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Dow Tumbles As China Retaliates With Tariff Hikes On U.S. Goods; Graham Tells Don, Jr. To Ignore Subpoena From GOP Colleagues; President Trump Is Hosting The Prime Minister Of Hungary At The White House. Aired 2-2:30p ET

Aired May 13, 2019 - 14:00   ET

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

BROOKE BALDWIN, CNN ANCHOR: President Trump tweeted, quote, "China should not retaliate." Guess what? The Chinese government did precisely that. Today, it announced a raise in tariffs on $60 billion worth of U.S. goods starting June first, so items like cotton, machinery and grains will be taxed as high as 25 percent. And the move comes three days after President Trump increased tariffs on many Chinese goods by that same percentage.

He's also started the process to impose tariffs on another $300 billion worth of Chinese goods like iPhones and toys. And President Trump continues to wage this campaign to convince Americans that tariffs are a good thing for the U.S. economy. Let me just read you one of his many, many tweets over the weekend on trade quote, "There is no reason for the U.S. consumer to pay the tariffs which take effect on China today."

So let's start there. Richard Quest is up for me. He's our CNN Business editor-at-large. And so Richard, before we even get to that, I want to tackle this issue. When Trump said today, the unexpectedly good first quarter 3.2 percent GDP was greatly helped by tariffs from China. Some people, he says, just don't get it. Can you give me a little fact check on that, please, sir?

RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: I'm one of those people who just doesn't get it, Mr. President. And you now, I can follow the Economic 101 of this. The tariffs get imposed at the point of entry. The importer - the U.S. importer, pays the tariff, that tariff then gets paid to the U.S. government. Fine, Treasury, here's your check.

But the importer then passes it on to the wholesaler or the manufacturer, who then has to decide whether to eat the margin, or pass it on to the wholesaler or the consumer, who then has to decide whether to buy the goods or not. That is the Economics 101 of the way tariffs work.

Now, the only -- sorry to be boring about this, but the only exception to this, is if the -- is at the point of import people decide not to buy from China. If they decide, the goods are now too expensive, so they're either going to look elsewhere -- Vietnam, Cambodia, any other parts of the ASEAN -- or they're going to buy from U.S. domestic sources.

But in many cases, that's not available. And there's -- people will tell you, if the apparel industry will tell you, as the steel industry will tell you, it is simply not an option not to pay these higher prices.

BALDWIN: What about the U.S. consumer paying tariffs? That doesn't jive with what the President's own economic adviser, Larry Kudlow said over the weekend, here he was.

(BEGIN VIDEO CLIP)

CHRIS WALLACE, FOX NEWS ANCHOR: It's not China that pays tariffs, it's the American importers, the American companies that pay what in effect is a tax increase, and oftentimes passes it on to U.S. consumers.

LARRY KUDLOW, WHITE HOUSE CHIEF ECONOMIC ADVISER: Fair enough. In fact, both sides will pay.

WALLACE: The tariff on goods coming into the country, the Chinese aren't paying.

KUDLOW: No, but the Chinese will suffer GDP losses and so forth with respect to a diminishing export market and goods that they may need for their own.

WALLACE: It's U.S. businesses and U.S. consumers who will pay, correct?

KUDLOW: Yes, to some extent. I don't disagree with that. Again, both sides - both sides will suffer on this.

(END VIDEO CLIP)

BALDWIN: So it's an important point to make, Richard. You know, you hear him saying both sides, so realistically my question to you, who pays the tariffs on Chinese good into the U.S.?

QUEST: Who pays the - so say that again Brooke?

BALDWIN: Who pays the tariffs on the Chinese goods coming into the U.S.?

QUEST: The U.S. importer, leading to the U.S. manufacturer, leading to the U.S. consumer, and the quick -- the vice versa is true. U.S. goods going to China that are now tariffed, it's the Chinese importer, the Chinese manufacturer, the Chinese consumer, but Brooke net-net -- who will suffer most, bearing in mind the disparity between goods.

Arguably the Chinese, because it's the year, it sounds more here, it will be the U.S. importers that pay the most. This is a very dangerous game. Larry Kudlow, by the way, knows full well, the protectionist dangers of tariffs, and to see him sitting there sort of justifying, but at the same time squirming at the obviousness of the President's false economics is uncomfortable to watch.

BALDWIN: The justification and the squirm. Richard Quest, thank you for your analysis. I want to talk about who this hit so hard the back and forth between the U.S. and China. It's been going on now for two years. So many American businesses have already been suffering from past retaliatory terrorists that the Chinese put on us goods. And that includes my next guest.

Stephanie Nadeau exports lobsters. She is the owner of The Lobster Company in Maine.

[14:05:07] BALDWIN: So Stephanie, thank you so much for being with me. So, you've already been hit hard. I was reading -- you told my producers that

exports fell 60 percent over the last year during the peak winter season and now, you hear this news. How devastating is this for your lobster business?

STEPHANIE NADEAU, OWNER, THE LOBSTER COMPANY: Thank you for having me, Brooke. Well, we've been devastated for the past 10 months, and we've been waiting patiently for the trade war to slow up here a little bit so we could get back to work. So we were quite disappointed to hear that, you know, trade talks had broken off.

BALDWIN: Tell me, I mean, help us understand how this affects your business, specifically.

NADEAU: I mean, it's basically thrown me into limbo, right? Because it was never defined and to the trend war. There's no to me limit that someone can give me.

I can move my business to Canada and continue one like there is no trade war. I didn't personally think it would last this long, given the effect that it's having on the agricultural sector, particularly.

BALDWIN: Knowing that you've been suffering for 10 months, seeing the news that the tariffs have now gone up, is there any way for you to mitigate these losses? Is there anything, Stephanie that you can do?

NADEAU: Move to Canada and start selling lobsters from there?

BALDWIN: But why would you want to do that?

NADEAU: I don't want to and that's one of the reasons I haven't. I mean and conversely, if I made a big, you know, capital investment in Canada and moved my business and, you know, by some capricious tweet, we suddenly end the trade war, it's all for naught.

I can't make any plans. I've been waiting to tell you the truth.

BALDWIN: When you say capricious tweet, are you angry? Tell me how you're feeling, Stephanie?

NADEAU: Yes, I mean it's kind of like stages of death, right. Initially, I was really, really angry. And now, you're just trying to survive and keep your head above water.

I mean, never in my lifetime did I expect that the President of the United States would pick winners and losers in a capitalist economy, that's what he's done. He picked me as one of the loser. BALDWIN: So when you see in one of these tweets over the weekend, the

President tweets, "The tariffs China's paid over the last year (are his words) partially responsible for our great economic results." What's your response to that for the President?

NADEAU: It's not great economic results if you specialize in exporting to China, and in the case of lobsters, the E.U., we have a differential in the tax rate again with Canada, but Canada plays zero percent and we pay eight percent.

So you're closing off the export markets for us lobsters. And it's a huge percentage of overall lobster sales, maybe as much as 50 percent.

BALDWIN: Stephanie Nadeau, thank you so much for just -- this is just one sliver of, you know, American businesses who are really, really hurting because of this. I appreciate you coming on. I wish you the best of luck. We'll stay in touch with you.

I do want to turn the page on another issue with regard to the President. He is hosting the Prime Minister of Hungary at the White House right now. But this is not just any other diplomatic photo up here.

Viktor Orban has not attended one-on-one talks with a U.S. President in nearly two decades. Past administrations have condemned this autocrat for his nationalistic views, restricting media access, and limiting migration into Hungary.

Since taking office though, President Trump has approached autocrats like Orban with warmth and praise. He has applauded leaders who censor the press, suppress dissent and strike down opponents.

Among them, Brazilian President Bolsonaro, Filipino President Duterte, North Korea's Kim Jong-un, and of course Russian President Vladimir Putin. So, let's go to CNN's chief political correspondent, Dana Bash who's with me now.

And while I understand for any, you know, the President of the United States, it's important to have dialogue. But Trump continues to go beyond that embracing these strongmen.

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: Yes, he does.

BALDWIN: Why?

BASH: And it's like vintage, classic Donald Trump. Well, first, let's take the Hungarian leader who he's going to be with today. I think the bigger question is why did it take, you know, so long for him to come to the White House?

Because this is a leader who actually embraced Donald Trump early when other European leaders did not, Viktor Orban, and he has such a similar worldview when it comes to immigration when it comes to nationalistic policies in Hungary.

[14:10:03] BASH: And I was told I just before coming on with you by somebody who knows Donald Trump pretty well with regard to these issues, that it's the President who wants to likely find out from the Hungarian leader, how he did it, how he has been successful in building a wall in cracking down on immigration in a way that the President campaigned on and says that he wants to put into full effect here. And so --

BALDWIN: He wants pointers.

BASH: He want pointers, and look, this is the reality with Donald Trump as President, that he does see a very big plus, in meeting with people who are, you know, considered by other Democratic leaders, past Presidents as not worthy of sitting down with. He says that that was a mistake and that has been his MO since he came down that escalator in June of 2015.

But Brooke, it's TBD, whether or not this approach had any success, it certainly doesn't seem to have in Russia's case, and we'll see if it does it and others, too. And I guess the other question is, how does Donald Trump define that success?

BALDWIN: Yes, yes. So we'll watch for that as he is getting his pointers. I also wanted to ask you because over the weekend, the President was tweet-tastic, right, tweeting 118 times -- 1-1-8, notably quoting a retweet of some pretty harsh criticism of the current FBI Director Chris Wray, saying that the agency has no leadership.

This is significant because it is Trump's first time confronting Wray directly. Are we seeing the beginning of another tumultuous relationship with the President and the head of FBI?

BASH: Possibly, possibly, I mean, look, this is vintage again. Another example of vintage Donald Trump just in terms of people who work for him, who he has very high expectations of loyalty to him, not necessarily to the institution to which he is appointed them and that they are confirmed by the United States Congress.

And Chris Wray had some testimony last week that was not necessarily as robust in his defense of the President as his Attorney General. And so it's not surprising that the President did that.

FBI directors have 10-year terms and it is really hard to imagine -- I might eat my words -- but really hard to imagine after the Comey debacle that this President will follow that path with the person that he put in to play. It has got to be really bad.

BALDWIN: Yes, handpicked by President Trump and everything. Dana Bash, thank you very much.

BASH: Thanks, Brooke.

BALDWIN: As the 2020 race heats up, some members of the Congressional Black Caucus, they are talking and they are talking specifically about a Biden-Harris ticket. Hear why?

Plus Republican Senator and lawyer, Lindsey Graham has a long history of standing up for the role of the law. So why is he now saying it actually doesn't apply to Donald Trump, Jr. And actress Felicity Huffman walks into a Federal courtroom today to make her plea in that massive college admissions scandal. Hear what is expected to happen and how it might impact Lori Loughlin. You're watching CNN. I'm Brooke Baldwin.

(COMMERCIAL BREAK)

[14:18:01] BALDWIN: We're back. You're watching CNN. I'm Brooke Baldwin. So the same man who once called President Trump an idiot and unfit for office has done a complete 180 and two Trump's biggest cheerleader and defender. I'm talking about Republican Senator Lindsey Graham, who said this about the subpoena issued for one of Trumps sons, Don Jr.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R-SC): As I understand it, this subpoena relates to what Michael Cohen said about some meetings and about the Trump Tower in Russia. And if I were Donald Trump, Jr., as a lawyer, I would tell him, you don't need to go back into this environment anymore. You've been there for hours and hours and hours. And nothing being alleged here changes the outcome of the Mueller investigation. I would call it a day.

(END VIDEO CLIP)

BALDWIN: I would call it a day. Just to remind you Senator Graham, who was a lawyer, and it's also the Republican Chairman of the Senate Judiciary Committee is advising the President's son to ignore a subpoena issued by the Republican chairman of the Senate Intel Committee.

He is singing a different tune now than when he did 1998 when he said this about subpoena power.

(BEGIN VIDEO CLIP)

GRAHAM: Article III of impeachment against Richard Nixon. The article was based on the idea that Richard Nixon as President failed to comply with subpoenas of Congress. The day Richard Nixon failed to answer that subpoena is the day that he was subject impeachment because he took the power from Congress.

(BEGIN VIDEO CLIP)

BALDWIN: Chris Cillizza is our CNN politics reporter and editor-at- large and that was then, this is now. You've got other examples of hypocrisy.

CHRIS CILLIZZA, CNN POLITICS REPORTER AND EDITOR-AT-LARGE: Yes, man. Breaking news, Brooke, politicians like Lindsey Graham sometimes just changed their positions to suit the moment.

Let's go through it because there's a lot here. Well, we only have another 40 minutes to do the segment. I kid. Okay. All right. Well, let's start first with, you mentioned what Lindsey

Graham said about Donald Trump when he was running against him. Remember, you might not remember, but Lindsey Graham was a candidate in 2016 primaries, and let's go to that very quickly. What he said --

Okay. He said Donald Trump -- well, here's his worry. Call me an idiot. But he also said, "You know how to make America great again? Tell @RalDonaldTrump to go to hell."

[14:20:08] CILLIZZA: Well, this is the two of them. That's Lindsey Graham. I'm an expert at this stuff. That's Donald Trump playing golf, and they play golf together regularly. Okay, so something changed there. And there's a lot more, it's not just personal.

Let's go to this. I think this sets the tone for everything we're talking about here, Brooke. This is Mark Leibovich in the "New York Times" who is doing a profile of Graham about a month and a half ago and said your positions as I'm going to detail have changed on so many things why?

"Well okay, from my point of view, if you know anything about me, it would be not to do this."

I asked what this was. "This is to try to be relevant." Man, I've got to get this finger more magic so I can underline that relevant. That's where he's going for.

Okay, let's go through the issues. Here we go. Okay, on immigration. When Lindsey Graham was a candidate for President against Donald Trump, he said the wall would be stupid and ineffective.

"Totally support Donald Trump's veto. President Trump is right to declare an emergency." This is March 2019. Right to declare national emergency. Remember Lindsey Graham even earlier than this said, we need to wait. We can't declare a national emergency. Okay, now we have to, let's keep going.

Okay, the Russia investigation, huge defender of Bob Mueller, we need to let Mueller do his thing. Now, Bob Mueller doesn't need to testify. I'm not going to call him before the Senate Judiciary, whatever he says. We've already heard from Bill Barr. Okie-dokey. Let's keep going.

Jeff Sessions. This is a favorite Lindsey Graham, quote I said it before once again, he said, "There'd be held to pay if Jeff Sessions was fired or removed this Attorney General." What did Donald Trump do? He removed Jeff Sessions as Attorney General the day after the 2018 election. And Lindsey Graham before had said, "I think the President deserves to have an Attorney General he agrees with." Okie- dokey.

John McCain. Okay. Without question that John McCain was Lindsey Graham's mentor in the House and in the Senate, Donald Trump has repeatedly attacked John McCain post his death before when he was sick from brain cancer and when he passed away. Lindsey Graham has essentially said, Look, I don't think we should

cast aspersions, but no sort of strong condemnation. Excuse me. What else we've got?

Okay, impeachment. Now, you mentioned this. Lindsey Graham was one of the House impeachment managers in 1998 against Bill Clinton. That's where that clip came from. But now, the idea that there's impeachment, we should all move on. Nothing has happened.

I think we have some sound from Lindsey on impeachment. Let's roll that.

(BEGIN VIDEO CLIP)

GRAHAM: So the point I'm trying to make is you don't even have to be convicted of a crime to lose your job in this constitutional republic. If this body determines that your conduct as a public official is clearly out of bounds in your role. Thank God you did that. Because impeachment is not about punishment. Impeachment is about cleansing the office. Impeachment is about restoring honor and integrity to the office.

(BEGIN VIDEO CLIP)

CILLIZZA: I saw right up in the corner there 1999 different President, different Lindsey Graham view of impeachment. Twenty years later, this is ridiculous, out of bounds. We need to move on. The Democrats are obsessed.

So you look, all politicians adjust their positions somewhat to suit the moment, Brooke. That's how they keep getting reelected, generally speaking. This is an extreme example. This was a critic of Donald Trump, personally, and from a policy perspective, who is now an ardent supporter, in contrast to many of the positions he long held in the House and the Senate. Brooke, back to you.

BALDWIN: Just makes you wonder you mentioned Senator -- the late Senator McCain, how different Senator Graham may be if his good friend was still alive, something we will never fully know the answer to.

We've got, but Chris Cillizza, I appreciate you pointing all that out. I want to move on because as we mentioned a second ago, President Trump is hosting the Prime Minister of Hungary at the White House right now, but this bilateral meeting did not come without quite a bit of controversy.

Viktor Orban has been iced out of one on one talks with the U.S. President for nearly two decades. So here is Atika Schubert with more on this leader.

(BEGIN VIDEOTAPE)

ATIKA SHUBERT, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Protesters in the Hungarian capital of Budapest have called him a dictator, but for Prime Minister Viktor Orban, he is merely leading an illiberal democracy, one that he wants to remain white, Christian and without migrants.

(BEGIN VIDEO CLIP)

VIKTOR ORBAN, HUNGARIAN PRIME MINISTER (through translator): We have to understand that the European people have reached the historic crossroads. Those who decide in favor of immigration and migrants, for whatever reason, in reality are creating mixed race nations and historic traditions in such countries will come to an end and the new world will take shape.

(END VIDEO CLIP)

SHUBERT (voice over): Under Orban, homelessness has been outlawed. Refugees and immigrants are now held in barbed wire transit zones. The courts have lost their judicial independence and the media is now in the hands of his friends and allies.

[14:25:10] SHUBERT (voice over): Worrying enough for the E.U. to launch disciplinary action against the Orban government.

In 2015, the European Commission President gave him this tongue and cheek welcome.

But for Orban's opponents in Parliament, it is no laughing matter.

(BEGIN VIDEO CLIP)

BERNADETTE SZEL, HUNGARIAN ECONOMIST: This is not a democracy anymore. I mean, it is not a fair game to ask us why we do not play with the rules of the democracy if you don't have the democracy.

(END VIDEO CLIP)

SHUBERT (voice over): Orban has made friends of other populist strongmen leaders like Italy's Matteo Salvini and former White House adviser, Steve Bannon. And when President Trump was elected, Orban was one of the first to congratulate him.

Like President Trump, Orban's finances have also come under intense scrutiny.

SHUBERT (on camera): So we're visiting the village of Felcsut, which also happens to be the hometown of Viktor Orban and in fact this is his private home where he sometimes comes to see his favorite football team. And that's pretty convenient because right across the street is the football stadium.

It was only built a few years ago and fits 3,500 people, more than twice the amount of people in the village itself.

SHUBERT (voice over): With its bolting arches and grand football pitches, watchdogs like Transparency International have questioned the money behind the project. But while no one we spoke to here seems particularly enthusiastic about the government and its policies, few see any alternative to Orban and his party.

(BEGIN VIDEO CLIP)

HAJNI LAUKO, FELCSUT RESIDENT: Anyone else who could be strong as them --

SHUBERT: That's the question.

LAUKO: Yes, that's it. So I don't think that is other choice at the moment because you could say this would be nice, that would be nice, but they don't have anybody behind new ideas.

(END VIDEO CLIP)

SHUBERT (voice over): President Trump and Prime Minister Orban may find they have a lot in common. After all the protests and criticism both remain firmly in power. Atika Shubert, CNN, Budapest.

(END VIDEOTAPE)

BALDWIN: And again these two men are meeting right now at the White House. We will standby we'll see what happens between two of them in mere moments.

Also, we will see how the President responds to China escalating -- retaliating in the trade war. Quick check of the Dow, still down 580 points, an hour and a half to go at the trading day.

Also, actress Felicity Huffman expected to plead guilty in that college admissions scandal. What the judge may decide about prison time.

And remembering the life of Hollywood legend, Doris Day.

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