SPECTATORS SAY THIS IS TRULY A PANACEA FOR THE SOUL AND WORTH LIVING FOR.

>> [PIANO MUSIC] >>> THAT'S IT FOR OUR PROGRAM TONIGHT.

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