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Trudeau and Trump Phone Call; Canada National Security Threat; White House Press Briefing. Aired 1-1:30p ET

Aired June 06, 2018 - 13:00   ET

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

[13:00:00] JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: Comments to Prime Minister Trudeau is that British troops burned down the White House during the war of 1812, though historians note the British attack on Washington during that time was in retaliation for the American attack on York, Ontario, which was then a British colony.

Now, sources familiar with the call don't know exactly if Mr. Trump's remark was simply his way of adding some levity to the conversation with Prime Minister Trudeau, but we are told by a source familiar with the conversation that they feel like this is no laughing matter, that this won't be a laughing matter for Canadian workers or American workers.

And as you mentioned, Wolf, Justin Trudeau has publicly denounced the national security justification for the new tariffs, and the prime minister blasted the tariffs over the weekend as insulting.

We're also told that the foreign minister for Canada, Chrystia Freeland, she made her concerns very clear in a conversation with Senator Bob Corker, the Senate Foreign Relations Committee chairman, earlier this week.

But, clearly, Wolf, this was a very testy phone call that played out between the president and Prime Minister Trudeau. Obviously does not set the table very well for this G-7 Summit coming up this weekend, Wolf.

BLITZER: Yes, it certainly doesn't.

Let me play a clip from Canada's foreign minister, Chrystia Freeland. She was clearly appalled, as so many other Canadians have been, the entire leadership over there, that the president of the United States was imposing these tariffs on Canada as a -- because of a national security threat facing the United States from Canada. Listen to this.

(BEGIN VIDEO CLIP)

CHRYSTIA FREELAND, CANADA'S MINISTER OF FOREIGN AFFAIRS: So what you are saying to us, and to all of your NATO allies, is that we somehow represent a national security threat to the United States. And I would just say to all of Canada's American friends, and there are so many, seriously?

(END VIDEO CLIP) BLITZER: So what does this say, Jim, about the state of relations right now between arguably the closest ally the United States has, certainly the number one trading partner of the United States?

ACOSTA: Well, it's not very good, Wolf. And I think Chrystia Freeland told CNN's Dana Bash over the weekend that she wouldn't describe this as a trade war, but as certainly a pretty bad rift in relations between the U.S. and Canada. Obviously when the president of the United States says there are national security implications for imposing these kinds of trade tariffs and he's citing the War of 1812, erroneously saying that Canadians burned down the White House, to the Canadian prime minister, Justin Trudeau, it obviously has reached a point where the president of the United States is clearly frustrated that the Canadians are pushing back.

Now, obviously, this is something that's going to come up in this briefing in just a few moments with Larry Kudlow, one of the president's top economic advisers. He's going to be asked about this very tense relationship between the president and the prime minister. But obviously, Wolf, the president has other big items on his agenda moving into next week. He's supposed to sit down with Kim Jong-un.

But it just goes to show you, as the president's trying to negotiate a nuclear agreement with the North Koreans, he is walking into a very somewhat hostile situation in Canada where he has a number of trading partners of the United States, important allies of the United States, just ticked off that the U.S. is imposing these tariffs and, obviously, the Canadians are not responding well to the president saying to the Canadian prime minister, well, didn't you burn down the White House, when, obviously, that was the British.

And beyond that, they just don't see this as a joking or laughing matter. They take -- they're taking this very seriously, Wolf.

BLITZER: Yes, and that happened during the War of 1812. That's a while ago.

ACOSTA: A long time ago.

BLITZER: Jim Acosta at the White House, thanks very much for that.

A national security threat, clearly that's what the president is calling Canada to justify these new steel and aluminum tariffs.

So let's discuss with our panel. CNN national security analyst Samantha Vinograd is joining us. Our global economic analyst, Rana Foroohar is joining us, CNN politics reporter and editor at large Chris Cillizza is here, CNN counterterrorism analyst Phil Mudd, and our national security analyst David Sanger of "The New York Times."

David, justify from the president's perspective why you can cite national security concerns for imposing these tariffs on Canadian imports into the United States.

DAVID SANGER, CNN NATIONAL SECURITY ANALYST: Well, Wolf, first, just to set the scene of the next week, it -- you could see from Jim Acosta's report, it's more likely that the president is going to go into a friendlier welcome from Kim Jong-un when he gets to Singapore than what he will have left in Canada after this G-7, which is in and of itself pretty remarkable.

So the national security argument is being made for one reason and one reason only, that there is an exemption in the World Trade Organization's trading rules that you can do certain things to protect your national security. And so they are twisting the definition of national security here.

Now, the only argument they could make for the steel and aluminum is that this undercuts the American industrial base. Well, Canada is not a big violator in that arena.

Previously, we've seen national security offered in trade cases, mostly involving technology. So, for example, it was a national security argument for banning ZTE part from the American market. The president has now allowed them, it appears, to come back into the market without explaining how we resolve a myriad of national security concerns, and is going ahead with this on Canada.

[13:05:20] Last point. When you heard Chrystia Freeland before, she went on, later on, to make the point that Canada, like some of the European that we've seen, fought with the United States in Afghanistan, sent troops to Iraq. And so they find it deeply insulting to be told that their exports are a threat to American national security.

BLITZER: It's one thing, you know, Phil Mudd, and we're waiting for Larry Kudlow. He's about to walk up to the podium and begin this briefing. He's going to be asked some tough questions about this. But it's one thing to cite national security in dealing with imports to the United States, let's say from China or Russia, but Canada?

PHIL MUDD, CNN COUNTERTERRORISM ANALYST: I mean to pick on what David's saying, obviously this is a technical point. They're going to -- the U.S. is going to make a point in global trade negotiations to say, under certain rules we can do this. That's not how I think the population in America and Canada will interpret this.

But to pick up on what David said, remember, we had the president at the U.N. calling the North Korean leader little rocket man recently. When he decided he wanted to have a high-impact summit with the North Koreans, he starts referring to the leadership skills of the North Korean leader and thanking him for releasing hostages, remember, after this new friend, the North Korean leader, murdered an American who was a hostage.

And now we're going to the Canadians saying, you guys have been with us in major combat since 9/11, including the catastrophic mistake of Iraq, and you're a national security threat. It doesn't make any sense.

CHRIS CILLIZZA, CNN POLITICAL REPORTER: To add to that, look, I always think we overthink broadly policy, diplomacy, politics, Donald Trump. He's playing eight dimensional chess and somehow there's a strategy here, Wolf. And I would argue largely, as it relates to diplomacy and foreign policy, he likes people who like him and/or do things he likes. So Canada, Germany, Australia, these are not typically countries in the modern age where we would say the U.S. is -- these are our dagger drawn enemies. And yet Donald Trump has clashed repeatedly --

BLITZER: Yes.

CILLIZZA: With the leaders of those countries while Kim Jong-un and other -- candidly, other authoritarian dictators, he has had some level of praise for.

BLITZER: Let me get Rana.

Rana, you're our global economic analyst. Talk a little bit about the economic impact of this potential trade war? We're going to hear a lot more about it from Larry Kudlow, the president's economic adviser.

RANA FOROOHAR, CNN GLOBAL ECONOMICS ANALYST: Well, Wolf, I would just start by saying, if you're going to have a trade war, and they do tend to be losing battling, they're usually zero sum gains, I can't think of one example in history where a trade war has actually been good for the country that started it, or for anybody. But if you're going to have one, it's a good thing to actually fight the bad guys. You know, fight the folks that you have a real legitimate beef with.

And this is what's so very ironic about the president calling national security -- calling Canada a national security issue, fighting with the Europeans. These are exactly the allies that we might actually at this moment come together with to put pressure on China, which, to be fair, and the administration has a point on this, has been a serial infringer in a number of areas, not just around steel, but around tech transfer, around the high growth industries of the future. And that's really where we should be putting our energy.

We are in such a losing game here by alienating the very allies that we could be working with. And, now, Europe, in particular, is at a point where it could be pushed closer to China right now. Germany is actually now a larger trading partner with China than it is with the U.S. So we could be at a real tipping point here in which the president could destabilize things in a way that will be very, very bad for America, both in the short term and in the midterm.

BLITZER: You know, and, Samantha, the president is going to be going to Canada on Friday for this G-7 Summit. Let's just remind our viewers. He's going to be meeting with the leaders, not just of Canada, but France, the U.K., German, Japan, and Italy. It's going to be a pretty tense session. You used to work at the NSC, the National Security Council, under President Obama. Walk us through what he can anticipate given these trade war threats.

SAMANTHA VINOGRAD, CNN NATIONAL SECURITY ANALYST: Well, Wolf, it's not just the trade wars. We have to remember that the G-6, basically the G-7 members, except for us, are already meeting and coordinating against us on tariffs, but also on Iran policy and on climate change. So we're the outlier on all of these issues. And to the last point that was made, it's not just our allies that are pointing the finger at us as a rule -- the rule breaker rather than the rule maker. Russia and China are echoing the statements that are being made about our trade policy.

And let's just call this what it is. We have to stop beating around the bush on this national security provision. This was the quickest way that the president could find to impose these tariffs. There is no national security argument for why these tariffs were put in place. We have not heard any articulation about how they harm our national security. We haven't heard Ambassador Bolton talk about an NSC meeting that led to this process. This was a convenient way to punish our friends and to make us, I'm sorry to say it, the skunk at the G-7 party that's starting on Friday.

[13:10:25] BLITZER: And, Rana, you know, as we await Larry Kudlow to start this briefing, let's not forget that -- I guess here he is right now. Here's the president's economic adviser.

LARRY KUDLOW, WHITE HOUSE ECONOMIC ADVISER: Hello, everybody. I'm Larry Kudlow.

So some brief stuff on the G-7 meeting in Charlevoix -- if my high school French pronunciation is doing good.

Basically the key points, number one, economic growth. The United States now has the fastest growing economy in the world according to the OECD, or at least the fastest growing economy among the industrialized nations.

Second, there will be trade discussions, as you might imagine.

Third, there will be some important bilateral meetings. President Trump will be meeting with Prime Minister Trudeau and President Macron. Important bilaterals.

And, finally, I think one of the key points, of course, on the eve of the North Korean summit in Singapore, one of the key points will be shared security issues among the allies.

And, if I may, just perhaps because it's my favorite subject, the United States economy is growing. We're pushing through 3 percent. Some said it couldn't be done. It is being done, and we're proud of it.

And I think President Trump's policies, the lower taxes, and major regulatory rollback are a key part of this issue. And I also think his role as a -- probably the strongest trade reformer of the past 20 years, not only protect American interest, but to open up avenues of growth for our business and our workers, and, frankly, to help open up world growth. The world trading system is a mess. It is broken down. And so far as fairness and reciprocity and ultimately free trade, I think this is contributing to our economic growth and our confidence.

The key point here on the economy is, small business confidence, record high or nearly so, consumer sentiment I guess best in 15 or 20 years at least. And, of course, the jobs numbers have been superb. A recent article in "The New York Times" suggested nothing better could be written about the job performance. I love reading that. And unemployment rates are down across the board. Really, we haven't seen such low unemployment in many, many decades, for all categories I might add.

So I think the policies are working. And my great hope is that our friends at the G-7 will take notice of these policies and work with us to extend and expand them so we can have a prosperous U.S. and world economy. So these will all come up at Charlevoix.

Yes, ma'am?

QUESTION: Thank you, Mr. Kudlow. I appreciate it.

A couple of questions on trade with China, if I may.

First, have you reached a deal to lift the ban on ZTE, as we've seen reported? And, if so, what can you tell us about it?

[13:13:54]

KUDLOW: No decision has been reached by both sides as of now. And of course I refer you to Wilbur Ross, Secretary of Commerce. But as of this moment, no decision has been reached by both sides.

QUESTION: Secondly, in terms of your focus on China and tariffs on China, there seems to be a dual focus of this administration on lowering the trade deficit with China, but also on structural reform. How do you see the more important of those goals and what are you doing to try to achieve the structural reform in particular?

KUDLOW: You know, they are absolutely related, integrated thoughts. In other words, the negotiations between the U.S. and China regarding trade will lower the trade deficit if -- if it works out, there are no deals at the moment.

But the way you do that, this is an important point, I'm not sure folks have sort of picked up on this and I appreciate your question on this. This is not a --

[15:15:00]

-- government to government, this is not the Chinese government buying a bunch of natural gas and soybeans from America.

This is about reducing tariff rates and non-tariff barriers that will permit the increase in U.S. export sales to China, that's the actual mechanism. And that -- I don't think that's been a clear point, that's an economic point. That's how you do it and that represents structural change, important structural change.

Now as you know, there are other issues here regarding technology transfers and theft of IP and so forth. But in terms of the -- and if you do that, if you lower the tariff rates and if you lower the non- tariff barriers and you permit increased U.S. export sales -- we are the most competitive economy in the world, so we will get that job done, then the trade gap will probably fall, that's how that will work. Yes, please?

QUESTION: Going into the meeting, the finance minister meeting over the weekend, the French finance minister (inaudible) the G6 plus one; Angela Merkel said there would be contentious discussions about trade.

Are these alliances a low point, and how does the U.S. plan to respond to these criticisms and concerns?

KUDLOW: Well look, we're talking everything through. There may be disagreements, I regard this as much like a family quarrel. I'm always the optimist, I believe it can be worked out. But you know, I'm always hopeful on that point.

This is a G7 meeting and the presidents and heads of state will get together. Let me add one thought to that, though. The president -- President Trump is very clear with respect to his trade reform efforts, that we will do what is necessary to protect the United States, its businesses and its workforce.

So that we may have disagreements, we may have tactical disagreements but he has always said, and I agree, tariffs are a tool in that effort and people should recognize how serious he is in that respect.

QUESTION: Do you expect him to make any changes to the tariffs on Canada or E.U. in this meeting? There's some reports that Secretary Mnuchin had pushed for changes with Canada.

KUDLOW: I'm going to leave that to the meetings, OK? The meetings will produce stuff. OK, lots of hands, sorry, yes sir? Please.

QUESTION: Thanks a lot Larry. You mentioned the president will be having a bilateral during the G7 with Canadian Prime Minister Trudeau. How would you describe relations right now between the U.S. and Canada? Are they better than having existed in prior administrations or are they worse than we've seen in prior administrations?

KUDLOW: I don't want to make comparisons with prior administrations.

QUESTION: Please, please, (inaudible).

(LAUGHTER)

KUDLOW: Just between us. I -- I get it, appreciate it.

Look, President Trump talks to Prime Minister Trudeau a lot and continues to do so. I think the bilateral meeting that is scheduled between the two is a really good thing and I think they'll walk through a lot of these issues.

I have no doubt that the United States and Canada will remain firm friends and allies, whatever short-term disagreements may occur. So I would say relations are very good.

Yes?

QUESTION: What are the prospects for NAFTA being renegotiated this year?

KUDLOW: Well, we're still talking. communication lines are open. I don't want to make a prediction. Ambassador Lighthizer's, you know, has the play on that. Everyone's still talking.

Yes?

QUESTION: Yes, sir, could you talk a little bit about...

KUDLOW: Sorry, it was actually the one behind you. But please, go for it.

(CROSSTALK)

No, go ahead, work it out fellows.

QUESTION: All right, thank you. Regarding trade deficits, the president often talks about trade deficits as if they're their own problem. And other countries aren't buying our goods, and I know that you -- you're saying that the issue is tariffs and lowering trade barriers will reduce trade deficits.

What happens when the tariffs come down, the barriers come down and the trade deficit doesn't go down? What happens then, sir?

KUDLOW: Well, look, you know, supply and demand in global markets subject to macro-economic factors, that stuff's pretty hard to predict. But I think it is reasonable to assume that if our neighbors and allies, whoever, lower their trade barriers, we will export significantly more, frankly, across the board.

And if I could expand on that thought, --

[15:20:00]

-- the United States economy is going through a very positive transformation right now, as I said earlier. Lower tax rates, rollback of regulations, the war against business is over, the war against success is over, the war against energy is over. We have now freed up the animal spirits. You can see that by the confidence indexes. We're rolling. The U.S. economy is rolling. So if you give us a chance, foreign countries, we will fill that bill. We will increase export sales in a significant way. Now, I can't promise, nor would I predict future trade gaps, but I'm saying it is bound to have a positive impact.

QUESTION: But sir, when -- when the president talks about, for instance, for automobiles, he complains that, for instance, Germans don't buy American cars, and Germany has a luxury car industry that's world-renown. Why would they buy our own cars? That's supply and demand right there. It -- it sounds awfully like the president's problem is that other countries aren't buying goods, not that we're -- we're not able to sell them to our -- to other countries.

KUDLOW: By and large, I don't agree with that. But let me just back up. Here's the president's key thought on this: reciprocity. And one of the problems, one of the reasons for the breakdown of the trading system, the world trading system, as I described, which the president is trying to fix: In the last 20-some-odd years, we've seen a lack of discipline, tariff-non-tariff (ph) barriers have gone up. There has been a lot of protectionism. The United States, by the way, we have the lowest average tariff in the world, and if you go down a laundry list of industries, you will see -- we are much lower. Our tariff rates are much lower than our competitors.

So his point is we should all have a level playing field. He calls it reciprocity. I think it's a very apt description. And that's the problem. If -- if you bring down the barriers and you equalize the -- level the playing field, then we'll let nature take its course. We'll let markets take their course, and we will see.

But I think the products we make here have improved enormously, and will continue to improve enormously, and that's really the message of this economic recovery. So we'll -- we'll wait and see on that, but -- but that -- that's the mechanism. As I said to the other question, you know, the way you lower your trade gap, the way you increase your exports is lower the barriers.

And again, I want to say, other presidents in both parties have paid lip service to this issue of the lack of reciprocity, and China's particularly bad behavior, but nothing ever comes of it. This president has the backbone to take the fight, and he will continue to make the fight, because he believes it is in the best interest of the United States, and also, the rest of the world.

QUESTION: Larry?

KUDLOW: Yes?

QUESTION: The question that they're asking (inaudible): is the United States committed --

[13:23:04] BLITZER: All right, we're going to continue to monitor Larry Kudlow's briefing over at the White House and see what he says, especially on some of the other sensitive issues. We'll get back to that.

I quickly want to bring in Rana Foroohar, our global economic analyst.

Give me your immediate reaction to what we just heard Larry Kudlow defending the president's strong positions in terms of trying to ease some of those trade barriers.

FOROOHAR: Well, you know, what I didn't hear was a sense of history. You know, ironically, given that we started talking about the War of 1812 and Canada. If you go back to the 1980s, which were the last time we had a real protectionist environment in the U.S., we slapped tariffs on Japan. There were retaliatory measures. Yes, the number of Japanese autos coming into the U.S. fell briefly, but ultimately the trade deficit in the U.S. went up because prices went up. The price of Japanese goods went up, other foreign goods. So this has not been a winning strategy.

I also didn't hear Kudlow talking about really the bigger existential threat, which goes way beyond tariffs, which is how China is preparing to win in the industries of the future. They have a China 2025 policy. They want to be free of western tech and dependence by then. We need to have a strategy at home, but we hear nothing about that. It's not sexy. It's about retooling education. It's about an industrial policy that really supports American jobs. But we're not hearing anything about that.

BLITZER: A fair point. You know, David Sanger is with us as well.

David, the -- it's not just on trade where there seems to be these serious splits between the U.S. and its closest allice, but there's a whole bunch of other issues, including the Paris Climate Accord, that have emerged, the Iran nuclear deal, that have really divided the United States from some of its closest allies.

SANGER: Well, that's right, Wolf. I mean I think, as Rana pointed out, what was most interesting about Mr. Kudlow's presentation was what he didn't say more than what he did. So he didn't get into justifying the national security split. On the two points that you make on the Paris accord and on Iran, the president will be hearing an awful lot about that, particularly Iran, because that's going to intersect with the trade issues because the president is threatening to put secondary sanctions on European firms that continue to do business with Iran now that we have pulled out of the deal.

[13:25:23] Now, of course, they went into those businesses encouraged by the Obama administration because they signed on with the 2015 deal. So the Europeans are going to feel as if we are blowing hot and cold out here. And I think, you know, there was a time period where this administration was saying that america first did not mean America alone. And I think this is going to be the first meeting of the G-20, the last one that -- the G-7, the last one that took place, President Trump was still pretty new, where people are going to begin to get the sense that America first really does mean America alone to the president.

BLITZER: And in recent days, recent weeks, as you know, Phil, take a look at who's participating in this G-7 summit in Canada over the weekend. And the president has had rather tense phone calls with the prime minister of Canada, of France, the U.K., Germany, with Angela Merkel. Japan and Italy are also there. He seems to have a decent relationship with Prime Minister Abe of Japan. Italy, there's a change in government right now. We'll see what happens over there.

But this is a tense time between the U.S. and its closest allies.

MUDD: And I think that what we just heard makes sense in a narrow sense of looking at the economic relationship with some of these countries. But there is a broader perspective that David was touching on. Let's be clear, if you look at traditional alliances and where we're heading, sort of American strategy and the American foreign policy apparatus, the president, 500 days in, not a single visit to the U.K. because he'll get booed out of town. A tense relationship with -- with Theresa May, the prime minister. Tense phone calls with Macron, the leader of France. Obviously a problematic relationship with the Canadians. He's insulted Angela Merkel on things like immigration issues.

And, meanwhile, he has a cordial relationship with a man who interfered in the American elections and threated the security of Eastern Europe with the Chinese, who threatening in the South China Sea. And he's going to visit and has complimented the North Korean leader. Aside from the tactical trade issue, I guess what I'm saying is, where is the sort of balance of power going between people who threaten the United States and people who have been traditional allies? I don't get it.

BLITZER: Everybody stick around. There's more we're following, including a new presidential pardon. The president commutes the sentence of a first-time drug offender after a celebrity pleads the woman's case. We'll have details.

Also ahead, agreeing with Trey Gowdy. Two very high profile Republicans in Congress now say the Republican congressman was absolutely right, that the FBI did nothing wrong. It's the latest blow against President Trump's unproven claims of spying on his campaign.

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