Sen. Mark Kelly, Sen. Katie Britt, Christine Lagarde

21:39Right. The successor failure of this will be if Israel and this international mechanism is able to create a viable alternative. If they are successful, Hamas will fail and Gaza will not be a threat to Israel. in the future.

21:54Margaret Brennan:You can see more of the interview in a new episode of 60 Minutes tonight at 7 p.m. or after football. We're joined now by the president of the European Central Bank, Christine Lagarde. The ECB sets interest rates for many countries in the European Union, which is America's largest trading partner. Good to have you here. Lovely to be back, Margaret. From where you sit, how would you describe the state of the global economy? In transformation. Transformation. Transformation, I think, caused by a couple of things. One is the tariffs, which have changed the map of trade around the world and reconstituted new alliances and reformed the way in which we trade with each other.

22:34I think the second major transformation is the impact of artificial intelligence on everything we do from data management to dating and everything in between.

22:43Margaret Brennan:Absolutely. Absolutely. And it's changing how we even receive the data itself to indicate what's happening. But the stock market has been up and down. I want to talk to you on the other side of this commercial break about some of the specifics with these trade wars and what else you're seeing in Europe. But we're going to take a quick break here.

23:08Margaret Brennan:Welcome back to Face the Nation. we return to our conversation with European Central Bank President Christine Lagarde. You said the economy is in transformation. S &P Global forecasts Trump's tariffs are going to cost global businesses upwards of$1.2 trillion this year, with a lot of those costs passed along to consumers themselves. You've said that many economists overestimated the impact of Trump's tariffs. Does that mean you think we've moved past the point of risk or are we yet to feel the pain? I think we're yet to feel the pain. What we observe, I'll give you some numbers. From Europe to the United States, our goods to the U.S.

23:50consumers had a tariff of 1.5. With the tariff that was decided by the U.S. administration, it's gone up to 13 percent. So the question is, where does this additional 11-ish percentage point go? At the moment, it's one-third on the exporter, so the European company, one-third of the US importer, and one-third of the consumer. What will happen, though, is that these two-thirds born by two corporates, essentially, the exporter and the importer, is based on a squeeze of their margins. How long are they going to put up with a squeeze of the margin to be seen? And when they don't, because it's becoming too tight, then it will be on the consumer.

24:33So it's a question of time.

24:34Margaret Brennan:How much they can stomach the hit to their own profits before passing that along. Well, there are talks happening, we understand, between the world's two largest economies. The Treasury Secretary, Scott Bassett, said on social media he's going to meet with China's vice premier in the coming days. This was after he called the negotiator unhinged recently. And President Trump said that starting November 1st, there will be new tariffs as retaliation for Chinese restrictions on rare earth exports. These are the largest economies in the world. Where does this go? How damaging does this get? First of all, I would discount a little bit of the positioning at the moment because this is typical of negotiating tactics on both sides.

25:19Typical. You show your muscles and you say that you're ready to kill. I'm exaggerating, of course. But people will have to come to the table because it's the interest of both economies, despite the hostility that there is between the two. But China is using an advantage that it has built over the course of time by accumulating rare earth and the ways to refine rare earth and then to sell it to the rest of the world. They have a very, very strong trading position on that front, and they're going to use it, which is why I think that on the other side, the consumers, that is the United States, Europe and a few other countries around the world, we should, you know, join forces and be a purchasing force on the other side of the table of a selling force.

26:02Margaret Brennan:Well, exactly to that point, there has been frustration on the American side of it that Europe hasn't been standing lockstep with the United States when it comes to China, that China has leverage over Europe here. Well, China currently has leverage against most countries that consume rare earth. And I think on the front of rare earth, the Europeans and the Americans are in the same boat and they're rowing in the same direction. But it's other items that you see space on? Well, I think, you know, it's not for me to say I'm just a central banker, but the European authorities and the U.S. administration see it slightly differently.

26:41I think it's the U.S. would see a blanket force. I think the Europeans are more interested in targeting specific industries or specific sectors where they think that it will make a difference. So it's a question of tactics that they will be discussing, I'm sure.

26:55Margaret Brennan:So you have also said recently that you think investors have begun to question whether the dollar would still warrant its status as the ultimate safe haven currency. I mean, the American dollar is one of the strongest weapons, frankly, that the administration has to use. Do you think that it is the rise of cryptocurrency that is most threatening to that? Or why are you worried? I see signs that the attraction of the dollar is slightly eroded. And future will tell whether there is more erosion of that. But when you look at the rise of cryptos, number one, when you look at the price of gold, gold is typically in any situation the ultimate destination for safe heaven.

27:39Price of gold has increased by more than 50 % since the beginning of the year. That's a clear sign that the trust in the reserve currency that the dollar has been is and will continue to be is eroding a bit. In addition to that, we've seen capital flows outside of the U.S. towards other destinations, including Europe. So, you know, for a currency to be really trusted, you need a few things. You need geopolitical credibility. You need the rule of law and strong institutions. and you need, I would call it, a military force that is strong enough. I think on at least one and possibly two accounts, the US is still in a very dominant position, but it needs to be very careful because those positions erode over the course of time.

28:28We've seen it with the sterling pound, you know, way back after the war, but it happens gently, gently, you don't notice it, and then it happens suddenly. And we are seeing intriguing signs of it, which is why I think that having a strong institution with the Fed, for instance, is important. Having a credible environment within which to trade is important. So volatility and certainty, to the extent it is fueled by the administration, is not helpful to the dollar.

28:59Margaret Brennan:Quickly on Ukraine, President Zelensky said he spoke to you recently about using frozen Russian assets. What is fair use, in your view? I think fair use would consist of an operational loan that would be using cash balances as collaterals. And I think that the strength of the system should be based on everyone holding Russian assets to do the same thing. So if all those countries holding assets that have cash balances available as collaterals go in the same direction of lending the money to Ukraine to be repaid by Russian financing of the reconstruction of Ukraine, because Russia is the aggressor, then I think that that would go a long way in convincing Russia that it has to come to the table to negotiate.

29:44Margaret Brennan:Christine Lagarde, always great to hear your insights. We turn now to higher education. Universities are resisting the Trump administration's proposal to reward schools that commit to President Trump's priorities. The White House has requested that nine universities sign a nine-page compact or risk forgoing federal benefits. Tomorrow's the deadline for feedback, and so far not one college has agreed to sign, and at least six have rejected it. The compact reviewed by CBS News states that universities pledge not to use race or sex in admissions and hiring, freeze tuition for five years, cap international enrollment at 15%, and require standardized testing.

30:29Margaret Brennan:There is also a pledge for all employees to abstain from speech related to politics. On Thursday, we spoke with three professors who represent the views of their respective faculties. Jerry Seidman of the University of Virginia, Layla Hudson of the University of Arizona, and Mickey Turner of the University of Southern California. We began by asking about the administration's request for schools to create an environment that doesn't, quote, punish, belittle, and even spark violence against conservative ideas. So belittling speech is obviously not something that any university would want. However, as a state university, we are required to abide by the Constitution.

31:13Margaret Brennan:And so while a private university could decide to limit the free speech of faculty, staff, or students if that university decided to, as a state institution, nobody can require the University of Virginia to limit the free speech or any other constitutional right of faculty staff or students. So Professor Hudson and Professor Turner, how do you all think your university is going to interpret that kind of guidance? Do you think first of all that that is happening on your campuses and then how is that supposed to be regulated with this federal mandate? I am on a task Force, a Provost Task Force for Academic Freedom.

31:56Academic freedom and freedom of speech are two different things, but what we're working toward is to, you know, find that common ground between academic freedom, what professors and students can or cannot do in the classroom. And I don't think that this initiative will happen at USC. I can't see a situation where we would want to limit what we say, how we say it, and what we do as a university.

32:31Margaret Brennan:Professor Hudson, can you go back to this idea that is being introduced here, that in the view of the Trump administration, this is actually a problem that needs to be fixed, that there is belittling or violence against conservative ideas on university campuses? Well, I would push back against that. Again, as a public research university, we are an open marketplace of ideas. So you're going to hear all kinds of speech. We have institutional rules that prevent harassment and certainly violence. But in terms of trying to regulate the speech, that indeed will violate not only the academic freedom that makes our universities great, but the constitutional rights of the university community.

33:28So I think that, again, this will require a lot more discussion and indeed resistance. And I've been very heartened, both on our campus and across the country, to see people rising up against anything that would silence any voices.

33:48Margaret Brennan:But in terms of the specific accusation that there is a problem of belittling and sparking violence against conservative ideas, Do any of you object to trying to counter that? Or is it that none of you believe that that's actually even a real problem? The University of Virginia has taken the ability of people to cordially or speak to each other with courtesy, but differing opinions very seriously. And we have a number of initiatives on grounds to try to advance that. So we definitely think it's something important and we want to make sure that those, you know, isn't happening on our campuses. I don't think it's happening to the extent that it gets reported.

34:33Margaret Brennan:But the thing that's really important is that each university should determine how those are implemented on their universities, what their issues are, and have the decentralized decision-making ability to decide whether their university has an issue and how to deal with that. Professor Hudson, you were talking about the open marketplace of ideas here, and that is referring to the language in the compact that talks about the need to foster a vibrant marketplace of ideas. But in these terms, it's suggesting that that doesn't exist, that the overwhelming persuasion of the professors on campus are liberal.

35:14Margaret Brennan:That seems to be the accusation here. Do you deny that that is an issue? Well, I don't think it's an issue that the federal government needs to weigh in on or any other level of government. Indeed we have traditions, we have understandings, we have an ironclad commitment to the principles of free speech that mean that any systematic or chronic silencing of any individual's voice or perspective would immediately be identified and rectified by more speech, not by government intervention. So I'm very comfortable that we can continue to improve climate on campus, but the act of introducing government regulation into that absolutely undermines and sabotages that project.

36:12Margaret Brennan:Professor Seidman, in terms of where the Trump administration's compact came from, there were a lot of influences, but one of them, according to the man himself, is billionaire Mark Rowan, the CEO of Apollo Global Management. And he said he helped write the compact because without government involvement, reform at universities will be difficult, he argues. He says there have been government mandates on things like diversity, on discrimination, and student discipline. So why view these as any different? Why is he wrong? We were talking about academic freedom. And I think in our ability to search for the truth in research, we also have responsibilities in the classroom that are different than you would experience in a corporate setting.

36:59Margaret Brennan:And so I read the compact differently than he does. I think the thing that I struggle with the most about the compact is the idea that it rewards loyalty as opposed to focusing on advancement of the truth. As a cancer survivor, I want federal research funds to go to the universities and the professors who have the best ideas to cure cancer. That's the way to advance knowledge. And academics, that's really, we are truth seekers. The compact says truth-seeking is a core foundation of institutions of higher education, and I completely agree with that portion of the compact. It's just the implementation of that truth-seeking that I think we differ on.

37:47Margaret Brennan:So the compact says that if this proposal is not signed onto by the university, they may choose to forego federal benefits. If you do sign on, there's a chance of increased funding and federal partnerships. So it's not explicitly threatened, but it's strongly suggested that that would be the consequence. That's how how you're how the university understands it. That's how I believe most faculty understand it that I have heard from. Something interesting is that even faculty who have grants have reached out to me and said, you know, we we want the grants to go to the places that have the best ideas.

38:29Margaret Brennan:We don't want to have special treatment. Faculty are truth seekers. And so we don't want special benefits, even if that means that our university is not favored because others do sign on. We all want the best ideas to be advanced. On the state government front, there's also pressure in Virginia and in California. In Virginia, Democrats in the state Senate wrote, if UVA signs this thing, there will be significant consequences in future budget cycles. Out in California, Professor Turner, Governor Newsom vowed to cut off billions in state funding if anyone signs this thing. And the White House says that's like California endorsing discrimination, tuition hikes, and confronting speech with violence.

39:17Margaret Brennan:If you're between those two pressure points, what do you do? That's a great question because I really have complete empathy for our college presidents who have to deal with this situation right now because they are kind of stuck between a rock and a hard place because of all this political ping pong. Professor Seidman, on the pressure from the Democrats in the state of Virginia, is that helping or is that hurting? Pressure from both sides definitely feels it. I think the difference between the pressure from the state level and the pressure from the federal level is the state funds that come from the university are the universities to determine how they use.

40:02Margaret Brennan:The federal funds that we get are either for students for financial aid or are for specific grants. So the threats to remove funding are a little bit different in that regard. Professor Turner, one of the things that got a lot of attention from both parties during the campaign was also just the high cost of college and university tuition right now. USC is the highest tuition of any private university in this country. We were looking at it before and I was floored. It costs$75 ,000 a year in tuition, gets close to$99 ,000 a year inclusive of expenses. There are a lot of parents who would hear, oh, a five-year freeze in tuition and be glad that it went into effect.

40:49Exactly. That's one of the components I'm in agreement with about the freeze on tuition.

40:57Margaret Brennan:But it also wants to cap the number of international students that you have, which would impact USC because you're above that 15 % threshold. Does one premise fight the other? Can you bring the cost down if you cut out the university students who are paying full boat coming from overseas? Not at all. Not at all. We would not be able to do that because, you know, they they essentially come with cash in hand. And not only that do they add to the financial pot, but they also add to the collective perspective. And so we want those students there from every country. I also want to bring up one of the things that was raised here, and that is we know the Supreme Court struck down race based admissions.

41:43Margaret Brennan:One of the first points in this compact addresses the issue of preferential treatment, as they refer to it, based on identity. They list sex, nationality, gender, religion, race or political views. Professor Turner, you work on recruitment, I understand. How does this impact recruiting students? If that goes into effect, that's going to affect the way I do things. but I don't think that it's going to have a huge impact on the way USC really does things. You know, we actively recruit, you know, students from all walks of life, of all races. And I don't think that, you know, we should stop that because, again, you know, we're thinking about these students.

42:28So we're thinking about their growth and how they're going to go out into the world and change this world for the better. And in order to do that, they need to engage with different types of people with different cultures. And so hopefully, you know, this won't have that impact on our school because, you know, we really can't afford to have that happen.

42:51Margaret Brennan:Professor Seidman, University of Virginia's president, was forced to resign because of a Department of Justice investigation related to DEI commitments. Do you get any indication that the federal pressure on UVA is going to go away? Two of our open investigations with the Department of Justice that related to admissions around DEI have been closed. So that is good news. And those were closed based on information we provided that apparently satisfied the concerns about race being used in admission. I think this particular item of the compact would impact UVA. UVA has always had a very holistic approach to admissions.

43:38Margaret Brennan:We find talent to be much broader than just test scores and grades. Since we spoke with the three professors, USC and the University of Virginia have rejected the compact. No word yet from the University of Arizona. We'll be right back. For the first time in decades, CBS News is no longer reporting from inside the Pentagon. Our reporters, alongside those from dozens of networks, newspapers, and wire services, emptied out their booths and workspaces this past week. The journalists exited, rather than agree, to a 21-page list of new restrictions which would prevent them from soliciting information that has not been pre-approved by the government.

44:25Margaret Brennan:The Department of War, as the current administration calls it, has a$1 trillion budget and employs 3 million military and civilian employees. CBS will continue to report from outside the building, but journalists will no longer have the day-to-day, face-to-face contact with the military that helps the public understand what U.S. troops are facing. Secretary Hegseth once promised the most transparent administration ever. But as one former defense official told us, the American people are going to know a lot less about what their Department of War is doing. That's it for us today. Thank you for watching.

45:07Margaret Brennan:Until next week. For Face the Nation, I'm Margaret Brennan. Today's guests were Arizona Democratic Senator Mark Kelly, Alabama Republican Senator Katie Britt, European Central Bank President Christine Lagarde, University of Virginia professor Jerry Seidman, University of Arizona professor Layla Hudson, and University of Southern California professor Nikki Turner. The senior executive producer of Face the Nation is Mary Hager, and the executive producer is Anne Hsu. This broadcast was directed by Shelley Schwartz. Face the Nation originates from CBS News in Washington. For more, we're online at facethenation.com and on YouTube.

45:47Margaret Brennan:We're also rebroadcast on our CBS News 24 7 streaming network at 12 30 on Sundays and we're available through our apps CBS News and Paramount Plus.