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New Tariffs Send Markets Down; Trump Tax Return Fight; Judiciary Subpoenas McGahn; Rep. Ted Lieu (D-CA) is Interviewed about McGahn Subpoena. Aired 1-1:30p ET

Aired May 10, 2019 - 13:00   ET


[13:00:00] JOHN KING, CNN ANCHOR: Let us know.

Don't go anywhere. A busy news day. Brianna Keilar starts "RIGHT NOW."

Have a great day.

BRIANNA KEILAR, CNN ANCHOR: I'm Brianna Keilar, live from CNN's Washington headquarters.

Underway right now, trade war standoff. China says it will hit back as the U.S. jacks up tariffs on $200 billion worth of Chinese imports.

Toe to toe on taxes. House Democrats tease an imminent decision on how they plan to lift the lid on the president's finances.

Rudy Giuliani's fishing expedition. The president's personal lawyer is heading to Ukraine on a fact-finding mission to help get his boss re- elected.

And why a California teacher, who's out on medical leave fighting cancer, has to foot the bill for her own substitute.

We begin with a critical meeting between U.S. and China trade officials that just concluded with no agreement in hand. Treasury Secretary Steve Mnuchin would only say that talks between the world's two largest economies were constructive. And the Dow, at this point in time, has spent the day in the red as investors are watching for any sign of an agreement, down 125 point at this point in time.

And you may wonder why is it so important? Well, almost 6,000 products from the U.S. -- from U.S. imports, from China, are affected by these tariffs. And we couldn't fit all of them into a graphic, so these are just a few of the many examples here.

We have CNN business editor at large Richard Quest, who's at the New York Stock Exchange, and international correspondent Matt Rivers is in China, in a port city where goods are flowing in and out.

And to you first, Richard. At the stroke of midnight these tariffs on $200 billion worth of Chinese imports will increase a lot, from 10 percent to 25 percent. How is this affecting the markets?

RICHARD QUEST, CNN BUSINESS EDITOR AT LARGE: Oh, the markets were expecting it, but -- and it was already priced in that particular movement. But, Brianna, what the market's terrified about is what comes next. I mean, will the president go ahead and tariff the -- those goods that he's threatened to and has now laid the paperwork?

The president had no choice last night. Having threatened come midnight with no deal, he had to put the extra 15 percent tariffs on, otherwise it would have been perceived weak. But as I'm sure Matt's now going to tell us, or will do in a second, the real issue for the market here, what does China do next? How far does China go in retaliation? Do they go full scale nuclear war, or do they go gentle, gentle, send a message, but not too far?

As for the talks, they're mired, they're bogged down. Constructiveness is meaningless.

KEILAR: And, Matt, what is China signaling at this point and how it's going to retaliate?

MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Beijing, Brianna, hasn't said anything specific at this point, but we kind of can gauge what China might do based on what they've done in the past. Generally, they haven't tried to escalate. They've only tried to respond, do things in kind to the U.S. So we don't expect them to go really overboard, but we don't know. We're kind of in uncharted territory here.

But if you're thinking about what they're going to do next, it's a couple of different things. One, I think, is they could increase tariffs that are already existing on American imports here to China. So most American goods sent here to China already facing tariffs. And I think that what China could do is just raise those rates.

Another thing they can do, China's really good at telling its middle class where to shop. They drum up a lot of nationalism through their state media. It happened with the South Koreans just a couple of years ago. Basically China state media said, don't buy South Korean products, don't go shopping there, it had a massive effect on the South Korean economy. They could do that let's say with iPhone, for example, telling Chinese people, don't buy iPhone.

And I think the last thing, it might seem a bit obscure, by soybeans. Soybeans, before the trade war, were responsible for billions and billions of dollars to revenue for American farmers. It was one of the U.S. -- biggest exports from the U.S. to China. Well, during the trade war, those purchases were cut off by the Chinese government. Then they were lifted when negotiations got a little better. Do they cut those off again? Does it hurt the American farmer? These are the kinds of things that China can do. We don't know exactly what they're going to do, Brianna, but rest assured they will do something.

KEILAR: All right, Matt Rivers, thank you. Richard Quest, thank you as well.

And in a rash of tweets, President Trump defended his decision to more than double the tariffs on billions of dollars' worth of exports. One said this, talks with China continue in a very congenial manner. There is absolutely no need to rush as tariffs are now being paid to the United States by China of 20 percent on $250 billion worth of goods and products. These massive payments go directly to the Treasury of the U.S.

Now, that's not actually quite true. The trade partnership, a consulting firm, estimates the entire cost of the president's tariffs, this 25 percent tariff and the existing taxes on high tech imports from China, would eliminate almost a million jobs and raise expenses for the average family of four by almost $800 a year.

[13:05:09] I want to break this down now with Ambassador Robert Holleyman, who oversaw trade discussions with China as the deputy U.S. trade representative in the Obama administration and he's currently a partner at Crowell and Moring's Trade Group.

Thanks for joining us.


KEILAR: The president says repeatedly that China is going to be paying for these tariffs and that's not right. So, explain to us how this really works.

HOLLEYMAN: Well, a tariff is effectively a tax. It's a tax on goods coming into the United States from China and the tax is not paid by the Chinese exporter, the tax is paid by the U.S. company that imports those goods. And so that's -- you know, I think it's actually better if we just talk about this as a tax strategy rather than a tariff strategy.

You know, with that said, neither the U.S. nor China want to maintain this situation for the long term. And I still think that we are in a position where both sides will ultimately want a deal. But the deal is going to take longer than had been anticipated. And in the meantime, American consumers and businesses are going to pay a higher cost. And that money going to the U.S. Treasury is going to be coming out of the pockets of American taxpayers.

KEILAR: You spent a lot of time negotiating with China. We just heard from our Matt Rivers in China that there's no doubt China's going to respond.

How do you think they are going to respond?

HOLLEYMAN: Well, historically, China is not the first to take an adverse action. I think one of the games, the strategies that China is playing, whether it's on this or it's on other tariffs that have been imposed, is they are trying to argue that they are the responsible player and that they are not overreacting to the U.S., which they're trying to position as the irresponsible player.

Now, the reality is there are enormous barriers in China, and there are enormous problems that they've created. And so we do absolutely need to break down those barriers and those challenges. But I think it says that in the court of public opinion, China will try to hold back a bit and then say they only responded after being forced to by the U.S. I think that's part of their global strategy, in addition to how they're one-on-one trying to deal with the United States. KEILAR: Were you surprise that no agreement came out of this trade

meeting happening here in Washington, D.C., between the U.S. and China?

HOLLEYMAN: I was not surprised given the relative short time that Vice Premier Liu He was in the United States. I think we all believed a week ago when Secretary Mnuchin, Ambassador Lighthizer were in Beijing that there was a deal that was roughly imminent and that this week might actually to be to come to a final deal. But when the U.S. made it clear that they thought that some of the earlier commitments that China had made, that they were actually backtracking on, they announced these tariffs, I think given then the truncated schedule for Liu He, it's not surprising at all that they didn't come to a deal this week. But that doesn't mean that we can't come to a deal in the next one to two to three to four, maybe several months. We have to be persevering in this effort.

KEILAR: You saw how we outlined the costs to the average American family, about $800, right.


KEILAR: Is that something -- I mean, in your experience, that is something that is going to be felt, but is that something, in your experience, that Americans will attribute to this, that they will make this connection?

HOLLEYMAN: Well, I think the people who attribute it most are people like our farmers and agricultural, who actually export to China, and they're seeing their sales drop. So they're the ones through the retaliation who are actually getting hit the hardest.

I think what we'll see is, now that we have 25 percent tariffs on $250 billion of products, we'll start seeing some more consumer pain. And then if the president goes ahead and does what he says he wants to do for the next step, which is basically put a 25 percent tariff tax on every other good coming in from China, then that will absolutely go to the pocketbooks of Americans because there are so many things, whether that's clothing or electronic products or others that we import, and that will raise those costs. But that may take a while for American consumers to actually see it and feel that impact.

KEILAR: Ambassador, it's great to have you on. Ambassador Robert Holleyman, thank you.

HOLLEYMAN: Thank you.

KEILAR: A key House Democrat is expected to make his next move today in the fight over President Trump's tax returns. The Trump administration is refusing a demand for six years of his tax records requested by House Ways and Means Chairman Richard Neal. Chairman Neal has been consulting with House lawyers on the next step.

[13:10:09] (BEGIN VIDEO CLIP)

REP. RICHARD NEAL (D-MA): We'll have a decision, I think, by the end of the day. To respond, I've been very careful to scrupulously follow the advice of House counsel, and I intend to do that again today.

QUESTION: And Chairman Schiff earlier today said that he's confident that you guys will have the tax returns before the end of this year. Do you agree with that?

NEAL: Well, I think that the case that we've attempted to build is based on substance. We've stayed away from the fanfare. We've stayed away from, I think, some of the hyperbolic conversation and we've attempted to reason this through based upon the advice of our attorneys.

QUESTION: So what's next for the committee?

NEAL: You'll have a pretty good idea.


KEILAR: Lauren Fox is on Capitol Hill for us, and we have Julian Epstein, chief council to House Judiciary Committee Democrats during the Clinton impeachment.

And, Lauren, you just got some new information there from Chairman Neal. Tell us what you've learn.

LAUREN FOX, CNN POLITICS CONGRESSIONAL REPORTER: Well, that's right. Richard Neal all day today basically saying he will make a final decision by the end of the day, depending on what he wants to do when it comes to the next steps in that fight for the president's tax returns. A couple of minutes ago, Richard Neal, I asked him, you know, has he consulted with his members, has he told them what he plans to do? Here's what he said.


REP. RICHARD NEAL (D-MA): They will all know this afternoon. I've given some hints to them, but I've been careful, until House council finished the documents, that they'll know, I would think, in a next couple of hours.


FOX: And this has been a long fight, Brianna. Back in April, Chairman Neal made that initial request. Now he's got a few options ahead of him. He could either subpoena for this information and then go to courts, or he could move to directly go to court. Those are the options ahead of him. He says by the end of the day we will know what the next steps are.

But I just want to say, you know, Richard Neal is a very pragmatic member. He's very different than some of the other chairman of these oversight committees. This request is not the end all be all of what his committee on Ways and Means wants to do. He's somebody who wants to work with the Trump administration on priorities like infrastructure. So expect that this is going to eventually move to the courts and out of sort of his purview on House Ways and Means.


KEILAR: So, Julian, subpoena and go to the court or just go to the court? What do you -- what do you think is the most likely avenue as we await to hear what he decide?

JULIAN EPSTEIN, CHIEF COUNSEL TO HOUSE JUDICIARY COMMITTEE DEMOCRATS DURING CLINTON IMPEACHMENT: I -- they could go either. And, in this case, unlike some of the cases we discussed last week where the Judiciary Committee is subpoenaing and the Trump administration is asserting executive privilege, the black letter law appears to be very, very clear here, that when the committee on Ways and Means asks for tax information, they're entitled to it.

They can do a subpoena and a contempt citation and go to court. I think they're on slightly stronger footing if they have the House behind them. But I think they also have the benefit of the statute so they can go right to the courts as well.

KEILAR: And next week a judge is planning to review the major legal issues in President Trump's challenge of a congressional subpoena for his accounting firm's records. That's going to put the issue on a much faster track because so many -- so many of these things, it feels like they're crawling along, right?


KEILAR: But tell us a little bit about how significant this is.

EPSTEIN: Well, it's not just that he's put it on a -- that he's having the hearing, but he is moving through all of the decision-making, the briefing and all of the -- kind of the judicial machinery, much, much quicker than we ever thought. And I said last week that with the -- kind of the administration stonewalling on the subpoenaing, the provision of witnesses, the provisioning of documents, I said I thought it was a bad political strategy because it would extend out the horizon of this controversy for the Trump administration going into the political season, but it might be a good legal strategy because they can runt clock.

But I think what's happening is that's changing. And I may want to amend what I said.

KEILAR: Is it the reverse then?

EPSTEIN: Well, I may want to amend that.

I think what's happening is the courts are now looking at Trump. And I've got to imagine the White House attorneys, White House counsel, are tearing their hair out every time Trump says, in a blanket way, we are just not going to cooperate in any way with The Hill. I think the courts are looking at this and saying, this is completely bad faith on the part of the Trump administration. Generally, they like to see a negotiating process between the executive and the legislative branch. But if one of the sides says, hey, we're just going to fold tent and go home and we're not going to cooperate and we're going to stonewall, I think the courts look at that as bad faith. That's what this federal district court seems to be saying on a House Oversight subpoena for Trump's accounting records from his accounting firm. And I think, again, they have not -- they are not just misplaying this politically, but I think now they're misplaying it legally. It's not necessarily a criticism of White House counsel and the attorneys. I think they got to be tearing their hair out because Trump is undermining any attempt to make it even look like they're in good faith.

KEILAR: Julian Epstein, thank you so much.

Lauren Fox, thank you.

And, up next, stress testing democracy. Former FBI Director James Comey denies claims of a constitutional cries, but admits the system is being tested in the fight to keep the executive branch in check.

[13:15:02] And Fox and frenemies. Democrats hold training sessions to prep members for Fox News interviews in a way to get their message out to a wider audience.


[13:20:01] KEILAR: Former White House Counsel Don McGahn is next on the list for the House Judiciary Committee. Chairman Jerry Nadler says that McGahn has been subpoenaed to appear to testify, and they expect him there on May 21st, which is a week from next Tuesday, but they're already preparing for what to do if he does not show. They'd hoped to hear from Special Counsel Robert Mueller next week. It's now looking like that is not going to happen.

I want to bring in Jeremy Herb on Capitol Hill for us.

Back to Don McGahn, Jeremy. What happens if he does not appear on the 21st?

JEREMY HERB, CNN POLITICS REPORTER: Yes, that's right, Chairman Jerry Nadler, today, made it very clear that if Don McGahn does not appear on the 21st, he's going to move to hold Don McGahn in contempt. Now, we've already seen this week him hold the attorney general, William Barr, in contempt, so this is now a series of contempt proceedings that the committee is doing.

And what we're learning is that we may wind up with a vote of multiple officials from the Trump administration who aren't complying with these subpoenas that will be held in contempt. The House is still figuring out exactly what it does want to do. But they're making it very clear to Don McGahn that if he doesn't show, he will be the next to be held in contempt.

KEILAR: And so what's -- what's the real effect of this? This -- what seems like a contempt vote-o-rama that they're already expecting to include Don McGahn in? What -- what does it really do?

HERB: Well, that's the question on all of this. You know, we saw this back in the Obama administration where Eric Holder was held in contempt. Practically, though, it doesn't have a huge impact. Now, what we're hearing Democrats talk about is what's called inherent

contempt powers, where they would consider fining or even jailing members of the Trump administration who don't comply with these subpoenas. Now, that hasn't been used in almost a century, but what we're hearing from some Democrats is that this is such an unprecedented time that they need to now consider taking those sorts of extreme measures.

KEILAR: That would be a huge development. We'll wait and see.

Jeremy Herb, thank you for that report.

California Congressman Ted Lieu is joining me now to talk about this. He is a Democrat on the House Judiciary Committee.

So, congressman, tell me your reaction to this, that Don McGahn has been subpoenaed by your committee to appear on the 21st?

REP. TED LIEU (D-CA): Thank you, Brianna, for your question.

If Don McGahn does not appear on the 21st, then we will move to hold him in contempt, the same way that we move to hold Attorney General Bill Barr in contempt.

But what does this mean? You know, when I'm at the grocery store or the post office, people don't walk up to me and go, hey, what's the deal with contempt? What they want to know is, why is the Trump administration hiding information and what are they covering up? That's what this really all boils down to. What is the administration trying to hide from the American people?

KEILAR: So what is the real effect of this though? I mean you heard Jeremy basically saying there -- certainly in the immediate future there isn't one. If what people are concerned about is getting information, how does this move towards that end, or is this just about political messaging?

LIEU: Right.

You can't believe how complicated this is. So the way the process works is, after we hold a person in contempt in the committee, we then send it to the House floor. And then the House floor has to take a vote and the House votes that person in contempt. Then it triggers two things. We get to litigate the issue in federal court, and Congress also has inherent contempt powers where we can start imposing fines on individuals who violate subpoenas without having to go to court.

KEILAR: You do have at your disposal -- although Congress, as you heard Jeremy report there, has not used it in some time -- you have at your disposal an enforcement mechanism in the sergeant-in-arms. I was speaking with Congresswoman Jackie Speier, and she brought up the idea of using that mechanism.

Do you support that?

LIEU: So my view is, if the Trump administration is going to completely deny every single congressional subpoena, then every option has to be on the table. Congress is Article I in the Constitution and James Madison and his Federal Papers 51 said that the legislative branch predominates. We're actually the strongest branch. And we're just going to have to exercise our powers and make sure we get the information for the American people. So my view is, all options have to be on the table.

I do think that fines are a pretty significant option. That should be what some -- something that could get us documents that we need, if we have to go there.

KEILAR: OK, so options are on the table. So you are actively considering jailing the attorney general?

LIEU: I'm not actually considering that. The Supreme Court has --

KEILAR: So then how is it on the table?

LIEU: So if we can't get information about criminal conduct, then the question has to be asked, well, we do have an option here to try to get information about what types of criminal conduct --

KEILAR: Well, you're not getting information.

LIEU: That's correct. So --

KEILAR: You're already not getting information.

LIEU: You're absolutely right, which is why we're doing these series of escalating steps. And my view is, yes, we should have all options on the table.

Impeachment is also one of those options. And I think that might be something we would do first before considering using the sergeant-at- arms.

KEILAR: OK, so you're -- I see -- so you're seeing this as an escalating series of options.

[13:25:04] You've heard now members of your party say that this is a constitutional crisis with the White House rebuffing all of these attempts by Congress to get information to get testimony. James Comey, on CNN last night, said the system is being tested, but he would not endorse that idea that this is a constitutional crisis. Do you?

LIEU: I agree with Speaker Pelosi and Chairman Nadler, that we're in a constitutional crisis. But whether you call it that or a stress test of our democracy, the issue again is the same, and it's what I said before, which is, the administration's hiding information from the American people. And it's not just the Judiciary Committee. They are stonewalling every single committee. So, for example, our Oversight Committee wants to know, well, why did the administration grant security clearances to all of these folks, including Jared Kushner, that the FBI said you shouldn't give him a security clearance. So we can't get that information either. And so we're in a crisis in the sense that we can't get important information from the administration to help Congress and the American people decide how to act.

KEILAR: On the issue of impeachment, you said in a "USA Today" op-ed, quote, if the administration continues to disregard subpoenas, another method of information-collecting would be an impeachment inquiry.

So if you move to impeachment, it opens up mechanisms where you could more easily get this information, but would it be better, especially as we see your leadership so reticent to pursue impeachment, would it be better to pursue the impeachment route than to let this play out in the courts?

LIEU: If Donald Trump's goal is to push us to impeachment, he's doing a good job of it because it is unifying the caucus, the blanket denials of our lawful congressional subpoenas, and the Democratic caucus realizes that we can't impeachment right now because we have to get all the facts, get the information. It's one of our gravest options. But if we can't get the facts, then we may have no choice but to move to impeachment. And in Watergate, Article III of the impeachment articles against Richard Nixon was obstructing Congress.

KEILAR: Would you like -- what route to you is preferable, impeachment or moving through -- through the courts?

LIEU: We should first try the contempt option. If that doesn't work, we should try the option in court. If that doesn't work, we should try inherent contempt and then I think we can look at impeachment.

KEILAR: All right, Congressman Ted Lieu, thank you so much for being with us, from Capitol Hill.

LIEU: Thank you.

KEILAR: The president's lawyer heading to Ukraine on a trip to dig up dirt on a political rival.

And why a California teacher, who is battling cancer, is paying for her own substitute teacher.