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Trump Hits Top Trading Partners Canada, Mexico, China With Tariffs; Secretary Duffy: We Are Going To "Surge" Air Traffic Controllers; NBA Trade Stunner: Doncic To Lakers And Davis To Mavericks. Aired 7:30-8a ET

Aired February 03, 2025 - 07:30   ET

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


[07:30:00]

MATT EGAN, CNN REPORTER: The footwear industry is saying that there's going to be higher prices for sneakers and shoes for consumers. The oil industry wants to have lower tariffs on Canadian energy. The plastics industry says that jobs are going to be hurt, and manufacturing. Farmers are already saying that they're going to be hurt by retaliation, and they already want federal aid. We have the alcohol industry saying this is going to be bad for all of North America.

And the housing industry is saying there's going to be higher home prices because they note that 70 percent of all imports into the U.S. of key manufacturing -- of key building materials come from Mexico and Canada. And in particular, we're talking about softwood lumber and gypsum. This is all coming from Mexico and Canada and it's going to get more expensive.

So this is a situation that could cause the housing affordability crisis to get worse, especially when you think about the fact that we could see the Fed have to pause even longer on interest rate cuts, which means perhaps higher mortgage rates.

Now, we know that the president likes to use tariffs. He loves tariffs, right? He sees them as a way to get leverage. He's trying to address these concerns around immigration and illegal drugs. But there's a lot of business groups and trade experts and economists who are saying that this could do more harm than good.

The Chamber of Commerce, which is pretty supportive of the Trump agenda -- they put out a pretty pointed statement saying that all of this is unprecedented. It's not going to solve those problems that Trump is worried about, and it's only going to raise prices for American families and upend supply chains.

John, I know that a lot of this kind of feels like Groundhog Day, right, because we saw this during Trump 1.0. But it's really important to remember that what Trump is doing here is much bigger in size and scope, right? We're talking about tariffs on all three of America's biggest trading partners.

Mary Lovely -- she's a trade researcher. She told me that this may be the biggest own goal yet. She said it's a recipe for slowing down the economy and increasing inflation.

So John, look, there's just so much at stake here and this is just a huge gamble.

JOHN BERMAN, CNN ANCHOR: Look, insofar as Donald Trump, the president, has addressed inflation at all, it has been saying he's trying to lower energy prices --

EGAN: Right.

BERMAN: -- lower oil prices.

What do they do today?

EGAN: Well look, we're bracing for higher prices because we get a lot of oil from Canada. And so what's happened is the U.S. is putting a 25 percent tariff on most imports from Canada, but a 10 percent tariff on energy in particular. And that is an acknowledgment that there's a risk that this could cause higher prices because Canada is the number one source of foreign oil into the U.S. Every day we're getting four million barrels of crude from Canada, right? That's four times as much from OPEC.

And GasBuddy is warning that we could see noticeably higher gas prices, particularly in the Midwest, in the Rockies, in the Great Lakes Region. We see five to 20 cents per gallon increase.

And look, John, if there's anything we learned from the last few years it's that Americans do not like higher gas prices.

BERMAN: All right, Matt Egan. Thank you very much for that.

With us now, CNN political commentator Scott Jennings, former senior adviser to Sen. Mitch McConnell. And Karen Finney, former senior adviser to Hillary Clinton's 2016 campaign.

Scott Jennings, favorite son of Kentucky. Kentucky has largely spoken overnight on what it thinks about these tariffs. I want you to listen to the senior senator from Kentucky and your former boss, Mitch McConnell.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY): It will drive the cost of everything up. In other words, it will be paid for by American consumers. I mean, why would you want to get into a fight with your allies over this?

(END VIDEO CLIP)

BERMAN: And Scott, your junior senator Rand Paul said, "Tariffs are simply taxes. Conservatives once united against new taxes taxing trade will mean less trade and higher prices."

But I'll just add one more to this, Scott Jennings. The Wall Street Journal, which has a lovely profile of you in it this morning -- they called this the "dumbest trade war in history." So what's your reaction to all of this?

SCOTT JENNINGS, CNN SENIOR POLITICAL COMMENTATOR, FORMER SPECIAL ASSISTANT TO PRESIDENT GEORGE W. BUSH (via Webex by Cisco): Well, first of all, I agree the profile was amazing.

Number two, this is not without risk. I mean, look, there are risks in engaging in this kind of massive policy upheaval and change in our economic flow with Canada and Mexico.

However, let me try to offer some explanations for why Trump might be on to something. Again, not with risks but he might be on to something.

Number one, the name of the game here is behavior modification. He wants Canada and Mexico to help stem the flow of drugs and people across the border. That's number one. He doesn't think they're doing enough.

He is using these tariffs as a tool to say look, I'm not fooling around. We mean business. Until you help me, I'm going to inflict some pain upon you. The American economy is bigger than yours. You depend on us more than we depend on you. Therefore, please modify your behavior.

Number two. The other goal here would be to renew some interest in American manufacturing. Don't want to pay tariffs on imported goods, make it here. Buy it here. That would take a long time to manifest itself in the economy but there is some viewpoint that the more we have -- the more manufacturing in the United States the less dependent we are on cheaper goods from other countries like this.

[07:35:10]

So those would be the arguments for it.

I would also just argue John, this morning, that Democrats who were crying foul about the possibility of raising prices for American consumers are simultaneously arguing to let the Trump tax cuts expire, which would, I guess, be a tax increase on everybody who pays taxes. So I think the hewing and crying from the Democrats today is a little hollow when they're trying to raise income taxes but fussing about these tariffs.

BERMAN: Karen, where do you see this --

KAREN FINNEY, CNN POLITICAL COMMENTATOR, FORMER SENIOR ADVISER TO HILLARY CLINTON'S 2016 CAMPAIGN: Yeah.

BERMAN: -- fitting in in the battle against inflation?

FINNEY: Well, first of all, not quite, Scott. What Democrats are saying is we don't need more tax cuts for billionaires -- and particularly, we shouldn't be paying for that on the backs of working and middle-class Americans. Where we see this is -- I mean, look, President Trump finally

acknowledged something that we were saying all throughout the campaign, which is there is going to be some pain. Well, guess what? He didn't run on there's pain to come. That was not his message.

And at a time when we've just seen the Fed is not going to cut rates, inflation is already -- you know, it's come down quite a bit thanks to Biden-Harris policies -- we're at about 2.9 percent -- but we're not going to get that down farther with these tariffs which are new taxes on the American people.

And there's another impact that's starting to happen. You're seeing countries and others sort of galvanize outside the country against America. So think about the people who are creating goods that they sell on Etsy. Well, you've got people who are saying you know what, I just can't buy that from you because I'm not buying America. We're seeing that kind of organization happening in Canada and other countries.

And we're also seeing other countries say well, hey, if America is going to punish us let's just get together and do things on our own.

So it is a very big gamble that is most likely going to increase inflation, and it's another increase in costs for the American people. Let's remember the first week Trump was in office he withdrew what President Biden had done by decreasing the cost of prescription drugs, like insulin. If you were paying $35.00 for your insulin you are now going to pay more because of Donald Trump.

So this is breaking faith with the promises that he made to lower costs and saying you all are just going to have to wait because I'm going to do my revenge agenda first.

BERMAN: Scott, what do you think the chances are that President Trump just declares victory in the next 24 hours, so these tariffs don't go have -- have to go into effect? I mean, Canada, for its part, says we don't really even know what you're asking -- the United States -- here so President Trump has some leeway to say ah, they did what we wanted.

JENNINGS: Sure, and I'm sure conversations are going on with both countries about what it would look like to secure their borders and to stop the flow of people and drugs across the border. And if Donald Trump did tell us that was happening, I think that would be a great outcome.

Regarding other countries and regarding our position vis-a-vis other countries Karen, I want to directly address that. You have to give Trump a little credit so far. He has had some success with this behavior modification strategy so far. It worked on Colombia. And if you look at the news reports from the weekend it might be working on Panama as they have started to move away from China a little bit over this issue of who actually controls the Panama Canal.

So one of the larger macro issues here to me is, is Donald Trump on a mission to show dominance in the hemisphere, dominance in the region, and to try to get other people to bend to our will. Colombia and Panama, I believe, have. If Mexico and Canada bend on helping us stop the flow of people and drugs, that would be another victory.

And John, yes, if the tariffs went away everyone would be happy. We'd have less immigration, less drugs, and lower prices, and that would be a great day for everybody.

BERMAN: I will say -- and we're going to get into this much more over the course of the show -- USAID has always been one area where the U.S. --

FINNEY: Um-hum.

BERMAN: -- has tried to exert influence on other countries overseas.

There's an email that those employees got this morning saying don't come to work today. And Elon Musk has outright said he wants to get rid of USAID, Karen. How do you think that fits into Scott's goal of spreading influence -- U.S. influence around the world.

FINNEY: Actually, it harms our ability. I mean, a big -- an important part of sort of what we've called for a long time a three-legged stool, right, is diplomacy, defense, and then the work that we have done through USAID and other efforts to increase not only -- not only our influence in other countries. Obviously, it helps us address things like outbreaks of different pandemics or things that can spread throughout the globe. But it also has been an important part of building our diplomatic and defense efforts in other countries. I've seen that work myself up front and close and in person over the last 20 years in a number of countries. So I think it actually makes us less safe.

[07:40:00]

A great example -- in the continent of Africa we used to be dominant. It's actually now China that is more -- is gaining dominance. And that -- again, that means -- that's a whole region where they have dominance. We have lost ground and that puts -- makes us less safe because we know there are plenty of areas where there are havens for terrorists.

So it concerns me greatly to just take a hatchet to everything rather than to say let me -- let's look at this mindfully -- you know, sort of piece by piece and see what makes sense to make sure we're not losing the expertise like in something like the NTSB, for example. I think this hatchet approach, particularly from somebody like Elon Musk who actually also has government contracts --

BERMAN: Um-hum.

FINNEY: -- that will be impacted by some of the work he's doing.

BERMAN: Karen Finney, Scott Jennings, great to see you both this morning. Thank you very much -- Kate.

BOLDUAN: This morning we are learning more about the victims killed in a Medevac jet crash in Philadelphia this weekend. The crash, which was caught on camera, killed all six people who were on board as well as a person who was on the ground. Dozens were injured and sent to nearby hospitals. Five people remain hospitalized as of this morning.

CNN's Danny Freeman is live in Philadelphia with much more on this for. And Danny, what are you learning about the victims who were in that plane, and also where things stand with this investigation now?

DANNY FREEMAN, CNN CORRESPONDENT: Well Kate, as of yesterday we now know the names of all six people who were on board that flight that came crashing down on the street behind me in Philadelphia back on Friday evening.

You mentioned Valentina; also, her mother Lizeth. Those were the -- that was the little girl and her mother who were being Medevac'd from Philadelphia on that flight.

We also learned the captain was Captain Alan Montoya Perales. He was 46 years old. He'd been with the company since 2016.

His co-pilot Josue de Jesus Juarez. He was 43 years old. He'd been with the company since 2023, Kate.

And then there was a doctor, Dr. Raul Meza Arredondo, and a paramedic, Rodrigo Lopez Padilla, all on that plane.

I spoke with the company Jet Rescue Air Ambulance yesterday. They said all of the people on that board -- on board that flight were very seasoned. They continue to extend their condolences to all six members -- family members of the people were on that flight.

Meanwhile, Kate, to your point, we are learning a lot more actually about the investigation. There was progress made yesterday evening in terms of what NTSB investigators are ultimately looking for.

They discovered one of the black boxes that was on that plane -- the cockpit voice recorder. They had been looking for it all throughout the weekend in this large debris field here in northeast Philadelphia. They ended up finding it eight feet deep in the crater that the plane left on Cottman Avenue behind me. So, just incredible that they do have it. It's been sent to the NTSB lab for further analysis.

The impact though, Kate, here incredibly, incredibly wide. Many people injured. Twenty-two in total. Five, as you noted, still in the hospital, and that includes little Andre Howard. Take a listen to how his family is processing right now.

(BEGIN VIDEO CLIP)

ANDRE HOWARD, SON INJURED BY PLANE DEBRIS: My son who also has the same name as me, Andre Howard, tells his little sister "get down" and he grabs her. I hear the glass shatter. I turn around and there's a piece of metal sticking out of my son's head.

LASHAWN HAMIEL, SON INJURED BY PLANE DEBRIS: As a mother, what am I supposed to do? But he's good. He's pushing through.

(END VIDEO CLIP)

FREEMAN: Just incredible. Truly hoping little Andre makes a full recovery.

Now, Kate, you noted at the top seven people were ultimately killed in this crash -- six on board that plane and then one person the city confirmed was in their car when that plane came down. Officials desperately hoping that number stays as it is, but they have noted they may not know the full picture just yet.

They are asking anyone in the area if you fear someone you love might be missing and hasn't checked in who might have been out there on the street last Friday night, please call 911. They're trying to make sure they know and account for everyone who might have been in the area that evening -- Kate.

BOLDUAN: All right, Danny. Thank you very much for bringing us that.

And in the wake of these two devastating plane crashes we've been talking about, the transportation secretary Sean Duffy was speaking to CNN and said that big changes are coming for the FAA. Listen to this.

(BEGIN VIDEO CLIP)

SEAN DUFFY, TRANSPORTATION SECRETARY: We're going to surge air traffic controllers. We're going to bring in the best and the brightest. That was the direction from President Trump.

Our air traffic control system -- it's antiquated. A lot of the systems we use date back to World War II. We have to upgrade the system. We have to have the best system in the world.

(END VIDEO CLIP)

BOLDUAN: What does that mean, and what does that require?

Joining us right now is a former air traffic controller, Steve Abraham. He ran the control tower at New York's JFK Airport. Steve, thank you so much for your time.

Secretary Duffy's statement there -- he's talking about -- he said we are going to surge air traffic controllers. How quickly can they do that?

[07:45:00]

STEPHEN J. ABRAHAM, FORMER AIR TRAFFIC CONTROLLER, FORMER AIR SAFETY INVESTIGATOR (via Webex by Cisco): I think, you know, all the administrations for the past 20-something years have been trying to hire enough air traffic controllers. The system now has about 10,800 controllers and there's supposed to be 14,000 of them.

And the challenges that they face are basically about two percent of people who apply for the job end up getting hired. And then the training time for a controller from the completion of their pre- training in Oklahoma City until when they are able to work on their own in a complex facility can run between 36 and 48 months.

BOLDUAN: Which lays out what the challenge -- let's be honest. The reality and what the challenge has been for years -- my colleague Pete Muntean has been reporting on the -- on the shortage of air traffic controllers for a very long time. This is not a new problem.

But what has the shortage that has existed for so long -- what has that meant for air traffic controllers?

ABRAHAM: I think after you work multiple years of six-day workweeks and 50- and 60-hour -- I mean, six-day workweeks and 50- and 60-hour workweeks under incredibly complex, challenging conditions you get fatigued. And the controller workforce is a dedicated group of individuals that will come to work every day and do what they can to make the system function, and it obviously functions well given the safety record. But eventually fatigue overwhelms the system and your -- you've been faced recently with retirements and numbers that continue to decrease as opposed to increase.

BOLDUAN: And to be clear, the NTSB has not put fault or has pointed to any one factor at all yet that led to, contributed to, or brought about that midair collision. The NTSB has been very careful to say that they are far from putting out any of their preliminary findings in this.

But as this investigation continues, Steve, one air traffic -- an air traffic control source has told CNN that at the time of the collision one air traffic controller was working two different tower positions, though they also noted that is not an uncommon setup. So it is not uncommon, but from your perspective is it a problem?

ABRAHAM: Well, I guess I would say if the agency designed the system to have multiple people performing separate job functions and they're combined to one person, you have the potential to overwhelm somebody.

I will say controllers are very, very aware of the line of when they become overwhelmed or reach the point where they have too much traffic and they the ability to turn off the valve -- to stop accepting airplanes. Because we all know that safety is the paramount rule and nothing -- efficiency will never trump that.

You know, the reality is all those folks at DCA, and actually everybody in the system right now -- they could have done, and it may show that they did their job perfectly, but they're still affected by this. Even someone who wasn't even involved in the incident will -- is critically affected by this error and this accident. It's a tragedy.

BOLDUAN: An absolutely tragedy.

The NTSB -- Todd Inman has done an amazing job trying to convey the -- where they are with their investigation as they continue it. And they were talking -- he was talking on Saturday about some of the altitude readings that they've been able to get. I would like your take on it because everyone involved from the outside looking in agreed that it's confusing and he said it's initial and not yet verified.

But initial data show that the passenger jet was flying at around 325 feet, give or take 25 feet, at the time of impact. And then the NTSB also said data available to the air traffic controller showed the helicopter was at 200 feet near the time of the accident. Clearly a discrepancy there because the two aircraft collided.

What could explain that? Does this point to a potential problem with technology available? What do you hear in that?

ABRAHAM: So I think the technological discrepancy is something that the NTSB will have to delve into -- when, as Mr. Inman said, it's only preliminary information. There are multiple sourcing points for all that data. There's the tower radar display. There's the black boxes available from the aircraft. And you really need to correlate the data between the three different points to end up to what the truth is.

[07:50:00]

You know, multiple people have talked about the voice recordings that have been made available publicly, and those voice recordings aren't the certified recordings so there is potential to miss syllables or words. And you really have to wait until you have all the verified information available from the true sources before you can make any truthful determination.

BOLDUAN: Yeah.

ABRAHAM: And, you know, the NTSB's goal is to prevent this from happening in the future.

BOLDUAN: And the goal of really everyone involved is to make sure this just can never happen again.

Steve, thank you for coming in. Your expertise in this time is really important. I really appreciate it.

Coming up for us, tens of thousands of protesters took to the streets in Berlin. Just look at those scenes. What Elon Musk had to do with it.

And Beyonce wins big. The Grammy's spectacular that's also helping to kick off her new tour.

(BEGIN VIDEO CLIP)

TAYLOR SWIFT, SINGER-SONGWRITER: And the Grammy goes to "Cowboy Carter," Beyonce.

(END VIDEO CLIP)

(COMMERCIAL)

[07:55:33]

BERMAN: All right. This morning new fallout from what might be the most stunning NBA trade in history and maybe one the worst. That's on top of a new superstar trade overnight. What's happening in this league? All this as we begin the silliest annual week of the NFL season, the runup to the Super Bowl.

CNN's Amanda Davis has the latest. (BEGIN VIDEOTAPE)

AMANDA DAVIS, CNN SPORTS ANCHOR: Happy Super Bowl week. It is officially here. The teams arrived in New Orleans yesterday ahead of Sunday's big game. The Chiefs touching down in The Big Easy without too much fanfare. Patrick Mahomes and company looking to become the first team to win three straight Super Bowls.

One of the pilots on the Eagles' plane hung a green and white flag out of the window reading "Go Birds." Philadelphia hoping to win their second Super Bowl in seven years. However, the Chiefs are the 1 1/2- point favorites going into Sunday's game.

Meanwhile, the NBA trade deadline isn't until Thursday, but fans are reeling for what is being called arguably one of the biggest trades in league history. Late on Saturday night the news broke that the Mavericks were trading superstar Luka Doncic to the Lakers in a three- team deal that also sent Anthony Davis to Dallas.

Doncic arrived in Los Angeles on a private jet last night. The five- time All-Star one of the most impactful players in the league but he's been sidelined since suffering that calf injury on Christmas day.

And the 25-year-old released his first statement across his social media accounts, saying, "Seven years ago, I came here as a teenager to pursue my dream of playing basketball at the highest level. I thought I'd spend my career here and I wanted so badly to bring you a championship."

He went on to say, "In good times and bad, from injuries to the NBA Finals, your support never changed. Thank you not only for sharing my joy in our best moments, but also for lifting me up when I needed it most."

We don't know when Doncic will make his debut playing alongside LeBron James at the Lakers. The team scheduled to take to the court next tomorrow night against the Clippers.

(END VIDEOTAPE)

BOLDUAN: Thank you for that.

And Queen B -- well, she's done it. Beyonce's "Cowboy Carter" took home more than one top prize at last night's Grammy Awards. Despite being the most decorated artist in Grammy history, the coveted category of Album of the Year is one she had not yet conquered until now.

But maybe the biggest star of the evening was the city of Los Angeles itself. The show paid tribute to the city and the emergency workers after last month's devastating wildfires. L.A. firefighters were invited on stage to close out the show.

Let's get to the show. CNN's Elizabeth Wagmeister has much more on this. Take us through it. What are the big moments of the night? ELIZABETH WAGMEISTER, CNN ENTERTAINMENT CORRESPONDENT: Hey, Kate. So Beyonce, of course, was the big moment. As you said, she finally did it. She has broken records every time it seems at the Grammys but now she has done it again.

So the first award of the night that she won was for Best Country Album for "Cowboy Carter." Beyonce herself even looking surprised as none other than Taylor Swift announced that she had won that award. And then capping off the night with the biggest award of the night, finally winning Album of the Year.

Now another standout moment that ran throughout the show -- and I was in the room Kate and the performances were just really incredible -- was the Best New Artist category was a stacked category -- everybody from Chappell Roan, to Sabrina Carpenter, to Benson Boone all performing. And there right now we see Chappell Roan as she is winning for Best New Artist.

Now, she took the stage with a very powerful speech actually calling on the record label executives in the room. Let's take a look at what she had to say.

(BEGIN VIDEO CLIP)

CHAPPELL ROAN, BEST NEW ARTIST WINNER: I told myself if I ever won a Grammy and then got to stand up here in front of the most powerful people in music I would demand that labels and the industry profiting millions of dollars off of artists would offer a livable wage and health care, especially to developing artists.