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U.S. Hikes Tariffs on $200 Billion of Chinese Goods; Trump Doubles Down on Trade Talk; Trump Lawyer Rudy Giuliani Plans to Press Ukraine Officials About Investigations That Could Help Get Trump Re- Elected in 2020; Comey Claims William Barr "Lost Most of His Reputation" By Acting Like Trump's Lawyer; U.S. Officials Say There's Still Hope for Possible Talks Between the U.S. and North Korea. Aired 9-9:30a ET

Aired May 10, 2019 - 09:00   ET


[09:00:00] JIM SCIUTTO, CNN ANCHOR: A very good Friday morning to you. I'm Jim Sciutto in Washington.

POPPY HARLOW, CNN ANCHOR: And I'm Poppy Harlow in New York. And we do begin with major breaking news.

The trade war embroiling. The two biggest economies on earth just got a lot more intense. And a critical day of negotiations is about to get underway. Overnight the Trump administration drastically increased tariffs on some $200 billion worth of goods that we import from China and this morning he seems to be claiming that those tariffs are a win in themselves. Not just a means to an end, Jim.

SCIUTTO: Yes. It's a claim the president has repeatedly made, writing this morning, "Tariffs will bring in far more wealth to our country than even a phenomenal deal of the traditional kind." It's just not true. Again we point out, even as this year's economic report of the president acknowledges.

HARLOW: Right.

SCIUTTO: Tariffs are paid largely by American importers and therefore, you and me, American consumers. It's a tax basically.


SCIUTTO: China is promising to retaliate.

Our coverage begins this morning with CNN chief business correspondent and "EARLY START" co-anchor Christine Romans.

So, Christine, how did we get to this point? Because White House officials are saying this morning very clearly that they do not expect a deal today. And what happens next?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: You know, it's looking grim. And it looks like it was not a bluff, Jim and Poppy. President Trump jacked up tariffs on thousands of goods, dishwashers, frozen fish, baseball caps. Right now about half of the products China sells to the U.S., about half of them, now carry an import tax. So how did we get here? Three rounds of tariffs last year, first the

U.S. put tariffs on all foreign steel and aluminum, including from China. Then in July the U.S. singled out Beijing, slapping tariffs on $50 billion worth of high tech Chinese exports. China hit back right away with tariffs on $50 billion in U.S. goods, mainly Ag products, and that has been devastating for American soybean growers in particular.

But the biggest round yet was in September, $200 billion in Chinese goods. This included consumer goods like luggage and handbags and hats. Beijing hit back with $60 billion worth of U.S. exports in response.

Now that $200 billion right there, that $200 billion net in September that was originally taxed at 10 percent. Today at midnight tonight it became 25 percent. And remember it is U.S. importers, not China who pay those tariffs.

Now experts warn this will have consequences. That Trump's tariffs will disrupt smaller American companies. One analysis finds it could cost the equivalent of about 900,000 jobs and raise prices for the typical family of four by $767 a year. Higher costs for everything you put in your shopping cart.

And the trade war is not over here. President Trump says he has started the paperwork for 25 percent tariffs on everything else, $325 billion more in Chinese exports. That would be everything that you shop for at Walmart and Target and wherever you're going to spend your money.

He also has this date, the 18th of May, to decide whether to impose auto tariffs if he declares that car imports are a national security risk -- Poppy.

HARLOW: This is remarkable, it's going to hit especially some of his base incredibly hard like farmers.

ROMANS: Already hitting his base hard.

HARLOW: I don't get it. Help me understand why.

ROMANS: So the president had a tweet storm this morning including something he deleted about buying soybeans and giving them away to impoverished nations that he then deleted. So it's unclear if he knows that already that America's farmland -- you know, heartland is going to be hurt hardest by this. But he did say one thing that has really resonated this morning. You don't pay tariffs if you make it here.

And that I think is the core of what he's trying to do here. You know, he says make it in the United States.

HARLOW: Yes. All right.

ROMANS: I think you're -- and I think on the autos, I mean, the early indications are that the president sees autos as another big part of the U.S. trade deficit. Between autos and China that is where their tariffs lie.

HARLOW: Right. You convince Americans to pay double for their T- shirts and everything else, you know, and then you can make it in America, but until you do that you've got a problem.

ROMANS: The $325 billion that he hasn't put on yet, that's going to be things like sneakers and pants.

HARLOW: Yes. Yes.

ROMANS: Those are things that people will feel right away -- Poppy.

HARLOW: OK, Romans, thank you so much.

ROMANS: You're welcome.

HARLOW: We appreciate it. Jim.

SCIUTTO: Poppy, it's a great point, right? You know, whether it's clothes, TVs, refrigerators, washing machines.


SCIUTTO: Make them here, absolutely.


SCIUTTO: Consumers would have to be prepared to pay a lot more for all those products.

HARLOW: Yes. Totally.

SCIUTTO: That's the essential question. There are no simple solutions here.

Well, President Trump is showing no signs of diffusing this tense, increasingly tense standoff with China. Joe Johns is at the White House this morning.

So the president appears to think he has an upper hand because the U.S. economy is strong right now. Does that hold, I suppose, is the question and are there concerns in the White House that he is overplaying his hand?

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, that's been the continuing argument from White House staff including some of his economic advisers that the U.S. economy is very strong, that tariff war here between the United States and China would benefit the United States and hurt China more.

[09:05:05] So as you look at the tweets this morning it's pretty clear what the president is trying to do. Number one, he's blaming China and Xi for the breakdown in the negotiations that occurred over the weekend. The president and others have said that China essentially was seeking to change some of the language that the United States had an understanding had already been negotiated and agreed upon, but he's doing a couple other things, too, I think. He is essentially trying to tell the American people that there is really no rush here because he says the tariffs are going to benefit the United States.

So what happens next, that's anybody's guess. Of course, the president did say last night that he got a nice letter from President Xi and he was asked if there would be a call between him and President Xi anytime soon. He didn't say when that might occur, however, the suggestion is it could occur today. That's not on the schedule, nonetheless I talked to one adviser who suggested it's possible.

Back to you, Jim.

SCIUTTO: Well, he got a lot of nice letters from Kim Jong-un, that didn't lead to a nuclear deal. You've got to make -- you've got to negotiate and make an agreement.

JOHNS: That's right.

SCIUTTO: Joe Johns, thanks very much.

JOHNS: You bet.

SCIUTTO: Let's speak now to national political correspondent for "The New York Times" and CNN political analyst Alex Burns, and chief economist at Moody's Analytics Mark Zandi.

Mark, I want to ask you first. First of all, so set aside the idea that somehow tariffs make us money, you and I pay for it, folks at home, $767 a year for an average family of four. Let's talk about what China will do now in retaliation. What kinds of U.S. products it will target and how will that hurt U.S. companies selling those products in China?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Well, the Chinese have already raised tariffs on most of the products that we ship to them, that we sell to them, about a hundred, a little over $100 billion a year. What they could do is they could increase the percentage of the tariffs. So most of the tariffs are now at 10 percent. They could raise them to 25, they could go even higher to 35 percent.

They could make life very difficult for a lot of American companies. I mean, the most obvious would be -- the most visible would be Apple. Right? So Apple produces a lot of iPhones in China, they could make life very difficult for them and other American companies. You know, they could manage their currency, the RMB, they could allow their RMB to fall in value vis-a-vis the dollar and that would offset the effects of the tariffs on them.

So there's lots of things they could and I suspect if the president keeps pushing here they'll do them.

HARLOW: All right. So, Mark, let me read you from page 496 of the president's own -- as Jim stated at the top, the president's own economic report, the economic report of the president talking about the tariffs. Offsetting these benefits are the costs paid by consumers in the form of higher prices and reduced consumption.

There is a lesson here, Mark, isn't there, in history and this Mood- Holly Act, when you imposed tariffs, and then in retrospect we see that it precipitated and made the great depression prolonged and worse. So is there anything in history that tells us this is a good idea?

ZANDI: No. No. Tariff wars are a really bad idea. They put the burden on us, the American consumer, the American businessperson. I mean, tariffs have increased, they've doubled since the trade war began a little over a year ago. That money, that $35 billion increase in tariffs is born by us when we go to the store to buy things that come from China, when businesses buy things to use in their production processes.

So it's borne by us and, you know, now that the tariffs are going to have a higher percentage and if the president follows through and increases what we're imposing a tariff on all Chinese imports, that's going to hit us as consumers more directly. I mean, you were talking about apparel very clearly, consumer electronics. So American consumers are already paying, they just don't really know. It's kind of a stealth tax, but it's going to be become a very obvious tax not too far from now if this continues.

SCIUTTO: All right. Alex Burns, so let's stipulate here that China is a bad actor. It puts undue burdens on U.S. and foreign businesses operating in China, makes it very difficult by design, it steals U.S. intellectual property left and right. We know that. What the president is demanding here is China in effect fundamentally change its economic model here. The president believes he has an upper hand. Xi is pushing back here.

I mean, is there an awareness in the White House that the president's tactics here might not work and then what happens next? If China doesn't yield, is the White House, is the president, prepared for just a trade war that threatens the economy?

ALEX BURNS, CNN POLITICAL ANALYST: Oh, I think there's very little doubt at this point that the president is prepared for a trade war, that he believes in the concept of trade wars, in some ways he's enthusiastic about the idea of pushing things about as far as he can.

You know, talking to a lot of Republicans over the last few months and sort of business sector donors to both parties, there has been this confidence that -- to be candid I'm not sure where it came from, that at the end of the day there's going to be a deal.

[09:10:12] The president won't take things over the edge and I think today we're seeing that a lot of that confidence may have been misplaced. So, you know, there is a sort of -- politically speaking there's a short term, long term tension here, where in the long term a lot of people like the president really taking it to China for all the reasons you just described. That there is a big constituency in this country for a president or for a politician who would say to the Chinese, you do have to fundamentally change the way you do business globally but short term, that comes with a lot of pain and we're going to see how long voters will put up with that.

HARLOW: You know what's really interesting, too, Alex, just talking about the politics of this, is that it was just a week ago or so that Joe Biden said China is really not that big of a threat, essentially, I'm paraphrasing here. You've got Joe Biden leading by a lot in the new Monmouth poll this morning. It sets up quite an interesting contrast between how former Vice President Joe Biden now 2020 contender sees China and how the president sees China, and how hard the president is going to go against China and what Joe Biden would do and what he's going to say in response.

BURNS: And a big -- I think that's dead on and I think it's a big contrast between essentially how they see the nature of competition with China.


BURNS: Right? That Biden I think remarks were inarticulate. What he was clearly trying to convey was the sense that China has a whole bunch of problems with their economic fundamentals that over the medium to long term will work to our benefit so let's not freak out. Right?

HARLOW: Right.

BURNS: He has had to sort of defend those comments and explain that he wasn't, you know, trying to play down different kinds of threats that the Chinese pose right now. But, you know, the president's argument is very much the opposite of that, right, that the Chinese are coming for us, you know, guns blazing and we've got to fight hard and we've got fight hard right now.


BURNS: What we haven't heard from Joe Biden and frankly a lot of the Democrats is what they would do differently to challenge China.

HARLOW: Sure. They're going to have to --

BURNS: On same underlying complaints.

HARLOW: They're going to have to articulate that especially when you have, you know, Senate minority leader Chuck Schumer telling the president to go hard on China. Right? So --

BURNS: Well, Schumer has been -- Schumer has been essentially a zero cost China hawk for a long time, right.


BURNS: Talking about currency manipulation, unfair trade practices.


BURNS: But this is what it might look like to actually take those subjects on. HARLOW: Thank you both very much.

SCIUTTO: Alex and Mark, thanks very much.

Still ahead, the president's personal lawyer Rudy Giuliani is now taken on a new role. He's planning a trip to Ukraine to dig for information that could help President Trump in 2020. Are you comfortable with that? We'll explain.

HARLOW: Yes. It's really fascinating.

Also former FBI director James Comey has clearly strong feelings about the current attorney general when it comes to the handling of the Mueller report. Ahead, why Comey thinks William Barr is behaving less than honorably.


[09:15:00] JIM SCIUTTO, CO-HOST, NEWSROOM: This morning, President Trump's personal attorney Rudy Giuliani with a new 2020 tactic, go after Joe Biden, involving Ukraine and Biden's son. According to the "New York Times", Giuliani is planning a trip to Ukraine in the coming days to dig up alleged dirt.

He is also looking to get information on the origin of the special counsel's investigation into Russia's interference in the 2016 election. CNN reporter Michael Warren, he has the details on that story, we also have the former federal prosecutor Shan Wu. Michael, first to you, what are you learning about what Giuliani is up to here, what's his intention?

MICHAEL WARREN, CNN REPORTER: So Rudy Giuliani is the lead attorney for President Trump. He says starting back in November, he started speaking with some people, some Ukrainian former officials, current officials, over Skype and even in person in New York in which he says he was getting new information that he was learning about connections between Democrats and certain Ukrainian officials, somehow this had to do with the origins of the FBI investigation.


WARREN: He also said he learned some details about Joe Biden's son, Hunter Biden's position on this Ukrainian natural gas firm. Now, both of these stories, the details of which we have known bits and pieces over the last couple of years.

And there are a lot of holes in Rudy Giuliani's sort of story that this is somehow --

SCIUTTO: Right --

WARREN: Corrupt. But he says now the "New York Times" reporting that he's going to Ukraine to follow up on these things. We don't know for sure who he's going to be speaking with. He tells CNN last week that he had been speaking with Lutsenko; who is the prosecutor general in Ukraine who seems to be on his way out. We expect he could be speaking with Lutsenko again --

SCIUTTO: Right --

WARREN: If he does travel to Kiev.

SCIUTTO: OK, to be clear, Joe Biden's son is no longer on the board of that Ukrainian gas firm --

WARREN: That's right, that's right.

SCIUTTO: OK. Shan Wu, legality here, I'm just curious. The president's personal lawyer going to Ukraine. From a legal standpoint, is that OK? Is that seeking foreign help, election-related help here?

SHAN WU, FORMER FEDERAL PROSECUTOR: Certainly sounds like it. Obviously, it's going to be much more obviously in that realm of things where for example, Biden to become the nominee. But this raises a whole host of concerns legally. I mean, it raises questions of, is there a national security problem? Is he discussing classified information that he learned from his client?

What about the FARA issues, the Foreign Agents Registration Act, he formerly supposedly was a lobbyist for the Ukraine. And to your question, Jim, on the obstruction part, Giuliani is quoted in Michael's article, saying he is quote, meddling in an investigation.

So it's really quite astounding that a former prosecutor like him is so blatantly acting this way, and frankly, I mean, he cries out for him to be subpoenaed and this would be topic B after the obstruction questions.

SCIUTTO: The broader intention here, Michael, I imagine, is to score political points in the run-up to the election as you still have questions hanging over the president, the president's son, et cetera, related to the Mueller investigation.

[09:20:00] So there is a political intention I imagine.

WARREN: Absolutely. And of course, now that the Mueller report has been completed, there is sort of -- those ends and ties have been sort of tied up, and now the whole sort of Trump apparatus is sort of focused now on 2020, trying to sort of work on the president's behalf.

Rudy Giuliani remembers not just a lawyer, he is a former mayor --

SCIUTTO: Oh, yes --

WARREN: He is a politician, and I think he very much thinks of himself as playing all of these roles on behalf of the president.

SCIUTTO: Absolutely, certainly not just a legal role. Michael Warren, thanks very much for your reporting and Shan, please stay with us. Poppy?

POPPY HARLOW, CO-HOST, NEWSROOM: It is such a fascinating story, we'll see where it goes. At the same time, former FBI Director James Comey is attacking the current Attorney General William Barr's character and his credibility when it comes to Barr's handling of the Mueller report. Watch this.


JAMES COMEY, FORMER FBI DIRECTOR: I think he acted in a way that's less than honorable in the way he described it in writing and described it during a press conference, and continues to talk as if he's the president's lawyer. That is not the Attorney General's job.


HARLOW: Shan Wu is back with us, Sabrina Siddiqui also joins us; White House correspondent for "The Guardian", good morning to you, both. Look, I know how you feel, Shan, about Comey going out there and saying this stuff over and over again.

You call it sort of link to a mob being drawn to a flame. But from a legal perspective, is he right?

WU: I think he is right. Comey, whatever his other shortcomings may be, has been pretty darn accurate in terms of his legal analysis, and I think almost every former prosecutor from DOJ agrees with him on this point, that Barr has unnecessarily reached out, he's acting very blatantly, so I think he's spot on.

HARLOW: Sabrina, what about the credibility issue here, though, when it comes to James Comey and his actions during the 2016 election, holding that press conference and essentially assailing Hillary Clinton as a candidate, but then not moving forward with charges and then publicly reopening any investigation just days before.

Is there a credibility issue here for him in making these claims, at least in the court of public opinion?

SABRINA SIDDIQUI, WHITE HOUSE CORRESPONDENT, THE GUARDIAN: Well, there certainly have been criticisms of former FBI Director James Comey, that he has crossed the line and engaged in territory that is clearly political, and that some of the criticism that you saw of Attorney General William Barr, that he put his own --

HARLOW: Right.

SIDDIQUI: He drew his own conclusions from the Mueller report, and was speaking in a way that was clearly designed in this case to protect the president, to absolve him of any wrongdoing, and those were his interpretations. In the same way that Comey was accused of applying his own interpretations of Hillary Clinton's conduct.

But at the same time it's worth noting, James Comey had expressed confidence in William Barr when he was named Attorney General. And I think this reinforces the way in which someone like Barr who was a much more mainstream Republican in the age of Trump appears to be a loyalist to the president and there are ongoing questions over his handling of the Mueller report. A lot of which I think will be resolved when special counsel Robert

Mueller appears himself, if he does to testify on Capitol Hill. I think the number one question members of Congress will have for Mueller will be, did William Barr accurately characterize your report, and do you believe that --

HARLOW: Yes --

SIDDIQUI: He has acted in a way that is designed to protect the president of the United States?

HARLOW: Yes, you say when he appears. We'll see if he appears, right? I mean, Nadler is getting a little less confident that Mueller will be there. But we'll watch, of course. Shan, listen to this exchange last night, again, from the great CNN town hall that my colleague Anderson Cooper held with James Comey. Here is this about the question of criminal intent.


ANDERSON COOPER, CNN: Do you think he had criminal intent based on what you have seen now in the Mueller report?

COMEY: It sure looks like he did in connection with a couple episodes, the direction to Don McGahn to get the special counsel fired is to my mind a flaming example --

COOPER: Of corrupt intent?

COMEY: Yes, of corrupt intent.


HARLOW: Does it, Shan, to you, to your expert legal eye look like corrupt criminal intent? Because, you know, it was just yesterday that the president said the Mueller report is the quote, "Bible".

WU: Well, it absolutely looks obstructionist. It's always hard to factor in to what the president is saying into any legal analysis. But yes, I mean, that seems like a very textbook example of trying to interfere with an ongoing investigation. And quite a few people including myself have said that from the very first hints of that.

So, again, you know, Comey, whatever other questions there may be about his motivations and such that analysis is quite mainstream in that sense right now. I'd say anyone who is trying to dispute that analysis including the Attorney General of the United States is really an outlier on this point. Mainstream conventional analysis says that looks like obstruction to us.

HARLOW: Thank you both for your expertise. Shan, Sabrina, always good to have you, appreciate it. Jim?

SIDDIQUI: Thanks --

WU: Good to see you. [09:25:00] SCIUTTO: Tension once again ratcheted up between the U.S.

and North Korea after the regime's recent missile tests, but U.S. officials say there is still hope for possible talks, why? We'll find out.


SCIUTTO: U.S. officials are saying this morning that the U.S. is still open to holding talks with North Korea. This despite renewed tension between the two countries and North Korea breaking a whole host of promises. This after Pyongyang conducted its second missile test in a week and the U.S. just seized a North Korean cargo ship.