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Pentagon Watchdog Launches Probe of Hegseth Signal Messages; Now: Hearing on Whether Trump Deportation Flights Violated Court Order; Temporary Layoffs Start at Auto Plants in U.S., Canada, Mexico; Tax Foundation: Tariffs Will Cost U.S. Households $2,100/Year on Average; Stocks Plunge, Dollar Weakens as Recession Fears Grip Wall Street. Aired 3-3:30p ET

Aired April 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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[15:00:40]

UNIDENTIFIED MALE: This is CNN Breaking News.

BORIS SANCHEZ, CNN HOST: Breaking news into CNN, the Pentagon's Acting Inspector General says he will review Defense Secretary Pete Hegseth's use of Signal to discuss military strikes in Yemen last month.

BRIANNA KEILAR, CNN HOST: CNN's Natasha Bertrand is live for us at the Pentagon. What are you learning about this, Natasha?

NATASHA BERTRAND, CNN NATIONAL SECURITY CORRESPONDENT: Well, the Acting Inspector General just sent a letter to Secretary of Defense Hegseth telling him that he is going to be launching a review of his use of a commercial messaging app to discuss these military strikes in Yemen last month and this comes after the chairman and the ranking member of the Senate Armed Services Committee actually requested this inspector general investigation because of course there was so much outcry over the use of Signal to discuss these very sensitive military operations against the Houthis that took place just last month.

Now, the Inspector General, the Acting Inspector General, he did say that essentially Hegseth is going to have to turn over some materials as part of this investigation. They asked the Secretary of Defense to appoint two people that could liaise with the office of the Inspector General in order to provide them with the necessary information. And noted that by law the Acting Inspector General and the Office of the Inspector General writ large they do have the authority to ask for relevant materials.

And they went on to say that this investigation is going to be taking place both here in Washington, D.C., of course at the Pentagon and also at Central Command headquarters down in Tampa, because this was ultimately a U.S. Central Command operation. And they're going to be investigating, look, was there any rule breaking when it came to the use of Signal to discuss any kind of classified information, were records retention laws violated. All of this is going to be wrapped into this IG probe. And it is a review, it's not necessarily framed as a legal investigation, for example, but it is one of the first, you know, consequences that we have seen in terms of the fallout from this Signal chat fiasco. Now, we should note that Secretary of Defense Pete Hegseth's spokesperson, Sean Parnell, he said in a statement last week that, quote, "These additional Signal chat messages," which were revealed by the Atlantic magazine last week and which disclosed Hegseth really outlining very detailed strike plans against the Houthis in Yemen, "confirmed that there were no classified materials or war plans shared," according to the statement.

Parnell said the Secretary was merely updating the group on a plan that was underway and had already been briefed through official channels. But, of course, CNN has been told and did report that the messages that Hegseth shared were in fact classified at the time. So, all of this now is going to be looked at by the Acting Inspector General. We should note the previous inspector general of the Defense Department was actually fired by President Trump early on in his administration.

KEILAR: Yes, that's right. Natasha Bertrand, live at the Pentagon. Thank you.

Happening right now, a high profile and fierce legal showdown is getting underway in a D.C. courtroom. Justice Department attorneys are making their case before Judge James Boasberg, arguing the Trump administration did not defy the judge's order to halt those deportation flights using the Alien Enemies Act.

SANCHEZ: But we know several U.S. planes landed in El Salvador in the hours after the judge's order. Joining us now is CNN Crime and Justice Correspondent Katelyn Polantz.

Katelyn, you've been following how the judge has been trying to get to the bottom of what happened. What are you anticipating will come at this hearing?

KATELYN POLANTZ, CNN SENIOR CRIME AND JUSTICE CORRESPONDENT: Well, this is a hearing where we really may get an answer on whether this judge, Judge Boasberg, believes the administration defied him intentionally. It's been the question that has been hanging over many of these court proceedings. Is the administration just willing to not follow court orders? This is the hearing where this judge is going to hear arguments about that very issue. The first time we've really heard this sort of thing come to a head like this in court.

The hearing today, it's about a case that raises very big questions related to the power of the President in immigration, in deportations. A lot of those questions are sitting before the Supreme Court now, so not going to be discussed today. But what is discussed today is two planes that were in the air on Saturday, March 15th, while Judge Boasberg was having a hearing with the government and telling him, turn the planes around. You can't have people on those planes being removed from the country under the Alien Enemies Act.

[15:05:06] Right now, the administration in their court filings, they've made some very technical arguments saying, we weren't not complying with you. We did have those planes out of the airspace. We were flying them in the air. The order was coming in in a written form later. And so, we weren't defying the court order, even though these two planes did land in El Salvador and give those migrants over to the Salvadoran prison.

But in this situation, Judge Boasberg, he really wants to determine, looking at the facts here, if the administration could have turned the planes around. And they must prove to him, show to him today, that the failure to turn those two planes around with the migrants on them, that that was not a direct violation of court orders.

The consequence, potentially, sanctions of lawyers, even people in the Trump administration. We don't know what that would look like, but that is what is potentially at stake here. Sanctions contempt of court for the Trump administration.

SANCHEZ: Katelyn Polantz, keep us posted on what happens in court.

Let's get some analysis now with Shira Scheindlin. She's a former federal judge from the Southern District of New York.

Judge, thanks so much for being with us.

What will you be watching for in today's hearing?

SHIRA SCHEINDLIN, FORMER U.S. JUDGE, SOUTHERN DISTRICT OF NY: Well, I think the real question is what we call separation of powers. You know we have three branches of government and they're supposed to be co- equal. So the question is, executive power, does it overcome the court's power? Can the court tell the executive what to do? I think that's the big overriding issue that we're going to hear a lot about.

And then there's this technical argument about oral orders versus written orders. I think that's a red herring. I don't think there's anything much more to say about that. I think that an order is an order of the court. And when a court issues an oral order, there's a transcript. That's the ruling, so that's very technical.

It does seem to me that the judge is going to hear a lot of evidence as to why they won't give him what he asked for. Do they have a really good basis that - raising state secrets. They're saying we can't give you this because of National Security. That's what they're going to really delve into.

And I don't think we're going to get a ruling orally from the bench. I think he's going to listen to the evidence, think about it, and decide whether he really wants to hold these people in contempt of court and what the remedy is if he holds them in contempt of court. So, there's an awful lot going on here.

SANCHEZ: Yes, no question about that. You touched on so much of it. I wonder on the state secrets privileges angle, the fact that they're withholding some pertinent information, do you think Judge Boasberg has what he needs to make a determination there? How do you think he's going to land on that?

SCHEINDLIN: Yes, I don't think he has enough information. I think he's going to press them and say, what is it about? What's the state secret about a time that a flight leaves or a time that a flight lands? That doesn't really sound like a state secret. I'm sure those records are kept and are available under Freedom of Information Act. It's not a state secret what time a flight takes off.

And that's a key question here, did they knowingly and intentionally violate the order. Because it seems to me from the time frame that these flights were in the air and had not yet landed and could have turned around. The third flight, of course, was after his order. But the first two had taken off. So, I think he's going to dig in deeply into the facts and press them for answers to the facts. If they refuse to answer, he'll consider that when he considers whether they've intentionally violated his order.

SANCHEZ: If he finds that, do you imagine they'll face sanctions? What do you think he'll land on in terms of his options?

SCHEINDLIN: Very few options under civil contempt. You can give escalating fines, but I mean, it's the United States government that would be paying those fines. You can actually incarcerate a person, an individual who violates your order. In civil contempt, you can actually incarcerate until the person complies with your order. I, in fact, did that once. So in theory, there must be a government person who he could say, you're in jail till you comply.

Now, I don't think he's going to want to do that, but it is an available sanction as well as fines. There's really not so much else the court can do at this point.

SANCHEZ: What about ...

SCHEINDLIN: But let's see (INAUDIBLE) ...

SANCHEZ: ... yes, what about DOJ's options in case he rules against the government? Can they appeal his decision?

SCHEINDLIN: Well, they're already in the United States Supreme Court, as you might know. It went to the D.C. Circuit.

And by two to one split decision, the D.C. Circuit so far allowed his TRO, Temporary Restraining Order, to stay in effect.

[15:10:08]

And in fact, he extended it by two weeks. So, there should be no more flights at least until April 12th. He stopped these fights - but - flights. But as you know, the problem here is with - from the beginning, does the Alien Enemies Act really even apply here? It's supposed to apply that a president has a right to detain or deport nationals of a foreign nation deemed to be hostile to the United States during war. Well, where's the war?

And he calls it an irregular warfare. I never heard of an irregular warfare. And furthermore, Congress certainly has not voted that there's a war going on. So, I think the whole use of this act is pretextual in the first place. This was a sweep up with no due process of hundreds of people. And I think our government has now had to admit that at least one or more of these people was wrongfully sent to El Salvador. And how do you get that person or people back?

So, there's just so many questions here. Anyway, the Trump administration has already gone to the Supreme Court and asked that the flights be permitted to continue. So that's under consideration now in the Supreme Court. Surely, if he were to find the government, so to speak, or an individual in contempt, he'd go right up again, right to the Supreme Court if he could, and even bypass the circuit.

SANCHEZ: It is a fascinating legal situation. Judge Shira Scheindlin, we appreciate you walking us through it.

SCHEINDLIN: Thank you.

SANCHEZ: We have breaking news to CNN. In the final hours of trading, it's been a downright ugly, no good, very bad tumble, a tumble day for stocks. It looks like the Dow is down roughly three and three quarters of a percentage, right, or 3.45 percent, I should say. They've been down across the globe reacting to President Trump's tariff announcement, and it's already affecting real people and their livelihoods. Automaker Stellantis says that tariffs-related layoffs will hit several plants in the U.S., Canada, and Mexico.

KEILAR: That's right. Let's go now to CNN's Richard Quest in New York.

Are you surprised by the magnitude of the sell-off, Richard? Is this what you expected?

RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: I'm not at all surprised. If you bear in mind the amount of economic vandalism that's been put onto the global trading system as a result of these tariffs, it's extraordinary that they've managed to hold their own as far as they have.

The administration just blew up the global trading system and completely attempted to rewire the whole thing, and nobody really knows how to do it. You've got countries that are going to be begging for favors. You've got those who are going to have to readjust. You've got some who are just wondering what on earth has hit them. So no, I'm not at all surprised.

What I'm surprised at is that this is, in a sense, it's happening, and it's happening quite in this fashion and without any warning. And how we get out of this is going to be the core part of it because economies are going to slow down. I mean, look, a few moments ago, I was just filming across the street, and we were filming products.

I'm just going to look, let me just take this, take this, take this, take this, take everything that's on my desk here. They're all imported, China, India, whatever. It's all going to cost 15-, 20-, 25 percent more as of the next shipment's in. So, of course, the market's going to fall. Whatever you buy that's imported is going to cost more. SANCHEZ: Of all those items on your desk and elsewhere, Richard, who is feeling it the most today? Where is the immediate impact?

QUEST: The immediate impact today is not the consumer because those products that they're buying in the shops today are already there, and they're not in - the people who are feeling it today are the customs brokers. Though - and besides the politicians, by the way, the world leaders like Ursula von der Leyen, Albanese of Australia, Sir Keir Starmer of Britain, they have to decide - Mark Carney in Canada, they have to decide how they're going to respond.

But in terms of the practicalities, car dealers who are getting their next shipments where tariffs are already being imposed, building merchants who are bringing in lumber and other things and how they're going to be - look at those numbers, look at them. I mean, this is - and this is because, by the way, you've also got exports from the U.S. and how are those companies going to be hit? And the import of auto parts, whichever way, by the way, my bell, which is also going to cost more, whichever way you look at it, this is just going to be one big mess for the foreseeable future.

KEILAR: And your tie probably too, Richard, and your tie, Boris.

SANCHEZ: Quite a nice tie. Actually, Richard himself is imported. So, I wonder if the tariff on Richard might ...

KEILAR: Yep.

SANCHEZ: ... might go up.

KEILAR: Yep, he'll probably cost more.

[15:15:04]

QUEST: Just in case anybody doubts I - I'm also one of you.

KEILAR: That's right. Good to know, always. Richard Quest, thank you so much.

And still to come, talk about awkward timing here. Secretary of State Marco Rubio meets face-to-face with European allies as they sound the alarm over President Trump's trade policies.

SANCHEZ: And the case of the Tufts University student whisked away by ICE agents going to court. Her lawyers accused the government of trying to keep her away from them. This and much more coming up on CNN NEWS CENTRAL.

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SANCHEZ: Today, a nonpartisan tax foundation says that President Trump's new tariffs could cost American households $2,100 every year on average. That's just one example of the pain that experts say we are facing as markets start to slide. KEILAR: And we have been keeping a close eye here on U.S. stocks all day long. Moments ago, the President had this to say when asked about how the markets are responding.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think it's going very well. It was an operation, like when a patient gets operated on. And it's a big thing. I said this would exactly be the way it is.

(END VIDEO CLIP)

KEILAR: Let's go now to Florida, where the President is heading this hour. That is where our CNN Chief National Affairs Correspondent Jeff Zeleny is.

So Jeff, the White House so far appearing unfazed by the turmoil that the tariffs have caused. What are you hearing?

JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: Well, Brianna, certainly the President there is seeming unfazed. He said the markets will boom. Talking about things in the present, not what is actually going on. I mean, look, he is viewing this as what he hopes the financial markets one day will be, but not what the country, and indeed the world, have seen for the last 24 hours.

But behind the scenes at the White House, there is no doubt many advisors, the political ones, are concerned about the fallout here. The policy ones are largely on board with the President. They believe this is something he has long addressed, long talked about, even though there's been much controversy over how these calculations were exactly reached with so many countries here, allies and adversaries alike.

But the Commerce Secretary Howard Lutnick, who's one of the president's closest advisors, he said Trump is not backing down.

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HOWARD LUTNICK, Commerce Secretary: Let Donald Trump run the global economy. He knows what he's doing. He's been talking about it for 35 years. You've got to trust Donald Trump in the White House. That's why they put him there. Let him fix it, okay?

PAMELA BROWN, CNN HOST: Right, I understand.

LUTNICK: It's broken. Let him fix it.

(END VIDEO CLIP)

ZELENY: So, essentially, a leap of faith. That's what White House officials, the White House Press Secretary Karoline Leavitt said earlier as well, that voters should essentially put their faith in the President, thinking back what he did during the first administration, which, of course, the economy was booming at the beginning of it. But these trade policies are nothing like that. This is something that none of us have seen in our lifetimes.

Now, these baseline, the 10 percent tariffs are scheduled to go into effect on Saturday. The so-called reciprocal that are actually more for different countries are scheduled to go into effect on Wednesday. The big question hanging over all of this is what types of negotiations are going on? Is the president open to turn back some of these policies?

But the Treasury Secretary, Scott Bessent, he urged countries to wait before retaliating. As we've seen all day long, many countries aren't waiting. And they say, how can you blame us? Boris and Brianna?

KEILAR: All right. Jeff Zeleny, thank you so much for that.

With us now, we have former Trump economic advisor Stephen Moore.

Stephen, thank you so much for joining us in the studio.

STEPHEN MOORE, FORMER TRUMP ECONOMIC ADVISER: Hi, Brianna. Good to see you.

KEILAR: I first want to ask you, because you saw - we heard from President Trump just a short time ago. He also said in that appearance that the tariffs will bring in $6- to $7 trillion in revenue, which is only possible if they're at a 25 percent rate, which they aren't quite on average, over 10 years, right?

MOORE: Mm-hmm.

KEILAR: So, if they stay in effect for a very long time. You told The New York Times here just a couple days ago that the President's goal was actually to lower tariffs rather than to raise them, and that Trump had conveyed that to you in conversations. So which is it?

MOORE: Well, I've talked to Donald Trump for eight years about this issue. And Donald Trump wants free trade, but he wants fair trade. And whether you agree or not with what Donald Trump did yesterday with those tariffs, and I'm not a big fan of it, but it is true that these other countries, almost every other country, does treat America unfairly. We're the - basically, the freest trade country with the lowest tariffs. And many of these countries have tariffs that are three or four times higher than we are.

So, his goal has always been to have a level playing field. And I think most Americans would agree he's right on that, that there's no reason that China should impose higher tariffs than we do or Britain or other countries. That's his goal. Now, look, I lost a lot of money in the stock market today. A lot of people did. But I think at the end of the day, the worst possible thing that these other countries could do is try to retaliate. Because how could they retaliate when they already have tariffs that are much higher than ours?

KEILAR: So - but to your point, though, that's not actually what the math is about here.

MOORE: Well, that's a different issue. KEILAR: Okay, so ...

MOORE: Okay.

KEILAR: ... you're saying that because they already have high tariffs.

MOORE: That's a different issue, yes.

KEILAR: Well, but that's not what they based the math on.

MOORE: Right. Yes.

KEILAR: They based it on the trade deficit ...

MOORE: Trade deficit, right.

KEILAR: ... with the country divided by the country's exports.

MOORE: Yes, and I don't like the way they did that, you know, I'll be the first.

KEILAR: So, okay - so there's like a lot ...

MOORE: But I think that's not a very accurate way to do it.

KEILAR: ... Stephen,. there's a lot you don't like about this.

MOORE: Right.

KEILAR: So, then let me just go back then ...

MOORE: Yes.

KEILAR: ... to - you also have the Commerce Secretary saying, I don't think there's any chance the President is going to back off his tariffs - he did have a but.

[15:25:04]

Is that just a negotiating position to you then?

MOORE: Sure it is. I mean ...

KEILAR: Okay.

MOORE: ... at some point, Trump I think has - look, Donald Trump, you know, whether you love him or hate him, is one of the best negotiators I've ever met in my life. He is standing on high ground here saying, I mean, what is Germany or France or Canada, these other countries going to say when their tariffs are up here and ours are down here?

KEILAR: Okay, but what about a poor African nation, not Germany or France?

MOORE: Yes, well, that's ...

KEILAR: What - or an Asian nation ...

MOORE: Yes.

KEILAR: ... with less purchasing power than America.

MOORE: Yes. Yes.

KEILAR: I mean ...

MOORE: Yes.

KEILAR: ... how does that increase its imports of more expensive American products to get that tariff number down?

MOORE: You know, our trade volume is so low with these - those countries. It's not really all that relevant. The big countries that matter are Germany, France, Canada.

KEILAR: Maybe not to us, but to them.

MOORE: That's true. That is true.

KEILAR: And they are being also hit by a pulling of aid, as you're aware, because of what's happened to USAID.

MOORE: Yes. Right. Right.

KEILAR: And then we look at China ...

MOORE: Well, we shouldn't have foreign aid, but that's a different subject, but ...

KEILAR: But at the same time, that is how it was.

MOORE: Yes.

KEILAR: And they were reliant on it.

MOORE: Yes.

KEILAR: And so there's this - at least a one-two punch. Do you have concerns, especially as you're looking at China here, that there's - creating this void for them to step into?

MOORE: Yes. Yes.

KEILAR: You already see, you know, South Korea, other allies, joining with them in lockstep on response here. I mean, that should not be something - do you not like that? I think we should add a list of things Stephen Moore doesn't like.

MOORE: So, let me put it very simply, all of these countries are much higher in their tariffs than ours are. So, Trump has the moral high ground here. You'd have to agree with that. When we're - you know, they're up here and we're down here, and all Trump ...

KEILAR: Because math doesn't - it doesn't account for that.

MOORE: No, I'm talking about the major countries: China, Canada, Mexico, Germany, France, Italy, Spain, their trade and non-trade barriers are much higher than ours. And so, what Trump is saying, and you can disagree with his strategy, but the goal here is a good one, which is forcing these countries to lower their tariffs, which they should do. It's not fair. It's not a level playing field. It's hurting our workers.

And that's really what Trump is after, is bringing a lot of these jobs back, because these countries are not buying our products.

KEILAR: Secretary ...

MOORE: Yes.

KEILAR: ... Bessent said businesses do not have to pass on the cost of these tariffs to - you could have other countries that could eat the cost of the tariffs. The price don't have to go up necessarily for consumers. I just spoke to a car dealer in Pennsylvania who actually sells Stellantis products: Dodge, Chrysler, Jeep, RAM. But some of those are still going to see a jump in the cost. Let's listen to what he said about what he's going to have to do.

(BEGIN VIDEO CLIP)

DAVID KELLEHER, OWNER, DAVID DODGE CHRYSLER JEEP AND RAM: The cost is going to get passed to the consumer. There's no doubt about that. There's nothing we can do about that. We can't eat - I can't eat the cost.

(END VIDEO CLIP)

KEILAR: I hear you saying you don't have to, you know, like it or whatever. But this idea representing something as it is not. I mean, we're talking to the actual people selling the things.

MOORE: Yes.

KEILAR: And they're saying, I cannot eat that cost.

MOORE: Right.

KEILAR: I mean, how can he? You're talking about a few thousand dollars a car. How important is it that these administration officials are more intellectually honest about what is happening here?

MOORE: I'll kind of give you the economic answer to that. Some of the burden of the tariff will be borne by the - for example, with an auto tariff, that will mean you'll pay a little bit more for a car. There's no question about that. I agree with you. But also, some of that burden will be borne by the foreign country that can't sell the cars.

KEILAR: That's not my question. That's not my question, Stephen.

MOORE: But - no, I'm saying, some ... KEILAR: How important is it ...

MOORE: Yes.

KEILAR: ... that they're honest about what is happening here?

MOORE: Well, what I'm saying is we don't know exactly how much the burden is going to be borne. Now, I've seen estimates from anywhere from $1,000 to $5,000 per car. We don't - I don't know the answer to that question. What I'm saying is that the institution that will pay the most for these taxes are foreign countries that are trying to sell cars in the United States, and the demand for those will go - look, if the price of something goes up, the demand for them goes down. And that's the problem that these Europeans are going to face.

That's why the worst possible thing they could do is try to retaliate against our tariffs, because if - well, number one, that would start a trade war and nobody wants to see that. But number two, they can't win, because every country in the world has to trade with the United States. We're the alpha male economy. China, Germany, France, all these countries, Canada, must have access to the American market.

And that's why I'm going to make a prediction to you, I think Trump will win here. I think it - I don't know if it's going to take a week, or a month, or six weeks, but eventually these countries are going to come hat in hand and say, take these tariffs off. And Trump's going to say, we'll take our tariffs off when you lower yours.

KEILAR: Let's be honest about some of the losers in the near term, though ...

MOORE: Yes.

KEILAR: ... is what I'm asking about. Stephen Moore, thank you so much. Great to have you.

MOORE: Thank you.

KEILAR: Appreciate it.

Still ahead, Secretary of State Marco Rubio meets with his Danish counterpart as the U.S. is looking to take Greenland. We'll be joined by the former U.S. ambassador to Denmark.

Also, President Trump's auto tariffs are already triggering layoffs.

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