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Trump Launches Trade War Against China; Economy Adds 213,000 Jobs; Former Thai Navy SEAL Dies During Rescue of Trapped Soccer Team; Trump Slams Former President George H.W. Bush And Sen. John McCain; Scandal-Plagued EPA Chief Scott Pruitt Resigns; Trump Mocks #Metoo Movement During Attack On Warren. Aired 9-9:30a ET

Aired July 06, 2018 - 09:00   ET

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

[09:00:00] ERICA HILL, CNN ANCHOR: -- Beijing, calling it the start of the largest trade war in economic history.

Our chief business correspondent Christine Romans is here now to help break it all down.

So let's start off first --

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Sure.

HILL: -- with the latest jobs report.

ROMANS: Another very strong jobs report. And these two stories are related because this is the backdrop of which the administration is confident enough that it can have a trade war with China because the U.S. economy is so strong and folks are hiring. Look at the jobs added. 213,000 jobs, and April and May were revised upwards. So you've had strong 200 plus hiring for the past three months.

Now the unemployment rate, it rose a little bit to 4 percent. Here's why that's not alarming. It's not alarming because 600,000 people came off the sidelines and started looking for work. They are either encouraged by all the headlines they're seeing, friends and family telling them that there are jobs plentiful in this country and so they are looking for work.

What we hear from employers is they can't find the workers. So then why do we see wages rising? Wages up just 2.7 percent. That's the real riddle here. Let me show you where the jobs gain were, Erica. Business 50,000 jobs created there. Manufacturing 36,000 over the past year. Just shy of 300,000 manufacturing jobs, highly skilled manufacturing in particular and health care, 25,000 in health care. That has been a real steady, predictable performer there in health care, all kinds of jobs in health care for years now, that has been a strong driver of jobs growth in this country.

HILL: So as we're continuing to focus on all that, there is the other headline that we're following as well, and this is the -- you know, it's a trade war. Are we officially in a trade war, Christine?

ROMANS: It's on. I mean, the U.S. fired the first salvo and right away the Chinese fired back. The Chinese are saying they're going to put tariffs on cars, crude oil, cash crops. These are things like soybeans, you've got about 100 soybean farmers who are going to go to Washington next week and say hey, these trade policies are not good for America's farmers, and many of these counties where they're going to feel these tariffs, these retaliatory tariffs from the Chinese are counties that were Trump counties. So you can see the Chinese being very strategic with where they are retaliating.

HILL: And we heard that from the beginning. We should point out, months ago when this all started.

ROMANS: And the Europeans as well, and Mexico and the Canadians. I mean, this isn't just a U.S./China trade war. The U.S. is fighting on all fronts here. Here are the tariffs the U.S. is putting on China. Aerospace, robotics, manufacturing, their auto industry. Why here? The U.S. has complaint for years, the Chinese don't play fair. The Chinese are bad actors and all of these places. And Chinese by the year 2025 want to dominate these particular industries, aerospace, robotics, manufacturing and autos, and so the United States wants to get tough on them now instead of ceding leadership in those areas to the Chinese.

HILL: How is it going to play off? I mean, it's $1 million question, or it might be $1 billion question.

ROMANS: I mean, trade -- tariffs are very dangerous. I think honestly here if you keep $34 billion in tariffs today matched by the Chinese then the president adds $16 billion I think next week, if that's matched by the Chinese and then it stops there, this very strong U.S. economy can absorb this but if you start to see tit-for- tat retaliation, retaliation, the president last night promised $500 billion in tariffs. If you start to go that far then I think it starts to hurt the economy.

HILL: We'll keep watching it, Christine. Appreciate it. Thank you.

ROMANS: You're welcome.

HILL: Joining us now to discuss further, CNN senior economics analyst and former Trump economic adviser Stephen Moore and CNN global economic analyst Rana Foroohar.

So we just laid out the reality of where we are today but, Rana, for a lot of people watching this at home there's that other reality of how does this impact me right now. What is the impact on the U.S. consumer?

RANA FAROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, the impact of tariffs on a consumer is always that it's kind of a tax, right? It raises prices for consumers and how much prices go up depend on how many tariffs there are, how it's interacting with complex supply chains. If you think about just cars, for example, not that we're seeing those tariffs quite yet but cars involve, you know, thousands of products, depending on how many tariffs there are on those products, it can raise the price of cars. And in fact this happened in the last really, you know, bout of protectionism in the 1980s with Japan. We did see price hikes in things like automobiles because of tariffs.

HILL: When we look at this, Stephen, and Christine just laid out for us to what could be coming next in this tit-for-tat, call it a high stakes game of chicken, whichever, you know, you'd like to put on it, if the president is really thinking of going up to $500 billion, there's a significant impact there. Where does this stop?

STEPHEN MOORE, CNN SENIOR ECONOMICS ANALYST: Well, let me just start by just going back to that jobs report because this was a blockbuster. We got 250,000 additional jobs. Maybe --

(CROSSTALK)

HILL: Right. But let's --

MOORE: No, no, but I mean --

HILL: Let's focus on --

MOORE: No, no, no. And I just want to say this, 600,000 additional people in the labor force, that's what we've been trying to get for years and years. More Americans in the work force and the only reason I bring that up is maybe we should start giving Donald Trump the benefit of the doubt on the economy since he's created the strongest economy in 20 years in just 18 months.

HILL: But maybe we also should focus on what we're talking about right here, Stephen.

MOORE: No, but --

HILL: I'm going to bring you back to this.

MOORE: But it is -- it is related because --

HILL: Because it's not that we're not giving the president credit for this economy.

MOORE: Yes.

HILL: We've been very clear about how strong it is.

MOORE: Yes.

[09:05:02] HILL: And Christine laid it out very well for us.

MOORE: So my only point is --

HILL: What that report was.

MOORE: This is part of his whole strategy is getting tough with some of the countries like China that have been, as Christine said, a bad actor. I tend to agree that Trump has probably made a mistake in picking a fight with some of these other countries like Canada, Mexico and Germany. We do need to focus on China and the only thing I would correct one thing is, you know, when China is trying to say well, we're firing the first shot here, no, I think what Donald Trump would say if he were on here right now with you is they have, you know, closed their markets to the United States now for 20 years.

We sell them $500 billion worth of goods every year. They only buy $150 billion from us. That is not a level playing field. They have very high -- I mean, it's ridiculous for them to say somehow we're breaking the trade rules when they don't -- they have such high tariffs and non-tariff trade barriers that make it almost impossible for America to do business.

What Trump wants is a level playing field and if China doesn't cooperate we're going to probably see more tariffs on China.

FAROOHAR: You know, one thing, though, that we really need to see the president articulate is what does success look like here? You know, I mean, for starters the idea of waging a trade war not just with China but with allies was a terrible idea. We've talked about that, you and I, Stephen, and it's good that we're seeing a little bit of a pull back from those Trans-Atlantic tensions and hopefully NAFTA can get resolved.

But what does success look like? Because I think it's one thing to talk about trade deficits and it's another thing to say we're expecting China to cede these high tech industries of the future. They're not going to do that. I don't actually think that you're going to see the Chinese strategy change all that much so I think we need a really clear national conversation about how much pain are people willing to take here and what is the end goal?

(CROSSTALK)

MOORE: Well, one point I would make is --

HILL: And that's the question --

MOORE: You know, look, that's a good question. You're exactly right. How much pain are we willing to take and I would make the point, look, you know, we shouldn't be Neville Chamberlain. Right? You know, China is an adversary here and the idea that we should just capitulate to them I think would be worse in the long run. We've got to be very tough with them. We have to be very unified and say look, you're going to start playing by the rules or you're going to get hit very hard.

I would make the case that China has much, much, much more to lose in this confrontation than we do because their economy cannot really grow at all if they don't have access to America's $15 trillion consumer market. That is the prize for them. And --

HILL: Stephen --

MOORE: And they're going to have to back down here and the tariffs may be escalated in the short term but in the end I'm hoping that we have freer and fairer trade with China and these other countries.

HILL: Rana, does China really have to back down? It doesn't seem -- FAROOHAR: Well --

HILL: -- that there's any indication they plan to.

FAROOHAR: I don't think they're going to back down in their larger strategic goals of trying to rule the high growth industries, high tech industries of the future. I think one thing that's very interesting is Europe's place in all of this. You know, China and Europe actually have much stronger trade ties than they used to. If we don't get the Europeans on board, if we don't really act a little more strategically in saying look, a lot of countries have the same complaints about China that we do, let's work with them, I think you might see the Europeans saying well, OK, you know what? We'll do more business with China. I think that's a risk here.

MOORE: You know, one thing that really concerns me about this, too, is what we're seeing -- what China is doing is trying to interject these tariffs in a way that influences the election. I think this is something we just as Americans cannot stand for. You know, we've had this whole discussion for a year now on CNN about Russia's, you know, interfering in American elections. Now you have China doing it in a very dangerous way and we should all really denounce that.

I mean, they are aiming these tariffs at specific states so they can influence the election and whether you love Trump or hate him, that's not something we can't have --

HILL: Well, they have said to your point --

MOORE: -- foreign countries do --

(CROSSTALK)

MOORE: Yes.

HILL: Stephen, you're right. From the very beginning China has said we are specifically targeting industries, farming as we know in areas that did go strongly for President Trump.

MOORE: Right.

HILL: It is a little difficult, though, to look at these two as equivalence, right? To look at China somehow retaliating --

(CROSSTALK)

MOORE: This is much more -- this is much more dangerous.

HILL: This is their interference -- hold on, Stephen. Hold on.

FAROOHAR: Right, I mean --

(CROSSTALK)

MOORE: It's much more dangerous.

HILL: Hold on. And then you have Russia meddling just to meddle and it's still going on, and the president still refuses to denounce that.

MOORE: Yes.

HILL: So we have a little bit of false equivalency.

MOORE: No, look, this is much, much more dangerous than the Russia situation because China is basically saying we're using trade as a weapon to influence American midterm elections. I mean, we can't allow that to happen. I mean, we're going to -- are we going to have all foreign countries influence on our election by saying we're going to trade with certain goods and services in certain states? I mean, we all have to denounce that because that is meddling in American politics.

FAROOHAR: Well, you know, you're making -- the point about the election is interesting because you can play it either way from a strategic standpoint if you're Donald Trump as well. I mean, on the one hand you can say hey, growth is pretty good, there's never a great time for a trade war but maybe this is as good a time as any but you can also say look, we had great growth, I mean, you know, like it or not -- and I didn't like a lot of the tax plan, you know, you do have a strong fiscal tail wind here. Why spoil it with a trade war? You know, before the midterm elections.

MOORE: Well, that's a fair point.

HILL: We'll have to save that --

FAROOHAR: That I don't quite understand.

HILL: We'll have to save that discussion for next time, though.

MOORE: I've actually --

(CROSSTALK)

HILL: Because we're out of time, we've gone way over.

MOORE: I've actually made that same point for the White House.

HILL: We're all in trouble now. Stephen, Rana, thank you both.

MOORE: OK. Thank you.

[09:10:08] HILL: We also want to follow this breaking news this morning. We've learned a former Thai Navy SEAL has died during an operation to deliver oxygen masks to those boys who still remain trapped in a cave. The diver ran out of air on his way back to the command center from the team's location.

Now it's a race against time, as you know, at this point. Officials now warning oxygen levels inside that cave are down to 15 percent. The Navy SEAL commander says they have a, quote, "limited amount of time" and that they can't wait any longer for all conditions to be ready to begin those evacuations.

CNN international correspondent David McKenzie is outside the cave site in northern Thailand. So what's the latest now?

DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Well, the latest, Erica, is that they're really rapidly accelerated it seems this timeline a few days ago as you see, you know, behind me the military and other tech coming in. A few days ago they said that they could have weeks even months to sort this terrible situation out with the 12 boys from that soccer team here and their coach who are stuck in this cave but now every indication is they need to move quicker.

Both the oxygen levels that you describe and the fact that the rain is coming soon and that's a very much a bad factor. Of course there was a lot of gloom here this morning earlier when the news filtered out of that retired Navy SEAL diver from Thailand who died taking oxygen to those boys. He managed to do that, he died on the way back out.

I spoke a specialist diver who's come in to volunteer. He says they just have to do their jobs.

(BEGIN VIDEO CLIP)

MCKENZIE: What is the mood like right now, now that we've learned that this one diver has died?

MIKKO PAASI, FINNISH DIVER AND VOLUNTEER: Definitely you can feel it that it has an effect. But we're moving on. Everybody is a professional, so we're trying to put it away and avoid it from happening again.

MCKENZIE: And everyone is focusing on getting these boys out?

PAASI: Everybody is focusing on getting them out. Keeping them alive or getting them out.

(END VIDEO CLIP)

MCKENZIE: And that is the focus here of all of these rescue teams including from the U.S. They just want these boys out and they want them out alive -- Erica.

HILL: As we're following all these developments here we know that teams are working really hard to pump water out of the cave. As you point out, more rain predicted for the weekend but there was some reports that some water went back in. What happened there?

MCKENZIE: Well, there's some indication that people trying to help made the situation worse a few days ago with water flowing back into the cave system. I don't think that's had a major impact on these efforts. But what we have seen, Erica, is overnight them putting more pumps into those cave systems to draw out as much water as they can.

Now that same diver I spoke to said there are sections now where you can sort of wade through the cabins. They're looking up maybe above and breathing a bit of air, and not have to dive the whole way through. There's been a lot of talk that these boys can't swim properly and that they're inexperienced. Time and time again what the specialists are saying they have to limit the fear factor, so their own panic in those narrow chambers on their way out -- Erica.

HILL: So many factors. David McKenzie, appreciate it. Thank you.

President Trump taking aim at ailing senior Republicans. Mocking the Me Too movement. As for Vladimir Putin, he's fine.

Plus it is deadline day. The administration must let parents who've been separated from their children speak with those kids. All of this as the administration is increasing its estimate -- it's an estimate -- of the number of children who have, in fact, been taken away from their parents.

And the nation's top diplomat in North Korea right now, trying to, quote, "fill in the details" on that denuclearization agreement.

(COMMERCIAL BREAK)

ERICA HILL, CNN ANCHOR, NEWSROOM: President Trump using a campaign rally to mock ailing members of his own party. After once again slamming Sen. John McCain's no vote on healthcare, the president deriding one of his predecessors, George H.W. Bush, for a decades-old campaign slogan.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: And even though we got a little surprise vote that evening, you all remember that evening, somebody came in with a thumbs down after campaigning for years that he was going to repeal and replace.

Thousand points of light. I never quite got that one. What the hell is that? Has anyone ever figured that one out? And it was put out by a Republican, wasn't it?

(END VIDEO CLIP)

HILL: When it comes to Russian President Vladimir Putin, no criticism there, just praise.

(BEGIN VIDEO CLIP)

TRUMP: They're going, will President Trump be prepared? You know, President Putin is KGB and this and that. You know what? Putin is fine. He's fine. We're all fine.

(END VIDEO CLIP)

HILL: One of the things the president did not address with his supporters, the resignation of his embattled EPA chief Scott Pruitt. CNN's Abby Phillip joining us now live from New Jersey, just down the road from where President Trump is spending the weekend.

Abby, good morning.

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Good morning, Erica. That is not something President Trump seemed to want to talk to his supporters about at that freewheeling rally last night in Montana.

I was traveling with the president all day yesterday and he did address it on the airplane with reporters on Air Force One, praising Pruitt and talking not at all about any of the more than a dozen scandals that has surrounded his EPA administrator since day one.

In his resignation letter to President Trump, which was quite personal from Scott Pruitt who had spent a lot of time over the last several months forging a relationship with the president, which is one of the reasons he was able to hold on to his job so long, Pruitt talked again also not about the scandals, but said it was taking a toll on his family.

He said "it was difficult for me to cease serving you in this role first because I count it as a blessing to be serving you in any capacity, but also because of the transformative work that is occurring. However, the unrelenting attacks on me personally, my family are unprecedented and have taken a sizable toll on all of us."

[09:20:13] Now, some of those scandals did, in fact, involve his family. One of the most recent including that Pruitt had reportedly asked his staff to try to find a high-paying job for his wife.

Now, all of these scandals have been kind of the bane of the existence of a lot of folks in this White House. We have sources saying senior aides at the White House were breathing a sigh of relief yesterday because they have been hoping that the president would finally pull the trigger and say that Pruitt needed to leave.

Other prominent Republicans saying that these scandals really unacceptable. Many of them involving the misuse of government funds.

The president trying to move on from this, talking to reporters saying that Andrew Wheeler, Pruitt's successor, would basically take the mantle that Pruitt had set up and continue that on.

He's going to be spending the weekend here in Bedminster focused on the Supreme Court decision where he is expected to announce that publicly at the White House primetime on Monday, Erica.

HILL: Abby Phillip with the latest for us. Abby, thank you.

Already, as Abby laid out for us, a lot to talk about after last night, but there was also this moment when the president went after Sen. Elizabeth Warren.

(BEGIN VIDEO CLIP)

TRUMP: Pocahontas, they always want me to apologize for saying it. Let's say I'm debating Pocahontas, right? I promise you I'll do this. I will take - you know, those kits they sell on television for $2? Learn your heritage. We will take that little kit and say - but we have to do it gently because we're in the #MeToo generation, so we have to be very gentle. And we will very gently take that kit and we will slowly toss it, hoping it doesn't hit her and injure her arm.

(END VIDEO CLIP)

TRUMP: The president then said he'd give a million dollars to Warren's favorite charity if the DNA test proved she was "Indian."

Well, Sen. Warren responding on Twitter, "Hey, @realDonaldTrump: While you obsess over my genes, your Admin is conducting DNA tests on little kids because you ripped them from their mamas & you are too incompetent to reunite them in time to meet a court order. Maybe you should focus on fixing the lives you're destroying."

Neither one of them mincing words there. Joining me now, Ron Brownstein, CNN senior political analyst and Amie Parnes, CNN political analyst. Neither one is known for mincing words either, we should point out there.

As we look at all of this and if we just start with those #MeToo comments, what's remarkable is that the president is honestly showing - he still doesn't understand what the #MeToo movement is about.

Joking about DNA tests when legitimately they are being used to figure out who children are that have been separated under his own policies from their parents at the border, also these calls for proof, talking about Pocahontas again. It's impossible to miss the racist nativist undertones there.

But, Amie, but none of this is new, as we said, and it's not really surprising. The question is, does it still work in 2018?

AMIE PARNES, CNN POLITICAL ANALYST: No. I mean, one thing, I think, that's noteworthy is that he's focusing on Elizabeth Warren. So, I think it shows that he's worried about maybe opposing her in 2020.

I think the 2020 race has actually begun. It started earlier. I know no one wants to talk about 2020 yet because 2018 is still right around the corner, but it really has, and it shows that he's kind of worried about her.

It shows also that he's worried about the left and what's happening on the left and the movement there. And so, I think that's why he's singling her out and he singled out Kamala Harris the other day on Twitter, the White House did.

So, it shows kind of who they are looking to oppose, I think, in 2020.

HILL: I mean, it's red meat both to his base and to anybody who opposes the president, right? So, yes, we've seen it play out before. The big question is what comes next. Michelle Obama famously saying when they go low, we go high. Going high doesn't work. Going low against this president doesn't work. So, what are we left with?

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Well, look, I mean, I think we're - it always amazes me that people say why can't President Trump stay on message, why can't he tout the economy or the administration agenda, why does he constantly pick these personal cultural fights, many, many of them racially themed, with racial coding and signaling. And the reason is because that is the message. This is not a bug. This is a feature. He believes it is in his interest to be in a constant succession of conflicts, many of them, as I said, racially themed because he believes it signals to his voters that he will fight for them against all the forces they believe are arrayed against them.

And when you talk about #MeToo, by the way, if you look at Trump voters, including the large number of blue-collar white women who voted for Trump, they tend to be more resistant to kind of the changing gender roles in our society.

The problem for the president is this is not cost-free. There was an incredible, Erica, poll result this week. You may have seen when Quinnipiac University asked in probably the most stark possible phrasing you can use, "is President Trump racist?" Is he racist?

[09:25:04] And 49 percent of Americans, a plurality, said yes, including about 80 percent of African-Americans and almost 60 percent of millennials and half of college-educated whites.

So, on the one hand, he believes this is stoking his base and, in fact, it may be doing (INAUDIBLE 0:18), but there is a real cost and it will most likely be paid by the Republicans in white collar suburban districts or at the epicenter of vulnerability for the GOP in November.

HILL: Let me just pick up on that point, though, the cost that could be paid, is that enough of a cost that you actually see it impacting what we hear and see from this president?

BROWNSTEIN: No. No. And he has made very clear - there are have been other presidents who have been credibly accused of sliding the voters outside of their base. Kind of ignoring the interests of the parts of America or sliding them that did not vote for them.

President Trump goes a big step further than, I believe, into waters that we have never seen before where he views the parts of - the groups and the regions that did not vote for him, in effect, as a foil, as a target, as someone to attack as a way of mobilizing and consolidating his base.

I often joke that he's so popular among Republicans because he's a wartime president, but the war is, in his mind, aimed at blue America both in policy and rhetoric.

So, I think you continue to see him doubling down. He believes that the way forward in 2018 is to reverse the usual decline in turnout from the president's party. Certainly, the way forward in 2020 is to mobilize more of his base.

There has been so little about this presidency, if anything, both rhetorically and in policy, that is aimed at voters who did not support him the first time. In fact, as I said, he's more likely to view them as a foil, as a target and a way to consolidate the places where he is strongest, older, blue-collar, evangelical, non-urban voters and that is the pattern. And I do not see anything deviating from it between now and 2020.

HILL: The other thing that's interesting in this pattern and we heard a little bit of it. Once again calling out John McCain and his vote, but also going after the thousand points of light from President George H.W. Bush.

I do want to point out George W. Bush's former Press Secretary Ari Fleischer, tweeting, "This is so uncalled for, going after a 94-year- old former president's promotion of volunteerism. I don't mind POTUS being a fighter. I do mind him being rude."

Amie, even that coming Ari Fleischer, though, we've seen when more established Republicans, as we know, if they do not fall in line with this president, and even see Mark Sanford for most recent example, it bites them.

PARNES: And that's true. But I do think that it is actually affecting a lot of Republicans. There are some Republicans that I've heard from, even in recent days, saying what is he doing?

He's attacking the former president, he's doing these things with separating families, these are things that are not helpful to them going into 2018, and so he's actually doing things, even talking about the #MeToo movement.

He hasn't really talked about that at all since this movement has come up because he knows that it affects him and what he's done and his indiscretions.

So, I think these are all things that actually do affect the Republican Party and what they stand for. And you're hearing little rumbling from Republicans saying none of this is helpful going into 2018.

So, even though this is a dog whistle, I think that's how some feel.

HILL: It would be interesting to see if more say it publicly. Amie Parnes, Ron Brownstein, always appreciate the conversation. Thank you.

BROWNSTEIN: Thank you.

HILL: Still to come, we'll have much more on those children separated from their parents by the federal government.

(COMMERCIAL BREAK)