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China Slaps New Tariffs On U.S. Ahead Of Trump's G7 Trip. Aired 10-10:30a ET
Aired August 23, 2019 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JIM SCIUTTO, CNN NEWSROOM: A very good Friday morning to you. I'm Jim Sciutto in Washington. Poppy Harlow is off today.
We are following breaking news this morning. No end in sight for President Trump's trade war with China. In just the last hour, China has announced it will impose new tariffs on $75 billion in U.S. goods. It comes as we wait to hear from the Fed Chair Jerome Powell at any moment. He is speaking at an economic forum in Wyoming. Will he announce interest rate cuts as he faces major pressure from the White House?
Let's got to CNN Business Correspondent Alison Kosik. Tell us what these new tariffs mean for the U.S. economy.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Okay. So those new tariffs are sort of a slap-back at the Trump administration for its final round of tariffs on the remaining Chinese goods of $300 billion in Chinese goods that come into the U.S. Those tariffs are a 10 percent tariff going into effect on September 1st and December 15th.
So in retaliation for that, China went ahead and announced its own tariffs on $75 billion of U.S. goods, a tariff anywhere from 5 to 10 percent. It's also going to reinstate a 25 percent tariff on automobiles that it imports from the U.S.
So that is happening in the background, because what's happening center stage besides stocks here falling a bit, is that meeting going on in Jackson Hole, Wyoming. This is where central bankers from around the world, where economists are gathering for a big conference to talk about global economies, to talk about monetary policy.
And taking the stage right about now, we're expected to hear from Fed Chief Jay Powell. And in his prepared remarks, he basically stopped short of giving any indication how the Fed is going to act in September at its next meeting, whether or not it's going to cut rates or leave rates where they are.
And that could come much to the chagrin of the Trump administration, which as you know, President Trump has had a constant drum beat on Twitter, hammering Fed Chief Ray Jowell like a pinata, also in front of the mics as well. Listen to this.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT: Jay Powell and the Federal Reserve have totally missed the call. I was right, and just about everybody admits that. He raised interest rates too fast, too furious.
People have said I was right. They were wrong. The Fed is often wrong. We don't have a Fed that knows what they're doing so it's one of those little things. But if we had a Fed that would lower rates, you would have a rocket ship.
But he's my pick and I disagree with him entirely.
We have a gentleman that likes raising interest rates in the Fed. We have a gentleman that loves quantitative tightening in the Fed. We have a gentleman that likes a very strong dollar in the Fed.
(END VIDEO CLIP)
KOSIK: Okay. And just so you know, an hour before Fed Chair Jay Powell went ahead and started his speech, guess who ribbed him one more time? President Trump going on twitter saying, now, the Fed can show their stuff. So trying to one last ditch effort to push Powell to go ahead and say something and he's not saying something just yet. It doesn't mean that the Fed won't act or cut rates or do anything in September. It just means they're not saying anything now.
SCIUTTO: Well, business leaders say it's not the Fed that's key. They say it's the China trade war, uncertainty about Chinese markets. So that focus is not backed up by the business leaders themselves. Alison Kosik, thanks very much.
Breaking this morning as well, another escalation, as we were saying, in the U.S.-China trade war, those plans to announce those new tariffs, $75 billion of goods. The president is just on his way to the G7 summit. He will depart this evening in France. Countries there are also worried about the implications of the trade war.
I'm joined now by CNN's Beijing-based Senior Producer, Steven Jiang. So tell us, Steven, how these tariffs will play out in China. 10 percent on American goods, many of which have big markets in China, will that immediately lead to a reduction in those sales of U.S. goods in China?
STEVEN JIANG, CNN SENIOR PRODUCER: Well, Jim that, we have to wait and see. But I think nobody is surprised about these announcements because the Chinese officials and state media have been saying for weeks that they will retaliate once Mr. Trump announces his decision to impose new tariffs on $300 billion of Chinese goods.
Now, this, of course, is going to cast a huge doubt over the ongoing trade talks between the two countries. Remember, the next round is supposed to take place in Washington in September. And one of the Chinese conditions for any trade deal is removal of any existing American tariffs. Now, with this escalation of both tariffs and counter-tariffs, it's difficult to see them reach any agreement.
Another thing to note, Jim, is how the Chinese tariff, at least in terms of the amount, $75 billion is not matching the American tariffs dollar for dollar. That is because China imports a lot less from the U.S. than the other way around. So this is worrying a lot of people here because this could mean the Chinese government will impose other non-tariff barriers on American business here.
For example, one thing that's been talked about a lot here is their intention to launch a non-reliable entity list. That's a blacklist against foreign companies that the Chinese government says that's been harming Chinese consumer and national interests. And FedEx, for example, is a company that's been mentioned a lot. So this is an escalation. It's really worrisome to a lot of people, Jim.
SCIUTTO: And you make a good point there that they have other measures that they can impose. Steven Jiang from Beijing, thanks very much.
CNN's Sarah Westwood is live at the White House. Reaction yet to these new tariffs by China? You know, Peter Navarro, the president's adviser on in the last hour claiming again, like the president, this is all about the Fed. We know that U.S. companies see differently. How does the White House see it?
SARAH WESTWOOD, CNN WHITE HOUSE REPORTER: Right, Jim, this is another wrinkle in the White House's efforts to calm fears of economic strain. We heard Peter Navarro try to downplay this and we've asked the White House for an official statement about the tariffs. We haven't quite heard back yet.
But recall that last week, President Trump did delay the imposition of additional tariffs on some Chinese goods, delayed them until December. But that was not necessarily an olive branch to China. That was, in fact, something that the president did largely because he was afraid of how those tariffs could potentially affect Americans during the Christmas shopping season. That's what sources told CNN at the time.
And those were tariffs that he decided to move forward with earlier this month after a period of relative calm over the summer. Recall that in June, President Trump indefinitely suspended the implementation of those new tariffs because he wanted to give those U.S.-China trade talks some breathing room. That was when he last sat down with Chinese President Xi Jinping in Japan at the G20 summit.
They said the talks were restarting. But, clearly, they have hit a snag here, the administration not seeing the results that they want to see from the U.S.-China trade talks. And this is all happening against the backdrop of the president and his aides and allies working overtime to try to reassure U.S. consumers and investors that the economic growth Trump has enjoyed the first two years of his presidency is not slowing down.
That effort also involved President Trump throwing out the idea of cutting taxes again only to walk it back a day later. So a lot of mixed messages coming from this administration on the economy as China implements these retaliatory tariffs, Jim.
SCIUTTO: Sarah Westwood, thanks very much, at the White House.
Joining me now is Sabrina Siddiqui, she's White House Correspondent for The Guardian, and Wesley Lowery, he's a National Reporter for The Washington Post.
So, Sabrina, the White House has, it often does, trying to create its own reality here to say that the economy is just fine. But we know that there is genuine concern inside the White House because the president's own advisers are presenting him with a menu of possible steps he can take to lessen the blow to the economy. What are you hearing about what those options are and the level of concern in the White House?
SABRINA SIDDIQUI, CNN POLITICAL ANALYST: Well, the president himself has flirted with the idea of a potential payroll tax cut, even though administration officials said that that's not part of the plan. He is looking at other possibilities in terms of slashing tax rates to boost the economy.
SCIUTTO: Can he do that without Congress, payroll tax cut?
SIDDIQUI: He would need likely approval from Congress. And, frankly, it contradicts the notion that the economy is doing just fine. Even if you look at the delaying of the implementation of those tariffs until December, it was designed -- it was a move that was designed to protect U.S. consumers around the holiday seasons, because despite what the president had said, prices were projected to rise.
He also has given, I think, billions of dollars in emergency funding to U.S. farmers, because the reality is that the brunt of these tariffs have been born by the U.S. agricultural and manufacturing industries, as well as U.S. consumers.
I think, ultimately, it's hard to overstate just how important the economy is to the president's re-election. That has really just been the one area where he has received high remarks from the public in an otherwise polarizing presidency. And so it does complicates his re- election message if there is a fear over an economic downturn.
SCIUTTO: Yes. I mean, you can tell him all you want, but if people start to notice their pocket books being affected, they can't ignore that.
Wesley Lowery, the White House's intention here is to focus all the fire on the Fed. Peter Navarro here didn't want to talk about the trade war. He wanted to talk about how this is all the Fed. That's not what business leaders say and you can see that even in the Wall Street Journal. I mean, it's calling this the Navarro Recession.
Is the White House trying to by focusing on the Fed to get a cut that they think will be material or are they trying to shift the blame for the slowdown?
WESLEY LOWERY, CNN CONTRIBUTOR: I think they're certainly trying to shift the blame, all right? And I think that -- and I'm not sure that this is going to be a winning political strategy for the White House. At the end of the day when you get to actual kitchen table issues, your average voter, because, again, this timing is particularly perilous for the president, right? The Democratic race is kicking up. There's now a bunch of discontent among the Republicans. Should they run someone against him? What exactly is going to happen?
And for any number of Americans who aren't like us, aren't obsessed with politics or economics all day, and they've said, look, has Trump really been that bad? Sure, he Tweets bad things but things haven't gotten worse for me day in and day out. If they're suddenly concerned, people are throwing around the world recession, people are talking about potential downturn, that is the type of thing that's going to turn people on their access, right, folks who were fine with this president or just didn't really care or apathetic one way or the other.
People remember the early 2000s. People remember the downturns in the recessions. They remember the unemployment and layoffs, right? And the idea that this businessman president might oversee an economic downturn is going to be something that has the potential to lose a lot of support for Donald Trump, and thus he is trying to pivot this way and blame the Fed for it.
SCIUTTO: The president leaves tonight for the G7 in France. What kind of meeting of the allies? Will this be similar to past G7s, which where there was a lot of drama and not a lot of action?
SIDDIQUI: In our conversations at The Guardian with representatives of some of the other foreign leaders who participate in the summit, what's telling is that they sort of look at President Trump as the grumpy uncle who comes into these meetings complaining about one thing or the other. You don't know how he's going to react. You don't know what his mood is going to be. And so this is essentially become, for them, an exercise in damage control and trying to mitigate any fallout depending on when you think about last time where he had a big row with Justin Trudeau, the Canadian prime minister.
I think it's become clear that this concept of the G7 representing the solidarity of the western nations is increasingly precarious under Trump is not on the same page on issues like trade, climate change. I don't think you'll have these sweeping joint commitments, as they have been in years' past. And he's coming to this meeting talking about reinstating Russia, which is something that the other participants, the other members of G7, are frankly against.
SCIUTTO: Why is the president talking about reinstating Russia when the reason that it was kicked out has not changed one iota? They've invaded and annexed Crimea in Ukraine. They still have troops on the ground in Eastern Ukraine, that's they were kicked out. Why is the president raising this?
LOWERY: Frankly, there's a temptation to try to make this about some type of deep policy decision. The reality is President Trump likes people who like him.
And what has been true from the very beginning has been that the Russians and the Russian administration has been very kind to President Trump. Many might argue so much so that they influenced our elections to try to get him to become the president of the United States. And he has shown time and time again a desire or a willingness to embrace Russia, to embrace Prime Minister Putin. If only because he feels sensitive over the fact that people are arguing that he is the president because of their interference.
And so, certainly, this type of campaign to bring Russia back into the G7 is not something that's going to win him friends at this assembly. And I agree with Sabrina. I think that this is going to be another case of your uncle who is a little out there showing up to Thanksgiving and everyone trying to make sure he doesn't ruin the meal before you get to --
SCIUTTO: Yes. Well, this is one very powerful uncle at Thanksgiving. Wesley, Sabrina, great to have you on. I hope you have a good weekend.
Still to come this hour, will the president's unpredictable diplomatic style work with world leaders at the G7? I'm going to speak with a former U.S. diplomat who has some experience with these things.
Plus, more than a dozen presidential candidates will be in San Francisco today for the Democratic National Committee's summer meeting, but one of them is expected to use his time on stage to pull out of the race.
And a special daycare opens for babies exposed to opioids. How West Virginia is trying to overcome the epidemic sweeping through the state.
SCIUTTO: The news this morning, China announcing $75 billion in new tariffs on U.S. goods. This makes them more expensive in China and can affect U.S. exporters, companies, employers here in the U.S.
Joining me now to talk about what this means, Max Baucus. He's the former U.S. Democratic Senator for Montana, also former U.S. Ambassador to China. Ambassador Baucus, thanks so much for taking the time this morning.
MAX BAUCUS, FORMER U.S. AMBASSADOR TO CHINA: You bet, Jim.
SCIUTTO: So China has doubled, tripled down, you can say, on the trade war, $75 billion, after the president notably backed off another round of tariffs as we head into the fall.
In your view, and you've spent a lot of time in China, who is winning this trade war?
BAUCUS: Frankly, nobody is winning. I also frankly think the U.S. is losing even more than is China. The Chinese are very tough. Chinese understand and respect strength more than any other people I've ever encountered and they sense weakness. And I think that they see a weakness in the United States today. Trump has weakened because of the weakened American economy and they're retaliating against the tariffs that Trump imposed after there was a truce there would be no tariffs. So nobody is winning, but I think we're winning even less.
SCIUTTO: You know China as you say. You've been there. You've dealt face-to-face with Chinese leaders. The Trump strategy here, as he uses on many things, even with U.S. allies, is a cudgel, right, a cudgel of tariffs to pressure China into concessions. Is that a kind of pressure that Chinese leaders accept, that they respond to?
BAUCUS: Frankly, I think that the Trump policy of America first and enacting tariffs on lots of products, not just from China, but from other countries, even our allies into the United States, is really becoming America isolated. It's not America first, it's America isolated. We're hurting ourselves. And the only way to address the legitimate complaints we have against China, protectionism, et cetera, is to work with our allies. We have to.
China is very, very good at dividing and conquering. They know how to pick apart different countries and set them off against each other. They know how to pick different industries in the U.S. against each other. They're very good. We have to have a strong leader in America who unifies our country and unifies other countries to work with us.
SCIUTTO: So in this environment, President Trump will leave this evening for the G7 summit in France. He, as you noted, has not just picked trade fights with adversaries or competitors, such as China, but with strong close U.S. allies, Germany, Canada, Mexico, you name it. How do those allies see the U.S. trade war? Do they see it as damaging themselves, the alliance, the world economy, and do they communicate that to the president?
BAUCUS: I think, frankly, they see the United States imposing self- inflicted wounds. I think they smirk when they think of the United States president, they think, what the United States is doing, picking fights against not only European allies, but China, the second largest economy in the world. They'll be fairly direct. Macron will probably be fairly, Boris Yeltsin, a little less so, and Merkel probably be a bit direct.
But the real question is how much effect does that have on President Trump. I don't know that it does. He is his own person. He's narcissistic in a way. He will just do what he wants to do irrespective of advice he's getting not only from European leaders, but advice from his own economy advisers. It's a problem.
SCIUTTO: An issue that is central to European-U.S. national security, also China, and an issue I know you dealt with in your role as ambassador to China, of course, is North Korea, its nuclear program. The president has staked a lot of political diplomatic capital on those negotiations, continues this friendly bromance-like relationship with Kim. Meanwhile, North Korea has, according to U.S. intelligence, continued to expand its nuclear program. Is the Trump approach to North Korea failing, in your view?
BAUCUS: I think it is. I don't think that it ever really was an approach. To be honest, I think it was the bromance of President Kim taking advantage of the opportunity to raise his profile by meeting with President Trump. There's no back groundwork done in advance. There's no spadework done in advance. A treaty we may or may not have with North Korea, that is getting North Korea to denuclearize is extremely complicated. It's extremely complicated. And just haven't done the work necessary to get the result.
And I'll also add to that, President Kim is going to keep his whole card, which is his missile and nuclear capability. And it's going to be extremely hard for him to back off. And he'll only back off if we work with China. There will be no agreement on the peninsula unless it's acceptable to China. China is right next door. They're not going to let anything happen that China does not like. Therefore, we have to work with China.
Look, this is not rocket science. We have got to get along better together. We've got to work together but we've got to be respectful of each other and not let China take advantage of us, just as we should respect China.
SCIUTTO: There's a theme there, just hearing our comments on Chinese leaders sensing weakness in Trump, on European leaders opposed to Trump's vision of the world and on North Korea, in effect, taking advantage of these negotiations.
I wonder just, again, based on your experience as senator and as ambassador, is it your view that these world leaders respect the U.S. president?
BAUCUS: Well, you have to ask them whether they respect our president or not. If you read the tea leaves and if you listen to the words as well as the music, I think they probably do not respect our president as much as we would like them to respect our president.
SCIUTTO: Right. Well, that's a sobering thought. Ambassador Max Baucus, thanks so much for joining the program this morning.
BAUCUS: You bet. Good luck, Jim.
SCIUTTO: Well, one Democratic hopeful is about to announce that he is exiting the race for the White House. Could others in a very crowded field, still crowded field, follow suit?