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China Imposes New Tariffs; Trump Talks Russia Rejoining G-7; Johnson Faces First Global Test. Aired 12-12:30p ET
Aired August 23, 2019 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[12:00:20] JOHN KING, CNN ANCHOR: Welcome to INSIDE POLITICS. I'm John King. A very busy Friday. Thank you for sharing your day with us.
The Fed chairman says he's watching a slowing economy but not sure yet if it needs more interest rate cuts. President Trump launches a vicious tweet storm in response asking if the Fed chairman he appointed is now a bigger enemy than China's president.
Plus, allies expect that angry mood to carry over as the president heads to a G-7 meeting in France. France is this year's host. It says that given President Trump's history of tantrums, it's not even worth trying to write a consensus summit communique.
And another 2020 Democrat bows out as Congressman and ex-Marine Seth Moulton heads for the exits, we will take a fresh from the trail look at how early surprise Pete Buttigieg hopes to shake off a summer slump.
(BEGIN VIDEO CLIP)
MAYOR PETE BUTTIGIEG (D-IN), PRESIDENTIAL CANDIDATE: This is the middle phase of the campaign. We're not at that end part, the finish line, where you've got all the adrenaline of coming up on the finish. We're not in the beginning either. This is the stage where I think the campaign is really to be won because now we have people on the ground forming the interpersonal relationships that are the real stuff of good politics, especially in a place like Iowa.
(END VIDEO CLIP)
KING: Back to that a bit later.
But we begin the hour with major economic turmoil and an angry president stirring it more by lashing out.
Two big developments today have the president on edge. His first target, the Federal Reserve chairman, Jerome Powell. Powell today, refusing to do the president's bidding and announce plans for more interest rate cuts. Instead, in a closely watched speech this morning at a conference in Wyoming, Chairman Powell said the Fed was tracking signs of a slowing economy, but was not yet convinced more rate cuts are necessary or wise. Powell did, in that speech, take one minor shot at the president, telling the audience it's, quote, a new challenge factoring trade volatility into his calculus about interest rates.
The president, clearly angry, tweeting pretty quickly, quote, as usual, the Fed did nothing. It is incredible that they can speak without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work brilliantly, that's the president's word in quotes, with both and the U.S. will do great. My only question, the president went on, and this is extraordinary, who is our bigger enemy, Jay Powell or Chairman Xi?
Chairman Xi would be the president of China.
The president then went on a long tweet tirade against China and the markets went into a tailspin. Beijing announced plans today to impose tariffs of $75 billion -- on $75 billion worth of U.S. goods. That would start in September. President Trump says he'll have a response to China later today.
CNN's Alison Kosik is watching Wall Street's nervous response.
Alison, once the tweets started, the markets said, oh, no.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. And I think it's that tweet storm that really has put the markets on edge, because we have seen the numbers fall with each tweet that President Trump has put out, especially the one where he's threatening to respond to China's latest retaliatory tariffs, promising that he's going to have a response later on this afternoon. So you've got that uncertainty stirring the market up, making investors very nervous, which is why they are selling.
One thing I have to say about one of those tweets that the president made, the one where he said, once again the Fed does nothing. At this meeting in Jackson Hole, Wyoming, the Fed isn't expected to take any monetary policy action. In fact, historically, it hasn't. It has to wait until -- usually until its meeting that happens in September. The next meeting is September 17th and 18th. So if the president was expecting Fed Chief Jay Powell to take action, I think that's really off the mark because the Fed chief isn't expected to do that. It doesn't mean that the Fed chief won't take action in September, it just means at this meeting there's no decision on interest rates.
The Fed still has to factor in a lot of data before that September meeting, whether it's the jobs numbers, whether it's GDP, which is going to be coming out as well, and whether it's a manufacturing number. One thing to keep in mind, we are getting some indications of cracks in the economy as well. Just this week, John, we learned that manufacturing -- reports show that manufacturing is contracting for the first time in a decade. So, ironically, the president may get his wish that the economy still shows these cracks. If the trade war continues to heat up the way it's hearing up, he may, in fact, get his rate cut in September.
KING: He may get his wish. He's just not getting it how and as fast as he would like. KOSIK: Yes.
KING: Which is stirring the volatility.
Alison Kosik, appreciate the reporting and the important perspective there.
KING: With me in studio to share their reporting and their insights, Josh Dawsey with "The Washington Post," Julie Pace with "The Associated Press," Darren Sands with "BuzzFeed," Julie Hirschfield Davis with "The New York Times."
And to Alison's last point there, the president's watching all this. He has, since day one, had a warped view of what the Federal Reserve is supposed to be and supposed to do. But China announces this, this morning. The markets are relatively tame, saying, you know, what, we expected that. The negotiators are coming in a couple of weeks, let's be calm. Jay Powell gives his speech. And if you read it carefully, he says we might have to cut rates, I'm just not going to promise to do that today. That's not good enough for the president and so a flat market becomes that, down nearly 500 points because of tweets.
[12:05:28] JOSH DAWSEY, WHITE HOUSE REPORTER, "WASHINGTON POST": Well, Jay Powell has been the president's perpetual punching bag. Every time folks -- every time the president gets to talk about the economy, he goes after Jay Powell relentlessly. And if you talk to folks around him, they see him as cover if the economy goes south next year.
But you have a president whose responsive far (ph) to the economic issues that have come up in the past couple weeks. Signs of a slowdown has been contradict and chaotic at times. He's proposed different things. He's thought about, you know, a payroll tax cut, then walked it back. The markets, you know, were a little spooked by that. They've talked internally about rotating boards of governors on the Fed, if they can do that. That would obviously spook the markets.
The president's messaging is both the economy is great and terrific and then also, we need to do drastic things. And today when you see his kind of tweetstorm, so to speak, that's, you know, questioning the loyalty of Jerome Powell to the country and maybe saying President Xi is a better person than he is, all the things he's saying, that obviously spooks the markets.
KING: Who is the bigger enemy --
JULIE PACE, WASHINGTON BUREAU CHIEF, ASSOCIATED PRESS: One thing the president is not considering doing is backing off his own -- his own impulses, right, both on the policy front, but also on just his tweeting, his reactions. I mean that today is a perfect example of how the policy didn't necessarily -- the Chinese policy move didn't necessarily spook the markets. It's when Trump inserts himself again. That actually is fully within his control. There are a lot of things that are not within his control right now, which is what's happening with the German economy, what might happen in the U.K. if Brexit does move forward. But his own responses, day in and day out, are fully within his control and we're seeing no sign that he is even considering trying to pull that back.
KING: Right, and that's what makes it on several levels. So fascinating in the sense that we know the president obsesses, probably overly obsesses about the markets. He has to know when he sends those tweets a flat day on the market is going to become a bad day in the markets.
And to Julie's point, he also has to know that negotiations are supposed to resume in a couple of weeks. The Chinese delegation is coming here. Of course China's going to lay down a marker beforehand. He did not have to take the bait, but he did.
JULIE HIRSCHFELD DAVIS, CNN POLITICAL ANALYST: Well, that all sounds very rational, but, as we know, this president gets, you know, very keyed up at certain moments. A big thing that gets him keyed up and is getting him nervous right now is the fact that there are these underlying signs that people are worried about inside the White House and outside the White House that the economy might take a bad turn and that there might be a recession, even though he's saying that that's a made-up media fiction. There are actually, you know, potential warning signs and there's some anxiety about that. And so he really wants to show that he's being aggressive and pushing back against that.
And one things about Jay Powell is, and one of the reasons he loves to beat up on him so much is because he can't control him.
DAVIS: A lot of other things he can control, but he can't control Jay Powell. And so to the degree that he's able to sort of foist this onto him and be, you know, the angry president saying, I'm not getting what I want because of that guy, he, I think, is -- he's trying to deflect like we so often see with his Twitter feed. But the problem is that the thing that markets hate the most is uncertainty.
DAVIS: And while they have baked into their assumptions that, you know, there's this trade war going on and that there's going to be negotiations and they're not sure how they're going to come out, what they don't know is what the president is going to do when he says I hereby decide, you know, to do something about this, the markets are thinking, well, what's that going to be?
KING: Well, it's the "I" part that's so important in the sense that if you've been around for a few rodeos, you understand the independence of the Fed. Of course the White House gives advice to the Fed. Every president wants the Fed to do certain things and a lot of presidents have made it clear. None like this president, who has to know Jerome Powell's political predicament. This morning, he's giving this big speech. The president has been badgering him for weeks, calling him clueless and the like.
If you read the speech, Jay Powell is essentially saying, Mr. President, if the data doesn't get better soon, I'll give you what you want, but just back off. Back off. The Fed's supposed to be independent. Let me do my job. The president won't.
DARREN SANDS, POLITICAL REPORTER, "BUZZFEED": Yes, and I agree, I mean I think, at the end of the day, he understands that this is -- whether you -- whatever you thought about the president's economic message going into his candidacy and throughout sort of the two and a half first years of his presidency, it was still a vision for the country. And I think that right now that vision is sort of in peril if we're going to have a situation, like you said, where we have these sort of very ominous signs that the -- the economic -- the -- we're taking a downturn here.
KING: And, again, I've said this repeatedly, the president deserves credit for standing up to China, which has been cheating for years. The question is and the debate is, is he doing it right? Is he handling that fight, a necessary and overdue fight, is he handling it right? The U.S. Chamber of Commerce, just as we were coming on the air, putting out a statement that if this continues, the back and forth between China and the United States. They see the real likelihood, possibility of a recession.
The president's -- one of the president's most bullish let's fight China's advisers, Peter Navarro, was here on CNN this morning. And, listen here, this does not sound like the president's looking to cut a modest deal, if you will, to find an off-ramp.
[12:10:03] (BEGIN VIDEO CLIP)
PETER NAVARRO, DIRECTOR, WHITE HOUSE OFFICE OF TRADE AND MANUFACTURING POLICY: My reaction to this is when China reacts like this, what they simply do is strengthen the resolve of this president and they signal once again to the American public that China wants to buckle our knees so that they can keep having their way with us.
If, in Jackson Hole today Jay Powell announces rate cuts or that he simply says the Fed has America's back, we'll see the Dow go up by 300 or 400 points.
(END VIDEO CLIP)
KING: As you can see, the Dow is down by more than 400 points because Jay Powell, number one, won't read the script the White House keeps trying to give him, even though if, again, if you read the speech, it a pretty responsible speech that essentially says, I've got my eye on this.
But to the China point there, if this becomes a test of manhood, if you will, I don't know how else to put it, again, you know, the president has been consistent that he thinks these tariffs will work and that the U.S. economy can take it. Is this president willing to go through, if we get a slowdown and possibly a recession, maybe just a much slower economy that doesn't tip into recession, is he prepared to go to the election year and say, I know you're mad at me, but I'm right. DAWSEY: Well, you saw last week or I guess maybe two weeks ago now
that he reversed on some of the tariffs that the administration said, you know, we're doing this because of Christmas coming up, which was a bit of an inexplicable given their past position that the tariffs were actually pouring money into the economy. Why would you need to take them away then for Christmas.
But you saw that was kind of a first step of relenting a bit. And you add in the 2020, I mean, if you talk to anyone around the president, you know, his central message is the economy, that they think when suburban voters wins (ph) more than just the folks who go to his rallies and give him a good chance of potentially pulling out a victory. And if it does downhill fast and China says we're going to wait this guy out or we're not going to give him a deal in the middle of an election year, it's hard to imagine the president just stays put. I mean he's not going to -- this is not a president who just sits back and lets things -- he reacts all the time. He's always reacting.
KING: And to that point, so many mixed messages from the president himself and his team this week about, are we going to try to cut payroll taxes? Are we going to try to cut capital gain taxes? Are we going to try to do something to use our power at the White House, the executive branch power, to juice the economy. The president now says, no.
Listen to Larry Kudlow, his top economic adviser, saying, not now, maybe later.
(BEGIN VIDEO CLIP)
LARRY KUDLOW, DIRECTOR, NATIONAL ECONOMIC COUNCIL: What the president is trying to say is, there's no near-term tax cuts for stimulus or fighting recession. We don't have that point of view. We think the economy's in sound shape.
We're not going to tamper with temporary tax cuts of any kind.
We're looking at what I call tax cuts 2.0. But that's a long-run project. And it probably will come out during the campaign.
(END VIDEO CLIP)
KING: So he's going to stand up at the Republican Convention in Charlotte next year and say, re-elect me, I'll cut your taxes again?
PACE: I mean it's not a -- it's not a great re-election message.
I think, you know, the thing to watch with President Trump is always how he's feeling his base is doing. I was in Iowa the last couple of days and talking to a lot of Trump supporters and you've -- a lot of them are still with him on this, even those who are feeling some short-term pain. I talked to one farmer who said something really interesting. He said, you know, I'm the China in this equation. I'm playing the long game. I -- someone had to do this with China and Trump is finally the one to do it. I'll willing to take the hit now. If that changes, I think we will certainly see Trump try to -- try to
pivot as well. He knows that his pathway and his team knows his pathway to re-election is pretty narrow. And if there's any erosion from that base, if they start shifting on this, on how they feel about his handling of the economy, I think he will have no choice but to change his posture.
KING: To that point, we are told the president is meeting with his trade team at the White House right now. He promises some reaction to China's announcement will come later today. We will keep our eyes on that and try to report on that. Among those interested in what the president decides today, the audience at his next stop. The president back on the world stage starting tonight. He heads to the G-7 in France. Expectations for any kind of big consensus, nonexistent.
[12:18:29] KING: As we noted, President Trump meeting with his trade team this hour at the White House. Later today he heads to France and the annual G-7 meeting. That trip is tonight. And the list of pressing issues is a very long one. The new China tariffs add to the economic urgency. Canada, France, Germany, Italy, the U.K. and Japan are the other members of the G-7. And like President Trump, all of those leaders trying to navigate slowing economies. The unsettled Brexit negotiations also part of the economic stress, and the fires in the Amazon and the uproar in Hong Kong also certain topics of discussion.
The idea of a group, of course, is to work together. But the G-7 host, President Emmanuel Macron of France, acknowledging at the outset that consensus and Trump are strangers, so the leaders won't even try this year to write their traditional summit-ending communique. That's a lesson from last year where President Trump agreed to a joint statement, then tore it up as he left the meeting.
That is, again, one of the many norms, traditions, pick your word for it, just thrown out the window. The idea of these meetings, the very idea of the meetings is, bring together the world's strongest economies, talk about your problems, talk about your strengths and write some guidance. Where are we now? How can we help the economies in Europe, especially Germany, from tipping into recession? What do we want to do about climate change? What about these raging fires in the Amazon and what should Brazil do about it? Instead, what does it say that President Macron, at the outset says, forget about it, we're not even going to try.
PACE: It really speaks to how the U.S. role has changed internationally under the Trump presidency. I mean not only would there be agreements at the ending of all of these meetings, it was oftentimes the U.S. leading the way and pulling other countries that didn't necessarily want to go along sometimes in their direction.
[12:20:04] There was enormous influence and sway that presidents of both parties had had with their allies. The difference now is that, you know, Trump doesn't care that play to role. You know, he -- he doesn't mind if he can't get France or Germany or Japan to come along with him. He actually doesn't think that his role as leader of the United States is to try to rally international consensus. He sees this as a much more narrow role that is focused squarely on U.S. interests. And if that means that allies are left on the sidelines, if that means that he is at odds with them, so be it.
KING: Oddly, he -- and in addition to that, he seems to enjoy picking fights.
KING: And one of the fights on the table this year, he's gone after the NATO alliance in the past. He's gone after Chancellor Merkel in the past. Former U.K. Prime Minister Theresa May in the past.
This year, all the other members have made clear, sure, we'd love to have Russia back. We'd love to be in the G-8 again. But, first, Russia has to get out of Crimea. Russia has to get out and then do other things instead of busting and challenge -- pocking the world in the eye. President Trump says, no, let him in.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: If somebody would make that motion, I would certainly be disposed to think about it very favorably.
We spend a lot of time talking about Russia at those meetings and they're not there. I think it would be a good thing if Russia were there so we could speak directly, not have to speak all the -- you know, by telephone and other things.
(END VIDEO CLIP)
DAVIS: I mean we've seen this before. This president obviously has an affinity for Russia. He has an affinity for Vladimir Putin. He clearly wants to have Russia be part of the sort of community of nations around that table again. And unlike the other countries that have talked about this issue, he's not insisting that, you know, Putin do anything in particular in order to earn back that place.
But I think more -- even more than what Julie said, which is -- which is right that he doesn't see sort of an advantage or an upside or a need for the United States to garner an international consensus about some of these big issues, I think he actually sees it as a weak -- weak point for him, that he would rather be untethered from the rest of those countries to be able to do his own thing and sort of -- and, as you said, you know, he enjoys being confrontational with other countries when it -- when there's an upside for the United States or when he can portray there being an upside for the United States in doing that and I think talking about letting Russia back in is another way on his way into this meeting of sort of poking everyone else in the eye. Of saying, like, well, how come we can't have Russia back here when everyone in the G-7 is, you know, has laid out a pretty clear sense of what the precursors would have to be for that to happen.
KING: Right, including -- including Boris Johnson. This will be Boris Johnson's first G-7 as the new U.K. prime minister. There was a picture of him yesterday putting his feet up on the table during talks. He was seeing President Macron in Paris.
An interesting new player here with President Trump -- he's comfortable -- with President Trump on the issue of trade and looking for the president's support about a no-deal Brexit, but not with the president on issues like Russia, on issues like climate change.
Well, one of the things we heard from White House advisers this week reporting out, going to have the lead-up to the G-7, is that Boris Johnson -- and meet with Boris Johnson is one of the few things the president's actually looking forward to. It's low expectations for the rest of this summit. We know some of his feelings on the other world leaders. He's not really looking to talk about much more than trade and the economy there.
But Boris Johnson is someone he sees himself as aligned with. He's already had multiple calls with Boris Johnson. I think five or six. They've been talking almost every week. And he kind of has a shared disposition of the president. He likes to, you know, glad hand and have small talk with him, unlike Theresa May, who the president thought was stilted and frankly referred to her in pretty unflattering terms privately. Boris Johnson is the one person at this conference where the president may have some simpatico views on the world and how to approach it.
That said, you talk to G-7 diplomats, even from Britain, and they have low expectations that the president will agree to much of anything. Much -- many of the issues, climate change, energy policy, other things, they just took off the table. They said, we're not going to even discuss with him because we don't want to have a fight.
KING: Right. And we'll see. Again, we're waiting for the president's announcement this afternoon. He says he's going to respond to China. We'll see how that affects his mood as he heads across the Atlantic.
And before we go to break, we want to note the passing of David Koch. The conservative billionaire, philanthropist and political donor died at the age of 79. David Koch became a household name through the policy and political empire he created with his older brother, Charles. He retired from Koch Industries and the Koch political operations back in 2018. Sources close to the family tell CNN he's been in declining health in recent weeks. Survived by his wife, Julia, and three children.
[12:29:06] KING: Seth Moulton is ending his presidential campaign and sending a message on his way out. The Massachusetts congressman had hoped his service in the Marines and his stirrings against Nancy Pelosi might give him a unique profile and a chance to break through in the crowded Democratic field. But he doesn't even register in the polls and made it known this morning he will run for re-election to the House now instead.
The Democratic field down two candidates just this week, yet still has 21. That's 21 active contenders. In an interview with "The New York Times," Moulton suggests 18 of them are wasting their time. This is what he says. I think it's evident this is now a three-way race between Biden, Warren and Sanders. And really it's a debate about how far left the party should go.
CNN's Phil Mattingly is here to join our conversation. He's just back from spending time in Iowa with Mayor Pete Buttigieg, who has struggled this summer after a strong early start, but who is hoping meticulous organizing in Iowa will help him prove this is not, as Congressman Moulton says, a three-candidate race.
[12:30:05] (BEGIN VIDEO CLIP)
MAYOR PETE BUTTIGIEG (D-IN), PRESIDENTIAL CANDIDATE: You can't get too caught up in what's happening from day to day or even.