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China Retaliates against U.S. Tariff Hike; New Details on Strait of Hormuz Attack; Hackers Target WhatsApp; North Korean Humanitarian Crisis; With Higher Tariffs, China Retaliates Against The U.S.; U.S. Targets $300 Billion Of Chinese Goods For New Tariff Hikes; Prosecutors Want Expedited Charges Against Al-Bashir; Actress Felicity Huffman Pleads Guilty; Selfie Culture Drives Some To Alter Their Appearance. Aired 2-3a ET

Aired May 14, 2019 - 02:00   ET




ROSEMARY CHURCH, CNN ANCHOR (voice-over): China strikes back and the trade war with the U.S. escalates, we will look at the impacts on global markets, consumers and manufacturers.

The U.S. is also at an impasse with Iran and the secretary of state is trying to get allies to isolate the country, we will have a live report from Tehran.

Plus the sophisticated attack that targeted users of a popular messaging service used by more than 1 billion people.

Hello and welcome to viewers joining us from all around the world, I am Rosemary Church and this is CNN NEWSROOM.


CHURCH: The escalating trade war between the United States and China has global investors anxious. Wall Street's sell-off extended to Asia Tuesday, you can see the numbers there, the Shanghai Composite down 1.5 percent and the Hang Seng lost nearly 1.5 percent there.

It was the Asian markets' first reaction to China's latest retaliatory action, word that Beijing will impose tariffs on $60 billion of U.S. goods sent the Dow plunging more than 600 points. It was Nasdaq's worst percentage drop of the year. But as Jim Acosta reports, president Donald Trump remains confident.


JIM ACOSTA, CNN SR. WHITE HOUSE CORRESPONDENT (voice-over): With his trade war with China escalating, President Trump downplayed the impact of Beijing's decision to impose retaliatory prices on U.S. goods that triggered big losses on Wall Street.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: This is a very positive step. I love the position we're in. There can be some retaliation but it can't be very, very substantial by comparison.

ACOSTA (voice-over): In a sign of how the trade battle could hit the U.S. heartland, the president said his administration will be seeking to provide assistance to American farmers, who are hammered by China's tariffs.

TRUMP: And out of the billions of dollars that we're taking in, a small portion of that will be going to our farmers, because China will be retaliating, probably, to a certain extent against our farmers.

ACOSTA (voice-over): The president tweeted a warning to Beijing, saying, China should not retaliate, will only get worse. It's a fight his own advisers concede could be costly.

LARRY KUDLOW, DIRECTOR, NATIONAL ECONOMIC COUNCIL: Yes, to some extent, yes, I don't disagree with that. Again, both sides, both sides will suffer on this.

ACOSTA: The president said he'll be meeting with both China's Xi Jinping and Russia's Vladimir Putin at the G20 summit next month.

As for Russia, the president predicted the U.S. would be getting along with Moscow and he promised not to use any stolen information from a foreign government in the 2020 campaign, something he claimed he did not do in 2016.

But he certainly welcomed it when he invited the Russians to get their hands on Hillary Clinton's emails during that campaign -- Jim Acosta, CNN, the White House.


CHURCH: And Matt Rivers is in Beijing, he joins us with the very latest.

So, Matt, China has retaliated with measured tariffs against the United States but now President Trump is threatening to put tariffs on everything that comes from China, so how is Beijing likely to respond to this escalating threat from the U.S.?

MATT RIVERS, CNN CORRESPONDENT: Well, at some point, Rosemary, China is going to run out of American imports here to China that they can tariff because the reality is that the United States has far fewer goods here to China than the other way around, with what China sends to the United States, so if Beijing is going to retaliate to that level they are going to have to look beyond tariffs.

Now they could also raise tariff rates on American imports, something they did yesterday, they could repeat that again if they want to.

But I think what you will see down the road here is that Beijing looking at non tariff barriers, so look at things like agriculture, for example, farmers in the United States, maybe China will completely restrict the purchasing by Chinese buyers of any American agriculture exports. That will, of course, devastate the America heartland and that is something that Beijing knows it has up its sleeve. It could also prevent the export of certain rare earth minerals from

China to the United States that a lot of company in the U.S. use in their supply chains, in key projects that are made in the U.S.

So that is something that Beijing will have to do, to look beyond tariffs and get more creative. Figure out how to make life difficult for American companies operating here while also trying to maintain or increase their economic impact in the United States.

CHURCH: Right, and, of course, President Trump has mentioned that he will help the farmers in the U.S. So presumably he is preparing for that particular pathway. But also President Trump says he is optimistic and that the dispute can be resolved.


CHURCH: But the markets don't feel the same way about that.

RIVERS: Well, so far, no, and what's interesting is that yesterday was the first major sell-off that we have seen in the market since the trade war really heated back up. I think some said that the investors had priced in this news a little bit. But yesterday I think was the first time that you saw the market say, this is real, this might go on for a long time, both sides don't really seem to be able to find a middle ground here.

If the question is how do we get to a middle ground, I think you are looking at that G20 summit between Trump and Xi, where they might meet on the sidelines in Osaka at the end of June. That could ultimately be where we get to in order for negotiations to move forward.

Both sides say that the negotiations have not broken down but no lower level talks have been scheduled. So you would expect one or two rounds of talks before the two leaders meet. That could happen but I think ultimately what people will be looking for is what kind of progress can be made when Trump and Xi meet, as the U.S. says they will, on the sidelines of the G20.

CHURCH: Yes, that is the critical point here, Matt Rivers bringing us the very latest from Beijing and many thanks to you.

All right, still ahead this hour, U.S. farmers were strong supporters of Donald Trump in the 2016 election. We will see whether the impact of his tariffs are changing their minds.

And Iran will likely be on the agenda as the top U.S. diplomat meets with Russian president Vladimir Putin in the coming hours. Secretary of state Mike Pompeo made a detour Monday to meet with E.U. officials in Brussels. This comes as the U.S. sends extra warships and bombers to the Middle East and after Iran threatened to abandon parts of the nuclear deal.

The State Department says Pompeo shared intel about Iranian threats with U.S. allies, the E.U.'s foreign policy chief says she wants both sides to avoid a conflict.


FEDERICA MOGHERINI, E.U. HIGH REPRESENTATIVE FOR FOREIGN AFFAIRS: We are living in a crucial, delicate moment, where the most relevant attitude to take, the most responsible attitude to take, is and should be maximum restraint and avoiding any escalation on the military side.


CHURCH: Well, Pompeo's Russia trip also comes as we learn new details about an alleged attack against U.S. allies in the Middle East. The United Arab Emirates in Saudi Arabia said that four ships were sabotaged Sunday near a key waterway. CNN's Nic Robertson has more from the Gulf of Oman.


NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR (voice-over): A gaping hole at the waterline of one vessel, another, a nautical mile or so away, listing slightly. And another, the Saudi-registered Al- Marzoqah, with U.S. flagboats inspecting its damage a few miles from them.

Three of the four vessels impacted Sunday by what Emirati authorities are calling sabotage. They were at anchor along with 140 other ships near the strategic Strait of Hormuz.

What we understand happened here is that a call came in earlier in the morning indicating that possibly there was water in the engine of one of the vessels. But within a couple of hours, a total of four calls had been registered, indicating that something was out of the ordinary with a number of the vessels here.

The incidents, a few miles from the Iranian coast at a global strategic turnpoint (ph) one-fifth of the oil passes through, come just days after U.S. officials raised of concerns of an Iranian or Iranian proxy attack on shipping in the area.

MIKE POMPEO, U.S. SECRETARY OF STATE: An attack on American interests from an Iranian led force, whether it is an Iranian proper or it's an entity that is controlled by the Iranians, we will hold the responsible party accountable. President Trump has been very clear about that, our response would be appropriate.

ROBERTSON (voice-over): The U.S.S. Abraham Lincoln carrier group is heading into the seas around here, supported by B-52 bombers and an amphibious assault ship, a guided missile destroyer and a Patriot missile battery system.

As U.S. tensions with Iran mounts, Iran's foreign minister called the sabotage incident " alarming and regrettable," calling for "clarification of the exact dimensions of the incident."

ROBERTSON: It is not quite clear yet what caused this sabotage and how it was perpetrated or even, for that matter, who perpetrated it.

ROBERTSON (voice-over): For UAE officials, events Sunday are deeply troubling.

CAPT. ABDULLA AL HAYYAS, UAE TRANSPORT AUTHORITY: This isolated event that happens, yes, still there. It still is always a concern for us. However, we (INAUDIBLE) won't happen again.


ROBERTSON: What is clear, these incidents of sabotage risk raising tensions in this already very tense moment, right next to one of the world's most strategic and important waterways -- Nic Robertson, CNN, the Gulf of Oman.


CHURCH: And for more we have CNN's Fred Pleitgen joining us from the Iranian capital of Tehran.

So Fred, oil tankers mysteriously damaged in the Strait of Hormuz, the finger pointed at Iran, what are you learning about this?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi, Rosemary, I think it was actually quite south of the Strait of Hormuz.

From the Iranian side, the Iranian side is also saying that they regret this incident took place and condemn this. It is quite interesting to see the statement the Iranians put out because they also insinuated that it might be some other party who was behind this, that was trying to inflame the situation.

Obviously saying that this could have been some false flag attack. Now Nick is just saying in his report, at this point no one is outright blaming Iran or anyone else for this attack.

But is also absolutely true that this stands to inflame the tensions that are already really high in this entire region but specifically in that very region, the Strait of Hormuz, but also the greater area of the Persian Gulf.

The head of the Iranian Navy came out and said that the deployment of the U.S. carrier strike group, the Abraham Lincoln, is something that the Iranians very much condemn and he was saying it was theatrical and he thinks that the U.S. is trying to raise the shadow of war in that region.

Obviously the Iranians on the one hand think that it is the U.S. escalating the tensions out there but they also say that if there is a conflict between the U.S. and Iran, the Iranians that will strike back and they're ready for confrontation with the United States -- Rosemary.

CHURCH: And, of course, Russia's foreign minister Sergey Lavrov will press secretary of state Mike Pompeo on the Iran crisis when they meet.

What might that mean? PLEITGEN: Well, I think that Sergey Lavrov wants the U.S. to do something diplomatically. It is at this point that is not happening. The Russians have been very critical of the United States. They think that the United States is not trying to go a diplomatic route. They think that the tensions are escalating right now.

The big problem in this region is that there really is not a diplomatic route out of this. The Iranians don't see it; the U.S. doesn't seem to be part of it. So the Russians have been very critical not just of the U.S. but also saying that the Europeans also need to do something to find a diplomatic way forward as well.

So it'll be very interesting, the meeting between these two foreign ministers to see what they talk about and how they try to find a way forward -- Rosemary.

CHURCH: And as this is all playing out, what is the sense there across Iran?

Is there a worry or concern, as they become aware of the military buildup, with the United States getting very intense about Iran's role in the region?

PLEITGEN: I think there is a grave concern here among many Iranian citizens and many analysts in this region, on the one hand most people think neither side really wants any military escalation and neither side wants any sort of war to take place or efforts to take place between these two nations.

On the other hand -- and I think Nick was referring to this as well -- the big concern is whether there is some miscalculation on either side. One of the things that we have to keep in mind is that we do have that carrier strike group that is set to go into the Persian Gulf, could go through the Strait of Hormuz as well.

I've been on one of these aircraft carriers after it went into the Strait of Hormuz. There is U.S. forces and Iranian forces in extremely close proximity. They can see each other, you can see the Iranian coastline and Iranian planes, you can see Iranian ships.

So certainly something that is extremely concerning, especially with the political situation, the way it is between these two parties. You hear in the rhetoric coming from Iranian military, saying we can strike American installations wherever and whenever we want.

You hear the rhetoric coming out of the White House, for instance, President Trump obviously being very critical of the Iranians as well. So certainly it is an extremely difficult situation and I think a miscalculation on either side is really what the region fears a lot and what Iranians fear a lot and it could certainly inflame the situation even more and probably have devastating consequences if that happens.

It does not seem either side wants that kind of escalation, is seeking that. But certainly with all those forces in such close proximity, with these additional American forces also being put into that region, it's really does not seem something that is out of the question right now as those tensions are really high.

Also, of course, with those sabotage incidences taking place --


PLEITGEN: -- as well -- Rosemary,

CHURCH: Certainly the question of a possible miscalculation is the big concern here. Our Fred Pleitgen with that live report from Tehran at 10:45 in the morning, many thanks.

We will continue tracking events in the Middle East and the Strait of Hormuz, what reports of sabotage could mean for global oil prices. We will take a look at that.

And a new report it says that millions of North Koreans could starve without assistance from the outside, we will look at efforts to get that assistance to those who desperately need it.

And Hungary's strongman visits Washington. Why critics are blasting President Trump for hosting Viktor Orban.


TRUMP: Probably, like me, a little bit controversial but that's OK. That's OK. You've done a good job.





CHURCH: The encrypted messaging service WhatsApp is under attack and more than 1.5 billion users are being told to update their apps for safety. The company that is owned by Facebook announced Monday they have discovered a vulnerability that could allow hackers to install spyware on users' phones by calling them through WhatsApp.

A company spokesperson put it this way, "We believe a select number of users were targeted through this vulnerability by an advanced cyber actor. The attack has all the hallmarks of a private company reportedly that works with governments to deliver spyware that takes over the functions of mobile phone operating systems."

CNN spoke to a security expert who explained just how the hack worked and who likely ordered it.


HEMU NIGAM, INTERNET SECURITY ANALYST: What we know so far is that all signs of using this exploit is probably by intelligence agencies or government actors. We don't quite know who built the exploit but we have identified it. But what we do know is that this is something that affected all the

WhatsApp users out there who have not already installed a temporary fix that once they had notified but now it's actually being deployed everywhere.

But 1.5 billion people are affected by this. So everyone needs to, all your viewers need to, if they are on WhatsApp, upgrade immediately because the upgrade will have the fix to it.

The type of exploit that has been used here --


NIGAM: -- is actually a very common one. And for a company that had been showing off in a positive way, that there is an encryption, I see all sorts of articles that say you can never break something like this unless you actually have physical code of the telephone where WhatsApp is installed.

But in this case, all you had to do was make a phone call that is connected to WhatsApp and it would work. The exploit takes over. It's called a buffer overflow, if anyone wants to Google search it, they can. But it's a very longstanding exploit.


CHURCH: Donald Trump loves his dictators. On Monday he welcomed Hungary's prime minister Viktor Orban to the White House. It is the first time that he's met face to face with the U.S. president since 1998. The two share a nationalist vision with a strong distain for immigrants.

The White House says that President Trump is trying to engage with Central European nations to counter Russian and Chinese influence.


TRUMP: People have a lot of respect for this prime minister, he is a respected man, I know he's a tough man but he is respected. He is done the right thing according to many people on immigration and you look at some of the problems that they have in Europe that are tremendous because they haven't done in a different way than the prime minister, highly respected, respected all over Europe. Probably like me, a little controversial but that is OK, that is OK. You have done a good job and you have kept her country safe.


CHURCH: The European Union calls Mr. Orban "a systemic threat to the rule of law." His critics say he stripped away press freedoms and worked to silence opposition. CNN's Atika Shubert has more.


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.


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.


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.


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.


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.


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.


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.


CHURCH: A longtime leader in Palestinian politics says she has been denied a visa to enter the United States. Hanan Ashrawi is a member of the executive committee of the Palestine Liberation Organization. She has been a vocal critic of the Trump administration.

In a tweet she wrote, "It is official, my visa application has been rejected. No reason given."

The U.S. State Department would not confirm or deny that her visa had been rejected but says it does not refuse visas based solely on political views if they are lawful in the United States.

North Korea is demanding --


CHURCH: -- that the U.S. return a cargo ship it seized for breaking U.N. sanctions. The U.S. says that the ship was hauling coal from North Korea to sell in other countries, including China.

Pyongyang says the seizure is counter to the deal signed by Donald Trump and Kim Jong-un in Singapore last year. They will keep a sharp eye on U.S. behavior going forward.

Well, as many as 10 million North Koreans could right now be at risk of starvation. That is according to a new U.N. report but as CNN's Paula Hancocks reports, the U.S. and other countries may want to be cautious about sending help.


PAULA HANCOCKS, CNN CORRESPONDENT: North Korean farmers prepared the land for rice planting. A staple free in the country. This footage was filmed last month, by the United Nation World Food Program, one of the few aid groups allowed to operate in North Korea.

It is morning, but the recent climate conditions bring 40 percent of the population are now in need of urgent food assistants.

NICOLAS BIDAULT, ANALYST, WORLD FOOD PROGRAMME: What is clear is that the succession of about the drought, heat wave and floods this year has bad impact in the crop collection.

HANCOCKS: The report from WFP and the U.N.'s food and agricultural organization says those most at risk are young children and pregnant women. They warn families being forced to cut meals or eat less. It is a warning that is being heard in the highest levels. President Trump spoke by phone to South Korean president Moon Jae-in last week and supported the South's desire to send humanitarian aid.

MOON JAE-IN, PRESIDENT OF SOUTH KOREA9through translator): We would have the effect of cracking opened the door form the current stalemates in talks. President Trump expressed the total support on their regard.

HANCOCKS: This despite North Korea's suspected short range ballistic missile tests earlier this month. A violation of U.N. resolutions.

South Korea's unification ministry says they are working on a plan to send aid, bit no specifics yet. For some experts concerns of food and security may be valid, but the extent of the crisis is unclear.

UNIDENTIFIED MALE: Something bad is definitely happening. However they should also keep in mind that food prices at free market, free food prices are stable. And it sort of does not agree this idea of famine just about to erupt.

HANCOCKS: WFP has 11 supported food factories in North Korea and provides nutritional assistance to some 770,000 malnourished women and children. Its report is based on information gathered during the assessment in country last month and in late 2018, the WFP does acknowledge it some data is provided by North Korea itself, experts fear that. It could be open to manipulation.

The U.S. has been skeptical of humanitarian aid from North Korea in the past, because they say that Kim Jong-un is perfectly capable of feeding his own people, he just chooses to divert millions of dollars into his nuclear and missile program. The Trump softening of that stands could signal a return to aid shipments as an incentive for Pyongyang to come back to the negotiating table -- Paula Hancocks, CNN, Seoul.


CHURCH: We will take a short break here. But still to come Beijing retaliates in the escalating trade war with Washington. A closer look at who is paying the price on tit-for-tat tariffs.

Plus China tariffs and oil prices: how global markets are reacting with the trade war and alleged sabotage in the Middle East. We will be back in a moment.

(COMMERCIAL BREAK) [02:30:49] ROSEMARY CHURCH, CNN INTERNATIONAL ANCHOR: Welcome back, everyone. I'm Rosemary Church. I want to update you now on the main stories we've been following this hour. Hackers have targeted Facebook WhatApp messaging service. The company announced Monday that they have discovered a vulnerability that could allow hackers to install spyware on user's phones by calling them through WhatsApp.

Whatsapp says the security issue has been fixed but it's warning more than one billion users to update their accounts for security purposes. Iran is said to be on the agenda as the U.S. Secretary of State meets with Russian President Vladimir Putin. Mike Pompeo's Russia trip comes as the UAE and the Saudi Arabia say that ships was sabotage near the Strait of Hormuz. The U.S. has sent extra warships and bombers to the Middle east citing an Iranian threat.

Well, U.S. stocks plunged in response to China's retaliatory tariffs but President Trump remains confident the trade war will be resolved. He said he will meet with Chinese President Xi Jinping next month at the G20 Summit. For more on this, David joins us now from Beijing. He is the Beijing Bureau Chief for The Economist. Thank you so much for being with us.


CHURCH: And in response to U.S. hikes in tariffs on Chinese goods, Beijing retaliated as we saw with tariffs of its own, now President Trump says that he will apply additional tariffs on everything. Where is all of this going do you think?

RENNIE: Well, I think it is important to realize that the way that Donald Trump describes this when he tweets out this kind of -- sort of work rise and when he actually speeches is really misleading. He makes it sound as if America is one kind of castle or fortress and China's another. So throwing projectiles of each other. But actually the world is made up of supply chains and you have American companies making a ton of stuff in China and then shipping it back to the states.

And that's the problem with this tariff. When Donald Trump says as he did in his latest tweets that China is going to be very badly hurt because Donald Trump has the power to -- if you like, frighten foreign companies out of China and somewhere else. It just doesn't work like that. If you see if a company like General Motors, they sell more cars in China than they do in America.

China is an enormous market for Apple. When Apple makes an iPhone in China and ships it to the States, actually China doesn't get that much the price that it gets by $8.00 of that $600-price tag goes to Chinese companies. So these ties of globalization, they're very complicated and it's not like just being able to punish China by levying a tariff, quite above from the fact that tariffs were tax that will ultimately impart, be paid American shoppers when they pay higher prices.

CHURCH: Yes. And of course, I want to talk about that but first, President Trump insists he is optimistic, this dispute, this trade war can be resolved but that certainly not how investors are failing, is it? What's making Mr. Trump so confident right now that this will all be worked out? What's his negotiating plan do you think?

RENNIE: I think there is quite a dangerous dynamic in the markets, which is that they're very complacent, they think that a deal could be -- could be done quite easily and the idea is that that Donald Trump is desperate to keep the stock market in good state in the states that he looks at as a barometer of his success as a kind of businessman president. And so he will cave. Certainly that's the view of Asian investors and I think that was partly the view of the Chinese government that they thought that Donald Trump was more vulnerable.

And on the other side, I think there are people around Donald Trump who said some pretty alarming things about how the weak they think the Chinese economy is and how actually America is almost typical -- tip China into recession with a soft touch of its finger. And so, I think both sides have gone into this latest escalation, greatly overestimating their own power and underestimating the resilience on the other side.

I think the thing that's become dangerous the last day also is that you are seeing the levels of nationalist rhetoric by getting much, much sharper here in China. The state media, which is the only media that the Chinese get to see has been really restrain up until now in terms of attacking Donald Trump.

[02:35:06] The last 24 hours, it's taking a much sharper nationalist tone. And that of course reduces the room for maneuver once it becomes a kind of fighter of nationalist pride.

CHURCH: Yes. So, interesting. So you're saying that across Asia, there is a sense that Donald Trump will cave, he hasn't done that, has he? And then on the United States side, they think the economy in China is vulnerable. So if they've readjusted that assessment, where do they go from here?

RENNIE: I think people need to spend a lot more time thinking about the politics, including the domestic politics on the two sides. This isn't for the moment a test of kind of pain and endurance between these two very large economies. The truth is that U.S.-China trade is big, it's $2 billion a day. But it's not overwhelmingly gigantic. I mean, exports from China to America are about four percent of Chinese GDP.

So actually this is going to be a fight about political pain and we're starting to see, you know, Donald Trump saying things about how he can be trusted to handle China in a way that Democrats can't, and that's why he should when next election in 2020. Xi Jinping obviously doesn't have elections here in China but he has domestic politics too. You know, when you see that nationalist reaction how well it's getting down here.

So I think that until now markets have been losing at the economics on the two sides and thinking, both sides have too much to lose, this is too profitable a business relationship. Of course they will do a deal, it's becoming much more sharply and focus, there is actually a political fight with domestic politics to think about on both sides

CHURCH: Yes. As always of course. So David Rennie, thank you so much for your assessment and analysis. Appreciate it.

Well President Trump pledged Monday to provide $50 billion in aid to farmers who were caught in the middle in the America's trade war with China. The deepening battle has angered growers, some of whom voted for Trump who did not spell out specifics.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We love our farmers, we take care of our farmers. Our farmers have been incredible. No country can get in the way of our farmers. Our farmers are great patriots and they've done a fantastic job. So, our farmers are going to be very well take care of.


CHURCH: So how bad is it for U.S. farmers who were trying to make ends meets as the trade war goes on? CNN's Ryan Young went to the U.S. State of Illinois to find out.


RYAN YOUNG, CNN NATIONAL CORRESPONDENT: Jim Schielein says the U.S. trade war with China and the tariffs are decreasing the revenue on his Illinois farm by 30 percent.

JIM SCHIELEIN, SOYBEAN FARMER: It's really hitting us in the pocketbook pretty hard.

YOUNG: Others farmers are much more critical of President Trump.

JOHN WESLEY BOYD, JR., SOYBEAN FARMER: President is playing footsie with China while America's farmers are on the losing end of the stick. And quite frankly I don't know why more mid-Western farmers are not outraged.

YOUNG: The trade wars are taking a toll on farmers, already hit hard by low commodity prices and devastating floods across the Midwest. There has been a wave of farmers declaring chapter 12 bankruptcy. Here in the Midwest, District of Illinois, Wisconsin, and Indiana, the number of those farm bankruptcy case doubled in 10 years according to the District 7 Appeals Court.

Jim says farmers are taking extreme measures to survive including went to buy critical machinery.

SCHIELEIN: You put off equipment purchases, you really tighten the belt on your expenses. This equipment wears out, it's complex.

YOUNG: The hope for some and the farm belt is that the tariff goes away. The trade war ends and farmers are no longer caught in a global crossfire.


CHURCH: And that was CNN'S Ryan Young in Illinois. Well, the impact on farmers is about money of course but the trade war is taking a serious emotional toll as well.


BILL GORDON: Just in our soybean farm, just between what my cost of production was basic zero to break even. Right now come up in our $65,000 just to plant this crop. It's more not to plant the crop, that's the unfortunate part that we need to plant the crop actually, that's a lower loss percentage than not putting the crop in at all. A few years back we had a great market in corn and soybeans and even wheat and different crops.

That is turned in the last five years. We've had an economic downturn, our prices have lowered, we've done a good job of overproducing like we do, trying to raise food. And now with these added tariffs farmers are not getting their lives renewed, the banks are coming in and for closing on their farms and taking their family living away. And it's too much for some of (INAUDIBLE) we've seen an definite increase in suicide rates and depression in farmers in the United States especially upper Midwest.


CHURCH: Bill Gordon is president of the American Soybean Association. Well, the trade war has rattled markets so has the latest sabotage against oil tankers in the Middle East. For more, CNN's Business Emerging Markets Editor, John Defterios is live in Abu Dhabi and joins us now. Good to see you, John.


CHURCH: So let's take a look at how the global markets are reacting to these escalating trade war between China and the United States. What are you seeing?

DEFTERIOS: Well, you know, investors don't like uncertainty and I think it's fair to say that climbing a wall of worry, particularly over the last two months as the trade tensions escalate here. The biggest concern of course is the U.S.-China dispute and that list has now been drawn up of about $300 billion and perhaps tariffs of 25 percent which translate into attacks on U.S. consumers and can slow down growth.

The Asian market reaction is more tepid because the response from Beijing was about one-fifth the level that we see in the United States. Let's take a look at the market reaction, three or four of the major indices are lower but not severe right now. You see that the one index in Hong Kong is down about 1-2/3 percent. A lot of those eight companies are listed from Shinzen on the Hong Kong stock exchange technology company which could be hit.

You see Tokyo is down lower but this is clearly not as bad of what we saw in the United States. Let's give a recap again of the blood bath if you will on Wall Street with that loss of better than 600 points on the Dow Industrials. The NASDAQ composite index again leading with technology company down well over at three percent and that broader index, S&P 500 down about 2.6 percent on the day.

Now, what does this mean? What is the bottom line? There are concerns within the International Monetary Fund, Rosemary, that the second half of the year, we could slow down dramatically because of the trade tensions between the U.S. and China. $34 trillion of combined GDP here and the downgrade from the IMF just over a month ago was to 3.3 percent. This could be the shock that tilts the global economy into a much slower growth rate due to those trade tensions.

And after nine years of recovery from the global financial crisis that we saw in 2008, '09 and then playing out in 2010.

CHURCH: And John, tensions also rising in the Middle East specifically between the United States and Iran. What impact could this ultimately have on oil prices?

DEFTERIOS: Well, you could look at a case where the oil prices shoot up and who would say there is a silver lining from the U.S.-China trade dispute. That's all we saw play out Monday. We had a spike -- this time yesterday, Rosemary of about $2.00 a barrel. And then later in the session when the Dow Industrials went down 600 points in that broad base selloff on the S&P 500, we saw oil prices drop because of concerns on demand of oil.

They're rising but not substantially as you can see here half a percent on crude, above $70.00 a barrel and WTI, the U.S. benchmark is up three quarters of one percent. We'll know more later in the day. There's an OPEC report that will show us how much Iran's output is dropping and that of Venezuela, these are the two countries that the U.S. has been targeting with sanctions. The bigger concern here is that the four tankers that we saw were hit in the Port of Fujairah, in that area in the UAE and the East Coast.

And whether in that reporting you saw from Fred Pleitgen in Tehran where we -- whether we see a further escalation of the tension as the U.S. military hardware comes in to the gulf here and what this could mean for supplies coming out of the Strait of Hormuz which is 20 percent of the global market supply passing through that straight each and every day, Rosemary.

CHURCH: And we'll be watching for that. John Defterios joining us from Abu Dhabi. Many thanks to you as always.


CHURCH: We'll take a break here on CNN NEWSROOM. Still to come. Felicity Huffman makes an emotional appearance in the college admission's court case. We will explain why the Hollywood actress was in tears before a U.S. Federal judge. That's next.


[02:46:27] CHURCH: Gunfire in the Sudanese capital, Monday. Killing a military police officer and injuring a large number of protesters at a pro-democracy rally in Khartoum. It's unclear exactly who opened fire, but the ruling transitional military council blames Monday's violence on groups seeking to undermine what they called the goals of the revolution.

In a separate development, Sudan's public prosecutor office once charges brought against ousted President Omar al-Bashir and others for their alleged ties to the deaths of demonstrators in recent weeks.

And you will, of course, recall al Bashir was removed from power during a military coup last month. A British broadcaster, ITV, has suspended the Jeremy Kyle show and launched a review after a guest died one week after taping an episode. No cause of death has been confirmed, and ITV says it will not air the episode in question.

The daytime tabloid talk show which centers on family disputes is known for its fierce confrontations and its host's combative style.

What's been called the biggest college admission scam in U.S. history, and one of the most famous names associated with it had an emotional day in court, Monday. Actress Felicity Huffman, broke down while pleading guilty to funding an illegal scheme to get her daughter into college. Erica Hill has more.


ERICA HILL, CNN NATIONAL CORRESPONDENT: Felicity Huffman, gripping her brother's hand as she enters Boston's federal courthouse, where the actress pleaded guilty to paying $15,000 thousand dollars to a fake charity to boost her daughter's SAT score.

Telling the judge through tears, she didn't know the scam's mastermind, William Rick Singer was paying others to doctor the test. But, quote, "Everything else they said I did, I did." The criminal complaint includes e-mails and phone calls with Huffman and the scam's mastermind, William Rick Singer. Outlining plans for her daughter to take the test at a specific location with an administrator, Singer had bribed. Her score jumped nearly 400 points from an earlier test she took.

In a statement last month, the actress expressing regret. I am ashamed of the pain I have caused my daughter, my family, my friends, my colleagues, and the educational community. I want to apologize to them, and especially, I want to apologize to the students who work hard every day to get into college, and to their parents who make tremendous sacrifices to support their children and do so honestly.

Her approach, a sharp contrast to fellow actress, Lori Loughlin, who along with her husband, fashion designer Mossimo Giannulli, pleaded not guilty to charges of mail fraud and money laundering conspiracy.

The couple is accused of paying half a million dollars to get their daughters into USC as recruits for the crew team, despite neither participating in the sport. Loughlin, who has been friendly with photographers and fans since the scandal broke is reportedly very concerned about the damage to her reputation. Dropped by the Hallmark Channel days after the scandal broke, her daughter, Olivia Jade, a freshman at USC, lost endorsement deals with Sephora and H.P.

OLIVIA JADE GIANNULLI, DAUGHTER OF LORI LOUGHLIN: I have two major projects coming out.

HILL: Earlier this month, to high-level crisis management execs told CNN, they were approached by the couple for help improving their public image. One telling CNN, it's "Killing Loughlin that her squeaky-clean reputation has done a total 180." Neither took the couple on his client.

[02:50:10] MELISSA MURRAY, PROFESSOR OF LAW, NEW YORK UNIVERSITY: The fact that she's been focused on her career will not look well for the judge. They want to see defendants who are really focused, who understand the gravity of what this all means.

HILL: Loughlin's publicist tells CNN, there is no crisis P.R. team being brought in. Of the 33 parents charged in Operation Varsity Blues, more than a dozen have agreed to plead guilty. Including Devin Sloane, also in court today.

The LA businessman allegedly paid Singer $250,000 to get his son into USC as a water polo recruit though he didn't play the sport. USC fired head coach, Jovan Vavic after news of the scandal broke. He has pleaded not guilty to racketeering conspiracy.


CHURCH: CNN's Erica Hill, reporting there from New York. Time for a short break. Now, when we come back --


HALA GORANI, CNN INTERNATIONAL HOST: A doll is not human by definition. Why do you want to look less human, because a doll is perfect?

KYRHYS DEVOE, INFLUENCER ON SOCIAL MEDIA: I just want to look like my actual photos on Instagram. So, I want to look selfie-ready all the time.


CHURCH: How an obsession with selfies is leading some people to plastic surgery. We'll have that for you when we come back.



DORIS DAY, AMERICAN ACTRESS: Que sera, sera. Whatever will be, will be. The future's not ours to see. Que sera, sera.

(END VIDEO CLIP) CHURCH: The dulcet tones of Doris Day. The legendary American singer and actress has died. Day, was one of the silver screen's most popular leading ladies for two decades. Known as the quintessential girl next door, she shot to fame with films like Pillow Talk, Calamity Jane, and The Man Who Knew Too Much. She passed away early Monday morning. Doris Day had just celebrated her 97th birthday last month.

It is Mental Health Awareness Week in the United Kingdom, and one of the main themes is body image. In a world where sharing selfies on social media is a regular part of life. It's easy to see why that's become such a concern.

Filters and editing tools can give you smooth the skin, whiter teeth, and sparkling eyes with just the press of a button. But as the pursuit of a flawless look gone too far, Hala Gorani takes a look.


GORANI: With almost half a million followers, KyRhys Devoe or Tug-Z to his fans, makes his living through Instagram. Like others in his generation of social media influencers, he's on a constant quest for physical perfection.

DEVOE: We all want to have smooth skin, we all want to have, you know, high cheekbones, we all want to have like frozen faces. We just want to look perfect.

GORANI: KyRhys spends at least an hour editing each selfie using apps like Facetune and AirBrush. He's also part of a new trend which is seeing the snap chat selfie look spillover into real life.

DEVOE: I'm want to be a presto. I want to be a living presto.

GORANI: A doll is not human by definition. Why do you want to look less human because a doll is perfected?

DEVOE: I just want to look like my actual photos on Instagram. So, I want to look selfie-ready all the time.

GORANI: KyRhys even gets regular cosmetic procedures done to look more like his edited selfies.

[02:55:07] DEVOE: I don't want to have any lines. Because I feel like I just want to be a face cream version of myself.

GORANI: Today, he's having filler injected into his smile lines and under-eye area.

DEVOE: It is looking much better already.

GORANI: KyRhys is not alone. Leading plastic surgeon, Dr. Dirk Kremer, says he's noticed his clientele get younger and younger, and edited selfies play a big role in what people ask him for.

DR. DIRK KREMER, PLASTIC SURGEON, LONDON: Most of them come with a phone, with their phone and show me pictures, and that's how I get most likes and most followers. And I noticed, and could we do that in reality? I'm tired of -- you know, modifying -- editing of the picture.

GORANI: And it just gives you a sense -- I show him the selfie I took with KyRhys. He edited the picture, I showed the doctor the before and after.

KREMER: Nasolabial folds are smoother.



KREMER: They -- well, exactly, that's easy to do.


GORANI: With filler.

KREMER: With filler.

GORANI: This obsession with personal appearance that selfie culture encourages may have darker implications for mental health.

DR. BRUCE CLERK, PSYCHIATRIST: In those people who have that psychological vulnerability, it can be particularly concerning. They are constantly bombarded with the image and constantly referencing their own image.

GORANI: At its most extreme this fixation on appearance can manifest in a mental health condition known as body dysmorphic disorder or BDD. For people like Alanah Bagwell, BDD can be completely debilitating.

ALANAH BAGWELL, RECOVERING FROM SUFFER OF BODY DYSMORPHIC DISORDER: Bradley left the house, I was stuck in a dark room, curtains closed, sleeping most of the day, I wouldn't let my family see me. Have to bring food to the door.

GORANI: Alanah, says although selfies didn't cause her illness, the hours she spent taking pictures of herself exacerbated her condition.

BAGWELL: I felt that I looked so disgusting and deformed and monstrous, that I just wished to be normal. So, I post selfies in the hopes of this sort of reassurance from other people. And when you hate the way you look, that can lead to you taking 100s before you find the perfect one.

GORANI: Our collective obsession with social media can be a very innocent and fun experience. But we are only just beginning to understand the potential mental health impacts on this selfie generation. Hala Gorani, CNN, London.


CHURCH: In pursuit of perfection. Thank you so much for joining us. I'm Rosemary Church. I'll be back with another hour of news in just a moment. You're watching CNN. Do stay with us.