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Trump and European Leader Agree to Work Toward Zero Tariffs; Mike Pompeo Grilled on Russia Talks; U.S. and E.U. Step Back from the Brink of a Trade War; Facebook Shares Plunge 20 Percent Overnight. Aired 9-9:30a ET
Aired July 26, 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] POPPY HARLOW, CNN ANCHOR: Hi, everyone. Good morning. I'm Poppy Harlow in New York. So glad you're with me. We are watching the White House this hour, as we do every morning. But any second now, President Trump is due to leave on a daytrip, highlighting jobs and trade in Iowa and Illinois. This is after a new and unexpected truce with the European Union. The president who recently called the E.U. a foe and on Tuesday declared tariffs are the greatest agreed yesterday to try to make a deal to scrap them altogether with European.
There's also the question of summit 2.0 with Vladimir Putin, which now is off the agenda for the fall, at least, before it was ever really officially on the agenda.
Let's go to the White House. Jeremy Diamond is there.
So let's begin with this and what's ahead for the president today. As he heads to some states where he should be warmly welcomed, especially in Iowa, but his moves on trade have been angering a lot of his base there.
JEREMY DIAMOND, CNN WHITE HOUSE REPORTER: That's absolutely right. You know, the farmers in Iowa and Illinois, those are the areas where farmers have been the hardest hit by some of the president's actions on the trade front, but they may be a little bit relieved to hear the president talk about some of the deal to make a deal, let's call it, that the president made yesterday, with the European Union.
That was essentially what he and the European Union agreed to yesterday, was simply to move forward, to begin negotiations, to try and eliminate all tariff and non-tariff barriers between the two countries. Really, what it's going to do for the European Union is stave off the president's threat to impose 25 percent tariff on automobile imports from the European Union. And this is going to be something that the president is likely going to address today, when he heads to those two states.
Iowa and Illinois, both, the top soybean and corn producers. Two agricultural products that were hit by retaliatory tariffs from the European Union. So the president will likely be able to address that. But he's also going to be addressing the initial part of this, which is the steel issue. He's visiting steel plants in Dubuque, in particular, that recently restarted a furnace thanks in part to his tariffs.
HARLOW: And also, when it comes -- we'll see him on the ground there. I know he's taking off shortly. We'll see him on the ground across the Midwest today. But when it comes to Vladimir Putin coming to the White House, right around the midterms, that's no longer on the table?
DIAMOND: That's right. Before the -- Moscow had a chance to accept the president's invitation for Vladimir Putin to arrive in Washington, to come for summit 2.0, the White House announcing yesterday that it is, in fact, pushing that back, saying that it won't have a next summit between Trump and Putin until at least next year. So that's going to be putting it off for at least past the midterms and the possibility, though, is still very real that Trump and Putin could meet again, perhaps on the sidelines of one of those multinational conferences.
HARLOW: All right. Jeremy, at the White House, thank you so much. Let me know if you get any important questions into the president. Again, he's not taking questions this morning as he heads to Air Force One.
So if you are one of the Americans who believes that bipartisanship no longer exists on Capitol Hill, apparently you didn't catch the pushback that Secretary of State Mike Pompeo faced from Democrats and Republicans on the Senate Foreign Relations Committee.
For hours yesterday, he tried to rebut accusations from the Republican committee chairman that when it comes to Russia and North Korea and other hot spots, the administration has a ready, fire, aim mentality.
Let's go to the State Department, Michelle Kosinski is there. It was quite a scene, frankly.
MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: Yes, I mean, this was rough from the start. And you mentioned the Republican chairman of the Senate Foreign Relations Committee, Bob Corker. He just laid it all out there from the beginning, starting with this striking criticism of not only President Trump, saying that he creates distrust in America and beyond, but also of his entire administration.
I mean, Corker said that he feels like the Trump White House wakes up every morning and just makes up foreign policy, as they go, saying this to the Secretary of State Mike Pompeo, who was absolutely on the defensive. So remember, this was the big chance for all of these senators to finally get some answers, on what exactly happened between President Trump and Russian president Vladimir Putin during this two- hour-long, closed-door meeting in Helsinki. But time after time, Pompeo just would not answer these questions, often with this snarky attitude, saying these were private conversations.
Even the simplest question, did Trump tell you what happened? The best Pompeo could muster was that he has a pretty complete understanding of the conversation. Listen to some of this exchange.
(BEGIN VIDEO CLIP) SEN. BOB CORKER (R-TN), CHAIRMAN, FOREIGN RELATIONS COMMITTEE: What is it that causes the president to purposefully, purposefully create distrust in these institutions and what we're doing?
MIKE POMPEO, SECRETARY OF STATE: Senator, I just disagree with most of what you just said there.
SEN. BOB MENENDEZ (D-NJ), RANKING MEMBER, FOREIGN RELATIONS COMMITTEE: Has the president told you what he and President Putin discussed in their two-hour, closed-door meeting in Helsinki?
POMPEO: The presidents have a prerogative to choose who's in meetings or not. I'm confident you've had private one-on-one meetings in your life as well. You've chose than setting as the most efficient way to --
MENENDEZ: I've asked you a simple question. Did you --
POMPEO: I just --
MENENDEZ: You can't eat my seven minutes, Mr. Secretary.
[09:05:02] POMPEO: The president disclosed what he said to Vladimir Putin about Russian interference in our elections and he said that he is confident that as a result of that conversation Vladimir understands that it won't be tolerated.
MENENDEZ: I wish he had said that in public in Helsinki.
(END VIDEO CLIP)
KOSINSKI: Pompeo just kept using the same mantra for many questions, that U.S. policy hasn't changed. But obviously, that didn't answer the questions. It was not enough for many of these senators, both Democrat and Republican.
But I will say, one thing Pompeo stated clearly was that President Trump believes the U.S. intelligence community's assessment that Russia did interfere in the 2016 election, but that is something that Trump himself would not say while he stood side by side with Vladimir Putin.
HARLOW: Right, right. Pompeo said yesterday, I know this, I've been briefing him on it for a year, but then why did the president not say it on the world stage, literally?
Michelle Kosinski, at the State Department, thanks so much.
With me now, Rachael Bade, CNN Political Analyst, Susan Glasser is also here, our global affairs analyst.
Nice to have you both. Look, Susan, watching this yesterday, Pompeo worked hard to project toughness. But when you look at the actual answers, as Michelle Kosinski just importantly laid out, they lacked important details. They lacked actual answers on the questions. "The New York Times" this morning calls his testimony an elaborate cleanup effort. Did he clean anything up?
SUSAN GLASSER, CNN GLOBAL AFFAIRS ANALYST: Well, I think what he's trying to do is not necessarily even so much as definitively answer the questions or clean things up with, but to create enough plausible alternate narrative of the case. He's trying to offer cover to Republicans who made very clear they were very uncomfortable last week, with President Trump's performance in Helsinki.
What I was struck by was the fact that it was such a combative, testy, at times, even nasty response from Mike Pompeo. Where on earth did you senators get the idea, he seemed to say, there's this narrative out there that we're not tough on Russia. We're the toughest administration on Russia that you've ever seen. And for a year and a half, we've heard this.
It's an amazing argument. The president's secretary of state sat there for three hours and said basically, don't listen to what the president of the United States says. That's not U.S. policy. U.S. policy is what I'm here to tell you. And he listed a long line of, you know, relatively tough actions on Russia that any administration, Democrat or Republican, might take.
But again, it's an argument that asks Republicans and Democrats to ignore the very consistent views coming from the president himself. That's just unprecedented.
HARLOW: I mean, I don't think that there, Rachel, is a question over whether, you know, arming Ukraine or selling javelin anti-tank missiles to Ukraine in opposition to Russia is a tough action. But the action is so divided and so antithetical to the rhetoric that's coming out of the president over and over again.
Listen to this exchange between the Republican chairman of the committee, Bob Corker, and Pompeo.
(BEGIN VIDEO CLIP)
CORKER: But it's the president's actions that create tremendous distrust in our nation, among our allies. It's palpable. We meet and talk with them. Is there a strategy to this or is it -- what is it that causes the president to purposefully, purposefully create distrust in these institutions and what we're doing?
POMPEO: Senator, I just disagree with most of what you just said there.
(END VIDEO CLIP)
HARLOW: And so he -- I mean, he laid it out, there's a little more than you heard earlier, Rachael. He's retiring, though. I mean, Corker's retiring. How powerful is it to hear something from him who doesn't need to be re-elected versus from, say, another Republican in a tough district?
RACHAEL BADE, CNN POLITICAL ANALYST: You know, he's retiring, but he's still the chairman of the Senate Foreign Relations Committee. And his voice, you know, it carries significant weight here. And the fact that he not only said what you played right there, he also said, Trump was, quote, "submissive and deferential to Russia."
HARLOW: Yes. Yes.
BADE: During Helsinki to Putin. And look, there is a lot of bipartisan outrage on this and I would say it's not just people like Corker, the usual folks who criticize Trump who are retiring, Jeff Flake, we are also seeing criticism from people who don't speak out as often. One that comes to mind, for instance, Bob Goodlatte, the chairman of the Judiciary Committee --
HARLOW: That's true.
BADE: -- rarely says anything against the president came out and pushed back on specifically his press conference with Russia. And I think that lawmakers brought Pompeo up to the Hill to try to get answers, right? That's exactly what Corker said, but he wouldn't answer a lot of those questions.
One thing that in particular stuck out for me was that he compared this one-on-one meeting with the president and Vladimir Putin to a private meeting that a senator may have, where they may not just want to talk about it. It's private, is what he said.
HARLOW: It's just so different.
BADE: But this is not -- this is so different.
BADE: This was a huge summit on the world stage with a leader who hacked our elections.
BADE: According to his own -- President Trump's own National Security adviser. This was an act of war. So, of course, people want to know about this.
[09:10:01] HARLOW: And actually, according to the president, is doing it again, in the midterms. But the president says to help the Democrats. But I digress.
On North Korea, Susan, there was a very, very important statement that was made by Secretary of State Mike Pompeo. When it comes to North Korea, listen to this exchange that he had with Senator Markey.
(BEGIN VIDEO CLIP)
SEN. ED MARKEY (D), MASSACHUSETTS: We do not have nuclear inspectors yet on the ground in North Korea. Is that correct, Mr. Secretary?
POMPEO: That is correct.
MARKEY: North Korea continues to produce fissile material, nuclear bomb material. Is that correct?
POMPEO: Senator, I'm trying to make sure I stay on the correct -- yes, that's correct. Just trying to make sure I don't cross into classified information. I'm not trying to hesitate. Yes, they continue to produce fissile material.
(END VIDEO CLIP)
HARLOW: Susan, correct me if I'm wrong, but that rings to my ears as very significant and the opposite of what the president has put out there publicly in terms of where the North Korean negotiations are going. Does it show us that the magnitude of the threat from North Korea, despite negotiations being ongoing, is growing?
GLASSER: Well, look, I think what it shows us, certainly, is that President Trump made vastly overstated claims in the immediate aftermath of the Singapore summit as to what exactly it had accomplished. And in fact, there was no substantive and fleshed out agreement. As Secretary of State Pompeo outlined several times, he's the one in charge of going back to North Korea and actually achieving an agreement. And when he was pressed interestingly by Senator Markey and several others yesterday on this, he basically said over and over again, well, I agree, it's not in the original agreement from Singapore, but we've talked about a lot of other things since.
GLASSER: And when he was pressed later, is there any verifiable progress towards denuclearization that you can cite to us today? I thought it was a fascinating moment where the secretary of state actually just said, well, the verifiable progress is that they're sitting down with us in talks, which isn't exactly what anyone else would define as denuclearization.
HARLOW: Right. That's not -- that's true.
Rachael, before we go, did anything get accomplished yesterday, or is this just partisan politics? Yes, I mean, not just partisan, I guess -- you know, many of them on the same side, but I mean, what got accomplished yesterday in your mind?
BADE: Look, I think the White House saw this as an opportunity to sort of clean up and try to refocus the narrative. Pompeo stressed over and over again the actions that the administration has taken, for example, against Russia, trying to say, again, look at the -- look at what the administration is doing. Don't listen to the president. But the reality is, on Capitol Hill and around this whole country, people are listening to what Trump says about Putin. And --
HARLOW: Well, I ask you -- I ask you because of this exchange, for example. You had this exchange between Senator Menendez and Mike Pompeo. Let's listen.
(BEGIN VIDEO CLIP)
POMPEO: Senator, I understand the game that you're playing. MENENDEZ: If President Obama did what President Trump did in
Helsinki, I'd be peeling you off the capital ceiling, please.
(END VIDEO CLIP)
HARLOW: Does that provide answers for the American people?
BADE: If anything, I think it gave lawmakers a chance to really lay some markers down with the administration. That is absolutely true what the Democratic Senator Menendez just said that if Obama would have done half the things that the president has said about Putin, Republicans would be talking about impeachment right now. So it did give lawmakers, at least, a chance to really lay down a marker.
HARLOW: Thank you both. Susan Glasser, Rachael Bade, nice to have you.
Ahead for us, 100 secret recordings? That is what the "Washington Post" reports the government seized from Michael Cohen. Could the one tape we've heard so far spell trouble also for the president's self- proclaimed fixer?
(BEGIN VIDEO CLIP)
KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Did Michael Cohen betray 2you, Mr. President?
TRUMP: Thank you. Thank you.
(END VIDEO CLIP)
HARLOW: In a move that should be deeply troubling to every American, regardless of party, the White House bans our CNN reporter Kaitlan Collins from an open event in the Rose Garden over questions the White House calls inappropriate. They were anything but.
HARLOW: Kiss and make up! After calling the E.U. a foe on trade just a few weeks ago, now all seems well between President Trump and the president of the European Commission.
A warm embrace and a Rose Garden announcement after three hours of negotiations yesterday afternoon. The president writes, "Obviously the European Union, as represented by @JunckerEU and the United States, as represented by yours truly, love each other!"
So, was there a major breakthrough on trade? Sort of. Or at least a deal to make a deal? Our chuckling chief business correspondent Christine Romans -
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: I thought they were breaking up. Two weeks ago, it was a breakup. Now, it's a makeup. HARLOW: Breakup, makeup, all is well. What's going on? Is this a
ROMANS: It's a trade detente, I would say, at this moment. And you're right, it's a deal to make a deal. And there's no schedule in here for how we're going to chart progress.
But, look, investors are very glad that there aren't 20 or 25 percent tariffs on European cars coming to the United States. That was their big concern.
So, what are they working toward here? Zero tariffs is the goal here. Something you've seen the president tweeting about and that the Europeans have apparently agreed to. Reduced trade barriers overall. And that includes subsidies and other trade barriers that aren't necessarily tariffs. Hold off on any future tariffs. Work toward fixing those U.S. metal tariffs that the Europeans absolutely hate.
And then, those retaliatory tariffs on things like bourbon and Harley- Davidson, try to resolve those. And the E.U. promises to buy more soybeans and natural gas. Now, all this has to be ratified by the 28 members of the E.U., as well. So, there's a lot of work to be done here. Again, a deal to make a deal. But it's going in the right direction. It's not going in the direction of trade war.
HARLOW: And these tariffs, though, that are in place right now, those are staying.
ROMANS: They stay. Oh, yes. They stay. Those tariffs are still here. So, there is some work to be done.
[09:20:02] A lot of folks are saying, hey, this looks a lot like what the Obama administration was trying to negotiate with the Europeans back in 2013, this thing called TTIP, which fell apart or kind of petered out after the UK voted to leave the European Union.
So, there's a lot of complicated pieces at play here, but going in the right direction. And that's what the market certainly liked yesterday.
HARLOW: Stay with me. I want to get to the Facebook news with you in just a moment. Before I do that, though, let me bring in my next guest. With me is Austan Goolsbee, former chairman of the Council of Economic Advisers under President Obama. Art Laffer is here, former economic adviser to President Reagan and to the Trump campaign.
Art, as much as I want to talk about the Laffer Curve for this entire time, I won't, and I will begin with the news at hand. Nice to have you both.
Austan, let me just start with you, though, on whether you think zero tariffs both ways is an achievable goal and one that would be good for America.
AUSTAN GOOLSBEE, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: On all products, it would be good for America, but it's not fully achievable.
I think what happened here, it's a little subtle, but it's smart. The Europeans looked at the old experience of the companies when Donald Trump was kind of stomping around, tweeting about individual companies.
And they announced things that they were already doing or that they already agreed to, as if they were new, so that the Trump administration could say, look what we did.
And then, they're just trying to get the focus off of Europe and shift it back to China or something else.
HARLOW: Art, you advised the Trump team, but you don't like these tariffs. And the president just on Tuesday tweeted, "Tariffs are the greatest." Apparently, he's changed his mind. And you've said, if this becomes a trade war, it would be a disaster.
And you do have companies like Coca-Cola just came out this week and said because of these steel and aluminum tariffs, it's really hurting us. And we've heard that from a number of companies.
Has this become a trade war?
ARTHUR LAFFER, ECONOMIST: I don't think it's a trade war, although goodness knows it could escalate into one. And that's what I hope doesn't happen.
But I think the president is very clear on wanting zero tariffs, zero non-trade barriers, and also zero subsidies. He said that, at the G7 in Ottawa. He put it out in a tweet. And I can't follow all of his tweets. Some of them are contradictory.
But his strategy is he thinks, by threatening tariffs, he can get them to negotiate and bring us towards free trade.
HARLOW: But if this isn't a trade war, what is? I mean, help me understand how you would define a trade war, then?
LAFFER: Well, I was in the White House in the 1970s when Nixon put on the 10 percent surcharge. We had the job development credit that excluded foreign-made capital. We devalued the dollar. That was a trade war. That led to a 50 percent collapse in the stock market. One of the worst economies.
In 1930s, that was a trade war. The Smoot-Hawley Tariff, that was a trade war of first proportions.
What's going on in Japan right now versus the rest of the world, that's a trade war.
HARLOW: But Smoot-Hawley did exactly what - I mean, Smoot-Hawley did, almost a century ago, exactly what we've seen sort of playing out here.
Austan, let me ask you this. It's not just Coke. It's General Motors with these warnings about the impact on business. It's Harley- Davidson. It's whirlpool, which the majority of their factories are in Iowa and Ohio, who loved the tariffs at first, and then when the steel and aluminum tariffs came in, they said, whoa, whoa, whoa, wait, wait, wait, we don't like them anymore.
So, my question to you, is there, Austan, a middle ground where some tariffs are beneficial to American companies, but you have to stop at a certain point and, I guess, pray there's no retaliatory tariffs?
GOOLSBEE: No. No, there's not a middle ground. Tariffs are bad. I think Art is right. This is not a trade war. And, hopefully, with this truce or whatever you want to call it - every day, we don't have a trade war is a better day for America.
LAFFER: Hear, hear.
GOOLSBEE: For sure, there's individual companies that want there to be tariffs on their competitors, but, overall, for the economy, all the 2tariffs are bad. These are just taxes on American consumers. They're bad. They hurt the economy and they hurt American consumers.
HARLOW: Isn't there, Austan, some good news, though, out of this announcement? Because we heard from the president in this sort of agreement to make the agreement that Europe will buy more soybeans and more liquid natural gas from the United States. Is that a win?
GOOLSBEE: Well, there's good news, and that is, we're not starting a trade war. The soybeans -
HARLOW: Answer my - come on! Answer that specific question.
GOOLSBEE: So, that's why I said, they announced things they were already doing, as if they were new. That's great. If that's what keeps us out of a trade war, let's keep making announcements like that!
LAFFER: I think it's much more positive than Austan says. But I do think he's completely correct. This is not a trade war and we are starting to move ever-so-slightly in the right direction.
HARLOW: Arthur, what does China think, looking at this?
LAFFER: China thinks they need to get in there and make a deal with us right now and move towards zero tariffs as well and do something about intellectual property, which does have to be done.
[09:25:02] China is no longer little bitty, tiny undeveloped country. They're getting to be a very big player on the stage and have to start behaving as such. They've got to reduce their barriers to U.S. products, and they've got to stop doing intellectual property theft. And that's easy for them to do.
They're a terrific country and would be amazingly good partner for ours. Remember, without Walmart, there is no middle class or lower class prosperity. And without China, there is no Walmart.
So, China really is our trade friend. And we should remember that they're not our enemy.
HARLOW: Austan? China, our trade friend?
GOOLSBEE: Look, we've got some disputes with China, but for sure, we could find a mutually beneficial relationship with China, and let's hope we do. I think, probably, China's getting a little nervous, and the NAFTA countries, Canada and Mexico, are getting a little nervous because the president has kind of had this, whatever's in front of me, that's the thing I'm blasting on.
So, if it's not going to be Europe, they're probably looking at each other and saying, it's going to be one of us. Hopefully, it's going to be you.
HARLOW: Thank you, gentlemen. Good to have you both here this morning.
LAFFER: Thank you, Poppy. Thank you, Austan. By the way, I wore my -
HARLOW: What? We cut him off. He wore some special Yale shirt, I think.
LAFFER: A Yale tie for Austan and me.
HARLOW: There you go! There you go!
LAFFER: Thank you.
HARLOW: I appreciate it. Thank you.
Overnight, Facebook shares whacked, even as the company reminds its investors that it reaches 2.5 billion people around the world. What happened? Christine Romans back with me. What happened?
ROMANS: Most companies would love revenue growth of 42 percent, and that's what Facebook had. The problem here is the company is promising that it's 2going to fight election meddling, it's going to fight fake news dissemination, it's going to fight privacy breaches. That's going to cost money.
It will spend billions on its platform in years to come to make sure that it addresses these big concerns that have dinged its reputation. And some would say, hurt democracy over the past couple of years.
ROMANS: And that spending is going to mean it won't make as much money. Facebook shares fell more than 20 percent overnight. If it opens like this in three minutes, as we expect it will, Poppy, this will be one of the largest hits to market value of a company in history.
In fact, it lost more than $100 billion in market value overnight. That is more. That loss in market value is more than the GDPs of like 120 countries. It means Mark Zuckerberg's billions are fewer billions and he falls down the list.
HARLOW: But this is just - I know this is too big a conversation, but this is why you have people like Jamie Dimon, who you just interviewed, and Warren Buffett saying, reporting quarterly like this, you need to be able to have companies that invest money, spend money to ultimately make their business better long-term.
And the Street responds to these every three-month reports -
ROMANS: It's true.
HARLOW:- which is sort of problematic big picture.
ROMANS: This is a long-term investment in the credibility and the sustainability of this company. And that's something that Mark Zuckerberg has talked about and they've had a lot of bad press over the past couple of years.
You look at futures right now, you could see the Dow manage to pull out a decent day there. But look, Nasdaq was at a record high yesterday, all the big tech companies are going to get hit today. S&P will be a little bit lower. But this is a tech-specific story here today.
Overall, it's that trade detente in Europe that is really being overshadowed right now by this Facebook problem.
HARLOW: And, by the way, imagine if Facebook said, we're not doing anything, we're not going to spend any money on this -
ROMANS: Well, then that would also -
HARLOW: - freak-out too.
ROMANS: That would also be a freak-out. You're right.
HARLOW: Thanks, Roman. Appreciate it.
ROMANS: You're welcome.
HARLOW: Still ahead, those tapes. The public airing of Michael Cohen's secretly recorded conversation with then candidate Donald Trump could cause more legal problems for him. We're going to explain, next.