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China Retaliates As Global Trade War Escalates; China Hits Back at 104% Tariff, Slaps 84% Tariff on U.S. Goods; Trade War Escalates, Markets Volatile for 5th Straight Day; Acting IRS Chief Resigns After Data-Sharing Deal with DHS. Aired 1-1:30p ET

Aired April 09, 2025 - 13:00   ET

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

[13:00:36]

BRIANNA KEILAR, CNN HOST: The President says the White House phone line is ringing off the hook, but you know when that hotline bling, it so far is not Beijing. And that's a problem, as China announces more tariffs against the U.S., as President Trump says other countries are kissing his ass, his word, trying to make a deal.

In the meantime, Europe strikes back with its own tariffs, as the Spanish prime minister suggests the E.U. may need to revisit its relationship with China. We're following the potential seismic shift in alliances ahead.

BORIS SANCHEZ, CNN HOST: And in the Dominican Republic, new details about the victims of the nightclub roof collapse as the death toll there rises. We're following these major developing stories and many more, all coming in right here to CNN News Central.

Thank you so much for sharing part of your afternoon with us. I'm Boris Sanchez, alongside Brianna Keilar in the nation's capital.

And happening right now, China hitting back at President Trump, as Europe is following suit, and again, markets are responding. China announcing an 84% tariff on U.S. goods. You see at least the DOW showing an up-and-down day so far. Just hours after that announcement from Beijing, the European Union announced a range of countermeasures of its own. All this as the administration is starting to outline its objectives with some of these negotiations.

KEILAR: The message from President Trump is, quote, "be cool." This, as he says, countries are now lining up to, quote, kiss his ass. That's what he said. But here's what others are saying, quote, "We may be headed for serious financial crisis wholly induced by U.S. government tariff policy." That's from Larry Summers, who joins us live just minutes from now.

The CEO of JPMorgan Chase also raising new alarm.

(BEGIN VIDEO CLIP)

MARIA BARTIROMO, FOX BUSINESS HOST: Do you personally expect a recession?

JAMIE DIMON, CEO, JPMORGAN CHASE: I am going to defer to my economist at this point, but I think probably that's a likely outcome.

(END VIDEO CLIP)

KEILAR: Sober words there. We have CNN Business and Politics Correspondent Vanessa Yurkevich with us.

First, though, let's go to the White House where Alayna Treene is reporting.

Alayna, the President and officials there have shed some light, I guess, on what's coming next. What can you share?

ALAYNA TREENE, CNN REPORTER: That's right. I mean, we've now really heard from the President himself that the door is open to negotiations. You played that sound, but he's clearly reveling in the number of countries and foreign leaders who are knocking on his door saying, let's make a deal.

Now, of course, not all countries are responding the same way. We know that China is essentially saying that they have no interest in negotiating on this. They're arguing that the tariffs against them are unjustified and, you know, slapping their own retaliatory tariffs on the U.S. and this back-and-forth tit for tat.

We did hear now that Treasury Secretary Scott Bessent addressed that in remarks this morning. Take a listen to what he said.

(BEGIN VIDEO CLIP)

SCOTT BESSENT, TREASURY SECRETARY: But in terms of escalation, unfortunately, the biggest offender in the global trading system is China. You know, I can tell the rest of the world that I'm not sure whether it was the prime minister or the economic minister in Spain made some comments this morning. Oh, well, maybe we should align ourselves more with China. That would be cutting your own throat.

(END VIDEO CLIP)

TREENE: That would be cutting their own throat, he says. Now, it's clear that the president himself believes that China is the worst offender on these tariffs. And we actually also heard Bessent at that same event speaking to bankers this morning. He actually said that their goal currently, one idea that this administration has, is to work with the United States' allies, places like Japan, Vietnam, South Korea in the region. And then once they have deals, tariff deals worked out, then approach China together. Unclear if those countries would, of course, accept that.

But we do know those are countries that this administration is having serious talks with. We know Japan, their prime minister spoke with the president earlier this week. They've been talking with leaders of South Korea. And then we actually learned that today, a force meeting told me that Treasury Secretary Bessent is going to be meeting with Vietnam's Deputy Prime Minister here in Washington. There's also a number of other countries that they already have talks underway with. That includes Italy, whose Prime Minister is actually coming to Washington, D.C. next week to meet with the president. Israel, of course, we saw Benjamin Netanyahu here on Monday. Cambodia, Thailand, the U.K. And then that's just, of course, one small part of this. They said that 70 countries have already reached out to the White House to try and make deals.

[13:05:12]

I think the key question, though, of course, in all of this is really what does this look like moving forward? It's very clear to me now in my conversations with Trump administration officials, but also what you're hearing from Americans is that they want to see some sort of wins on the board. They want to see some victories to make them believe that this tariff plan is going to work, that the economy is going to get better from where it is now. Still really unclear on how the White House plans to sort all of that out.

Boris, Brianna.

SANCHEZ: Alayna Treene at the White House, thank you so much.

Vanessa, over to you. Given the state of play and everything we heard from Treasury Secretary Scott Bessent, what jumps out most to you?

VANESSA YURKEVICH, CNN BUSINESS & POLITICS CORRESPONDENT: Well, we're watching markets right now, and they're up across the board. One investor told me, Sam Stovall, he's been in the industry for decades, he says that traders are like surfers and oftentimes they make their own waves. And he says that's kind of what's playing out here.

You have investors who may be doing a little bit of bargain shopping right now, trying to buy some of these stocks at their lows. We've seen Apple, tech stocks like Apple, Nvidia up today. And it's worth noting, though, that this is a snapshot in time, right?

This is one single moment. This is not a race, everything that has happened over the last week and more, really, as investors are still really trying to game out what is happening here. Where is this going to go?

A lot of investors I spoke to earlier in the week said that they're still planning for the worst-case scenario. And we've seen that kind of play out in this escalation that happened with China just this morning.

Also, investors are watching the bond market. And stick with me here, as this is a little complicated at times. But usually when stocks fall, yields on Treasury bonds also go down. But that's not what we're seeing here. We're seeing them rise and we're seeing them spike, which means that people are not putting their money in bonds, which is usually a safe haven. So folks really feeling like maybe there's no real safe place to put

money right now. And what that means when yields rise on bonds is there's a knock-on effect. That ultimately makes it more expensive for businesses and consumers to borrow, especially things like mortgages. Usually yields, Treasury yields, 10 and 30 years are good indicators of where mortgage rates are going.

So while consumers at home may not be paying attention to the markets or the bond market right now, it's just worth noting that Wall Street is indicating that they're still very, very nervous about this trade war.

And they're not finding a lot of safe places to put money right now. And ultimately, the big question is, what does this mean for prices? Well, this is an indication that prices will likely rise and borrowing costs for Americans will rise at a time when obviously you want things to become more affordable.

Guys.

SANCHEZ: Yeah, it's a red flag, no doubt. Vanessa Yurkevich, thank you so much for that.

Let's discuss with Larry Summers. He served as Treasury Secretary for President Bill Clinton's administration -- actually, before that, let's get to this other story. In response to President Trump's tariffs, the European Union today approved its first retaliatory measures.

The E.U. had been hit by three sets of U.S. tariffs, 25% tariffs on steel and aluminum, 25% on cars, and 20% tariffs on all other goods.

KEILAR: Let's go now to CNN's Anna Stewart. She's in London for us. Anna, any new details on the EU's response?

ANNA STEWART, CNN REPORTER: So we are still waiting for the full comprehensive list of what is being targeted. We think we may know what's on it, but we'll wait to have that in full. But as you say, this is really just the first tranche of retaliation from the E.U. It will be implemented next week and perhaps another one a month later. They do take some time, the E.U.

But I would say that the U.S. has actually targeted $420 billion worth of European goods overall. If we look at aluminum, steel, cars, the 20% across absolutely everything, and today they're only responding to $28 billion of that. So this response is pretty measured. And at the same time, the E.U. had this to say.

The E.U. considers U.S. tariffs unjustified and damaging, causing economic harm to both sides as well as the global economy.

Now, this is the crucial bit. These countermeasures can be suspended at any time should the U.S. agree to a fair and balanced negotiated outcome, i.e., we are retaliating, but, hey, our first option, our preferred option here really is to negotiate. They clearly haven't got very far with that. I believe President Trump really has a target on the E.U. at this stage. Perhaps he considers them to be one of the many countries ready to kiss his or America's -- and I'll let you fill in the rest.

KEILAR: I've been doing that.

SANCHEZ: Anna Stewart. Thank you so much, Anna.

[13:10:01]

So now with us to discuss is Larry Summers. He served as Treasury Secretary under President Bill Clinton's administration.

Larry, thank you so much for being with us. So you heard the Treasury Secretary there shrugging off China's escalation, claiming that it's going to be a loser for them. I wonder who you think has the advantage in this trade war, the United States or China?

LARRY H. SUMMERS, FORMER TREASURY SECRETARY, CLINTON ADMINISTRATION: I don't think it's about who wins and who loses. I think it's about everybody loses. I've just got to say that hearing the Secretary of the Treasury refer to a European ally like Spain as cutting its own throat was very sobering for me.

I've resisted the idea that the United States was behaving like Don Corleone in "The Godfather." But when I hear that kind of rhetoric from the Treasury Secretary, I have to wonder. I don't have any idea who's going to be hurt worse.

But surely the objective of our policy is to help ourselves, not to hurt other countries. And if our goal is to change China's behavior, I cannot imagine a less likely to succeed strategy than alienating with threats and with punishments every ally that we have.

Markets, if you extrapolate from the market response to what has happened, the cost to the U.S. economy of what we're doing is probably $30 trillion. This is really a major blunder by the United States. The idea that somehow we're going to get out of this without reversing our truculence is really quite unlikely.

SANCHEZ: And Larry, what do you make of investors now selling off both stocks and bonds? That's an ominous sign.

SUMMERS: It surely is. Look, it's not unfamiliar in the world. It's the normal dynamic with respect to countries that have pesos as their currency. Emerging market countries, when people think that the rule of law is deteriorating, when people think that the country is being mismanaged, they sell its stocks and they sell its bonds, too. They sell everything. And that's the way it works in countries where political risk is the big thing.

Traditionally, the United States hasn't been that kind of country at all. Rule of law has been secure. The dollar has been a central asset in the system. And so when things get risky, when stocks go down, people want to put their money into dollars. And so our Treasury bonds prices go up and their yields go down. So what this is saying is that we're becoming more like an emerging

market country, more like a country with a peso rather than a dollar as its currency. And that's something that past Treasury secretaries were always very focused on avoiding. And so I'm really sorry to see this administration moving towards that.

SANCHEZ: What do you make of the argument, though, Larry, from folks in the administration that the dollar being so strong and being this haven has been manipulated by countries like China as a way to weaken their currencies, as a way to prevent U.S. products from being imported into their countries and maintaining trade imbalances? It doesn't sound like you buy that.

SUMMERS: First of all, I think I'm one of many Americans who likes to buy things at lower cost rather than higher cost. And when the dollar is stronger, whether it's toys produced in China or coats produced in Europe or textiles produced in India, when the dollar is stronger, the things we buy are cheaper.

Second, when the dollar is really an attractive asset for people, then when you want to borrow money in U.S. dollars, you can borrow cheaper. And that means more affordable housing and more affordable cars for American consumers.

So, yes, we've got to support U.S. manufacturing. That's why I thought it was so dangerous and misguided when the president abandoned and declared war on the CHIPS Act, which was generating major investment in what's a central industry for the future, semiconductors.

[13:15:20]

But do we really want to be trying to drive down our currency? I think markets will fluctuate, and if we -- and what we should want to do is have a stronger economy that supports a stronger currency.

If some other country is manipulating its currency downwards for (technical difficulty) we've got a set of procedures for that, they're written into law, the Treasury Department writes a report, we ask for consultations, we're able to pursue that.

So yes, we should go after manipulating exchange rates, but declaring war on our own currency, that seems to me to be a way to make America poorer and our economy much riskier.

SANCHEZ: One quick final question, Larry. As prices for consumers have been rising, it seems like the President and the administration are banking on Congress to alleviate some of that strain with tax relief, whether extending the 2017 tax cuts or eliminating taxes on tips, Social Security, overtime, et cetera. How do you think that effort to drive growth might offset these tariffs? Will it actually do that?

SUMMERS: It will for wealthy Americans, but it won't for most Americans. The Yale Budget Lab estimates that for the average middle- class family, the tariffs are going to add $3,800 to their costs. I don't think they're going to get anything like that kind of tax benefit from reducing taxes on tips. Frankly, they don't report a fair part of their tip income anyway, right now, and nobody's paying -- nobody's paying $4,000 on their tip income. So I don't think that the offset is likely to be sufficiently large. I think for most families, the recession that this is fairly likely to generate is actually going to do even more damage than the direct effects of the tariffs themselves.

SANCHEZ: Larry Summers, fascinating to get your perspective. We appreciate you joining us.

SUMMERS: Thank you.

SANCHEZ: We have much more coverage still to come on our global trade war. We're going to speak to a small business owner who's already tried moving her company's manufacturing to the U.S., but wound up having to go to China instead.

And also, as you just heard there from Larry Summers, the math isn't mathing. Why some Republican senators say they are against their own party's budget resolution.

KEILAR: And then later on the heels of the Trump administration's data deal with DOGE, the interim IRS Commissioner is stepping down.

You're watching CNN News Central. We'll be right back.

(COMMERCIAL BREAK)

[13:22:42]

SANCHEZ: President Trump is putting new pressure on House Republicans today to pass the Senate's budget plan. The President posting this on Truth Social, quote, "It's more important now than ever that we pass the one big beautiful bill. The USA will soar like never before."

KEILAR: But several hardcore conservatives tell CNN there's still a no and still House Speaker Mike Johnson is planning to force a vote later today.

CNN's Lauren Fox is on the hill for us. So Lauren, explain this standoff. And so often the president has pressured some of these Republicans and they have capitulated. Is this going to be different?

LAUREN FOX, CNN CONGRESSIONAL CORRESPONDENT: Well, we've seen a lot of close votes over the last couple of months that Donald Trump has been able to convince some of these hardline conservatives to flip their votes at the last minute. But that was when we were dealing really with maybe a half a dozen possible no votes. Right now we are staring down potentially a dozen or more of those votes.

And I just talked to two conservatives who were coming out of this Republican study committee meeting who are still noes. That's Keith Self and Andy Ogles, who were making the case in the -- in Andy Ogles's case that they certainly don't trust the United States Senate. The argument you're hearing over and again from conservatives is they trust the president, but they don't trust that Senate Republicans are going to make the cuts that they want to see.

And let me just backtrack a little bit because there's a huge discrepancy that House Republicans are working through right now. Their budget resolution requires about one point five trillion dollars in cuts. The Senate budget resolution requires four billion. And here's the frustrating piece for conservatives.

(BEGIN VIDEO CLIP)

REP. CHIP ROY (R-TX): They haven't put any guardrails on their budget, and yet they've done a one-way ratchet on taxes. So they're fine saying that they'll unlimited tax cuts, but they're unwilling to say that they'll do spending cuts, which is phony math. The Senate has produced a budget that is phony math, and I'm not going to support it.

(END VIDEO CLIP)

FOX: And in just a couple of hours, we're going to see what transpires on the House floor. Now, it's always possible that if leadership doesn't have the votes, if they don't think that they could get them once they go to the floor, that perhaps they punt moving forward with this until later in the week. But lawmakers don't have a ton of time because they're expected to be on recess next week and the following week. The president clearly wants to get this done sooner than later.

[13:25:09]

So there's a lot of confusion right now on what happens in the next several hours up here on Capitol Hill.

SANCHEZ: And Lauren, what happens if the budget does pass? Because a big concern for a lot of voters out there is that Congress might have to cut Medicaid benefits and other entitlements to pay for those tax cuts.

FOX: Yeah, I mean, this is when the real work begins. And this is actually the point that a lot of Republicans who want to vote for this budget plan have been making to their conservative colleagues. Nothing about these budget blueprints ties our hands in the future.

We can have these tougher conversations about where we want these cuts to be. But that is going to be where some of the tension is because there's a lot of Republican senators who do not want to get involved in strategically and deeply cutting Medicaid.

In fact, they're warning that that would be a huge problem for them in terms of ultimately supporting the tax package. So in a way, this discrepancy over cuts on these budget blueprints really kicks down the road a lot of these hard decisions over not just what the cuts are going to look like, but also what tax policies ultimately get adopted.

There's a lot of issues that individual senators, individual House members want to see included in a tax bill. They can't afford to do everything. So that's when some of these hard decisions get made. And again, there's not a lot of room for error in the House of Representatives, certainly nor in the United States Senate, where Republicans can control that body.

KEILAR: Yeah. Lauren Fox live for us. She's working very hard there on the Hill. We can tell she's in the basement. That's how you know that she's working very, very hard.

And turning now to chaos at the IRS, the agency's Acting Commissioner is resigning. Sources say Melanie Krause made this decision after the Trump administration finalized a deal to share the tax data of immigrants with ICE officials.

SANCHEZ: Krause is only the latest senior leader to leave the agency. She's among several who allegedly refused to sign on to this data sharing deal. CNN's Rene Marsh is following this for us. So Rene, what are the details?

RENE MARSH, CNN NATIONAL CORRESPONDENT: Well, so this acting head of IRS, I will have to say that many people within the agency were shocked by this news. They really didn't expect this or see this coming because she was seen as in line many times with DOJ's request and the administration's request, because many employees within the IRS felt that she didn't resist enough.

But yesterday, sources are telling me that Melanie Krause, she decided to leave the agency and take this deferred resignation mainly or in part, I should say, because of this data sharing agreement that we've been talking about.

On Monday, both the IRS and DHS finalized this agreement to provide this sensitive taxpayer data that will enable ICE to locate and deport undocumented immigrants.

Now, this agreement essentially allows ICE to submit names and addresses of suspected undocumented immigrants to the IRS for the IRS to cross check that information with their data, which, as we know, many undocumented immigrants pay taxes. And so the IRS houses a lot of the sensitive information.

But many of these employees have said all along that they just didn't agree with the legal justifications that the Trump administration was laying out for this sort of program. And what we are seeing is really turmoil and upheaval for the IRS at a very critical time. Tax Day is just days away, but it's not just Krause, a long list of others, five other top executive senior employees at the at the IRS also putting in for their resignation.

SANCHEZ: Rene Marsh, thank you so much for the update.

We have major breaking news into CNN on the global trade war. President Trump just truth doubt saying, quote, "I have authorized a 90 day pause." The President here announcing a 90 day pause on tariffs, though it's not clear specifically which countries this pause is going to apply to the DOW right now, shooting up over 2000 points.

Look at that. As this announcement comes through, a giant spike in the Dow Jones industrial average. This is important as part of the messaging around this post, the President saying that this is based on the fact that more than 75 countries have called the U.S. and try to work out deals with the administration and not try to retaliate for his tariffs.

Notably, though, the President is raising the tariff applied to China from the United States to 125% effective immediately. So this pause applies to other countries, not China.

KEILAR: That's right. A 90 day pause on new tariffs except for China, which again goes to 125% in the markets obviously. Ebullient they are as they are hearing this news.

Let's go to Jeff Zeleny. He is live for us at the White House. This is what they had been hoping for the markets. They actually kind of imagined it the other day and had a little bit of a jump into positive territory.

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