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North Korea's ICBM Launch; Trump Administration Weighs North Korean Options; Trump Tweets on Economy; Trump Promises on Trade; Aired 12-12:30p ET

Aired July 04, 2017 - 12:00   ET

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

[12:00:00] JOHN KING, CNN ANCHOR: Important news today about the agenda there. Instead of a casual pull-aside, the first meeting between President Trump and the Russian president, Vladimir Putin, will be a more formal, more extended conversation.

We begin, though, with a major, new provocation by North Korea that will undoubtedly be part of those Trump/Putin talks. The regime in Pyongyang celebrating what it calls a historic first, the successful test, it says, of an intercontinental ballistic missile. In showing that launch, you can see it right there, and leader Kim Jong-un celebrating, North Korean state television said the regime's missile could now reach any corner of the world. The United States, Japan and South Korea are skeptical about the ICBM claim, believing it could have been a more sophisticated intermediate range missile. But after watching this latest missile travel for nearly 40 minutes and just shy of 600 miles, there is no disputing the significant progress in North Korea's missile technology.

Barbara Starr is live at the Pentagon with more.

Barbara, what are they thinking at this moment about this launch?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, here's what's most interesting, John. A number of U.S. officials -- it's July 4th, they should be at home -- they are in at work today from the State Department to the Pentagon, a series of very quickly called meetings to discuss all of this. When North Korea said overnight our time here in Washington that they had launched an intercontinental ballistic missile not of shorter range at the U.S. initially thought, it caused a scramble. All night they've been looking at the data from the missile launch. Data gathered by satellites and other U.S. classified sensors, recalculating everything. And we could see indeed the Trump administration come to a conclusion today that this was North Korea's first launch of an intercontinental ballistic missile.

This changing the security calculation across the world because what it fundamentally means is, Kim Jong-un's testing program has worked. He tests and tests his missiles, and now he may well have an ICBM that would be capable some day of reaching the west coast of Alaska. This changes everything if this actually proves to be true because he is also, of course, looking at trying to develop a functioning nuclear warhead that could go on top of that missile. This is everything that U.S. policy, U.S. military security policy has been centered around not allowing Kim Jong-un to have.

This now puts it square on President Trump's desk. What does he decide to do? The indications we are getting at this very early hours, the administration will continue to focus on diplomacy. No one is looking for military confrontation with North Korea. That would be a disaster for the world the assessment is. So diplomacy, but also looking at whether in the coming days and weeks the U.S. military might send additional assets, if you will, ships, aircraft and troops to the Korean peninsula, have more of a U.S. military presence there. Still trying to send a message to Kim, even as the Russians and the Chinese are stepping into all of this with their proposals which the U.S. objects to which center around having a freeze, making Kim give up his weapons in exchange for the U.S. no longer conducting military exercises with the South Koreans, the U.S. views that's a non-starter. It has become a very tense July 4th, John.

KING: Very tense July 4th. Perhaps a new chapter in what has been a long running drama.

Barbara Starr live at the Pentagon. Barbara, thank you.

The timing seems no accident. The world's largest economies are about to convene their annual summit. And President Trump just met with South Korea's new president and then followed up that meeting with phone calls to the leaders of Japan and China.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Together we are facing the threat of the reckless and brutal regime in North Korea. The nuclear and ballistic missile programs of that regime require a determined response. The era of strategic patience with the North Korean regime has failed. Many years, and it's failed. And, frankly, that patience is over.

(END VIDEO CLIP)

KING: The president's patience may be over but the options are bleak. CNN military and diplomatic analyst Admiral John Kirby dealt with this challenge while working at both the Pentagon and the State Department.

Admiral, let's start with military options. H.R. McMaster, the president's national security adviser, has said the president has asked for a list. There's nothing appetizing at all on that list. Is there a military option, really?

REAR ADMIRAL JOHN KIRBY (RET.), CNN MILITARY & DIPLOMATIC ANALYST: Well, there's no military option if -- in terms of you're talking about, you know, kinetically in a strike or open conflict. I don't think anybody wants to see that. Clearly that would be catastrophic. But there are military responses that are going to probably be part of the bigger fabric here as they determine how to go forward.

So, for instance, you could do something very low-risk and yet visible, like flying a bomber or two over the peninsula, or, as Barbara suggested, perhaps boosting up assets that are on the peninsula. Frankly, John, I think they're probably looking at region- wide assets and allocation there and whether or not there's a regional posture that needs to change, not just on the peninsula. Certainly you could sail more ships to the region as well.

So there's lots of things you can do that are low risk, that are not kinetic, that won't provoke necessarily open conflict but do communicate to Pyongyang that from a military readiness perspective that we mean business, that we have significant treaty alliance commitments there on the peninsula and in the region that we're going to honor.

[12:05:34] KING: Let me move you from your Pentagon hat to your State Department hat. There have been negotiations back to the Clinton White House days, George W. Bush, Barack Obama, negotiations with North Korea trying to get it to give up its nuclear program, to give up its missile program. If Kim Jong-un has ICBMs, if he has a missile that can now reach Alaska, perhaps reach Los Angeles, perhaps eventually reach St. Louis and beyond, how does that change the diplomatic calculations, especially from his standpoint? Is there any reason for him to give up what he views as his cherished strategic asset?

KIRBY: No, you hit the nail exactly on the head, John. I mean he has been striving to get this bargaining chip for a long time and it looks like he's ever more closer now to achieving that. If he has ICBM capability, it is a game-changer, it's not a game-ender, you know, because, you know, he still wouldn't have the ability, necessarily, to miniaturize and put a nuclear warhead on it, although the intelligence would suggest that he has tried to get that capability. So there's still time to try to find a way through this diplomatically.

That said, this certainly helps give him an upper hand at whatever negotiating table he might sit at, and he's going to be less likely to want to sit down because he now has this capability. So his -- this is a -- this is a huge bargaining chip for him. I don't see any willingness for him to want to sit down and have a meaningful negotiation about freezing his program when, in fact, it appears to be advancing at a very accelerated clip.

KING: Admiral Kirby, appreciate your insights.

KIRBY: You bet.

KING: A sober day indeed.

With us to share their reporting and their insights, Jackie Kucinich of "The Daily Beast," Michael Warren of "The Weekly Standard," Sarah Westwood of "The Washington Examiner," and Olivier Knox of "Yahoo! News."

The question then becomes, after using such muscular rhetoric, determining early on this president did that he thought President Obama was too soft on this or just wasn't muscular enough in his talk, trying to force the North Korean regime to back down, now what? The president tweeted this morning, "North Korea has just launched another missile. Does this guy have anything better to do with his life? Hard to believe that South Korea and Japan will put up with this much longer. Perhaps China will put a heavy move on North Korea and end this nonsense once and for all."

Olivier, I remember being with you back -- we go back several White Houses. Every president in our lifetime has had to deal with this. This, under the Trump administration, Kim Jong-un has made these missile tests almost a weekly occurrence. What's a heavy move from China, which has not given the president what he's wanted so far?

OLIVIER KNOX, "YAHOO! NEWS": Well, every president we've covered has also relied on China, or professed to rely on China as North Korea's patron as the player with the most -- the most -- probably the most skin in the game and the most influence over the regime in Pyongyang and it hasn't really paid off. We've seen a bewildering array of carrots and sticks to China, to North Korea that have not stopped what happened overnight from happening.

The big question now is, is what's the Trump administration going to do both in the diplomacy of this week? A lot of meetings. The president's going to Europe. He's going to meet with all the major players in this crisis. The leaders of Russia, China, Japan, South Korea. What's going to happen in U.S. pressure on China? The Trump administration's been ramping it up. We've seen sanctions on entities thought to be helping North Korea. We've seen a big arms sale to Taiwan. We have seen freedom of navigation operations challenging China's assertion of control over parts of the Pacific. What's going to happen next? I'm -- I'm not -- frankly not sure. But this meeting between the president and President Xi in -- in Europe this week is going to be enormously important.

KING: But you make an important point because everybody has their own interests here. If you think about, OK, well, Japan's talking about this. They're concerned. South Korea's concerned. The Russians are concerned. The Chinese are concerned. The president of the United States is concerned. If you're watching at home you say great, great, all the big players are concerned.

However, Russia says, we'd like to help out but maybe the United States and South Korea should tone down their military activities. China says, we'd like to help out. We've seen this over the years. They help out up to a line. They don't want a unified Korea. They don't want the regime to fall. And so it becomes a very complicated chess game. I guess my question is, President Trump, having essentially drawn a line saying my patience is over, what does that mean if North Korea keeps launching missiles?

SARAH WESTWOOD, "THE WASHINGTON EXAMINER": Well, President Trump was very critical of the Obama administration's tendency to articulate clearly its strategy on any given international conflict, and so the Trump White House has been very reluctant to give any indication of what its strategy will be when dealing with Syria, when dealing with North Korea. They don't want to talk about whether they're running cyberattacks to counter North Korea -- the growth of North Korea's missile program, and that has sort of left a lot of uncertainty about how the Trump administration is going to handle any conflict. Maybe some clarity would de-escalate the tensions a little bit, but President Trump, he ran partly on this argument that the U.S. should not be telegraphing its options because that might weaken the ultimate attack.

[12:10:03] JACKIE KUCINICH, "THE DAILY BEAST": Yes, we're seeing in other instance of its -- it's all fun and games until you're in the chair. You can criticize the other administrations, you can criticize their tactics and what they -- what they -- how they've dealt with various situations, both domestically and internationally, and what it seems like now is the president is realizing, this is more complicated than he thought and it has been a theme that has been woven throughout many different narratives in this White House.

MICHAEL WARREN, "THE WEEKLY STANDARD": But I would say, among the foreign policy and national security issues facing the country, North Korea is one I think where this administration came in with a much clearer idea and a much -- sort of more fully formed idea of what they wanted to do. Not the case in Syria -- with Syria and the Middle East. Not even really the case with Europe. But this is something that from the very beginning, you know, experts on the National Security Council, folks in the Pentagon, they have been focusing on this.

The problem is things have changed on the ground. Obviously what we're seeing in this development in North Korea is, you know, missile technology. But also domestically in South Korea you've got a new more left wing, more conciliatory government in Seoul that complicates all of this, but you do have, I think, in -- maybe not in the president himself, but in the people around him, is a more fully-formed idea that this old -- you know, past several White Houses' tendency to try to be conciliatory with China to get North Korea to the table, we've got to move on from that.

KING: Right. But I agree completely. And the Obama -- and the Trump administration national security team will tell you that they worked very closely with the Obama administration team in transition saying this is a big problem.

WARREN: That's right.

KING: This is going to come up soon. You cannot wait to put this on your plate because it's going to come up soon. But this president is learning, this is not a criticism of this president because it has happened to Democrats and Republicans. Every president learns this regime is very different. It doesn't care. It doesn't -- it's not affected by the normal norms. Sanctions haven't helped.

Today, the North Korea state media saying, "as a strongest nuclear state with the best ICBM rockets," we could fact check that, but this is their propaganda, "North Korea will end the U.S. nuclear war threats and defense peace and stability of the Korean peninsula." They're poking President Trump. This is a deliberate poke at President Trump. And to your point, you're right, the president does not like to say exactly what I'll do, but he's laid down a pretty strong line here. As president -- here's what he told the "Financial Times" in April, "if China is not going to solve North Korea, we will." That is a declarative sentence by the president of the United States and Kim Jong-un appears at times to be trying to call his bluff.

KUCINICH: And we still don't know what that means. Does that mean military intervention? Does that mean more sanctions? What does that mean? And there hasn't been an answer to that question yet from the Trump White House. Just -- it's a lot of threats (INAUDIBLE).

KING: Well, in parts because thy -- the president left Mar-a-Lago and his first meeting with President Xi quite encouraged. The two men struck off a personal rapport, which is critical. And President Trump left convinced that President Xi would do some things. And we did hear reports of coal shipments cut off, other economic sanctions put in place by Beijing. But, again, over the years, China has pushed up to its comfort letter and then pulled back. The question is, and the president now get them to do more? And the question is, what?

KNOX: Well, he's got to -- he's got to get China to see it our way, right? He's got to get it to see it the United States' way. What would you do in an identical situation where say the United States were the patron of a country that was the same way -- had the same relationship between -- that you have -- that we have with North Korea? I don't know how that's going to -- I don't know how that's going to happen.

But to your point about the poke. I think the more important part is it reiterates what the North Korean regime wants, which is survival. That's their -- that's their main priority. That's what they're not going to retreat from. That's why they don't want to negotiate. That's very important as you -- as you try to tackle this problem, try to understand what the different players want, and that's very clear from that statement what they want.

KING: Right. And they are isolated in the international community, even if they have a relationship with China, an occasional conversation with Russia, they're very isolated in the international community. And so what is the end goal of diplomacy? They've shown no willingness -- they -- they negotiated a deal with the Clinton administration to give up the nuclear program and then I think the next day they started violating it very quickly thereafter.

WARREN: Right.

KING: So if you want to de-escalate by some sort of diplomatic process, what is the goal? You'd have to give President Trump something that makes it worth coming to the table. North Korea would have to say, it's open to x. X being, I assume, for the Trump administration, giving up its missile and its nuclear program. They're not going to do that.

WARREN: Right. No. And, look, I think that there is a difference here if you talk to people in the White House and thy say the president -- they -- those stopped coal shipments. Now there's this -- reports that well, you know, either Russia is sort of somehow funneling new energy to North Korea or China's letting these go in, that's very much angered the president. I think what you're likely to see is behind- the-scenes, whether it's cyberattacks, you know, we don't know for sure. Again, not, you know, channeling the strategy publicly, this is something where I think the president perceives himself as being more tough, you know, letting China do, you know, have a chance to come to the table, but being more tough when China does what it always does, which is go up to that comfort level point. KING: Right. And I think to your point, and to the point with the

Chinese maybe, we need your help. If you're not willing to give it to (ph) us, not only are we going to be tougher on North Korea with cyber and other attacks, but the Taiwan arms sale, the U.S. military vessels in the South China Sea sending a message to China that we will poke you a bit, too. It's a very complicated one. We'll watch this as it plays forward. We'll also wait to hear from Barbara Starr at the Pentagon if the United States -- if, after those meetings, they update their assessment of this missile. That would be very important.

[12:15:10] Ahead, though, more on the Trump/Putin meeting and the reception awaiting the president in Europe.

But next, the home front and a fact check of the president's upbeat new Twitter report.

And as we go to break, throughout the hour we'll try to give you some Fourth of July celebrations around the country. Here's one. America's 241st birthday as they're celebrating it in Grandville, Michigan. Vice President Pence and his wife due to be in the parade there in just a little bit. Happy birthday, America.

(COMMERCIAL BREAK)

KING: Welcome back.

This is President Trump's first Independence Day at the White House and he will play host tonight to military families and other guests with a prime view of fireworks over the National Mall. It is 165 days from Inauguration Day to the Fourth of July and the president hits the six-month mark in just two weeks. Obamacare is still the law of the land. Tax reform and infrastructure both in limbo as Congress is stalled by the health care debate.

But the president sees progress on other fronts and took to Twitter yesterday to make his case. Here it is. "Really great numbers on jobs and the economy. Things are starting to kick in now and we have just begun. Don't like steel and aluminum dumping."

Christine Romans watches -- matches those tweets to the facts.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Hi, John.

Remember, candidate Trump bashed these numbers, but President Trump is quick to take credit for them. So how much does he deserve?

Well, let's look at the stock market. After the election, stocks did get a big bump. A nice rally. The S&P 500, that's the broadest gauge of the market, it's up about 16 percent since then, fueled by this administration's promise of tax reform and deregulation. But let's put that in perspective. The Trump bump is actually the tail end of a bull market that began under former President Obama, born after a brutal financial crisis.

[12:20:08] Now, President Trump also cheerleading jobs here. Some 600,000 have been created since President Trump took office. That's a solid number. But just like stocks, that's a cap on years of recovery in the labor market. In fact, this February to May is actually the slowest pace in the last three years. We'll see the latest numbers on Friday.

Now, there's one dark spot the president mentioned in that tweet. "Don't like steel and aluminum dumping." This most likely refers to Chinese steel and probable tariffs this administration will impose. In trade, dumping, of course, is when countries sell goods as prices lower than the world average. American companies accuse Chinese steel companies of dumping, boxes out U.S. competition, killing American jobs. Now, to fight this, the Obama administration slapped a 500 percent tariff on Chinese steel last year and experts expect the Trump administration to announce its own steel tariffs any day now. Critics worry, though, doing that would trigger a trade war, hurting other U.S. industries. What if there's retaliation against agriculture or other American industries. That's a concern, John.

KING: Christine, we'll keep an eye on that. Christine Romans, thank you very much.

And to that point, Trump was a -- trade was a trademark of the Trump campaign. He believes -- and he -- let's actually put it right up and show. The president believes he won Michigan, Wisconsin, Iowa, Pennsylvania, other states, but especially those blue states, the big ones, the Pennsylvania, Michigan, Wisconsin, traditional blue states. The president thinks he turned them red with the trade message. There's good reason to believe he's right about that, getting blue collar votes.

We thought we would get the Commerce Department announcement last week. The president asked for a study early on, signed an executive order saying, look into this steel dumping. We thought we would get it last week and it's been delayed. We expect to get it soon. There's no doubt the administration is going to impose some new tariffs on China and potentially others, correct?

WARREN: Yes, I think that's -- that's coming. And, again, it's a centerpiece of what -- of sort of the Trump economic message and agenda. But there's this -- there's this sort of cognitive dissonance because Republicans on Capitol Hill don't really subscribe to this. There's no constituency in the House and the Senate for that kind of protectionism. Now, maybe there's on the margins a little bit, but you're -- you sort of look at the whole Trump economic agenda. It's really kind of a mish-mash. There's regulatory reform, which the president's been able to do really without Congress being involved at all. There's infrastructure, which I think if the president had gone back to the beginning of his administration, he might have decided to push for that first rather than health care reform and tax reform, which is much more amenable to sort of traditional economic conservatives concerns, but not so much the new kind of Trump nationalism. So this mish-mash I think is -- offers a mixed picture of economic, you know, of Trump's economic legacy so far. We're only, you know, five and a half months in.

KING: Five and a half months in. And no matter whether you think it's the stock market as a continuation of what happened under Obama, whether you think the declining unemployment rate, now 4.3 percent. If you're a Democrat, you probably think the groundwork was laid by Obama. Just set that aside. When you're the president of the United States, you benefit. If the economy -- if the numbers are good, you benefit, period. And so that's -- should help the president, even though his approval ratings and like are not great (ph).

But I just want to go back to the campaign, to stress, as we talk more about the trade, how important this was to the president. He made his mark in the Republican primaries when he talked about building the wall, when he talked about immigration. But in terms of the general election and turning those blue states red, this helped a lot.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Hillary Clinton unleashed a trade war against the American worker when she supported one terrible deal after another, from NAFTA to China to South Korea.

We're going to take jobs back from China, Japan. We're going to make our country great again.

We're going to start winning again. We're going to win on trade with these other countries that are ripping us off.

We have the -- probably the dumbest trade deals in the history of the world.

(END VIDEO CLIP)

KING: This, I think, though, is a defining test of the next several weeks and months. The second 100 days as we finish them out and get to the six-month mark, if you will, in the sense that this is something the president can do with executive power. He said he's going to renegotiate NAFTA. We're waiting for this announcement from the Commerce Department. He has to meet his own test from the campaign, correct, or does he -- on several issue he's backed off. You mentioned this is not Republican orthodoxy. On several issues he's backed off. Will he try to find a compromise here or will he be all Trump?

WESTWOOD: We've already seen kind of a fake out with NAFTA. There were reports that he was getting ready to scrap NAFTA altogether. Then maybe someone intervened with the Canadian prime minister, who put in a call into President Trump and sort of talked him off the edge on NAFTA. But certainly we have not seen actions of trade match the campaign rhetoric yet with the exception being TPP. He did cancel that almost immediately, fulfilling a campaign promise. And at first, when he first started talking about killing TPP, it was not very popular in Washington. Like Mike said, they didn't have a constituency. But he -- his rhetoric against TPP and how quickly that caught fire sort of reshaped the way both parties approach TPP. It made it politically toxic. And so that was one of the few things that he's done that has gotten bipartisan support, was to repeal TPP. But beyond that, he has only kind of played small ball with maybe some soft wood lumber from Canadian -- pushing back on those kinds of trade issues, but no sweeping trade disputes, like we heard about on the campaign trail. [12:25:16] KING: He said he would label China a currency manipulator on day one. He didn't do that. We expect these tariffs to come down (INAUDIBLE). And I think this part is crucial because it is within his power. And if you look at his approval rating just on the economy, his overall approval rating is worse in this. But on the economy, 44 approve, 46 disapprove. So he's got a split. For the president of the United States -- and, again, this sounds snarky, I don't mean it to be -- for a president whose poll numbers are not all that good, if you look at that, you're pretty encouraged in the sense that you -- you're split evenly there with low unemployment, with a chance to -- if the economy improves and he gets credit for it, that could be the tide that lifts it.

KUCINICH: And mid-term Republicans are keeping an eye on that number, too --

KING: Right.

KUCINICH: Because the economy, at the end of the day, is what effects -- it's what got Trump elected. I mean it's one of those things that really resonated with people, particularly in those blue states that he turned red. So if that -- if that sort of optimism continues, that's good news for Republicans across the board who would be in charge of executing some of these issues that are stalled right now, tax reform, infrastructure, which they don't agree on. I mean we should say -- and there's no -- and there's no guarantee that Trump's tax reform package or what he said for infrastructure wouldn't add to the deficit and wouldn't face a lot of resistance. But it is definitely in his interests and the Republican Party's interest to keep those numbers above water.

KING: It will be interesting to get a report from the vice president who's at a July 4th parade in Grandville, Michigan, to see how they -- what they think out there, what the blue collar folks out there think. Has the president delivered on his promises on trade or not yet? Mr. Vice President, you can call us in -- call in, maybe, and talk to me about that.

Next, America first at times leaves America alone. The president heads to a big summit in Europe and even the few friendships he made early on now under strain.

And as we go to break, this is how some Atlantans -- did I say that right -- celebrated July 4th. There's a 10k race every July 4th in Atlanta. If it looks crowded, that's because on this July 4th, the largest 10k in the world.

(COMMERCIAL BREAK)