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Elon Musk Targets USAID; Trump Delays Tariffs With Mexico. Aired 1-1:30p ET

Aired February 03, 2025 - 13:00   ET

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


[13:00:56]

BRIANNA KEILAR, CNN HOST: Tariff tradeoff. Mexico says it has a deal that could push off punishing tariffs for a month, but a potential trade war with Canada could heat up unless the two leaders can reach a deal in a critical call two hours from now.

BORIS SANCHEZ, CNN HOST: Plus: Elon Musk's government makeover. He's putting his own stamp on the federal bureaucracy backed with the power of President Trump. We're going to take our closer look at how an unelected billionaire is now transforming government as we know it.

And new threats and defiance at the FBI, agents questioned about their role in investigating the January 6 riots, as fears spread that a personnel purge is coming. One official saying he's digging in to defend his staff.

We're following these major developing stories and many more all coming in right here to CNN NEWS CENTRAL.

KEILAR: Hello. I'm Brianna Keilar here in Washington alongside Boris Sanchez.

And President Trump now says he will immediately pause tariffs on Mexico for one month, his announcement happening just hours before the U.S. was set to impose 25 percent tariffs on nearly all Mexican and Canadian imports. It follows what Trump calls a friendly conversation this morning with Mexican President Claudia Sheinbaum, who promised to send 10,000 Mexican soldiers to reinforce the U.S.-Mexico border.

SANCHEZ: Now, the question is, could Canada cut a similar deal? Trump spoke with Canadian Prime Minister Justin Trudeau earlier today. They have another call scheduled in just about two hours.

CNN's Kevin Liptak is following the latest from the White House.

Kevin, we will get into trade in a second, but we understand that, as we're speaking, President Trump is signing more executive orders. What do we know about those?

KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Yes, he's in the Oval Office.

Reporters have been in there with him for about 15 minutes. So we will see what he has to say. Early read is that he is signing some personnel appointments, some new special envoys. And he's also created a new American sovereign wealth fund. That's something he's talked about previously, but, of course, we will have to get a few more details on what exactly he's saying.

Certainly, I think the backdrop to all of this is this trade news here at the White House, and I wouldn't be surprised if President Trump has quite a bit to say about these tariffs that were set to go into place at midnight tonight, but now have been delayed, at least when it comes to Mexico, after that phone call with the president, Claudia Sheinbaum.

Of course, the big question now that's hanging over all of this is whether Canada will receive a similar reprieve from their own 25 percent tariffs that are, again, set to go into place at midnight. According to Canadian officials that I was talking to this morning, they weren't necessarily optimistic after that first phone call between President Trump and Prime Minister Trudeau that an extension would be granted.

But, of course, they do have this second call on the books at 3:00 p.m. Of course, now it is, I think, a little clearer for Trudeau what exactly he could do to help ease these tariffs. Before, it was unclear to Canadian officials, along with Mexican officials, exactly what Trump was looking for in terms of a quantifiable metric to avoid these tariffs.

Now he has a good example of what he needs to do. You certainly see Mexico saying that it would deploy those troops along the border. Can Trudeau do something similar to curry favor with Trump to allow these tariffs to be held off?

I think that's a big question now hanging over the White House this afternoon. Of course, this could have sparked a major trade war. Even Donald Trump himself acknowledged yesterday that Americans would feel some pain from these tariffs.

And you saw in the stock market this morning significant repercussions. Of course, Donald Trump is attuned to nothing more than the stock market. Of course, that could have played a role here as well. But we will have to see exactly what Trump has to say about these tariffs in the Oval Office when we see tape from that event shortly.

KEILAR: All right, we will be looking for that, Kevin. Thank you so much.

Let's talk a little bit more about this now with Douglas Holtz-Eakin, former chief economist for the White House Council of Economic Advisers under President George W. Bush. He's now president of the American Action Forum. And Justin Wolfers is also with us. He's an economics professor at the University of Michigan.

[13:05:10]

So, Doug, Mexico giving Trump these 10,000 Mexican soldiers at the border to combat fentanyl and illegal immigration, and then they see their tariffs paused. Do you expect that something like that is going to happen with Canada? Trump has a 3:00 p.m. follow-up call with Prime Minister Trudeau.

DOUGLAS HOLTZ-EAKIN, FORMER CONGRESSIONAL BUDGET OFFICE DIRECTOR: Yes, I think that probably is the most likely course. Whether it will happen as quickly as Mexico or not. I don't know, but these tariffs were not built to be around very long.

You know, 25 percent is quite high. There are no exceptions, especially for things like autos that cross both borders half-a-dozen times during the course of production. There's some complicated issues with U.S. electricity coming from Canada. So I don't think these tariffs are something which are economically desirable at all.

But they are certainly not economically survivable over a long period. They're there for negotiating purposes, and that's exactly what I expect to have happen. We will see how long it takes.

SANCHEZ: Justin, Kevin from the White House just mentioned a moment ago that stocks were not responding well to this initial announcement that the tariffs were incoming. They bounced back up slightly when it was announced that the tariffs on Mexican goods were going to be delayed by a month.

But if Trump doesn't find some sort of deal or back down from the tariffs on Canada and China, what can we expect markets to do?

JUSTIN WOLFERS, UNIVERSITY OF MICHIGAN: Look, the markets are speaking pretty clearly here, aren't they? Trump announces tariffs, so markets fall. Trump walks back tariffs, markets rise.

And so if we don't see some action the Canadian front, markets are going to fall again. China is, of course, also an absolutely major trading partner. And then we have got the president out there also talking about levying additional tariffs on the European Union.

Look, if this is a way of writing a TV show, it's a pretty compelling script, and I'm watching it pretty closely. But if this is a way of managing an economy, it doesn't make any sense.

KEILAR: I mean, Justin, speaking of a TV show, the one that comes to mind for me is "South Park" the movie, and that song "Blame Canada."

In fact, that was sort of playing in my head today because something that's interesting that I think a lot of people don't understand, there's really a difference on these two borders. One percent of the fentanyl street supply in the U.S. comes from Canada. Most drugs do come through actual ports of entry, not between. Most of it is brought by U.S. citizens, not noncitizens.

And in 2024, only about 43 pounds of fentanyl was seized at the northern border, comparing that to more than 21,000 on the southern border, actually rounded. The rounding is actually bigger than what was found there on the Canadian border.

Is it kind of arbitrary, then, to go after Canada? I mean, why Canada? WOLFERS: I mean, it's beyond arbitrary. They are our closest

neighbors.

There -- we trade,and people and families and lives more closely integrated across that border than any other border. The claim is that it's about fentanyl. Well, they're not a big source of fentanyl. A different claim is that this is all about raising revenue. But that story doesn't make sense on its face either.

And then, of course, you have got the president tweeting that they'd be a remarkably good 51st state. And the easy way to get a back down in the trade war is, you make it easy for the other side to make concessions. That sort of language makes it a whole lot harder for Trudeau, because Canadians, believe me -- I'm coming to you from near the Canadian border -- they're angry.

SANCHEZ: Doug, I actually want to show that social media message that the president posted about Canada here.

It's -- quote -- "We don't need anything they have. We have unlimited energy, should make our own cars and have more lumber than we could ever use."

Is it crazy to think that Trump is actually trying to annex Canada and bullying them is the way that he sees that happening?

HOLTZ-EAKIN: So, I don't know what the president believes, but this behavior is unacceptable.

And I think Justin's right about the revenue component of this. It's never going to replace the income tax. That's -- that kind of talk is just very misleading. It's not going to balance trade between the U.S. and Canada. That kind of talk is very misleading.

You can't find an issue about which economists are more unanimous than the damage that tariffs like this will do, particularly with our largest trading partners, and at the scale of which they have been imposed.

So the only reason to defend tariffs is as a negotiating tactic. And the question is, what does he want from Canada? And I don't know the answer to that. I think a better way to go about this is that if you have genuine concerns about border security, southern or northern, that in the context of renegotiating the U.S.-Mexico-Canada trade agreement, you have a side agreement on efforts at the border and embody that in the language of the agreement.

[13:10:04]

It would then also have to be ratified by the U.S. Senate, so it would be a bipartisan position what we think needs to be done at the border. And that would be a right way to take this issue off the table for the foreseeable future. This doesn't really do that.

KEILAR: But, Doug, you hear just in describing how upset Canadians are. And there's concern obviously about... HOLTZ-EAKIN: Oh, they are, yes. Wouldn't you be?

(CROSSTALK)

KEILAR: Of course.

And with the concerns of -- ironically, considering inflation may have won Trump his second term, concerns about how inflationary this would be, do you see with emotions running high here that we could fall into cycle where this does go on for longer than it should? Is this sustainable, as you put it?

HOLTZ-EAKIN: I'm very concerned about that, and not just because of the tariffs on Canada and Mexico, but, as Justin mentioned, the president has raised the prospect of further tariffs in the middle of the month aimed at all imports of pharmaceuticals and other products from any country on the globe.

And so he is setting out to pick trade wars with our allies. And that strikes me as completely counterproductive. If you think back to his first presidency, he came into office, he did some remarkable things on the regulatory costs. He got the agreement of the 2017 tax reform. He got a big new Pentagon spending bill.

The economy picked up really quickly. And then he picked a trade war with China, and it ground to a slower and slower stall. I don't know why you would do this as your as your opening act, having had that history. So it's worth watching closely. It's not a good story from any economic perspective.

SANCHEZ: We will be watching that call between Trudeau and Trump set to happen at the 3:00 hour.

Doug and Justin, thank you both so much. Appreciate the analysis.

WOLFERS: Pleasure.

HOLTZ-EAKIN: Thank you.

SANCHEZ: Still to come this hour: The flight data recorder from that Black Hawk that collided midair with an American Airlines plane has now been recovered. We have the latest on the investigation and the salvage operation under way.

KEILAR: Also, he's unelected, unconfirmed by the Senate, but through the power of DOGE, Elon Musk's fingerprints are all over the major shakeups at federal agencies, including access to payment systems.

We will have much more on that just ahead.

(COMMERCIAL BREAK)

[13:16:52]

SANCHEZ: Elon Musk calls it cost-cutting, but an official at one agency he's targeting says it's more like the apocalypse. We're talking about the U.S. Agency for International Development.

Musk says that President Trump agrees with him that U.S. aid needs to be shut down. This comes days after its funding was frozen and dozens of its employees were put on leave.

Its Web site and social media accounts have gone dark or disappeared altogether. The agency's headquarters were closed today and employees were told in an e-mail to just stay home. The move could have life-or- death implications. The agency is the biggest distributor of humanitarian aid in the world, all of it in an effort to alleviate poverty, treat diseases, respond to famines and natural disasters.

It also promotes democracy building and development by supporting nongovernment organizations, independent media and social initiatives as well. The agency, like several others, has found itself in the crosshairs of Trump and Musk's efforts to revamp the federal government dramatically.

Here is what Musk said about USAID this morning.

(BEGIN AUDIO CLIP)

ELON MUSK, OWNER, X: As we dug into USAID, it became apparent that what we have here is not an apple with a worm in it, but we have actually just a ball of worms.

And so at the point at which you don't really -- like, if you have got an apple that's got a worm in it, maybe you can take the worm out. But if you have got actually just a ball of worms, it's hopeless. And USAID is a ball of worms. There is no apple. And when there is no apple, you have just got to basically get rid of the whole thing.

(END AUDIO CLIP)

SANCHEZ: Let's bring in CNN's Alex Marquardt. He's live from the agency's headquarters in Washington, D.C.

Alex, walk us through how this move to shut down this agency went about.

ALEX MARQUARDT, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, Boris, it does appear that USAID is on the cusp of at least being absorbed into the State Department. And that is something that is worrying a lot of current and former officials who have worked at USAID, who simply say that the State Department is not equipped to carry out the kinds of missions that USAID has been doing since the 1960s.

This is the outside of USAID. There's an ongoing press conference with Democratic lawmakers from both the House and the Senate. Many of the people who you see here are staffers from USAID who we have been speaking with. The lawmakers are talking about the gutting of USAID.

One lawmaker used the word purge. They're also highlighting the fact that this helps America's adversaries, Russia and China, and every so often, cheers are going up from the crowd. Mind you, these staffers are not allowed inside the building. They got

an e-mail overnight saying that they were to work from home today, that they could not go inside. In fact, I went up to the entrance, Boris. There's a fake hedge in the way of that revolving door right there.

One of the biggest pieces of news today, Boris, is that the acting administrator is now the secretary of state, Marco Rubio. That is the clearest sign that USAID is about to be absorbed by the State Department. He said that just a short time ago. He's putting someone else in charge of implementing the day-to-day.

[13:20:08]

But he was just asked about this move during his trip to Central America. Take a listen.

(BEGIN VIDEO CLIP)

MARCO RUBIO, U.S. SECRETARY OF STATE: Our goal was to go in and align our foreign aid to the national interest. But if you go to mission after mission and embassy after embassy around the world, you will often find that, in many cases, USAID is involved in programs that run counter to what we're trying to do in our national strategy with our country or with our region.

That cannot continue. USAID is not an independent nongovernmental entity. It is an entity that spends taxpayer dollars and it needs to spend it, as the statute says, in alignment with the policy directives that they get from the secretary of state, the National Security Council, and the president.

(END VIDEO CLIP)

MARQUARDT: And, Boris, again, the officials who I have spoken with say that State Department simply does not have the capability, the training, the expertise to carry out the lifesaving missions that they undertake all around the world in more than 100 countries with a $40 billion budget.

Now, Boris, this event comes just days after DOGE officials barged their way into the building to demand access to very sensitive areas, very sensitive information. Initially, USAID officials blocked them. And the top two security officials were put on leave. They did manage to get inside.

But one thing that is being underscored by these Democratic lawmakers, Boris, is the illegal nature of USAID being absorbed, because this was an agency that was created by Congress, and only an active Congress can change its status -- Boris.

SANCHEZ: Alex Marquardt, thanks for the update live outside USAID headquarters in Washington, D.C.

And, Brianna, these were just some of the moves that Musk and his DOGE personnel were making over the weekend, moves that had actually been in the works for a while.

KEILAR: Exactly right.

And his team now has access as well to sensitive payment systems at the Treasury Department. In the run-up, as Boris alluded to there, to this, started a few weeks before Trump even took office, when members of his transition team showed up at Treasury wanting answers about how government payments are processed.

Things really came to a head last Friday, when the top civil servant at Treasury, David Lebryk, left unexpectedly after Trump-affiliated officials expressed interest in stopping certain payments. According to one person familiar with the department, Lebryk pushed back on those inquiries, saying: "We don't do that."

And that source went on to tell CNN that the Trump officials seemed -- quote -- "to want Treasury to be the choke point on payments." And that is unprecedented. The person added that it is not Treasury's role to decide which payments to make. It is -- quote -- "just to make the effing payments." That's what the source said here.

And the timing of this is key, especially since it comes after the White House's Budget Office was met with resistance in its attempt to freeze all federal spending. And the importance of this payment system, it really cannot be overstated here. It reportedly disbursed more than $5 trillion in fiscal year 2023 alone.

And access to it has historically been really close-hold, because it includes sensitive personal information. We're talking about millions of Americans who receive Social Security checks, tax refunds, other payments from the federal government. So if you're one of those people, you fall into one of those categories, then DOGE associates could have access to your personal data.

Boris, Musk's influence is also being felt in what is essentially the government's H.R. department.

SANCHEZ: Absolutely.

And on that note, three former Musk employees have reportedly taken top positions at the Office of Personnel Management. And our sources tell CNN that senior staff at the agency have been directed by one of those former Musk employees to prepare plans to eventually cut 70 percent of its work force.

You might recall, it was also this same agency last week that sent this fork in the road e-mail, a take-it-or-leave-it-style buyout offer to millions of federal workers, giving them the option to resign and get paid through September. That e-mail echoes a message that X, then called Twitter, sent to its employees just days after Musk took over the company.

The offer did not sit well with federal workers unions, which quickly lashed out. The American Federation of Government Employees, the largest federal work force union, says that the communications from OPM are riddled with inconsistencies and uncertainties. And of the buyout offer itself, they added -- quote -- "It's also

unclear whether OPM has the legal authority to support the program or its alleged benefits and the eligibility criteria are vague. The union also notes that the federal government is only funded through mid- March, so the Trump administration can't make payment promises beyond then until Congress passes a spending bill.

[13:25:01]

The president of the nation's first federal employee union shared that same level of apprehension when he spoke with us.

(BEGIN VIDEO CLIP)

RANDY ERWIN, PRESIDENT, NATIONAL FEDERATION OF FEDERAL EMPLOYEES: Another reason that we are advising our members not to accept this deal is because there's a good chance they're going to get stiffed. They would essentially be signing away their rights, signing away their job, and then when the administration has to deliver on their promises, they will renege on that because Congress never authorized it.

So you don't make offers like this. This is not the way you run the federal government and it's just highly irresponsible.

(END VIDEO CLIP)

KEILAR: Now, to be clear, Musk is making all of these changes without being an elected official. Yes, elections have consequences. He's not an elected official. He's not a federal employee. He's not been approved by the Senate to a leadership role in government.

SANCHEZ: Yes, let's discuss these moves and more with CNN contributor Kara Swisher, who's covered Musk extensively. She's also the host of the podcast "On With Kara Swisher" and "Pivot." Also with us is Richard Painter. He's the former chief White House ethics lawyer under President George W. Bush.

Thank you both for being with us.

Richard, first to you.

Let's start with the obvious question. Are these actions by Elon Musk actually legal?

RICHARD PAINTER, FORMER ASSOCIATE WHITE HOUSE COUNSEL: Well, Elon Musk is acting as if he is a federal officer, a federal officer appointed by the president of the United States.

And President Trump can appoint him as a federal officer and then send him into the agencies. Some of what he's doing is legal for a federal officer. Some of it is not. But he would be a federal officer bound by the criminal conflict of interest statute at 18 United States Code 208, which says it is a crime for a federal officer to participate in a government matter that has a direct and predictable effect on their financial interest. And so that means that Musk is going to have to sell his interest in

Tesla, X, SpaceX and the rest of it, or recuse from any and all government matters that have anything to do with, that could impact those companies. But he's going around saying, well, actually, I'm not a federal officer.

They're saying it's a federal advisory committee. They said it would be outside the government. Well, then he has no authority to do any of this. And then, also, if it's a federal advisory committee, they must have public meetings and public disclosure of their documents and their proceedings and public access, a chance for public participation, pursuant to the Federal Advisory Committee Act of 1972.

So it's one or the other. And I pointed this out in an op-ed in "The Star Tribune" weeks ago, and they're playing games with us. He's running around acting like a federal employee, but he doesn't want to comply with a criminal conflict of interest statute. He's playing with fire, and the White House needs to make it clear he's a federal employee, or he's not, and then have him perform the appropriate functions.

KEILAR: Kara, what do you think about how Elon Musk is conducting himself?

KARA SWISHER, CNN CONTRIBUTOR: I'm surprised. I'm surprised that someone who breaks the rules all the time is breaking the rules. That's all he does. This is his playbook, whether it was at Twitter or any of his businesses.

He blows up rockets and it rains down trash. He goes around people. He says things. He sues the SEC. This is his -- this is such a playbook for Elon Musk. And now, apparently, he's attacking a ball of worms or an apple with worms or whatever the heck is going on in his brain at that hour of the night.

This is all nonsense. He doesn't have the authority to do this, but the president did, in that executive order, give him the authority. The problem is, it runs smack into congressional authority, of course, around spending. He's also doing it in a typical manner on the weekend, late at night, with a band of people that come in, an attack of engineers, usually young men, in this case, who are just doing whatever they want.

And there's nobody there to stop them. And so he will keep doing that as long as nobody stops him, trust me. He doesn't care about rules or laws or anything else.

SANCHEZ: Kara and Richard, please stand by. We want to listen in now to President Trump. This is inside the Oval Office moments ago signing some new executive orders. Let's listen.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I sent him to California to turn on the water. We turned it on. It was not easy because we had to go through a lot of environmentalists that are causing a lot of problems.

And we have billions of gallons of water. It was on three days ago, you probably saw. It should have gotten a lot of press, but it didn't get much. All we're doing is giving Los Angeles and the entire state of California virtually unlimited water, which they could have done five years ago, which I told them they should do.

But the environmentalists stopped them. And we opened it and we did it, regardless of the state. And now the state seems to be very happy. I spoke with Gavin Newsom, and he's very happy. I almost called him by the other name, didn't I?

(LAUGHTER)

TRUMP: My little nickname for him. But I think they're all happy. They have a lot of water in California. Too bad we didn't have it about two months ago, right?

QUESTION: Mr. President...

TRUMP: That was -- by the way, that was a big -- that was a big move. We have -- I don't know if you saw the pictures that were released of the water pouring down from the Pacific Northwest and Canada and lots of other places.