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Right Now: Trump Set to Speak to PM Trudeau About Looming Tariffs; Trump: "What I'd Like is for Canada to Become our 51st State"; Musk: Trump Agrees that USAID Needs to be Shut Down; Rep. Sarah McBride (D-DE) Discusses About Elon Musk threatening to Close USAID; Trump: "I Don't Think" Congress Needs a Say in Dismantling USAID. Aired 3-3:30p ET

Aired February 03, 2025 - 15:00   ET

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


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[15:00:10]

BORIS SANCHEZ, CNN HOST: A critical call with a possible trade war at stake: President Trump expected to speak with Canada's Prime Minister at any moment. Tariffs set to take effect at midnight if these two leaders can't agree on a deal to prevent that from happening.

BRIANNA KEILAR, CNN HOST: And a warning from an official at USAID. Elon Musk's threat to shut down the agency is a, quote, "apocalypse" for a group that provides billions of dollars in desperately needed aid for other countries. The billionaire says Trump agrees with him that the agency needs to be closed.

And a grim salvage operation underway as crews begin to remove large parts of the wreckage of American Airlines Flight 5342 from the Potomac River. Officials are giving an update here on the effort just one hour from now.

And we're following these major developing stories and many more all coming in right here to CNN NEW CENTRAL.

SANCHEZ: At any moment, President Trump is set to speak with Canadian Prime Minister Justin Trudeau. Their second conversation of the day with just hours to go before sweeping tariffs go into effect between the two nations. Trump vowing to initiate 25 percent tariffs on many Canadian imports at midnight. Though, we should note, he paused the same conditions for Mexico earlier today.

Trump announcing a one-month reprieve as Mexican President Claudia Sheinbaum promised to send 10,000 soldiers to reinforce the U.S.- Mexico border. We're joined now by CNN's Matt Egan, who has more.

Matt, markets at least earlier in the day had not been responding favorably to all of this.

MATT EGAN, CNN REPORTER: That's right, Boris. I mean, there are days where markets move in mysterious ways, and it's not really clear what's driving stocks up or down. Today is not one of those days. It is totally clear. The Dow fell almost 700 points this morning as investors were bracing for President Trump to put tariffs on all three of America's biggest trading partners. But the market turned around completely. You see, the Dow is actually up by a few points right now. And that's because, yes, Trump has said that those tariffs on Mexico, they haven't been canceled, but they've been delayed by a month.

So, the message from the market seems clear here, right? Tariffs are not great for business. And we've heard the same message from business groups, right? Homebuilders are warning of higher home prices because there's going to be tariffs on building materials. Farmers are worried about retaliatory tariffs. And the footwear industry is also alarmed about higher prices.

I talked to the CEO of the trade group who represents Crocs, Nike and other footwear companies. And he told me, "If you want to make a list of ways to drive up prices, this tariffs would be at the top of the list. It's totally counterproductive."

And he went on to reject the President's argument that tariffs are paid by foreigners. He said, look, we're paying these tariffs. Consumers are paying these tariffs as well. And to that point, there's some new numbers up in the Peterson Institute that finds that a typical household is going to have to pay an extra $600 per year because of the tariffs on Canada and on China that we're just hours away from. That figures actually goes up to $1,200 per year if you include the planned tariffs on Mexico as well.

So, look, at the end of the day, clearly "tariff man," as President Trump has called himself, tariff man is back. And that doesn't just need mean a return of all the tariffs themselves, right? It's also return of the chaos, the uncertainty, right?

Tariffs are threatened. They are increased. They're dialed back. Retaliatory tariffs are threatened as well. And meanwhile, everyone's just trying to make sense of it all. And consumers, of course, are bracing for the potential of higher costs. Boris?

SANCHEZ: And bracing for tariffs to potentially go into effect tonight, right? What do you think investors will do if they do? What happens tomorrow?

EGAN: Well, I don't think that we're going to see a dramatic reaction from the market if those tariffs on Canada and on China go into place, because I think at this point it's probably largely priced in. But I do think the reaction from the market is telling, right? There is some concern about tariffs now, right? We're just in a very different environment from back in 2018 and 2019 during Trump's first term. Investors, central bankers, consumers, everyone's a lot more sensitive to higher prices right now. And there's obviously just concern about interest rates, right?

I mean, if tariffs go into place, if they stay in place for a long time, it could prevent the Federal Reserve from lowering interest rates, which, of course, would mean higher borrowing costs, higher mortgage rates for everyone. So there's so much at play right now and we're going to find out in just the next few hours whether or not these tariffs do, in fact, take effect. Boris? [15:05:09]

SANCHEZ: We may get some indication of what's going to happen based on the readout from this call, so we'll be watching for that. Matt Egan, live for us in New York, thanks so much. Brianna?

KEILAR: President Trump again saying that he'd like our northern neighbor to join the United States.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Well, I'd like to see Canada become our 51st state. We give them protection, military protection. We don't need them to build our cars. I'd rather see Detroit or South Carolina or any one of our Tennessee, any one of our states build the cars. They could do it very easily. We don't need them for the cars. We don't need them for lumber. We don't need them for anything.

(END VIDEO CLIP)

KEILAR: Canada not on board with that idea, to say the least, but Trump's objective for waging a trade war with Canada is not actually clear. He's mentioned Canada becoming a state. He's also mentioned wanting more American banks in Canada, Canada's car exports, their immigration and drugs.

And just this afternoon, Trump's trade adviser, Peter Navarro, said it was that last one, drugs, that is motivating the tariffs on Canada.

(BEGIN VIDEO CLIP)

PETER NAVARRO, PRESIDENT TRUMP'S TRADE ADVISER: We're in a drug war and Mexico understands that. They've been very cooperative. President Trump has been fully engaged with the Mexican president. Canada seems to think we're in a trade war and not only seems to think we're in a trade war, they're dramatically provoking the trade war.

(END VIDEO CLIP)

KEILAR: You can't blame Canada, even though South Park, the movie might suggest you should for thinking they're in a trade war and not a drug war with the U.S., because less than 1 percent of the fentanyl street supply in the U.S. comes from Canada. Most drugs come through ports of entry, not between. And in 2024, only about 43 pounds of fentanyl was seized at the northern border compared to more than 21,000 on the southern border. And that's not sitting well with Canadian officials, including the outspoken Canadian MP Charlie Angus.

(BEGIN VIDEO CLIP)

CHARLIE ANGUS, CANADIAN MEMBER OF PARLIAMENT: Well, I think the issue is, is that Donald Trump is claiming Canada is a narco state. The man's a liar. So, would we put some more money on the border? Sure. I'd love to put more money on the border to keep American guns from shooting our people on the streets. We would do that to avoid a trade war. We're reasonable as Canadians.

(END VIDEO CLIP)

KEILAR: And a big meeting scheduled right now with Justin Trudeau and Donald Trump. We'll see where that goes.

In the meantime, global markets are seeing some uncertainty from the threat of tariffs. And CNN's Richard Quest is here with a look at that side of this equation.

So, Richard, is there worry that Trump could expand this use of tariffs?

RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: Oh, I don't think there's worry that he could. There's worry that he will. And I - we are in such uncharted territory here that I'm aware that anything I say, not only could be nonsense and meaningless by tea time, but it's - look, let's just take this. The speed with which he has settled with Mexico suggests he always intended to. That this was a deal waiting to be done. The Mexican president offered 10,000 troops. She probably knew that was a price he would accept. Done deal. Sorted. Excited.

Canada's different. Listen to the rhetoric that you've just been hearing about. It's as if the administration wants this fight with Canada because of the territorial ambitions regarding - whether it's Greenland or Canada or whatever. Donald Trump is looking at this in a different way, because there's no logic.

There is no logic on the drugs issue. There is no logic on the immigration issue. The guns go north, not south. Same around. So, if we - we have to start looking at where does he want to have a fight? He wants to have a fight, I think, with Canada. Nothing else could explain the way it's been put together, and the EU.

He loathes the EU. Have a listen.

(BEGIN VIDEO CLIP)

TRUMP: We have massive deficits with the European Union. Massive, like $350 billion, if you can believe it. They don't take our farm product. They don't take our cars. They don't take almost anything. I asked a couple of the leaders. I don't want to use names, but how many Chevrolets or Fords do you see in the middle of Munich, and the answer is none because they don't take any cars. They don't take anything.

So, the European has abused the United States for years and they can't do that. And they want to make a deal. Let me tell you, in all cases, they all want to make deals.

(END VIDEO CLIP)

QUEST: He's conveniently forgetting that for all those number of years, the reason they didn't take all the cars from the U.S. is that U.S. car manufacturers: Ford, General Motors, Chrysler had large operations - Volkswagen - I'm sorry, Vauxhall - had large operations in Europe. [15:10:09]

So, that's why it was. But my point also, let's look at the U.K., he's also not one - he's also suggesting he could do a deal with the U.K.

Brianna, this is about politics. It's what he wants and who he wants to have a fight with.

KEILAR: Yeah. And sometimes it's just about appearances as well.

Richard Quest, thank you so much for that. Boris?

SANCHEZ: Let's expand the conversation now with Larry Summers. He's a former Treasury secretary under President Clinton. Larry, thanks so much for sharing part of your afternoon with us. I do wonder what you make of Trump and some of his administration officials saying that Canada is inciting this trade war through their actions. Do you see it that way at all?

LARRY SUMMERS, FORMER TREASURY SECRETARY UNDER PRESIDENT CLINTON: It's absurd. Canada is our friend. Canada is not an important source of illegal immigrants. Canada is not an important source of illegal drugs. Canada is an important market for American products. Canada is a crucial co-producer with American automobile companies that enable North America to compete with Asia and Europe.

This whole policy is of the stop or I'll shoot myself in the foot kind. It represents a self-inflicted supply shock, a wound on the American economy. It is very dangerous. The major winner will be Xi Jinping.

SANCHEZ: Why do you say that?

SUMMERS: Because we are, with our tariffs on China, giving him an excuse for their poor economic performance and ability to blame it on us. Because by alienating all our traditional allies and creating uncertainty about whether we can be relied on, we're driving people into China's arms.

SANCHEZ: When it comes to the impact on U.S. consumers, if these tariffs wind up going into effect one minute after midnight, how soon do you think Americans are going to feel an impact?

SUMMERS: I think it'll be within a week - within a small number of weeks, because people will know that when they deplete their inventory, the marginal new good in their inventory is going to be more expensive because of the 25 percent tariff, and therefore they'll price that in. They'll want to be able to blame their price increases not on themselves, but on some policy from outside, and so they'll want to associate the price increase as much as possible with the tariff, and that will mean doing it very quickly.

So, I think this will be felt very rapidly in the economy, and there's never a good reason to raise prices, reduce people's purchasing power, in order to make yourself less competitive. SANCHEZ: What do you make of the argument that on some level beyond just economics, as Trump said, it's about your ability to have a pain threshold, to endure pain. He's essentially saying that it's part of a negotiating tactic, that as American consumers suffer that pain, there will be a greater good that comes of it, whether it means reduced fentanyl or reduced immigration in the United States or access to, for example, financial products that the United States can sell in Canada. Could there be any kind of greater good that comes from consumers paying higher prices?

SUMMERS: ... belief that the United States is suffering in a major way from Canadian exports, that the United States is suffering from a major way from its cooperation with our traditionally most reliable ally, that is Canada.

Why it would make any possible sense to raise the price of cars, and foodstuffs and gasoline by hundreds of dollars a year for consumers in order to let some American bank sell some kind of investment certificate in Canada, I can't imagine why that would be a good trade- off for American people. And the effect of all of this is just going to be that every other country in the world, if we were prepared to do this with Canada, is going to view us with much more suspicion.

[15:15:07]

They're certainly not going to do anything voluntarily generous for us if they expect to be extorted in the near future in this way. So, it's pretty rare actually to be able to formulate a policy that's loosed for American consumers, loosed for American producers, loosed for American influence in the world, and only is benefiting our adversaries who are getting a great deal of satisfaction out of seeing this spectacle of traditional alliances being torn apart with these kinds of threats.

SANCHEZ: Larrys Summers, very much appreciate your perspective. Thanks for joining us.

SUMMERS: Thank you.

SANCHEZ: Still to come, the fate of long-time humanitarian aid agency USAID is looking bleak as Elon Musk, with President Trump's blessing, is working to shut it down.

And we're following the latest out of Reagan National Airport, a salvage operation underway there to remove the wreckage of that passenger jet that crashed from the Potomac. An update on that is less than an hour away. Stay with CNN News Central.

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[15:20:48]

KEILAR: America's largest distributor of humanitarian aid around the world is in serious limbo right now as President Trump and Elon Musk work to radically remake the federal government. Just moments ago, President Trump said he has the power to scrap the U.S. Agency for International Development, also known as USAID.

Its Washington, D.C. offices were locked today. Employees told overnight to stay home. They were locked out. It was one of Trump's early executive orders. The agency's funding was frozen. Dozens of workers were put on leave. Elon Musk, the world's richest man charged with slashing costs in the federal government, says President Trump agrees with him that USAID needs to shut down.

This afternoon, the President said Musk has the power to fire government employees as long as he approves first.

(BEGIN VIDEO CLIP)

TRUMP: He's got access only to letting people go that he thinks are no good if we agree with him, and it's only if we agree with him. He's a very talented guy from the standpoint of management and costs, and we put him in charge of seeing what he can do with certain groups and certain numbers.

(END VIDEO CLIP)

KEILAR: I'm joined now by Democratic Congresswoman Sarah McBride of Delaware. She sits on the House Foreign Affairs Committee.

Congresswoman, thank you so much for joining us.

And you probably heard President Trump just a short time ago saying he liked the concept of USAID, but it was taken over by, I think he called it radical leftist lunatics. What do you make of that?

REP. SARAH MCBRIDE (D-DE): Well, this is no way to run a government, but this is the chaos of the Trump administration. His attacks on funding and workers at USAID undermine our national security. They undermine global health. They undermine our very economy. It's creating incredible risk of a global pandemic. It's throwing vulnerable women and oppressive regimes under the bus.

It's already resulted in prison guards who were overseeing thousands of ISIS combatants in Syria walking off the job because their pay was temporarily frozen. So, the President can say what he wants. He can throw out names and insults, but foreign adversaries like China and Russia are cheering on these actions because they know when the United States shirks its commitments to the world, they're able to enter and take the lead, and increase their profile and their power.

KEILAR: Is it legal what the Trump administration is doing here?

MCBRIDE: No, it's absolutely not legal. This is a gross and unconstitutional power grab. And it's also one part of a larger illegal and unconstitutional effort by this administration to gut the federal workforce and gut the federal government writ large. If they can get away with this, with USAID, they can do it anywhere. And that means that no part of the federal government, including programs like Medicare and Social Security, will be safe from this administration.

So, it is illegal, and it is just the first stop on this administration's effort to undermine programs and benefits in order to line the pockets of uber-wealthy donors and friends of the President.

KEILAR: I will say they do seem sensitive to making sure that people know those programs are not going to be touched. They've been very sensitive about that. But you hear President Trump trying to rationalize what's happening here. And he'll say things like they found $100 million for condoms for Hamas, which is not true. It's been easily refuted. There has been no money, aid money, going for condoms in the Middle East and yet he repeats it.

So, knowing that, I mean, what can Congress really do if Democrats control no chamber? What is the recourse here?

MCBRIDE: Well, first off, let me just say something, because you mentioned the administration's already lying about what USAID was doing.

[15:25:05]

They lied during the course of the campaign when they said that they wouldn't be implementing Project 2025. Well, this is Project 2025. So, we cannot take them at their word when they say that Social Security and Medicare are protected. Fool me once, shame on you. Fool me twice, shame on me. We will not be fooled by this administration.

Look, we are doing all that we can. I've been working with colleagues in the Delaware congressional delegation around the clock over the last several weeks to fight back. And House Democrats are going to be utilizing our leverage in committees and through the appropriations process to push back on this administration and do all we can to stop these illegal and unconstitutional actions.

But at the end of the day, we will also need the American people to continue to rise up. We have gotten an unprecedented number of calls over just the last few days because of these billionaire, unelected individuals taking over our federal government. And we need people to continue to reach out to us, continue to speak out. And ultimately, we also need to win the November 2026 election so that House Democrats have a majority and can truly hold this administration to account with hearings, with legislation and with the full control of the United States House of Representatives.

KEILAR: Congresswoman Sarah McBride, thank you so much. We really appreciate it.

MCBRIDE: Thank you.

KEILAR: And we'll be right back.

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