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China Retaliates, Raising Tariffs to 25 Percent on $60 Billion in U.S. Goods; Democrats Set Friday Deadline for Trump's Tax Returns; U.S. Markets Set to Tumble at Open Over U.S.-China Trade War; Hollywood Legend Doris Day Dies at 97. Aired 9-9:30a ET

Aired May 13, 2019 - 09:00   ET



[09:00:00] JOANNA LOPEZ, NURSE: To keep his spine straight.


JOHN BERMAN, CNN ANCHOR: Baby big shot. She went and monitored Little Brandon's pulse until paramedics arrived and thanks to her help the little boy did survive.

ALISYN CAMEROTA, CNN ANCHOR: Oh my gosh. What a beautiful little boy and story.

All right. So Dow futures are way down.

BERMAN: Way down.

CAMEROTA: After China just retaliated against the U.S.'s tariffs. Jim Sciutto is going to pick up our coverage right after the break.

BERMAN: I think right now. I think Jim is here right now.

CAMEROTA: Right now. Take it away.

ANNOUNCER: This is CNN breaking news.

JIM SCIUTTO, CNN ANCHOR: I am here right now. A very good Monday morning to you. Jim Sciutto. Poppy is off. We start this Monday morning with the breaking news.

In spite of new warnings from President Trump, China has just struck back with sharply higher tariffs on U.S. companies importing to China. Minutes ago Beijing announced it will hike tariffs on $60 billion worth of U.S. goods, hiking those tariffs to 25 percent from just 10 percent, 2 1/2 times, effective on June 1st.

Earlier in another predawn social media barrage, there were lots of tweets, the president claimed that an ongoing lack of a trade deal will be very bad for China, very good for the USA. He again claimed wrongly that U.S. consumers do not bear the cost of more expensive imports. In fact, they do. He declared tariffs greatly help the U.S. economy. Not much evidence of that. They are certainly not helping the U.S. stock markets. Another major

selloff is in the works just minutes from now when the markets open up.

But we begin with Beijing with CNN's Matt Rivers. He's on the ground there. This move from China shows the very brutal math of this trade war. The U.S. can impose tariffs. China can impose tariffs as well.

MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Yes. And we've been waiting for exactly what China was going to do, Jim, since the United States announced its move late last week. And it was just within the last hour or so that China's government has announced as you mentioned that it's raising tariffs on $60 billion worth of American imports here to China.

Now in terms of how high those tariff rates go, they are going to vary. Some of them are going to be increased to 25 percent, some are going to be increased to 20 percent. There's a varying range of what those rates are going to end up looking like. But no matter which way you look at it, that means that if you are buying American products here in China, it is going to be more expensive to bring those products in.

Now what's interesting is that it does not appear that China expanded its list of American products facing tariffs here in this country. You'll remember that China has so far put $110 billion worth of American imports under increased tariffs. These new $60 billion worth of tariffs do appear to come from that initial 110 number. Now there had been some thought that China would try and expand on its tariffs in terms of which American products were facing these new taxes. It doesn't appear that they've done that.

And part of the reason, Jim, is because China can only go so far when it comes to putting tariffs on American products. America sends a lot fewer goods here to China than the other way around. But this is Beijing signaling to America, they're not going to take this lying down, they did not listen to Donald Trump's tweet. And to China's credit, they have been signaling that this was coming for several days now -- Jim.

SCIUTTO: Yes. I mean, we talk a lot about internal U.S. politics. China has its own politics there and zero political incentive to give in.

Matt Rivers in Beijing, thanks very much.

Christine Romans joins me now.

So earlier Beijing echoing that, said they would never yield to external pressure. I spent a lot of time in China.


SCIUTTO: You should never underestimate the backbone of Chinese leaders, particularly their lack of a desire to back down to a U.S. president here. The math is tough because the U.S. has a strong economy.


SCIUTTO: It means we can impose tariffs.


SCIUTTO: China has a lot of stimulus.


SCIUTTO: They can impose and weather economic damage, too.

ROMANS: And this is what a trade war looks like. I mean, this is what it looks like. You know, and this is a selloff around the world, global markets spooked. You know, the Hong Kong stock market the only one to close higher because it was closed for public holiday. And on Wall Street an ugly Monday morning shaping up.

Look, the U.S.-China trade war will raise costs for Americans and create uncertainty for investors. Tariffs on thousands of things, dish washers, frozen fish, handbags, they jumped to 25 percent Friday.

The president falsely states China pays those tariffs. His economic adviser Larry Kudlow reluctantly admitted on FOX Sunday what everyone else knows, the U.S. companies pay tariffs, not China. And they expected the Chinese to retaliate.

This trade war is not over. The administration says it has also begun the process of raising tariffs on more stuff. All the remaining imports from China worth about $300 billion more. And American farmers, I really want to make this point, have the most to lose in this dangerous game. Until Trump's trade war, every third row of beans, soy beans were shipped to China. Planting season has begun this week. And more Chinese retaliation comes at the worst possible time. Fields are under water.

Last year's soy beans are still in storage. And you've heard so many times, you know, that old stuff from president, he can shoot somebody on Fifth Avenue and get away from it.

[09:05:01] American farmers are being shot by U.S. trade policy right now. And what is the end game here?

SCIUTTO: You know, there was an interesting detail that -- so this -- U.S. tariffs obviously affect Chinese companies selling stuff here. The prices for those go up. But I've read that U.S. companies that make stuff here in the U.S. are meeting those price rises. In other words, because if they see -- you know, because they've got -- you know, it's a market out there.

ROMANS: Right.

SCIUTTO: If you can charge a bit more because your competitor is charging more.

ROMANS: Right.

SCIUTTO: That means U.S. consumers are going to be facing price increases across the board.

ROMANS: That's right. The first 10 percent tariffs in some cases they were eaten by the company. They weren't passed down to consumers. Those are -- those first round of tariffs are on things that used to make other things.


ROMANS: So they would try to absorb that along, but the 25 percent tariff, that's going to come into the bottom line for consumers.


ROMANS: Now in some cases, those companies are going to move someplace else, Vietnam, Cambodia, even Mexico makes those goods.

SCIUTTO: Yes. And it's happening already.

ROMANS: But not necessarily moving back to the United States.

SCIUTTO: Right. All right. Let's bring in Rana Faroohar. She's associate editor of "The Financial Times," also a CNN global economic analyst. We also have Patrick Healey, politics editor from "The New York Times."

Rana, if I could begin with you. It strikes me that, you know, trade wars are a game of chicken.


SCIUTTO: And the U.S. -- so Trump says we got a strong economy, now is the time to hit the Chinese. China, I mean, their economy weaker, arguably.


SCIUTTO: But they've got enormous stimulus potential. They can support, you know, Chinese businesses.

FAROOHAR: They do.

SCIUTTO: So where is the off-ramp here?

FAROOHAR: Well, that's what's always been so baffling to me. I mean, you know, trade wars are easy, right, Christine? Not so much. You know, China has a mission. They are trying to transition to be a consumer economy. They have plenty of stimulus as they say, and they have plenty of political will. I mean, they simply don't have to -- that's the advantage of autocracy. Right? They don't have to answer to a votership, an election situation. And I don't see the Chinese backing down here.

And also we have to remember that Trump is asking them to do things that are fundamentally impossible I think within their political context. He's saying don't subsidize state-owned businesses. You have to privatize everything. This is simply not the way China works.

SCIUTTO: That's the thing. It is -- and listen. Let's be clear here. China has been cheating for years.

FAROOHAR: Yes. For sure.

SCIUTTO: Democrats and Republicans agree on that. They make it extremely difficult for U.S. companies to operate in China, they take their technology, et cetera.


SCIUTTO: So let's stipulate that. The trouble is, how do you force a country.


SCIUTTO: To change the way it got rich, right?

FAROOHAR: And this is a key point because I think what we should have been doing all along is looking internally and saying, how can we enrich our economic ecosystem, how can we make it easier for companies to manufacture more of the supply chain here? I mean, I think we are moving to sort of a bipolar or even a tripolar world where the U.S. is going to be here, China is going to be here. Europe is in between, by the way.

And I think that Europe may end up veering more towards China when it comes to supply chains and the way companies do business. And China is doing a lot of economic diplomacy in Europe. That's another unforced error by the Trump administration. We should have gotten Europe and in particularly Germany on board early on.

SCIUTTO: Yes. But meanwhile doing the opposite.

FAROOHAR: In this battle.

SCIUTTO: Because he's been attacking them.


SCIUTTO: So, Patrick Healey, politics obviously an enormous element of this. And Trump is making a calculation here. He's keeping with the campaign promise with enormous risk and up against an adversary here that has its own political motivation here. Yes, no elections, but they're very conscious of Chinese pride, no desire to back down to a U.S. president here. Is there a political off-ramp for the president or does he have to double, triple, quadruple down as we get closer to 2020 with all the economic dangers?

PATRICK HEALY, CNN POLITICAL ANALYST: I mean, we know, Jim, about this president, that he likes to go up to the edge, that he sees himself as a dealmaker who knows how to use maximum leverage when it can push an adversary into the corner. The problem is that's a concept that exists in the president's mind.

We haven't seen strong results on this from North Korea to Iran to, you know, a number of issues, certainly Russia and Syria, that the president has pushed on. But the president thinks he's got three things going for him, Jim. He's got a pretty strong economy stateside, you know, low unemployment, strong GDP. He thinks the economy is something that can essentially has capacity to absorb this.

Number two, he sees his base as being basically solidly with him. That even when the farmers in Iowa state that, you know, he very much needs to carry again in 2020 if he has any shot of re-election, that those folks will stand by him. And the third again is his sort of concept of himself as a dealmaker, that he somehow can achieve in a historic victory by bringing a country like China, as you got at, that sort of fundamentally in terms of its own economics, behaves differently than this president wishes it would, that he will somehow be able to pull this off.

So right now I'm not sure he's thinking about off-ramps as much as playing this game of pressure, of, you know, Twitter messaging and seeing how that works out.

[09:10:03] SCIUTTO: Well, you can't change North Korea's permanent interests, can't change China's permanent interests.

HEALY: Right.

SCIUTTO: We'll see how, you know, the art of the deal works here. Certainly can't see the results yet.

Rana and Christine, I'm just curious. In the midst of this, the president is fundamentally misleading or attempting to mislead the American people about the effects of this. I mean, he says repeatedly even when Larry Kudlow acknowledges American consumers pay tariffs, tariffs are a tax. But the president still kind of doubling down with this. I mean, doesn't that matter?


FAROOHAR: I think it does matter. And you know --

SCIUTTO: And many people -- are people still fooled by it? I don't -- sure.

FAROOHAR: Look, to connect the dots between what you were saying, Christine, about the big Ag states, I mean, I think that this has not only big economic implications but political implications. Because out of the top 10 states that are going to be affected in a trade war, eight of them voted for Trump. Now Democrats see that. They're in Iowa campaigning already, they're trying to set the stage as the American farmer being the victim in all of this. Companies are going to pass on these tariffs to the consumer. I think you're going to start to see a major market correction. Goldman Sachs is saying that's going to shave half a percentage point off the economy.

SCIUTTO: OK. FAROOHAR: That's not great for 2020.

SCIUTTO: We talked about this a couple of weeks ago that the big market-jumped, what, 15 percent in the last several months. Priced in a trade deal.

ROMANS: Yes. Yes. Look, and I think -- yes. And I think that there are a lot of people in markets who are not taking it seriously the threat of -- the suffering that you could have from a protected trade fight. There are some people who keep telling that this mutually a shared destruction, a trade war with China. So they're going to have to figure it out. You know, so they think that when Trump and Xi are together in Japan at the G20, that those two men together will find some way for both of them to save face, both of them to look strong, but to end the worse of -- they're strong.

I mean, that plays for this president. You know, when I talk to people in the Midwest and they say OK, soy bean prices have tanked.


ROMANS: You got farm bankruptcies going up. But what about Trump? And they say he's doing what no one has had the nerve to do anything strong.

SCIUTTO: Easy to play well before you lose your farm. Right?

ROMANS: Right.

SCIUTTO: Or before it cost you $700 more a year to cloth your family.

Christine, Rana --

ROMANS: Nice to see you.

SCIUTTO: Patrick Healy as well. thanks very much. Obviously a story we're going to stay on top of.

HEALY: Thanks, Jim.

SCIUTTO: Stop, block and troll. The president's tactic for taking on Democrat-led investigations. Will it work? And Secretary of State Mike Pompeo nixes a trip to Moscow. To meet with European allies as tensions with Iran heat up. Where this clash, this important one, goes from here.


[09:15:00] JIM SCIUTTO, HOST, NEWSROOM: This morning, President Trump is upping his fight with House Democrats. According to "The Washington Post", the White House right now is blocking more than 20 investigations. And Democrats say they are still waiting on at least 79 congressional requests.

Of course, Congress has the power to request such information from the executive, the executive branch. The White House saying no. Manu Raju is on Capitol Hill with what Democratic leaders are planning to do next. I mean, Manu, the kind of -- I don't know if backed in the corner is the right expression here.

But the president just saying no, sees no political consequences, it seems from that. So what's the Democrats' strategy?

MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Yes, we're heading into a new phase and this clash between Democratic leaders and the White House. The first phase was sending letters, asking for the information voluntarily, the White House said no, the administration said no.

Then we headed to the subpoena phase, now, the administration is resisting those subpoenas. Now we're heading into the contempt phase. What the Democrats are trying to ratchet up the pressure to try to get this information. And ultimately, this could end up in court.

Now, there are two significant deadlines this week. One on Wednesday from the House Intelligence Committee has set a deadline to turn over information related to the Mueller investigation, counter-intelligence information under a subpoena that Adam Schiff issued.

Now, he told me last week that he could hold -- his committee could hold Bill Barr, the Attorney General in contempt if he does not provide this information over his panel. This comes after the House Judiciary Committee voted last week also to hold -- to hold the Attorney General in contempt.

And also, there's a Friday deadline for the Treasury Department to furnish the six years of the president's tax returns over to the Ways and Means Committee. The question is what will they do assuming the Treasury Department does not comply.

There's a push to hold both Stephen Mnuchin; the Treasury Secretary and the IRS commissioner in contempt if they don't comply. So the ultimate question here, Jim, is what will the Democrats do if the courts -- once they go to court, they try to get them to turn over this information if it drags on for some time.

There's a debate internally right now within the House Democratic caucus, whether to impose fines on individuals. Adam Schiff proposing the idea of fining people $25,000 a day if they don't comply with these subpoena requests, if they are held in contempt of Congress.

Something they have not settled on yet, but something they may start to consider doing if more and more people resist starting with -- including these two big deadlines tonight -- both this week with the Mueller report as well as the tax returns on Friday. Jim?

SCIUTTO: Interesting strategy, hit them in the pocketbook, see if that makes a difference. Manu Raju, thanks very much. Let's find out what the plan is next. Joining me now, Democratic Congressman Dwight Evans of Pennsylvania, he serves on the House Ways and Means Committee which of course this committee requesting the tax documents as the right by law it appears to do so. Congressman, thank you for taking the time this morning. REP. DWIGHT EVANS (D-PA): Thank you for inviting me.

SCIUTTO: So let's ask you the question. Manu posed it, was going to be my first question too. You set a Friday deadline, your committee has for Trump's tax returns. Of course, the Treasury Secretary kind of running defense here from the president, resisting that. What do you do if they break another deadline?

EVANS: Well, look, I hope they don't break another deadline. I mean, the chairman of this committee, Chairman Neal has been very responsible in the way he's attempting to handle it. He has sent two letters, one on April the 3rd and the other one on April the 13th indicating to the president that this law is on the books, that the Internal Revenue shall provide this information.

And that's basically how we have now led up to the subpoena that will -- that is indicated that this Friday, they are the Secretary of Treasury as well as Internal Revenue is to step -- come before this committee and ask why specifically they haven't provided the information.

[09:20:00] So it's clear this is not a confrontation that this chairman of this committee wants. We want to try to work this out. We think it's in the best interest of the people, and we don't take this lightly. So we understand on the Ways and Means Committee and as the chairman has said to all of us, we need to work together and be deliberate about this. And I believe that, that's the way Chairman Neal wants to handle it.

SCIUTTO: Fine. But there's no interest -- there's no sign of White House has any interest in working together. They're saying no to some 20 different investigations, 79 separate congressional requests here. I'm just curious what the Democratic plan is for when the White House is saying no to everything. I mean, there's --

EVANS: Well --

SCIUTTO: The idea of fining people -- fining people who don't show up, taking them to court. What do you do now?

EVANS: All those -- all those options are part of the tool box. At the end of the day, we want to resolve this and get it done. We've been very clear, the law is on our side, you know, ultimately court is the option. There are other options that are available.

So, I want you to be very clear, we want to make this work and get it done. We're very clear as a responsibility that we have on the Ways and Means Committee that we have the responsibility of oversight of -- in terms of our tax system. And we don't take that lightly.

So the chairman in consultation with members on the Ways and Means Committee has been very clear that at the end of the day, ultimately, we may wind up in court with the president. But we don't think that this is the way we should go. We hope that the president will step up and do what's necessary. SCIUTTO: We'll see. It doesn't look like a lot of sign of that at

this point. On May 1st, you told the morning call that you support impeaching President Trump. Do you still hold that position and do you find that your colleagues, your Democratic colleagues are moving towards that step now?

EVANS: Well, I think that it's moving towards that step. I mean, when I said that at the particular time that was when the Republicans were controlling the House. I made it very clear that I thought this president needed to be impeached.

But there's a step before impeachment. There's the impeachment inquiry that needs to take place. And in my view, the Judiciary Committee has done what it needs to do, Oversight Committee is doing what it needs to do, the Intelligence Committee is doing what it needs to do, Ways and Means are doing what it needs to do.

And the way it works, at the end of the day, we want to work together to get some things done. We've got transportation, we've got trade, we want to invest in our infrastructure. That's the ideal situation. So I hope that this president understands that we are a co-equal branch.

And it is our responsibility and obligation to work together, to do something for the American people.

SCIUTTO: So to be clear --

EVANS: We don't take that lightly --

SCIUTTO: You do not support impeachment today. You say that's down the line --

EVANS: No, what I --

SCIUTTO: There are a lot of steps in between.

EVANS: What I would -- what I would support -- what I would support is an impeachment inquiry which is the step before impeachment. What it basically does, it gives the necessary tools to Congress. So at this particular point, where we are is that the president is by denying, accepting the fact of the subpoenas and we have the responsibility of oversight, we don't take that lightly. That is the --


EVANS: Responsibility that's guarded and their responsibility, they have oversight in terms of what the president does.

SCIUTTO: I want to ask you about the issue of gun violence. We spoke with a mother of a survivor of the Colorado shootings, we spoke to her last week and her phrase really struck us. She said hoping didn't work. Her hoping that this wouldn't happen to her child in their neighborhood school. My colleague Poppy Harlow and I at that point said listen, we're going

to ask every lawmaker, Democrat or Republican, when they come on this broadcast, what are you going to do? What's your party going to do right now to save American children from this threat?

EVANS: Well, she's correct. There should be no more excuses. But we did -- we passed out of the house, house resolution 8 which is universal background checks. That's something that did not happen when the Republicans were in charge. And we have a gun violence task force which I'm a part of.

We recognize that we have to work together to get this done. We have a bill that's in the United States Senate now. We also passed a bill about closing the Charlotte bill loopholes.

SCIUTTO: Right --

EVANS: And we passed that particular bill --

SCIUTTO: But do you have any Republican support for those measures? Because it feels like --

EVANS: Well --

SCIUTTO: A lot of Democrats say that fine, Democratic-controlled house is passing all this hopeful stuff --

EVANS: They were --

SCIUTTO: But it dies in the Senate --

EVANS: There were -- there were one or two Republicans, I understand two or three, I'm not sure what the number was. But there were some who supported it. Look, at the end of the day, this is an American problem, this is not just a Democratic problem.

We have to work together. Now, I know that doesn't solve the problem, but at the end of the day, we're going to keep moving forward for people. And that's --

SCIUTTO: Right --

EVANS: What we have done. We have moved that agenda which is over in the United States Senate. And I don't mean to pass a political ping- pong back and forth, but at the end of the day, we need the Senate to do what they need to do. We need to call --

SCIUTTO: Understood --

[09:25:00] EVANS: On the United States Senate to step up and do what they got to do.

SCIUTTO: Congressman Dwight Evans, thanks very much.

EVANS: Thank you, appreciate the opportunity.

SCIUTTO: We are just moments away from the opening bell on Wall Street. Brace yourself, this could get ugly. The escalating trade war with China weighing heavily on investors, stay with us.


SCIUTTO: This is breaking news just into CNN and sad news out of Hollywood. The actress and singer Doris Day; an American treasure had died at the age of 97. The Hollywood legend and animal welfare activist died early this morning at her home in California we are told.

Stephanie Elam looks back at her remarkable life.



DORIS DAY, LATE ACTRESS: Shaking the blues away, unhappy news away.

STEPHANIE ELAM, CNN CORRESPONDENT (voice-over): Over the span of two decades, Doris Day was one of Hollywood's most popular leading ladies. The consummate girl next door, Day's vivacious on-screen charisma and sweet vocals won over fans around the globe.

DAY: I'm going to ring the bells tonight, I'm going to ring the bells tonight, that's what I'm going to do.

ELAM: Day's career began as a teen growing up in the Midwest. A singer, she shared the stage with big band giants Bob Crosby and Les Brown.

DAY: Going to take a sentimental journey

ELAM: Her first recording hit "Sentimental Journey" was especially popular with American troops coming back from World War II. A gig in Hollywood led to her first movie role, the 1948 musical "Romance On the High Seas".

In the '50s and '60s, she co-starred with Hollywood legends Rock Hudson, Cary Grant and James Stewart. Her films consistently topped the Box Office, many featuring Day's wide vocal range like her rendition of "Que Sera Sera".

In Hitchcock's "The Man Who Knew Too Much", "Whatever Will Be Will Be" became Day's anthem and won an Oscar for a best song. But it was romantic comedies like "Calamity Jane", "That Touch of Mink" --

DAY: Hello?

UNIDENTIFIED MALE: Morning Miss Mara --

ELAM: And the blockbuster "Pillow Talk" which endeared her to fans as America's sweetheart. Off screen, Day bristled at her innocent depiction on screen, telling host Johnny Carson she wanted to set the record straight.

DAY: Well, the image has been so boring, you know, the virgin and the goody two-shoes and all the nonsense, which is, you know, it's not human.

ELAM: But that same wholesome image helped her win a total of five Golden Globes. In 1969, she was nominated as best actress for her TV sitcom, "The Doris Day Show". And 20 years later, she received a Lifetime Achievement Award.

DAY: This business has been a great joy in my life. I've loved every minute of it.

ELAM: In 2004, President George W. Bush presented Day with the Medal of Freedom, the highest civilian honor. After Hollywood, Day dedicated herself to the care of animals through a foundation that bears her name.

DAY: Go to your city shelter today and adopt a pet.

ELAM: Late in life, Day was rarely seen in public, but she still had plenty of admirers. Once a year in her final act, she emerged to celebrate her birthday, serenaded by a chorus of devoted fans.


SCIUTTO: Well, that is quite a life.