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Tariff Trouble; Russia Investigation; U.S.-North Korea Summit; Thousands Mourn Nurse Killed in Gaza; Political Shakeup in Italy; More Evacuations as Wildfires Spread in Western U.S. Aired 3-3:30a ET

Aired June 3, 2018 - 03:00   ET

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


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CYRIL VANIER, CNN ANCHOR (voice-over): Unacceptable and dangerous: finance ministers of the G7 meeting in Canada take a stand against U.S. trade tariffs.

Protecting their client: Donald Trump's lawyers argue the U.S. president cannot be forced to testify in the Russia investigation. We'll examine the letter they wrote to the special counsel.

And uncontained: wildfires in the western United States force thousands of people to flee their homes.

Live from the CNN Center here in Atlanta, I'm Cyril Vanier. It's great to have you with us.

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VANIER: So the meeting of G7 finance misters in Canada ended on Saturday in a way rarely seen before, six of them ganging up on the U.S. for sticking key allies with punishing new tariffs on aluminum, unusual among friendly nations.

Senior officials from Canada, from France, Germany, Italy, Japan and the U.K. all giving Treasury Secretary Steven Mnuchin an earful behind closed doors. Their frustration with Washington was palpable.

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UNIDENTIFIED MALE: What we're trying to communicate that is the six countries, not including the United States, are expressing our concern over the tariffs that the United States has put forward.

And that concern was communicated. And obviously Secretary Mnuchin talked about the administration's point of view. And we are hoping that, with that approach, that we will have clearly communicated our views to the U.S. administration.

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VANIER: And Steve Mnuchin, for his part, downplayed this dispute.

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STEVEN MNUCHIN, U.S. TREASURY SECRETARY: I don't think in any way the U.S. is abandoning its leadership in the global economy; quite the contrary. What the group was very focused on was obviously the steel and aluminum tariffs, which, again, we're doing to protect in particular our steel and aluminum industries.

So this is -- there was general concern that this could be create and become larger trade issues. We're in conversations with the E.U. about trade issues. And I think, as you know, on China, we've been very focused on the trade relationships with China.

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VANIER: The U.S. president was defiant as usual, tweeting, "When you're almost $800 billion a year down in trade, you can't lose a trade war."

All of this while U.S. trade negotiators are this Beijing right now for crucial trade talks after the administration threatened to levy 25 percent tariffs on $50 billion worth of Chinese imports.

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VANIER: Political analyst Peter Matthews joins us from Los Angeles to discuss this possible potential impending trade war. He teaches political science at Cypress College.

Peter, the countries that Trump targeted with tariffs are about to retaliate with their own tariffs and they are putting, again, the ball in Donald Trump's court.

Where do you think this goes from here?

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PETER MATTHEWS, CYPRESS COLLEGE: I think it's going to escalate if we don't calm things down and Trump reverses himself. Otherwise, it could escalate and become another Smoot-Hawley tariff, back in 1930, when exports to the United States were cut by at least 60 percent because of the tariffs, because a trade war broke out.

So I would think it would behoove Mr. Trump to backtrack, especially with our allies, our biggest trading partners, the E.U., Mexico and Canada, where he stuck these big tariffs on their products coming in.

And that's going to really, really hurt the exports to the United States, it's going to hurt jobs. The price of goods and services are going to go up right here and they are, have already started going up.

And that's a big problem. Mr. Trump has to look at this very carefully and look at why he's doing this and know it's going to start a trade war and continue the trade war that's already actually begun.

VANIER: Well, the U.S. has imposed its tariffs. Now the Canadian counter tariffs don't come into effect for another months; the European tariffs also don't come into effect for at least a few weeks.

How big could this get?

Because we're talking about a trade war, those words are always a little scary. But the former boss of the World Trade Organization, Pascal Lamy, says, look, let's not exaggerate the economic impact this could have.

What do you think?

MATTHEWS: I think it begins rather small and it escalates gradually. If we look in past history, back in 1930, again, it began with the tariffs that escalated further and further and retaliation occurred by many, many of our trading partner.

And the whole world was engulfed in a trade war, which escalated the price of goods and services, caused more unemployment and deepened the depression. So this could happen once again here. And I think it's very dangerous territory.

And Trump should understand the main problem here with American exports and import trade deficit is not so much the tariffs that will help but higher wages across the board.

He should have insisted in the NAFTA trade agreement earlier, when it was brought in by President Clinton, that --

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MATTHEWS: -- wages should increase in Mexico, raise gradually, step by step, so Mexican workers could have more money in their pockets when American companies go down there.

That way they can demand American exports and buy them as well. The fair trade model is truly based on labor and environmental safeguard being increased, not on these tariffs, which is really a very backward way of looking at things.

VANIER: Could this end up backfiring politically for Donald Trump?

Because the U.S. allies are targeting Republican states with their potential tariffs.

MATTHEWS: Yes, they are. And many Republican states are rural states, where there are many farmers with export products and their products are going to be hit hard by, for example, China, which buys a lot of American soybeans and that's Midwestern farmers that voted for Trump.

So it can certainly backfire on him. And there's a good chance that that's already going to start happening.

And don't forget the gas prices have gone up because Trump got out of the Iran nuclear deal and that made a shortage in the oil around the world. And so you have now gas prices having gone up by at least 50 cents a gallon in many states in the United States, many of the Midwestern states as well.

So already Trump's actions, when it comes to the international political economy, are backfiring on him. And I think it's going to hurt the chances of the Republicans in Congress being re-elected this fall, very good chance that would happen.

VANIER: All right, Peter Matthews, always good to have you on the show. Appreciate your time. Thank you very much.

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VANIER: Now to the Russia investigation. President Trump's lawyers are trying to argue that it's impossible for a sitting president to obstruct justice. "The New York Times" obtained a confidential letter written by Mr. Trump's lawyers and sent to special counsel Robert Mueller's office.

It shows the lengths the Trump team is will to go to, to keep the president from testifying. The fact that the document was published sent Mr. Trump on a Twitter tirade. He again said there was no collusion with Russia and asked whether the Justice Department had leaked this letter to the media.

There's a lot to unpack in the letter. CNN's Shimon Prokupecz sorts it out.

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SHIMON PROKUPECZ, CNN CRIME AND JUSTICE PRODUCER: The 20-page letter argues why the president doesn't have to be in interviewed by the special counsel. The president's legal team in their letter was also responding to some of the questions that the special counsel, the FBI and Mueller and his team is seeking to ask Trump.

In the letter they say because Trump is the chief law enforcement officer, that, quote, "that the president's actions could neither constitutionally nor legally constitute obstruction because that would amount to him obstructing himself and that he could, if he wished, he could terminate the inquiry or even exercise his power to pardon if he so desired."

And then some of the other issues that the special counsel has been looking at is Michael Flynn and whether or not the president tried to interfere in that investigation when he fired the former FBI director, James Comey.

And here in an interesting argument from the president's lawyers, they claim that the FBI never told the White House that Flynn was under investigation and, therefore, how could Trump obstruct justice when he didn't know that Flynn was officially under investigation?

They also said the White House had every impression based on what Flynn told them, that he was going to be cleared after the FBI interviewed him.

And they write this in the letter, "There could not possibly have been intent to obstruct an investigation that had been neither confirmed nor denied to White House counsel and that they had every reason, based on General Flynn's statement and his continued security clearance, to assume that that investigation was not ongoing," they say.

Now the letter addresses some important aspects of the special counsel investigation and that has to do with the crafting of a statement by the president regarding the Donald Trump Jr. meeting at Trump Tower.

You'll remember that was with a Russian lawyer. And for the first time, really, the lawyers here, the president's lawyers here write in this letter, basically admitting an admission from those lawyers that he, the president, helped craft a statement.

And the response here from the lawyers to the special counsel, who's looking into that meeting and also the crafting of these statements when it was revealed that this meeting took place, they say essentially that this is private matter.

And the letter goes onto say that the special counsel has received all of the notes, communications and testimony indicating that the president dictated a short but accurate response to "The New York Times" article on behalf of his son, Donald Trump Jr.

Now the significance of this meeting, as you'll recall, was that Don Jr. thought he was meeting with someone who was going to provide dirt on Hillary Clinton. But it really turned out to be that it was a Russian lawyer who wanted to talk about adoptions.

And finally what's really important here is that, since at least January, the president's lawyers have been making these arguments to the special counsel and now some of them publicly why the president should not be subjected to an interview.

And it seems --

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PROKUPECZ: -- at least, as far as everything we know, that that's not working because basically we are now in June and there's still this ongoing battle with the special counsel about the interview -- Shimon Prokupecz, CNN, Washington.

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VANIER: With only nine days before the historic U.S.-North Korean summit, U.S. Defense Secretary James Mattis says it will be a bumpy road to negotiations and that just having a summit in the works does make any difference when it comes to U.N. sanctions currently being applied to North Korea.

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GEN. JAMES MATTIS, U.S. SECRETARY OF DEFENSE: The strong enforcement of North Korea-related United Nations Security Council resolutions will continue, our objective remain as stated by Minister Onodera, the complete, verifiable and irreversible denuclearization and full removal of all WMD on the Korean Peninsula.

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VANIER: There's also this. According to "The Washington Post," North Korea wants someone else to pay its hotel bill. Alexandra Field is in Seoul, South Korea.

Alex, this is just strange, frankly.

What's going on with this hotel story?

ALEXANDRA FIELD, CNN CORRESPONDENT: No ordinary hotel bill it would be, according to "The Post." Kim Jong-un is demanding to stay at Singapore's five-star Fullerton Hotel, where the presidential suite runs $6,000 a night. And, yes, they're reporting that North Korea believes that someone else should pay this bill.

They also run a response from a State Department spokesperson who says that the U.S. won't be footing the bill or asking other countries to do it but they do report that it's likely the U.S. would request a waiver from the U.N. for sanctions related to travel expenses for the North Korean delegation.

This is just one bump in the road where you talk about the logistics of pulling off what once seemed to be an improbable summit. Cyril, there's the outstanding question of how Kim Jong-un will get there. There are questions about his aging fleet of Soviet-era aircraft, if he'll be able to use one of his planes to go all the way to Singapore, if he'd have to borrow a plane from another country. Potentially embarrassing from the optics perspective on a diplomatic level, really a strange thing to be sorting out some nine days before the summit.

And I should mention, at this point, Cyril, we don't even know exactly where that meeting will happen once these leaders do arrive in Singapore.

VANIER: We're also just learning that Syrian president Bashar al- Assad is going to visit North Korea and meet its leader, Kim Jong-un.

What can you tell us about that?

FIELD: Right, you've got the U.S. on its end, staying in close contact with its allies like South Korea and Japan. You had Secretary Mattis meeting with his counterparts here over the weekend. At the same time we're seeing parallel moves from North Korea. They are working to firm up their relations with the countries that they have traditionally had most solid relationships with.

You saw Kim Jong-un have two meetings with Xi Jinping in the last couple of months. You've also heard plans that North Korea has announced that they will have a summit between Kim Jong-un and the Russian president, Vladimir Putin, by the end of the year.

Now news Syrian president Bashar al-Assad will visit with Kim Jong-un as well. Still no date set but KCNA state news in North Korea says Assad has said the following about the meeting, that the world welcomes the remarkable events in the Korean Peninsula brought about by the outstanding political caliber and wise leadership of Kim Jong- un.

Those are the words that North Korean state news says Assad said with regard to this meeting. Again, no date for the meeting yet. We have to point out Syria and North Korea have had warm relations for decades. It was Assad's father who met with Kim's grandfather back in the '70s.

VANIER: Alex Field, nine days to go, we'll keep you busy. Thank you very much.

A CNN team in northern Gaza is reporting two large explosions on Sunday. They appear to be part of Israeli retaliation after it claims Gaza militants fired a total of six projectiles toward Israeli territory on Saturday.

That attack appears to have broken a cease-fire agreed to by Hamas and Islamic Jihad but never confirmed by Israel. Israel answered by striking 10 Hamas targets. This comes less than five days after the largest clashes since the last war between Israel and Hamas four years ago.

This is also in Gaza, thousands of mourners there carrying the body of a young Palestinian nurse killed on Friday. The 20-year old was known for her dedication to saving lives.

The Palestinian news agency says Israeli snipers shot her while she was giving first aid to injured protesters. Israel will reportedly look into the shooting and the Israeli Defense Forces said it was following rules of engagement.

In just over two months, Israeli forces have killed more than 100 Palestinian protesters. About half of them died in a single day. Protesters are demanding the right to return to land that is now inside Israel.

Let's stay in the Middle East for this. Anger is growing in Jordan against austerity measures, as the kingdom faces its largest protests in years. For the third consecutive day, demonstrators are --

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VANIER: -- demanding the government scrap proposed reforms which would hike taxes on some workers and companies. Unions say it will worsen living standards. The legislation includes recommendations from the International Monetary Fund aimed at cutting Jordan's massive public debt.

The prime minister says it's up to parliament to decide the fate of these measures.

Still to come on the show, raging wildfires forcing thousands to flee. We'll have the latest on the flames engulfing parts of the western United States.

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VANIER: The streets of Rome are decorated in red, white and green this weekend, celebrating Italian patriotism. Saturday marked the anniversary of the founding of the country's republic, as well as the installation of the new populist government, ending months of political turmoil.

Italy hasn't had a government since elections in March. This one is a coalition of the country's anti-establishment Five-Star Movement and the far-right League Party.

Leading this new government is Giuseppe Conte, a little-known law professor who's never held political office before. CNN's Delia Gallagher has detailed on this the country's new prime minister.

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DELIA GALLAGHER, CNN VATICAN CORRESPONDENT (voice-over): Italy is celebrating. The national holiday of the founding of their republic, a day of unity. And victory for the new populist government of the Five-Star Movement.

UNIDENTIFIED MALE: (Speaking Italian).

GALLAGHER (voice-over): Saviano Posadincini (ph) from Umbria works in finance and says the movement has been an antidote for people's anger against the establishment, which he says has oppressed them.

"From Italy, the message will go out, definitely to Europe and also to the rest of the world," he says.

Five-Star supporters like Emma, a 21-year-old university student, have hope.

EMMA, UNIVERSITY STUDENT: We do think that things are going to change. It will take time. It's not like we say in Italia, Rome was not built in a day.

GALLAGHER: The Five-Star Movement was founded only 10 years ago but they received only 32 percent of the vote. It was not to govern with a majority so they made an alliance with the anti-immigrant right-wing League party.

They have different histories and different agendas but the two will have to stay together in order to govern.

GALLAGHER (voice-over): The new government promises to deport illegal immigrants, raise the minimum wage and guarantee a basic income, programs that will cost money for a country that can't afford it.

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GALLAGHER (voice-over): There are challenges ahead for this new government and Italy. But now is their moment to see how long they can make the party last -- Delia Gallagher, CNN, Rome.

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VANIER: More people are being forced to leave their homes as massive wildfires spread across parts of the western U.S. In New Mexico the Ute Park Fire has grown to --

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VANIER: -- 121 square kilometers. Hundreds of firefighters are battling that blaze. It is still uncontained.

In California, meanwhile, firefighters are making progress fighting a brush fire that has already scorched 100 hectares. Some of the people who were forced to flee are now being allowed to return home.

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VANIER: Here's another story the weather center has been working in Hawaii. Some residents near the erupting Kilauea volcano have two options left, evacuate or get arrested.

Seven people have been cited for loitering in a disaster zone. Officials worry people who stay could get trapped by the lava. It's been four weeks since Kilauea's first eruption rocked Hawaii's big island and molten rock continues to spew from volcanic fissures. Scott McLean has the latest.

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SCOTT MCLEAN, CNN CORRESPONDENT: After an entire month, Kilauea continues to erupt, cutting off roads and destroying well over 80 homes so far. Most of the lava flows are being fed by one single fissure, which, at times, has shot some 200 feet into the air.

In fact, you can see the smoke from that fissure in the background several miles away. Now new video shows that that fissure is not sending lava as high anymore. Still, the massive amount that it is producing continues to cause problems.

This afternoon, a lava flow some 300 yards wide cut off a main highway near the coast, the last remaining escape route for some communities.

Meanwhile at the Kilauea summit, things have been unusually quiet in recent days. Brand-new drone footage shows that the main crater of the volcano has been blocked by boulders and debris. Geologists say that the lack of activity could mean one of two things: either this cycle of explosions and eruptions is coming to an end or --

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MCLEAN: -- there could be pressure building under the surface, which could lead to a much larger explosion down the road. Experts aren't sure outcome which is more likely. And so the national park that houses that crater will remain closed indefinitely -- Scott McLean, CNN, Pahoa, Hawaii.

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VANIER: As Puerto Rico braces for the new hurricane season, families there are remembering their loved ones, the ones they lost in last year's devastating storms amid a controversy over the real death toll from last year's hurricanes.

CNN's Leyla Santiago is back on location to look at how the islanders are coping.

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LEYLA SANTIAGO, CNN CORRESPONDENT: Thousands of shoes have been placed at the capital building in San Juan, Puerto Ricans coming here and raising awareness of specific people who died, they believe, because of Hurricane Maria.

I spoke to this family; I'll come down here so you can see. This is Doroteo Diaz y Rodriguez And his family told me that he had medical conditions that worsened significantly after Hurricane Maria, given the lack of access to medical care as well as lack of power.

His son wrote here, "We will love you always." And he is number 1,580. There are more than 2,000 shoes that have been placed right here at the capital building. A lot of hugs, a lot of tears.

The organizer told me, this is a funeral and they consider this the cemetery. I spoke to one woman who came here and was just caught up with all the emotion, crying.

When I asked her why, she said she had two pairs of shoes to put down.

And then she said, "I smell death. This is death."

Of course, all of this comes after Harvard put out a new study that indicates they believe that at least 4, 600 people died as a result of Maria. The Puerto Rican government says the death toll remains at 64, even though they have commissioned a study with George Washington University that was supposed to part of it be complete in May but there have been delays.

And the timing of this is also creating anxiety. We are now in the 2018 Atlantic hurricane season. And as we have spent the week traveling across this island, many people say that they are not prepared for another hurricane to come because this island is just too vulnerable and it's still recovering -- Leyla Santiago, CNN, San Juan, Puerto Rico.

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VANIER: That does it from us for now. Thank you for watching CNN NEWSROOM. Back with the headlines in just a moment.