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Layoffs Begin at Auto Plants; Deadly Tornado Outbreak; Stocks Plunge on Trump Tariff Fears. Aired 1-1:30p ET

Aired April 03, 2025 - 13:00   ET

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

[13:00:37]

BORIS SANCHEZ, CNN HOST: The president says the operation is over and the patient is healing. But after his sweeping tariff announcement, the patient's vital signs are shaky and there's widespread concern about lasting side effects. We're following a reaction from Wall Street to Main Street.

BRIANNA KEILAR, CNN HOST: And smile for cameras, but what's really going on behind the scenes? Secretary of State Marco Rubio face-to- face with European allies as they sound the alarm over President Trump's policies.

Plus, dozens of tornadoes rip through the Central United States, tearing through homes, tossing cars, and the threat of more twisters is not over yet.

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

SANCHEZ: Thank you so much for joining us this afternoon. I'm Boris Sanchez, alongside Brianna Keilar, in our nation's capital.

Fewer than 24 hours after President Trump tried to reset global trade, stocks are plunging, recession fears are rising, and world leaders are now vowing retaliation, though, according to the president, it's all part of the plan.

KEILAR: That's right.

The message from the White House today in the middle of all of what has been some fallout, trust in Trump. Here's more from Commerce Secretary Howard Lutnick.

(BEGIN VIDEO CLIP)

HOWARD LUTNICK, U.S. COMMERCE SECRETARY: The president is not going to back off, but there is room...

PAMELA BROWN, CNN HOST: So, he's not going to back off of what he announced yesterday? That's cemented?

LUTNICK: He is not going to back off. He's not backing off.

BROWN: Nothing could change that? LUTNICK: But countries can fix their tariffs, their non-tariff trade barriers, which are much, much rougher.

Only then will Donald Trump make a deal with each country, when they have really, really changed their ways.

(END VIDEO CLIP)

KEILAR: Let's go now to the White House where CNN's Alayna Treene is for us.

Alayna, what's the latest?

ALAYNA TREENE, CNN WHITE HOUSE REPORTER: Well, look, I think the White House has been very intentional in its message, even as we have heard people like Howard Lutnick, as you just played, and other top officials in the wake of these tariffs kind of struggle to articulate the end goal here.

A lot of what we have heard -- I know White House Press Secretary Karoline Leavitt made this point this morning as well -- has been to trust the president because of what he did in his first term. But, of course, that hasn't really eased a lot of the concerns for -- on Wall Street, but also with the United States trading partners.

But the real message that they have leaned into hard today, we heard the president do this as well yesterday, is really something that strikes at the core of what President Donald Trump believes, which is that the United States has been taken advantage of. Whether that's true or not or people have argued both sides of it, that is something he believes.

And what really these tariffs are meant to do is try to create a broader realignment of the global economy. It's essentially breaking what has been built over several decades, 70 or 80 years of us doing trade this way with different global partners, trying to restructure that in a way that would better benefit the United States.

Of course, a key question is, how long is this going to take? Now, we heard Karoline Leavitt speak with CNN this morning. She kind of emphasized that. She said this isn't a negotiation, these tariffs are here to stay. Instead, she called it a national emergency. Listen.

(BEGIN VIDEO CLIP)

KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: The president made it clear yesterday this is not a negotiation. This is a national emergency. He's always willing to pick up the phone to answer calls, but he laid out the case yesterday for why we are doing this, and these countries around the world have had 70 years to do the right thing by the American people, and they have chosen not to.

(END VIDEO CLIP)

TREENE: So, as you heard there, they had 70 years to negotiate this. They have chosen not to. I mean, it's really in -- the opposite of what we have heard from a

lot of the president's defenders over the last several weeks, particularly Republicans on Capitol Hill, who have tried to argue that Trump's a dealmaker at heart, he's going to back away from this, this is a negotiation.

Top White House officials are trying to say that's actually not the case, these tariffs are here to stay. And so for those who are hoping that maybe there is a quick off-ramp to this, I don't really think that's the case.

SANCHEZ: A bit of mixed messaging there.

Alayna Treene, live for us from the White House, thank you so much.

The Chinese Ministry of Commerce is calling Trump's 54 percent tariff on their goods -- quote -- "bullying," saying that China firmly opposes this and will resolutely take countermeasures.

Meantime, leaders across Europe, including staunch U.S. allies, are also vowing to retaliate.

[13:05:00]

(BEGIN VIDEO CLIP)

URSULA VON DER LEYEN, PRESIDENT, EUROPEAN COMMISSION: I know that many of you feel let down by our oldest ally. Europe has everything it needs to make it through the storm. We are in this together. If you take on one of us, you take on all of us.

OLAF SCHOLZ, GERMAN CHANCELLOR (through translator): I believe the latest decision tariffs by the U.S. president are fundamentally wrong. The entire global economy will suffer from these ill-considered decisions.

(END VIDEO CLIP)

SANCHEZ: CNN's Paula Newton is live for us in Toronto.

And, Paula, Canada just a short time ago issued their first countertariff. What does it look like?

PAULA NEWTON, CNN INTERNATIONAL SECURITY CORRESPONDENT: It is 25 percent on American-made vehicles coming into Canada. But here's the key, Boris. It's on those that are not compliant with a trade deal that's on the books with Mexico and Canada.

Now, that will still amount to likely about $5 billion U.S. and Will hurt some specific assembly plants and auto parts in the United States. It's just the way the supply chain works. More than that, though, Boris, in the last hour, Prime Minister Mark Carney did in fact issue a strong indictment of what the Trump administration has done.

He's called it, really saying that the U.S. global order, what they had sponsored for six decades, that the Trump administration has said, look, now it's over. And he also had some strong words in terms of what Canada would go through now that this trade war has been initiated and what the United States would go through as well. Listen.

(BEGIN VIDEO CLIP)

MARK CARNEY, CANADIAN PRIME MINISTER: Our trade becoming closer and closer together, that is over. I mean, we saw that that was ending a while ago. It's now emphatic. I think the world is learning that that is over.

That creates real challenges for us. We're not sugarcoating it. We're absolutely clear about that. It also, though, creates an enormous opportunity for a country like Canada, which has virtually everything that the world wants, has a lot of things that the U.S. wants, and they're going to find out how much they want it.

(END VIDEO CLIP)

NEWTON: Now, what he's pointing to there, Boris, is the fact that, in a phone call last week with the president and the prime minister, they decided there'd be a complete renegotiation of the commercial relationship between Canada and the United States, mainly because the United States has broken that trade deal that Donald Trump negotiated.

I mean, look, this really is a pivot away from the United States, as much as it can be, and it will also involve defense and security, the prime minister making a point that 80 percent of defense procurement comes from the United States -- Boris.

SANCHEZ: Paula Newton, live for us in Toronto, thank you so much -- Brianna.

KEILAR: Well, we knew tariffs were coming, but now that we know specifics, shockwaves are rippling through the global economy and American businesses.

Restoration Hardware CEO Gary Friedman was in the middle of his quarterly earnings call when the tariff news broke, and this is what he said: "Oh, expletive," starts with an S, you can guess it, as he watched the company's stock plunge. He's not alone in that sentiment, though.

Mark Zandi from Moody's Analytics used more words. He's sounding the alarm, saying: "If the administration follows through on these higher tariffs without significant carve-outs, it's going to be very difficult for the economy to digest this. A recession seems more likely than not."

Now, to be clear, a recession doesn't happen overnight. So let's look at previous recessions since the 1950s. You could see the unofficial definition of a recession is back-to-back quarterly contractions in real gross domestic product, but even that isn't a guarantee, because economic data is constantly revised.

So, who makes the official call here? Well, it's actually a small group of economists at the National Bureau of Economic Research. It's a private nonprofit organization that looks at several things, including GDP, inflation, and employment numbers.

And the data has to show a -- quote -- "significant decline in economic activity that is spread across the economy and lasts more than a few months." It's a retrospective look. That means the economy can be in a recession before we can officially call it one. So, long story short, we are ways away from any recession call, because we won't know the estimated GDP numbers for the first quarter of 2025 until the end of the month.

We also don't know if or for how long these tariffs will remain in place, because those tariffs that were announced yesterday don't officially take effect for six days. And there is a lot of inflation -- or -- pardon me -- recession talk, but what we're also looking out for is stagflation.

You, of course, know inflation. Well, stagflation is high inflation, plus high unemployment, and also slower growth. It's a triple threat nightmare scenario for policymakers, because any lever they try to pull to remedy one thing ends up hurting somewhere else. So there's really no other way to put it. It's time to buckle up, Boris.

SANCHEZ: Let's discuss this and more with Scott Lincicome. He's the vice president for general economics at the Cato Institute.

Scott, thank you so much for being with us.

[13:10:01]

Before we get into the potential for stagflation and the details of this policy, overall, I wonder if you agree with the underlying idea that U.S. trade deficits are, as the president has described them, a national emergency.

SCOTT LINCICOME, VICE PRESIDENT OF GENERAL ECONOMICS, CATO INSTITUTE: Most definitely not.

I don't think there's really a serious economist out there that would say that trade deficits are driven even by trade policies, that, instead, they're driven by underlying macroeconomic factors, and certainly not something that is a national emergency requiring these massive new import taxes.

SANCHEZ: So you reject the view that the administration has that, for national security, the U.S. needs a booming industrial base, and the way to do it, the way to rebuild it, as it's been decimated over the years, is to incentivize domestic production of goods via tariffs, via tax breaks for companies? You reject that notion?

LINCICOME: Well, I agree that the United States needs a thriving defense industrial base.

But the idea that these tariffs are going to produce that industrial base is just wildly mistaken. The reality is that about half of everything we import into the United States today are capital goods, equipment, raw materials that American manufacturers need to remain globally competitive.

When you tax those things, you actually harm American manufacturers. Throw in the inevitable foreign retaliation against American exports, the massive amounts of uncertainty that are baked into all of this, with the president effectively flipping tariffs on and off like a switch in the Oval Office, and this is just simply not an environment that's conducive to boosting the manufacturing sector.

And I'd actually expect, at the end of the day, that it's a net drag on manufacturing output investment, not a boost.

SANCHEZ: That is fascinating.

When you talk about foreign retaliation, I guess the argument from folks around President Trump and even President Trump himself would be that a lot of these countries, whether adversaries or allies, are already making it more difficult for American exporters, and so this is just getting even with folks that either bend the rules to their will or don't follow the rules at all.

What would you say?

LINCICOME: Well, there's two big problems with that.

First, if you look at President Trump's tariffs, they apply to countries that -- with whom we already have free trade agreements and that have really low trade barriers. Singapore, we have an FTA with. It has zero percent tariffs, and yet they're suddenly getting a 10 percent reciprocal rate.

So that's just a bit disingenuous, at best, I think. The other big point, though, is, we again have to ask, will import restrictions actually boost American exports? And the economics literature here is clear. Past history is clear that tariffs are actually going to undermine exports. They're going to actually do the opposite of what President Trump says he wants.

And that's even before we get to the retaliation that's inevitably going to come.

SANCHEZ: What do you anticipate it's going to look like?

LINCICOME: This is the hardest question, because I can tell you about the direct economic effects, manufacturers paying more, foreign governments retaliating.

But things really get, I think, scarier when you talk about, what happens in the next step. What happens with currencies? What happens with asymmetrical retaliation, where companies, citizens, governments are not just going after American exports of goods, but services, investment, intellectual property?

And then what does the Trump administration do in response to that? And combine that with all of that uncertainty baked in. And that's where I think the real economic trouble lies. The U.S. economy was doing pretty well for the last couple of years, but certainly was slowing down.

And the last thing we want is to do a bunch of dumb stuff that actually pushes us over the edge into a recession.

SANCHEZ: So where would you put the chances of a recession and potentially the dreaded S-word, stagflation, down the road?

LINCICOME: Yes, I mean, I think it's kind of a fool's errand to try to predict recessions, right?

But I think it's really clear that these tariffs will increase prices and reduce growth, and thus do push us towards that dreaded stagflation term. I mean, that's -- it's a recipe for precisely what we don't want and getting us back to that 1970s economy.

SANCHEZ: Scott Lincicome, I appreciate you sharing your point of view with us. Thanks so much for joining us.

LINCICOME: My pleasure.

SANCHEZ: There is likely to be some sticker shock at the car lot. Still to come, how new auto tariffs are impacting car buyers and dealers.

KEILAR: Plus, Secretary of State Marco Rubio meeting with NATO allies as anxiety builds over the president's agenda. We are live in Brussels.

[13:15:00]

And a deadly tornado outbreak hitting multiple states. The other threat is unrelenting rain.

That and much more still ahead on CNN NEWS CENTRAL.

(COMMERCIAL BREAK)

SANCHEZ: Some springtime storms have spawned a swarm of deadly tornadoes that have killed at least six people overnight and caused tons of damage and destruction across the mid-South and Central parts of the United States.

KEILAR: In hard-hit Arkansas, people captured this. It's a huge funnel cloud that whipped through parts of Lake City. You can see widespread damage being left behind.

And the threat isn't over here. More tornadoes could be breaking out today. In Tennessee, twisters shredded homes and tossed mangled cars into the air.

[13:20:05]

One survivor describing his frightening effort to stay alive.

(BEGIN VIDEO CLIP) SAMMY, TENNESSEE TORNADO SURVIVOR: I woke up. It was like I want something. And I got towards my bathroom, so I had to slip my mattress up, so when it came through, it came through real fast. And then it threw me -- it threw me a loop, out the door and out the window and all that stuff.

(LAUGHTER)

(END VIDEO CLIP)

KEILAR: And on top of all of that destruction, there's also the very real threat of dangerous flash flooding following what is forecasted to be a torrent of historic rainfall.

Adam Houston is a professor of earth and atmospheric sciences at the University of Nebraska-Lincoln.

Sir, thank you so much for being with us. As you're looking at this outbreak, how are you seeing this episode?

ADAM HOUSTON, UNIVERSITY OF NEBRASKA-LINCOLN: Yes, it's pretty unprecedented to have multiple days.

And this is just the start of it, because there's supposed to be additional severe storms today and tomorrow and into Saturday. It's unprecedented in terms of the scope, multiple days and severity.

And, chronologically, this is the time of year that you might see these types of events in this part of the country, but to have them day after day is pretty unusual. And then to have the flooding risk on top of it is -- makes it even worse.

SANCHEZ: Have you also noticed an increase in the intensity of these storms compared to previous seasons?

HOUSTON: You know, it's hard to say.

I mean, one of the things we do know is that, as the climate is changing, we have a lot more variability in these kind of severe storm events, meaning that not necessarily they're getting more severe, but they are getting -- you have periods of lots of severe weather, then droughts, so to speak, of severe weather, so a lot more ups and downs.

So I think the -- and that's challenging. It's challenging to forecast those events. It's challenging to prepare for those types of events. In terms of severity, it's really hard to say.

KEILAR: What are the real impacts on people? We're looking at video right now of the damage, which, as usual with tornadoes, is just mind- boggling what they can do.

But what are the real impacts on people as they try to prepare, the impacts on communities as they try to insure themselves against this kind of thing?

HOUSTON: Yes, there's -- in some times -- in some ways, there's only so much you can do.

I mean, the best thing to do, particularly for tornadoes, is just to be aware, to be aware of the risk, be aware of any tornado warning that might be issued. There are certain things you can do in terms of construction of homes that make them a little bit better, but tornadoes are so strong. It's not a whole -- there's not a whole lot you can do.

It's -- the best thing to do is to have a plan. So, if you're at home, if you're at your place of work, if you have kids, I mean, you need to communicate this and have a plan of action, because you don't have a lot of time. I mean, the typical lead time on the tornado warning is on the order of 15 minutes. Sometimes it's more.

But particularly these kinds of events in the Southeast, they often are associated with storms that are moving very fast. And so the National Weather Service is doing a great job trying to anticipate where they're going and giving as much lead time as possible. But, again, we're only talking about 15 minutes.

You're not going to be able to make big changes in your plan. You have to have that plan already kind of in everybody's mind, so that you just take action very quickly.

SANCHEZ: Really important advice.

Adam Houston, thank you so much for joining us.

HOUSTON: You're welcome.

SANCHEZ: Still ahead: Temporary layoffs begin at auto plants in the United States, Canada and Mexico. It's as there's now a 25 percent tariff on every car, truck and SUV that crosses the border.

In just moments, we're going to be joined by a car dealer who says this will drastically impact his business.

(COMMERCIAL BREAK)

[13:28:42]

KEILAR: Some American autoworkers are already feeling the impact of President Trump's tariffs on imported cars and car parts.

Stellantis, one of the Big Three automakers in the U.S., whose brands include Dodge, Jeep and Chrysler, is pausing production of some of its Canadian and Mexican assembly plants, and that's resulting in temporary layoffs of about 900 hourly employees at five different plants across Michigan and Indiana that supply those Mexican and Canadian facilities.

The 25 percent tariff went into effect at midnight last night, and another round of tariffs on imported auto parts is expected to go into effect on May 3.

The president is arguing that these tariffs will lead to a dramatic increase in auto manufacturing here at home, but even cars assembled in American factories will likely get more expensive if they use foreign parts.

But just how high are we talking? Well, Bank of America estimates an increase of about $3,200 per vehicle on cars assembled in the U.S., while Goldman Sachs says cars made abroad could cost up to $15,000 more each.

Former Ford CEO Mark Fields warning -- quote -- "It's just math. The bottom line is, there is absolutely no vehicle that won't be impacted by tariffs."

With us now, owner of David Dodge Chrysler Jeep RAM, David Kelleher.

David, thanks so much for being with us.

Give us a sense of how these tariffs have been affecting you and are going to affect you there in car sales.