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China To Impose New Tariffs In US Goods; Trump Scrambles, Meets With Trade Team After China Retaliation; Economic Pressure Mounts On Trump Amid Retaliation, Red Flags; Putin Orders Military Response To US Missile Test; Russia Blames Radioactive Exposure On Fukushima Crabs. Aired 1-1:30p ET

Aired August 23, 2019 - 13:00   ET

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

[13:00:00] JULIE HIRSCHFELD DAVIS, CNN POLITICAL ANALYST: Do what you have to do, politically, do what you have to do. But my position is it's not happening right now.

JOHN KING, CNN HOST: Now the next chapter starts. Thanks for joining us today in "Inside Politics", have a great weekend. Brianna Keilar starts, right now.

[13:00:20] BRIANNA KEILAR, CNN HOST: I'm Brianna Keilar live from CNN's Washington headquarters. Under way right now, trouble brews as the President prepares to depart for the G7 summit. First, the Chinese sense weakness, slapping new tariffs on the US as economic fears grow.

Then, an angry Vladimir Putin vows a military response to a US missile test. This as Russia appears to cover up the nuclear accident involving its own missile test, one of the worst accidents since Chernobyl. Russian officials now reportedly saying the radioactive material found in human tissue after that mystery explosion is due to "workers eating Fukushima crabs while on vacation." And as the burning Amazon rainforest becomes a global disaster, Brazil's president tells the world "mind your own business."

It's been a week of red flags on the economy and now the President has tossed a hand grenade into the stock market. This started with China announcing retaliation tariffs on everything from coffee to car parts, to wheat and whiskey. The markets took the news pretty well.

But a short time ago, President Trump tweeted his anger at China, saying things like we don't need China and urging American companies to look elsewhere for trade partners. The market reacted dramatically to that.

Now, remember, that this is all coming just as the President prepares to leave the country this evening. He is heading to France for the G7 Summit where testy relations and fresh disagreements with top US allies will be on full display.

The President also tweeting that he will be responding to China's tariffs this afternoon, so we should be expecting that at any moment and will bring that to you. Alison Kosik is our Business Correspondent. She's in New York. And Abby Phillip is at the White House. And I want to start with you, Abby. Who is the President meeting with right now?

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Well, Brianna, the President is meeting at the White House right now with his trade team as they scramble to figure out how exactly they will respond to this announcement that China is going to slap new tariffs on American goods.

Now, the President has been talking pretty tough on social media all morning, basically saying that he wants the United States and their companies to move away from using China. He's saying he's ordered American companies to find other trading partners. But it's not clear that he even has the power to do that.

The President also says the United States doesn't need China. But, you know, I think markets, based on what they're doing right now, will probably disagree with that.

And as all of this is happening, Brianna, President Trump continues to attack the Fed Chairman, Jay Powell, implying in a tweet this morning that he's not sure who is our enemy, whether it is Jay Powell or Xi Jinping of China, so a lot of tough words from President Trump. But as of right now, we still don't have any indication of when President Trump might speak and what he might say.

Will he give an actual statement and will that be a statement that calms markets or continues to roil them? Based on his tweets this morning, it seems that President Trump is in a fighting mood. Brianna?

KEILAR: All right, Abby, thanks so much. And, Alison, let's take a look at the Dow because right now it's down nearly 500 points, how quickly did the markets start responding to the President's tweets?

ALISON KOSIK, CNN CORRESPONDENT: It was almost immediately, Brianna. Right now, actually, stocks are at session lows or at least close to them. And we did see the markets react in tandem every time President Trump, you know, put out yet another tweet and another tweet in his really massive and stunning tweet storm today.

The one that really is rattling the markets is the part about what President Trump is going to do in response to the retaliation from the new China tariffs against US imports. That is what the market is waiting on. That is what investors are telling me is the wild card here.

And it's that uncertainty that's causing the sell-off that you're seeing. You know how much the market hates uncertainty. And that's exactly what this trade war is breeding, is more and more uncertainty because it's growing more and more intense. And that is why we are seeing the sell-off today.

In addition, the tweets against Fed Chief Jay Powell certainly not helping, the expectation that the President had that Fed Chief Jay Powell was going to ahead and make some sort of rate decision or announce some sort of coming rate decision, that rattled the market too because it's unusual for that expectation to even be there.

Because historically the fed doesn't make rate decisions at that Wyoming meeting that is going on this afternoon. They wait for their actual meeting, which is happening -- the next one happening September 17th and 18th when there is an expectation that the fed will move on rates in some way. But it's rattling the market to see the President get so upset at the Fed Chief, that he didn't take action today, which would be historically odd, to say the least. Brianna?

[13:05:03] KEILAR: To say the least, Alison. And, Abby, back to you, do we have any indication before this tweet from the President that he was planning to announce anything about China today?

PHILLIP: No, Brianna. His schedule was almost virtually clear, save for a lunch midday that he had with the Secretary of State before he leaves tonight at around 10:00 pm for the G7 where he is going to be in France.

So the President had a completely open schedule today, and there was no indication. Even as we speak right now, there is no indication from the White House about what form the President's comments might take. Will he actually speak to reporters, will he be in a venue where he might be able to take questions or will they release some kind of paper statement.

I think there's a really big distinction between those two things because if President Trump is the one using his own platform to say something about this, will he be on script, will he go off script, and can the White House really expect that whatever he says will not make matters worse.

As Alison has been just been describing, you know, investors clearly have been hanging on every word President Trump is saying, will he actually appear before cameras today is very much an open question.

KEILAR: All right, Abby, thank you so much. Alison, thank you.

Austan Goolsbee was Chairman of President Obama's Council of Economic Advisers. He's currently an Economics Professor at the University of Chicago's Business School. And he's joining us along with Maya MacGuineas, the President of the Committee for Responsible Federal Budget.

OK. So, Austan, Jerome Powell, not mentioning anything about rate cuts, no hints at all. We heard Alison explain maybe why but considering this environment right now, what do you make of this?

AUSTAN GOOLSBEE, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS UNDER OBAMA: I mean, the President of the United States tweeted out that the head of the Fed, a man he appointed, is an enemy of the state. Let's just take a step back. Nothing like this has ever happened in US economic history.

It's crazy. And it's not even the lead story. So I think everybody should just take a pause here and recognize this is uncharted territory and this is not a comfortable place for us to be.

KEILAR: Yes. He put out a tweet basically saying who is more a foe of the US, is it Xi Jinping or is it the Fed chairman. Keeping that in mind and knowing that the Fed chairman, Maya, is in a weird place because he's got this incoming from the President that a Fed chairman doesn't normally have, what are his options?

MAYA MACGUINEAS, PRESIDENT, COMMITTEE FOR RESPONSIBLE FEDERAL BUDGET: Yes. This is uncharted both kind politically having your own President being very aggressive in the face of the Fed chair, and also what's going on in the economy structurally.

So we are going through major shifts in the economy after a very long expansion. It is not unlikely we'll head into a recession. But at the same time we're seeing different things going on in terms of inflation and interest rates than we normally would have expected.

So the Fed is balancing a lot of different things to try to work out. And then to have the President, both being very aggressive, but also creating an incredible amount of uncertainty because of the interactions with China.

So we never know what's going to happen from day to day in terms of these negotiations. But we do know, I guess one piece of certainty is that this trade war and these tariffs are going to decrease economic growth. We've already seen that they're probably going to bring growth down by a couple percentages point -- couple times of a percentage point.

So the Fed is having to balance what it wants to do if we go into a recession, preemptively, from a recession, and changes in the political and policy environment day to day. I don't think anybody has been juggling this many balls when the economy wasn't in recession before. There's a lot to manage.

KEILAR: The President's opinion isn't really supposed to sway the Fed chairman, Austan. But is it possible for him to keep that out of his mind as he goes about his work?

GOOLSBEE: I don't know, but I think the irony here is the more the President publicly says do as I say, the more the Federal Open Market Committee and Jay Powell in particular, kind of have to resist a little. Otherwise the world looks and says, "Wait a minute, is the President dictating what's happening?"

If we get -- I mean it seems like we're going into full-blown escalating trade war with China. And it kind of feels like, you remember the scene in Star Wars where they're thrown down the trash compactor and he says, "Well, you know, it could be worse." Then you hear some awful sound and Han Solo says, "It's worse." This is worse.

We had uncertainty but now we have outright damage. And the Chinese have been trying to de-escalate the situation. Now it seems like they're angry and they're going to escalate, and then President Trump is going to escalate back. And you can only think they're going to escalate again. And that's why the market is doing what it's doing. And it's in the context that we're already teetering on the edge of recession. So I've got to say I'm pretty nervous for this moment for us.

KEILAR: And thank you for the Star Wars analogy because that always makes things more clear for sure.

[13:10:05] KEILAR: And thank you for the Star Wars analogy because that always makes things more clear for sure. So I wonder when you look at this tweet of the President's, he said the hereby order tweet. And he's saying that actually American businesses should find other places besides China to buy products.

MACGUINEAS: Yes.

KEILAR: My question is, I think we've seen this when it comes to agriculture too, even as he's buoying the farmers who should be selling products to China. There's a destruction of their market share. This is something that they build over decades. This is something you don't just replace once things cool down a little bit between the US and China. And we're seeing businesses respond kind of saying what, this isn't how we do things. What do you think about the President saying that?

MACGUINEAS: Yes. And again, it's back to certainty. That certainty is the cheapest kind of stimulus that there is to strengthen an economy and we have the opposite of that right now.

So listen, I think and many people think, I believe, that was right to take on China for a number of issues, from unfair trade practices, to security threats, to theft of intellectual property. So this is not something we should be ignoring. But you need a strategy, and you need objectives, and you need transparency about what you're trying to accomplish. And yet, we have a president whose negotiating strategy is chaos and don't let anybody understand what's happening.

So that in no way enables US industry and business to make the longer term decisions which they need. They need to have an environment where they can make investment decisions, production decisions that are based on some sense of where the economy is heading. They have the opposite. That's going to freeze a lot of the opponents of the economy that we need to keep growth going right now.

KEILAR: There's a Washington Post report, Austan, that the President is basically ignoring forecasts and warnings from his own people. So internally, right, not just external indicators, these warnings internally of an economic slowdown. He's pushing ahead with this message the economy is stronger than ever, it's phenomenal.

Is there a sense from you that he is in denial, and what does that mean for the economy?

GOOLSBEE: Yes. Well, it certainly seems that way. And, you know, the gunfighter's credo is, don't pick seven fights while carrying a six-shooter. The President is flying to a G7 meeting. If you were going to confront China, the first thing you'd think is let's get some allies and let's get the whole developed economies of the world to join us. But we've threatened trade wars and sanctions on pretty much all the other members of the G7 that are our allies. So there's very little sentiment of any of the countries of Europe or Canada, or Japan, or anywhere else to go along with the US confrontational strategy.

So I think that's why the President's economic team is advising him, "Hey, let's set some priorities. Let's pick one, you know, if we want it to be about China, let's make it about China and let's try to get other people onboard." And I don't think the President is in a mentality.

If the president comes out in his press conference today, it may be the first throwing off a pit by a president in the Rose Garden live on television.

I mean, you see what he's saying on Twitter is just a stream of angry invectives. We don't need you. I hereby order every company to stop talking to anyone in China for the next 10 years. And it doesn't seem well. I mean, this is a weird moment.

KEILAR: And those companies aren't listening, which is key. What does that mean about where the President is on this? Is he in a strong position? We'll be looking at that.

Austan, thank you so much. Maya, really appreciate your perspective as well.

And if China's retaliation wasn't enough, Vladimir Putin also vowing revenge, ordering his military to respond to a US missile test. Plus, in one of the worst nuclear accidents since Chernobyl, Russian officials reportedly concoct a nutty story to explain how a doctor who treated explosion victims ended up with radiation poisoning. He ate bad seafood, they say.

[13:14:07] And celebrities and world leaders are speaking out as the Amazon rainforest burns and the Brazilian president says "stay out of it."

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KEILAR: Russian President Vladimir Putin tearing into the US during an unusual and unscheduled appearance on Russian-state TV. His anger aimed at the Pentagon's testing of a conventional ground launched cruise missile. This was a test that would have been banned under the now-abandoned INF Treaty with Moscow.

Putin called on his military to work on an equal response to it.

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translation): Given the newly emerging circumstances, I instruct the ministries and relevant departments to analyze the level of threat posed by the actions of the United States to our country and take comprehensive measures to prepare a symmetrical response.

(END VIDEO CLIP)

KEILAR: This is especially concerning following the new language the Pentagon is using to describe Russia's missiles. In the past, the US has only said that Russia has nuclear-capable missiles. Now officials are saying the Russians have nuclear-tipped missiles and they're pointing at Europe.

[13:20:02] We have Senior International Correspondent Fred Pleitgen who is in Moscow. And, Fred, as you watched this news conference, what stood out to you?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I mean, two things stood out for me. On the one hand, Brianna, the fact that Vladimir Putin certainly seemed genuinely extremely angry and really called this press conference at a last minute.

We were on a conference call earlier today with his spokesman, where the spokesman said Vladimir Putin had a meeting with senior security officials here in Russia and he's going to make an important announcement. It was just a couple of minutes later that Vladimir Putin came on and then said that he was obviously very extremely angry about this US missile test.

He essentially said that the fact that the US tested this missile only 16 days after the INF Treaty was essentially killed showed that the US was the one who was driving the killing of that treaty and was trying to blame it on Russia. And then he came and he said that there would be this symmetrical and comprehensive response to that.

Now, without saying exactly what that is, it certainly does seem as though from the words and also from the body language that we saw from Vladimir Putin that the US and Russia at this point in time seem to be a lot closer to a new nuclear arms race than they were before this statement was made.

So the Russians haven't announced exactly what they're going to do, but it certainly seems like they're going to continue to ramp up some of the new weapons programs that Vladimir Putin today also acknowledge that the Russians have been working on for quite a while, Brianna.

KEILAR: I want to ask you about this bizarre story about this mystery explosion at a Russian military test range. This happened about two weeks ago and it caused the deaths of five nuclear experts. And there's a Latvian-based news outlet that quotes a hospital employee is saying that a doctor who treated them or some of them was told that the reason he tested positive for radioactivity, which would be normal if a doctor was treating someone who had radiation exposure, that the reason he tested positive for radioactivity was because he ate seafood contaminated by the Fukushima nuclear disaster. Tell us more about this.

PLEITGEN: Yes. It is a little bit bizarre, but it sort of also fits into the pattern with the aftermath of this explosion. It took place about two weeks ago, Brianna. At the beginning the Russians said, look, there was no spike in radiation after this took place. Then the local authorities said actually there was a spike in radiation. And then that statement was then later removed from their site.

Now, there's a Russian opposition paper that's reporting that two of those five victims that you were talking about who were all people who worked for Russia's atomic nuclear energy agency that they actually died of radiation poisoning.

Now, that's something that has not been officially confirmed. But what the Russians did confirm today is that yes, indeed, one of the doctors who was treating them, that they found cesium-137, a radioisotope inside this man's body.

And then it is true that they did say, yes, they believe that this does not come from the fact that he treated people who were exposed to radioactivity but that it came from eating seafood because he had been on a holiday in Asia, I believe it was Thailand. And they believe indeed that it may have been a crab from the Fukushima region that may be responsible for this.

There is an official statement by the Arkhangelsk authorities, which is the region where this happened where they say that that cesium-137 is something that can happen in seafood and some other foods as well. And they believe that that is the reason why this person was contaminated.

But, of course, from the backdrop of the information that we've been seeing or the lack of information that we've been seeing after this disaster, it is something that certainly does seem strange, to say the least, Brianna.

KEILAR: Yes, considering who he was treating. All right, Fred Pleitgen, thank you so much.

And for more on this, I am joined now by CNN Chief Political Analyst, Gloria Borger, and CNN Military and Diplomatic Analyst, retired Rear Admiral John Kirby, who has served as Pentagon and State Department Spokesman under President Obama.

How much does Vladimir Putin hang over the Trump presidency?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Well, in every which way, and in every way. I mean, Vladimir Putin has hung over Donald Trump ever since he ran for president, when everyone was sort of scratching their heads about why Donald Trump said, you know, I want a great relationship with Vladimir Putin. Why can't I have a great relationship with Vladimir Putin?

And we have the Mueller investigation and the question of Trump Tower Moscow, and the question of the big so-called witch hunt, as the President called it, and the President's campaign aides who spoke time and time again to Russians. Although as we know, there was no collusion that Bob Mueller decided to pursue.

And now in terms of foreign policy, and you can certainly speak to this better than I can, you have Putin rearing his head again. And the question is, how will the President react to this nuclear -- to this testing.

This is a President who has been at odds with his own national security staff, who want to get tougher with Russia. This is a President who pulled out of the INF. Is this a new arms race we have here?

[13:25:04] There's the President just recently said, I want to put Russia back in the G7, make it the G8. So, how is he going to react to this? And that's the question in this presidency we always seem to be asking about Donald Trump and the Russians.

KEILAR: I want to talk about the capabilities of the Russians, Admiral. You have these missiles and the Defense Secretary Mark Esper now says Russia has possible nuclear-tipped missiles and that these are facing Europe right now. So, what is that mean? How serious is this?

REAR ADMIRAL JOHN KIRBY (RET.), CNN MILITARY AND DIPLOMATIC ANALYST: If it's true, and I have no reason to doubt the Secretary of Defense, I mean that's very worrisome. He already had a robust capability in these intermediate range missiles conventionally tipped.

Now, if they're nuclear tipped that just ups the ante that much more for the security of the entire Eurasia continent, and that's one of the reasons why I think, you know, we've now been testing our own version of this.

What worries me, Brianna, is that this -- aside from just being an arms race, it's an accelerant and I worry that however Trump reacts, it's going to just encourage Putin to advance his program that much more quickly. He's already got a head start on this.

And number two, it's a potential accelerant of our allies and partners and some of European nations to acquiesce even more stridently to Putin's continental, you know, demands. Whatever he's trying to do in Europe, they will be less inclined because they don't think they can trust the United States anymore to come to their assistance to just simply (inaudible).

KEILAR: It strikes me that normally with the President heading to the G7 this weekend. In other presidencies, you might think what a great time for the President to be heading to the G7, this issue of missiles with Russia is going to be on the table. He needs to be talking to allies and what a great opportunity to do that. But --

BORGER: But nobody knows how he's going to react and nobody knows what he's going to say. I mean, he has imposed sanctions, for example, on Russia but only because Congress pushed him to it.

KEILAR: Overwhelmingly.

BORGER: But when Kim Jong-un testified some missiles recently, if I recall, the President was like, "Oh, those are nothing. Those are short range, they're nothing. It doesn't really matter." Will he have the same reaction here or not? I don't have any idea. KIRBY: We used to have what we called convening power, you know, and that's what we talked about it at the State Department and that's why meetings like the G7 were important because you could talk about global issues that all of us could agree on, the major industrialized economies.

Now, we, the United States, seem to be the source of the frustration on all these global issues that Macron says he wants to talk about, climate change, Iran, trade. The United States is the provocateur on all these things. And so Trump is going in, in a very chilly -- will have a chilly reception. But what I really worry about is he's simply going to blow up any possibility for consensus and moving ahead.

And all of that is a gift to Vladimir Putin. All of this disunity just makes it that much easier for him to pursue his own interests in Europe.

BORGER: And what he does want to talk about is the global economy because he's worried about the domestic economy, and what he's likely to do, although far be it from me to predict Donald Trump, but what he is most likely to do, I think, is to say to our allies why aren't you doing more? You're ruining us. You're hurting us. This is your problem. You're making a problem for me.

And I think they're worried about that as well because, you know, he is the bull in the China shop and they're afraid of it. And, you know, they're not going to come out with any kind of communique. They're not even going to think about any kind of communique. They just want to sort to keep peace in the family to a degree and get through it.

KEILAR: Gloria, Admiral, thank you so much to both of you.

As the President's two former press secretaries get TV jobs, new CNN reporting on his current press secretary and her unorthodox rise to the position.

Plus, world leaders calling at Brazil's president as the Amazon burns at a record rate and he is not taking the criticism well.

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