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U.S. Markets Volatile as Trump Triples Down on Trade War; Trump, Netanyahu Meeting in White House to Discuss Tariffs and War in Gaza; Trump Threatens 104 Percent Tariff on China; Unfounded Rumor on Tariff Pause Causes Wild Swing on Wall Street; Global Markets on Edge as Trump Tariffs Drive Steep Losses. Aired 2-2:30p ET

Aired April 07, 2025 - 14:00   ET

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

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[14:02:30]

BORIS SANCHEZ, CNN CO-ANCHOR OF "CNN NEWS CENTRAL": Happening now, whiplash on Wall Street as President Trump fires off new tariff threats at the same time signaling that the White House is open for negotiations. With just two hours left in trading today, wary investors have been keeping tabs on wild swings. At one point, the market hitting bear market territory, that was before Trump threatened an additional 50 percent tariff on China in response to their reciprocal tariffs. Now, if you do the math, that would equal a 104 percent tariff on one of the country's largest trading partners.

BRIANNA KEILAR, CNN CO-ANCHOR OF "CNN NEWS CENTRAL": That is huge. And right now, the president is meeting with Israel's Prime Minister Benjamin Netanyahu. This is really the first chance for any world leader to negotiate tariffs with President Trump face to face. Israel facing a 17 percent tariff despite being an ally, despite that being higher than was expected. Reporters may be allowed into that Oval Office meeting soon. And we are going to bring that to you live when it happens, no doubt there will be a lot of news.

Let's bring in Jeff Zeleny at the White House. Now, Jeff, just minutes ago, the White House canceled a planned joint press conference between Trump and Netanyahu, which seems like a very big development here. What are you learning about it?

JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: Brianna, certainly an intentional development. Nothing, of course, is either on or off the president's schedule without a reason for it. And by removing that scheduled press conference from the public agenda, it certainly signifies that the White House is not eager to have the president out taking a variety of questions in a formal setting. Of course, the White House is pushing back against all, what they view in the words of one advisor, hysteria over the tariff policy.

But when you look at what the world financial markets have endured, really in less than a week's time, this is why so many countries are on edge, of course, and the administration is still left trying to explain its policies. So this is going to be the first opportunity with the Israeli prime minister here face-to-face with the American president to talk about tariffs, of course. As you said, Israel is an ally but many of the countries on that long list of countries being assigned either a 10 percent tariff or a much bigger one are allies. It is hitting allies and adversaries alike as the president is trying to remake the global trading economy, if you will, with much consternation and objection on Wall Street.

So the president certainly will be asked about if he still believes in this policy, but just the fact that he sent out a message this morning on social media about China, one example, imposing yet another tariff starting tomorrow.

[14:05:00]

You guys did the math, 104 percent, think what that would do to the cost of goods. So that sort of sets the table for this conversation. But of course, many, many, many other things that you discussed between these two leaders, a ceasefire deal is just one of them, of course. This is the first time that they've been coming together face to face to meet since February, and so much has fallen apart in terms of the ceasefire potential in the Middle East as well for, Boris and Brianna.

KEILAR: Jeff Zeleny live for us at the White House, thank you. Let's discuss this now with Gabriela Santos. She is the Chief Market Strategist for the Americas at JPMorgan Asset Management. Thank you so much for being with us. We're watching these volatile markets. They spiked briefly this morning after that unfounded rumor from a Kevin Hassett interview that President Trump may pause tariffs made its way around. How should investors be reading when they're reading it, when they're listening to these White House advisors give interviews, when they're presenting such mixed messages on the possibility of negotiations?

GABRIELA SANTOS, CHIEF MARKET STRATEGIST - AMERICAS, JPMORGAN ASSET MANAGEMENT: Yeah, that's a great question. I think we can get some signal from some of the headline noise we've seen, which is that the outlook for this year is going to be different than what was expected to start the year. And when there's such a big change versus expectations, that's when the market has to price that in and helps to explain why we've seen a 17 percent correction from mid-February all- time highs.

And I think the signal we're getting is that tariffs is really a feature here, not a bug, of this administration really aimed at a whole variety of different objectives. I think what we've seen over especially the last two, three trading days is investors understand that 10 percent tariffs are now a floor for what we should expect. And then there could be a ceiling, or maybe not quite yet, around 25 percent depending on how tomorrow goes and how further negotiations go. And for tariffs, we really see this as something that -- just typical economic theory teaches us that it raises prices and it cools activity and markets are pricing that in, in advance, on what happens with corporate profits.

SANCHEZ: What do you expect to happen to markets if that ceiling for China reaches 104 percent? SANTOS: So for China specifically, I think the market had understood, coming into this year, that tariffs would be at the epicenter of policy with regards to China specifically, which was what happened during the first trade war where tariffs were increased from three to 13 percent. We estimate that we're actually already at 65 percent for China specifically. From 65 to 104, it just increases the magnitude of the hit on consumer prices as well as the slowdown on growth.

It's also something that we have to factor in when we think about company by company, which companies have exposure to suppliers that are based in China and then are exposed to these ever increasing tariffs. And also which companies have revenues that are derived from China and are now exposed to these retaliatory China's -- tariffs that China has imposed, which we estimate now has brought up the average Chinese tariff on U.S. imports to 51 percent. So that's why there can be a very nuanced impact within the market depending on that company's exposure, as well as a nuanced impact on the economy overall depending on the magnitude from here.

KEILAR: And Gabriela, JPMorgan Chair Jamie Dimon, your boss, full disclosure obviously, warned about a great probability of a recession in his letter to shareholders. He's not alone in that assessment, right? We're hearing Goldman Sachs analysts put it at 45 percent and that's based on these tariffs not going into effect on Wednesday. So they say if that happens, they're going to shift it into recession more likely. Is there anything right now that President Trump can do besides strike some quick deals and move away from this posture that would avoid a high likelihood of a recession?

SANTOS: So I think the first is, that floor around 10 percent that we're seeing, even that alone could cause a cooling in the economy and a very mild, what we would call, a mild recession. Because if you just think about it, companies would pass on about half of the increase in cost to consumers, especially lower-end consumers would really feel the pinch. Tariffs are a very regressive tax and would pull back on spending.

And then on the corporate side, we would likely see a wait and see pause on investment hiring and depending on the magnitude, on layoffs. So even right here, we would say where we are today that the probability of recession has gone up.

[14:10:00]

Now depending on what happens on Wednesday at midnight and if we see a further increase of those tariffs to levels we hadn't seen since the early 1900s, then that probability goes up and also potentially the magnitude of any recession could also start to become more severe. Now, of course, it will depend on exactly what happens with tariff policy. It could easily be eliminated, and this is really a policy driven shock, so it could easily go away.

We also are watching, for example, any fiscal policy responses, for example, with this bill making its way through Congress. Are there additional tax cuts, for individuals and some companies that are included and could help offset some of this impact as the year goes on?

SANCHEZ: It seems like the administration is banking on some of that. We'll see what happens. Gabriela Santos, thank you so much.

SANTOS: Thank you.

SANCHEZ: So right now, Israeli Prime Minister Benjamin Netanyahu is meeting with President Trump at the White House. This was their handshake outside the West Wing just moments ago. It's Trump's first in-person meeting with a foreign leader since he announced these sweeping tariffs and that 17 percent tariff on Israel, along with the ongoing war in Gaza and Iran, are expected to be big topics of conversation.

KEILAR: And there, Trump kind of just left Netanyahu hanging a little bit.

(LAUGH)

KEILAR: He seemed surprised he walked in very abruptly there. So we'd been expecting to hear from both of them at this press conference. It had been on the schedule for some time, but then the White House abruptly canceled that just a short time ago. So let's turn now as CNN's Chief National Security Correspondent, Alex Marquardt.

Alex in Whitehouse is saying, well, Trump may be taking questions with Netanyahu in the Oval Office. That's not the same thing. We just need to be very clear about that. So, why stop this press conference when it was supposed to start so soon?

ALEX MARQUARDT, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: No, it's not. And we've seen this steady parade of foreign leaders who have come through the White House since Trump took office, and there's been a formula each time. They go to the Oval Office, both of them take questions and then they have a meeting, and then they go to the press conference and they take more questions. And Trump can hardly resist it seems, taking those questions in the Oval Office.

The one lone exception, of course, to this formula was President Zelenskyy and we all know what happened there. The Oval Office meeting devolved into this shouting match and Zelenskyy was quickly kicked off of White House grounds. We're not quite sure why this is happening. There's no evidence that anything has soured in the U.S.-Israeli relationship. So, is it potentially more about the tariffs and Trump not wanting to face questions about the market?

Certainly, I think Netanyahu will be disappointed that there won't be a press conference because he's the kind of guy who wants to stand up there and explain what he wants to do, first of all, on tariffs. Why the Israelis continue to do what they're doing in Gaza, Lebanon, Syria, and what the Israelis might like to do with the U.S. in terms of striking against Iran. So, Netanyahu never wanted to shy away from a microphone.

The only silver lining in this meeting, I think, for Netanyahu today is this really just highlights the relationship, the proximity between the U.S. and Israel. The Israelis have been reminding everyone that Netanyahu was the first to come to the White House when Trump took office again, and he is now the first to come here since these trade -- tariff policies have gone into place. The Israelis tried to avoid getting smacked with tariffs by taking off the duties of American goods before the tariffs went into place. That did not work, of course. 17 percent now put in place on the Israelis, and that according to some experts in Israel could result in perhaps more than 25,000, jobs lost.

SANCHEZ: Do we know why the administration hasn't responded to that move by Israel in kind?

MARQUARDT: Well, I think what we're seeing across the board, whether it's Israel and other countries, is certainly the fact that they want these foreign -- these other countries to come and renegotiate and essentially ask, if not beg for, the administration to change the terms. And Netanyahu is certainly banking on his relationship with the administration to try to change the terms that have been put on Israel and what happens today could perhaps be an example for others to follow, if it is indeed successful.

But guys, remember, there are so many other issues for these two leaders to talk about as well. We are in the middle of the resumption of this war in Gaza. The ceasefire that Trump, forgive me, trumpeted when he took office has now completely fallen apart. His envoy, Steve Witkoff, trying to broker some kind of extension of that first phase because the Israelis have shown that they don't necessarily want a second phase because that would mean an end to the war. Hamas saying essentially, we're not going to release these hostages unless we get an end to the war. And Israel is saying, well, we obviously want those hostages back, but we're not ready to commit to that.

So, there's a lot to discuss between these two leaders. So hopefully, for our sake, they will take some questions in the Oval Office.

[14:15:00]

KEILAR: The meeting they're having is happening just hours after Israeli soldiers killed a 14-year-old Palestinian-American boy. That's according to a Palestinian official and the Israeli military is saying it was targeting a group that was throwing stones at cars. How is this sort of hanging over this visit, do you think?

MARQUARDT: Well, I think a lot of people would like to hear the American president speak up in support of his citizens. This is not necessarily the kind of incident we would expect these two leaders to highlight. And I think it is very important. Hours before, actually, as Netanyahu was already here on the ground in Washington, these three American teenagers, Palestinian-American boys, were shot at and struck. One of them, a 14-year-old, as you say, was killed. And the IDF in response called them terrorists who hurled rocks toward the highway.

I've reported in the past about Palestinian-American teenagers during this war who have been killed. And oftentimes, because we're so focused on Gaza, we're not focused on what's going on in the West Bank and there's increasing violence by Israeli settlers and troops against Palestinians there. And here we have American citizens who have now been shot and killed. So, it'll be very interesting to see if that's raised. I would imagine there are some journalists in the Oval Office who will certainly want to ask about that.

SANCHEZ: Alex Marquardt, thanks so much. Still to come, we get to the bottom of the rumor that briefly put markets in the green. You see that little bit of green on the chart today, that gave Wall Street false hope. We'll break down where it started and what it might reveal about investors' desperation. And farmers are finding themselves in an uncomfortably familiar place after needing billions in aid during President Trump's last trade war, are they now better positioned to cope with this one?

KEILAR: Plus, water rescues underway in Kentucky after days of violent storms. And the governor says the danger is not over yet. We'll have that and much more coming up on "CNN News Central."

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[14:21:40]

KEILAR: Blink, and you might have missed it. Wall Street opening today plunging into bear market territory. But then soon after it surged, you see that green spike there, just as quickly though, it tumbled back to red again. And that was all in the span of minutes.

SANCHEZ: That wild swing was fueled by a rumor that President Trump was considering a temporary 90-day pause in tariffs as investors search for any sign that the administration could negotiate or even halt the trade war. CNN's Chief Media Analyst Brian Stelter joins us now. Brian, the White House is denying that the president is thinking about pausing these tariffs. Take us through how this rumor got started.

BRIAN STELTER, CNN CHIEF MEDIA ANALYST: It was an obscure account on Elon Musk's X with barely a thousand followers that first posted this claim as fact at 10:11 a.m. Markets were already looking for a reason to rebound from the lows of 9:30 a.m. and 9:45 a.m. Some stocks were already trending upward. And then this tweet emerged on a tiny little Twitter account. It was attributed to National Economic Council Director Kevin Hassett. Two minutes later, this is the important part, that tweet was amplified, copy and pasted by a much more popular Twitter account, sorry, X account.

It was reposted by an account with millions of followers and went viral within a span of one to two minutes. By 10:15, this was on CNBC and other financial news networks. And that blip you see, that blip is a lot more than a blip. At 10:15 billions of dollars were made and especially lost in those minutes as people interpreted this stray tweet. Now, there's no real -- this popular account is called Walter Bloomberg, no relation to the Bloomberg News Service. It tries to feed off Bloomberg's credibility in order to get traffic. And ultimately that may have been what this was about. This might have been obscure X accounts trying to drive the market. We don't know for sure because they have not explained themselves. KEILAR: OK. So, this wasn't a real quote, is that what you're saying?

STELTER: Not a real quote from Hassett. The White House denied it. Took a few minutes to get that denial, but you see the market declined as a result. And there's no real accountability in these situations when a random user on social media says something people want to hear, it can drive the market, but there's no accountability. One of these accounts did end up deleting the faulty quote, but that's basically it.

I think what it does tell us though is that investors are on a hair- trigger alert. There's so much cash waiting on the sidelines right now, so many people wanting a reason to buy stocks and in some cases this morning, they mistakenly did so.

SANCHEZ: So, I mean, what's the lesson here? It seems like you shouldn't trust social media.

(LAUGH)

STELTER: Yeah, well, look, reader beware. And in some cases, algorithms beware. A lot of this trading is happening --

SANCHEZ: Right.

STELTER: -- by computers, not just by human beings. So whether it's an algorithm that sees the X post that's going viral and reacts, or whether it's people, it is reader beware. We learned in journalism school, if your mother tells you she loves you, check it out. Well, nowadays, I think it is if the social media algorithm says something you want to hear, you should check it out. And if it tells you that Donald Trump is backing down from his tariff promises, you should really be skeptical. The profits might be sweet, but the losses are going to be really sour.

KEILAR: Yeah. Brian Stelter, thank you for taking us through that. Do appreciate it. And next, President Trump is now vowing to hit China with a retaliatory tariff that would then put tariffs on China at 104 percent. We'll be speaking to an Iowa farmer.

[14:25:00]

His state could be one of the hardest hit in this fight with China.

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SANCHEZ: Global markets have been rocked by President Trump's sweeping tariffs on his trading partners and now some countries are looking to negotiate.

KEILAR: But that is not the case with China, which slapped the U.S. in response with its own 34 percent tax. And that prompted Trump then today to threaten to bump China's tariffs up another 50 percent if China doesn't back off of their retaliatory tariff by tomorrow. And --

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