Return to Transcripts main page

CNN News Central

Trump Pauses Tariff Plan Amid Fears of Bond Market Catastrophe; Interview with Sen. Jeff Merkley (D-OR): Trump Orders 90-Day Pause on Tariffs, Except on China. Aired 8-8:30a ET

Aired April 10, 2025 - 08:00   ET

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

[08:00:00]

ELIE HONIG, CNN LEGAL ANALYST: I want to say this, they will have a very good case of what we call selective prosecution, which can get a case dismissed if they can show that they were singled out for improper or political purposes. Here, Exhibit A would be the proclamations that Donald Trump issued yesterday saying just that.

KATE BOLDUAN, CNN ANCHOR: Yes, I mean, if anything gets more blatant than that, I would be surprised. Elie, it's great to see you. Thanks so much for jumping in.

A new hour of CNN NEW CENTRAL starts right now.

JOHN BERMAN, CNN ANCHOR: So what happens now after the blink heard around the world, watching the markets and world reaction after the president's sharp reversal on many terrorists? Do other countries now see weakness?

This morning, authorities have started identifying bodies being pulled from the rubble after the deadly roof collapse at a nightclub. They say it is no longer a rescue effort.

And former first lady Michelle Obama addressing rumors of divorce for the first time. What she is saying this morning about her marriage to the former president.

Sara's out today. I'm John Berman with Kate Bolduan. This is CNN NEWS CENTRAL.

BOLDUAN: John framed the important question of the day. What happens next? Well, here's what's already happening this morning.

The new 84 percent tariff that China slapped on the United States, that's taking effect. And for the first time, Beijing is responding to the 125 percent tariff that President Trump is now hitting them with, saying this.

The door to talks is open, but dialogue must be conducted on the basis of mutual respect and equality.

And another major development this morning, the European Union announcing it will put its own tariffs against the United States on hold after the president backed off and announced that 90 day pause on tariffs for essentially the targeted tariffs on everyone except for China. The EU saying that the pause is a time to give negotiations a chance.

Trump's reversal led to an historic surge on Wall Street yesterday. U.S. markets, though, right now, let's take a look. Well, I'm going to go this direction. They are not in surge territory, if you will. Futures are down across the board.

The White House is spinning this as all a kind of big win and part of a grand strategy by President Trump. Others, though, are saying that, well, he caved, he backtracked and he retreated on demands that only he made and a self-inflicted wound.

The nation's biggest bank, JPMorgan Chase, is still sounding the alarm even in the face of this move by Donald Trump about a possible recession this year. CNN's Zain Asher here with us now to talk about it. And there has been a lot.

I mean, what happens next is where everyone's mind has to be, especially when we're looking at futures like this. I mean, what is expected now with this U-turn backtrack and buckling of President Trump?

ZAIN ASHER, CNN ANCHOR AND BUSINESS CORRESPONDENT: So I spoke to one analyst last night who said to me, can we just -- can we please have a normal day on the markets?

BOLDUAN: No.

ASHER: Just just one normal day, because we have earned it. Looking at where futures stand right now, the last I checked out was down about 500 points or so.

I'm going to guess, Kate, that today is not going to be that day. Now that everyone has had an opportunity to really sort of sober up and digest what we saw yesterday. I mean, obviously, everyone has gotten over the shock, positive shock, but the shock of Donald Trump pausing these tariffs for 90 days. But now that everyone's had a chance to sort of sober up, the reality is setting in.

You look at the facts. We're seeing a 10 percent tariff still on most parts of the world.

BOLDUAN: That's still historically high.

ASHER: That is still historically high. And on top of that, 25 percent tariff on steel, on aluminum, on autos as well, and not to mention the minor detail of triple digit tariffs on China, with whom we import about 400 billion dollars worth of goods every single year.

What I think is really interesting is that you look at Dow futures. They're obviously down. You contrast that with what's happening with European stocks. If you could just pull up European stocks squarely in the green, that's obviously because they're reacting to the 90 day pause, but also the fact that Europe is saying that they're not going to retaliate anymore.

But I think what is also interesting is what's happening with Asia stocks. Obviously, you would anticipate that the Asian stocks were seeing tariff reliefs. We could just put up Asia as well.

Asian stocks that are seeing tariff reliefs, for example, the Nikkei up about nine percent. But Kate, check this out. Even the Shanghai composite, right, Chinese stocks also rallying despite the 125 percent tariff increase.

And that indicates to me that Chinese investors saw what Donald Trump did yesterday and are saying to themselves, well, look, this kind of indicates that if the pain is great enough for Americans, be it investors or perhaps later consumers, that Donald Trump is willing to back down, that he is willing to negotiate. So that's why the Shanghai composite ended the day there in the green.

[08:05:00]

BOLDUAN: And on that, there's been a lot of really interesting reporting about how China has been preparing for this for a long time and is ready to unleash even more pain as it could be a very long fight. What are China's options?

ASHER: OK, so a couple of things. This time yesterday, we saw China in the same boat pretty much as the rest of the world. They had a little bit more pain inflicted on them compared to everyone else, but they were more or less in the same boat. Now they are completely isolated. And that is a strategy deliberately designed by Donald Trump to make the Chinese regret retaliating.

In terms of who blinks first, whether it's going to be Donald Trump, whether it's going to be Xi Jinping. Kate, your guess is as good as mine. But what I will say is that we've talked a lot on this show about American consumers and the fact that they are going to suffer in all of this.

But I think is also important to note is that the Chinese economy has been suffering for quite some time. They're dealing with slower growth, slower GDP. They have a real estate market crunch. They're dealing with a demographic crisis when it comes to declining population. So there's a lot of pressure on Xi Jinping.

This decision by him of how to respond to this is just as much economic as it is political. The good news, as you talked about, Xi Jinping has had time to prepare before this coming, of course, but they have a controlled economy.

So they have levers that they can pull in order to shield their economy from tariffs. So for example, they're already devaluing the currency just to make their exports a little bit cheaper. And that's why we're seeing Asian markets, especially the Shanghai composite, rallying on the hope that perhaps there is going to be a deal here.

BOLDUAN: Yes, so who has the upper hand in this, we'll call it a chess match right now. And we will see more evidence of that today. ASHER: We'll see.

BOLDUAN: It's great to see you again. Thank you so much -- John.

BERMAN: All right, joining us now, Jason Furman, the former chair of the Council of Economic Advisors and now a professor of economic policy practice at the Harvard Kennedy School. Professor, thanks so much for being with us. So is this a case now of no harm, no foul, the tumult over?

JASON FURMAN, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Absolutely not. This is above and beyond what the president campaigned on doing. And at the time, most people discounted those threats and thought he'd only fulfill part of them.

Tariffs are still very, very high and we're about to start seeing it in the real economy, in the prices that families pay, in the layoffs that companies are going to be doing.

BERMAN: All the reporting, it was the bond market that spooked the president and forced his hand, led him to blink here. Can you explain for all of us who may not have taken Act 10, exactly what was happening with the bond market and if those fears are still over or fears are still existent, I should say.

FURMAN: Yes, normally when you're going into a downturn, you would think that the Fed is going to cut interest rates and interest rates are going to come down. But what was really scary was that interest rates were going way up. And that's because investors around the world, reportedly some of them in Japan, but around the world and in the United States were more nervous about the United States.

They didn't trust our country. They didn't want to lend to our country. And because of that, that made interest rates go up, just like any other borrower who's not particularly credit worthy is going to end up with higher interest rates.

BERMAN: In the New York Times reporting, the president knows what that means as someone who worked in real estate, when interest rates start going up, it just gets harder to do business.

What do you think China sees here? We just heard from Zain Asher on this.

Do you think they see this as a chance now to talk? Do they feel isolated or do they see now that the president will blink when facing certain pressures?

FURMAN: The president has shown over and over again, a willingness to blink. In his first term with China, when he would negotiate deals with them, it was largely deals about how to not escalate further rather than to deescalate. But now we're starting from triple digit tariffs on China in the United States, nearly 100 percent tariffs on the United States in China.

It's really, really hard to picture how either of our economies will be able to function, deliver job gains, deliver benefits to consumers in the midst of a very, very extreme trade war. So some which way someone's going to need to blink or else we're both going into recession.

BERMAN: Talk to me about what you are looking for. I guess in the next hours and days, everything's moving so quickly here. There's so many twists, but what are the next shoes that could drop in your mind?

FURMAN: To me, it's number one, are we hearing about more new tariffs? The president has talked about tariffs on pharmaceuticals, on semiconductors, on lumber. Is he still talking about those new tariffs?

Number two, that 10 percent on every country in the world, that's pretty high. That goes on all our friends and foes alike with the exception of Russia, which doesn't get it.

[08:10:00]

Is that there to stay or is that part of the negotiation? And then number three, what's happening with China?

BERMAN: How about prices? When do you think and where do you think -- because there are still, I think you rightly know, really big tariffs still in place.

When might Americans and on what products will they see prices increase?

FURMAN: Well, we're going to be getting the CPI later this morning, which will tell us what inflation was in March. Some of these tariffs, the first round on China were already in effect then. So I expect to see it in some of the consumer products, some of the consumer goods that are tracked in those data.

But the real effects on prices, the bigger ones are going to show up in April and May. You'll see that. I'll bet you're going to feature it on CNN.

You'll go to a car dealership and people will be paying an extra couple thousand dollars on cars. So I don't think your viewers, I don't think Americans are going to need to wait for the reports. You know, coffee prices up 10 percent because of this.

And by the way, we're never going to grow all that coffee here in the United States. It doesn't make any sense.

BERMAN: When you're talking about coffee prices, you're hitting us where it hurts on a morning television show. Professor Jason Furman, we appreciate you being with us this morning. Thanks so much for explaining everything so clearly -- Kate.

BOLDUAN: Also new this morning, the White House is keeping a closer eye on who has access to the president's highly classified and important daily intelligence briefing, why they're tightening up that list now of who has access. And an international student at Carnegie Mellon University speaking

out after learning his student visa has been revoked.

And the death toll has risen again to 218 in that tragic roof collapse at the Dominican Republic nightclub. We have new reporting on where the recovery effort heads now. And also still an investigation into what even led to this tragedy.

[08:15:00]

(COMMERCIAL BREAK)

BOLDUAN: This morning, the world is reacting to President Trump's decision to hit pause on his targeted tariffs on U.S. trading partners. That pause applying to more than 100 countries, all except China.

Trump hitting China even harder now. Now, 125 percent tariff on Chinese goods. And China's retaliation of 84 percent tariff against U.S. goods, that took effect this morning.

So why did the president buckle and backtrack? The reporting points to the bond markets spooking him. But here is how the director of the National Economic Council tried to spin it just this morning.

(BEGIN VIDEO CLIP)

KEVIN HASSETT, NATIONAL ECONOMIC COUNCIL DIRECTOR: It could well be that the announcement that came out yesterday was going to happen anyway because there were so many deals teed up. There was a discussion about whether a general pause or a few deals that are just about finalized are the way to move to the next step and to make it clear to markets that we're serious about the strategy that we're following. And I think in the end, everybody decided, as a team, all the way from, you know, Peter Navarro to whoever else you think is on the other side, agreed to do it this way.

And I think the fact that the bond market was telling us, hey, it's probably time to move, certainly would have contributed at least a little bit to that thinking.

(END VIDEO CLIP)

BOLDUAN: And joining us right now is Democratic Senator Jeff Merkley of Oregon for much more on where things head now. The big question mark is what happens next. Hard for anyone to know.

But what we do know, Senator, is the president hit the pause button on some of the tariffs and the market surged. And now you just heard from Kevin Hassett and the way the White House is describing it. Essentially, what we've heard over and over again is that this is all part of the plan, that this was strategic genius.

If you have read "The Art of the Deal," this is what you would see. Is that what you see? SEN. MERKLEY (D-OR): Well, I don't know if it's genius to produce convulsing stock markets in a distressed bond market. I mean, normally when there's a sell-off in stocks, people move their money into bonds, which means that the interest rate drops. But in this case, the reverse.

People fleeing the bond market at the same time they should have been buying into it. This was a massive signal that the world was losing faith in the stability and logic of the U.S. market. And, of course, it's the world treating the U.S. market as a reserve currency that allows our interest rates to be lower. So this was a massive, massive red flag.

BOLDUAN: You have often called China an adversary. On just this point of taking -- I mean, taking on China, bumping up more tariffs on Chinese goods, do you applaud that he is taking China on so directly?

MERKLEY: Well, he's not taking it on in a serious manner. In a serious manner, you say, hey, we're going to have a long-term, stable, rising response to the very low wages and very low environmental laws in China that are undermining manufacturing. Because we want people to build their factories in the United States.

But when you say I'm sending shock and awe in order to negotiate, no investor is going to build a factory in the United States as a result. So this is a really insanely, it's not crafted, it's not planned, it's from one day to the next, where am I going to stumble to? Really, this is a testosterone battle right now between Trump and Xi.

And what we need is a serious strategy that encourages investment, factories to be built in the United States of America.

BOLDUAN: Speaking of factories to be built in the United States of America, a major company based in Oregon, as everyone knows, is Nike.

[08:20:00]

And Nike took a huge hit at the beginning of these tariff announcements. They have production in Vietnam and Indonesia and China.

And we've talked to the industry.

BOLDUAN: Huge hit at the beginning of this tariff, these tariff announcements, they have production in Vietnam and Indonesia and China. And we've talked to the industry quite a bit and they cannot move production back in here fast enough in order to not take a hit because prices will go up.

What does the news coming out just yesterday from -- mean for Nike and for all of the people in Oregon that it employs?

MERKLEY: Well, Kate, it's a huge factor. I mean, Nike does have factories elsewhere in Asia. They'll ship as much manufacturing as they can to places like Vietnam and Malaysia.

But the key point you made is prices will go up. So last Wednesday, it was not Liberation Day. It was Trumpflation Day.

The American consumer is going to be seeing much higher prices. And American companies that import parts from China are now going to have more expensive products when they try to ship it around the world. And so it can really hurt in the short term American manufacturing rather than help it.

But no, it's a huge hit to companies like Nike and all kinds of companies that import inputs or final products, finished products to the United States. And the American consumer is going to pay the price.

BOLDUAN: The Treasury secretary is going to be leading negotiations we've heard over kind of new trade deals now over the next 90 days with this pause with other nations. What could you hear from Scott Bessent that would make you feel better about the approach?

MERKLEY: I would like to hear him say, we understand that China does all sorts of things, non-tariff barriers that are a huge problem. They make our American companies do partnerships with Chinese company, which then rip off our intellectual information or IP. They proceed to tell our companies where they can produce products in China. That's a non-advantageous location.

All of these things need to change. Plus, because of their low environmental laws and their low wages, there needs to be a much more reciprocal tariff.

Those are steady, long-term strategies would encourage investment in the United States. And when the American companies are in China, it would mean that we get a much fairer deal there.

BOLDUAN: You are also the top Democrat on the Senate Budget Committee, and there's a whole lot going in terms of the world of the budget right now. House Republicans hit a snag last night. The Speaker had to push off a planned vote on the budget bill that was already the blueprint that was already approved by the Senate.

There's an announcement they're going to try to vote on it again in the House this morning. So stand by for that.

You did not like what passed the Senate. In the House, House conservatives are holding out because they do not think it goes far enough in terms of cuts. What happens if the House sends back changes?

MERKLEY: Well it does mean it has to go through the floor of the Senate again but realize the underlying theme of this bill is families lose and billionaires win. We saw those billionaires stand behind Trump at the inaugural speech. This is a bill for billionaires.

It takes $2 trillion in cuts to programs that families use to thrive, like health care and housing and education, and gives those $2 trillion to the richest Americans. Who thinks that's a good idea? I mean, lots of House Republicans are very nervous, particularly about the cuts to Medicaid, to health care that serves all kinds of functions in each state. So now the House conservatives are saying, well, we want to cut more than $2 trillion. That makes it just that much worse. And by the way, this bill puts up massive additional debt on the United States.

The first numbers we had from CBO were $37 trillion, but that's before it was recalculated to include the additional tax cuts. I think we're going to see a much higher number today of new debt brought by this bill. Where are the House fiscal conservatives when it comes to the future of the United States if they want to pile more additional debt onto the next generation than we've built up in the last 249 years?

BOLDUAN: Well, that is some of the criticism from some of the conservatives who are holding out right now, is that they don't see the right pay-fors coming through. Senator let's see what happens in the next couple hours. Thank you very much. I really appreciate your time.

MERKLEY: It will be very interesting.

BOLDUAN: Interesting is one word for it.

Do not forget, a programming note for all of you, CNN Tonight, you will want to stand by to see this, a special evening. Members of Congress from swing districts are going to be facing tough questions from voters.

Jake Tapper and Kaitlan Collins will be moderating "CNN TOWN HALL AMERICA ASKS CONGRESS." That airs live tonight at 9 p.m.

This morning, Republican infighting, as I'm just talking about, causing a major blow to President Trump's agenda, at least for the moment.

[08:25:00]

The news now from House Speaker Mike Johnson. He was forced to pull a vote on a budget blueprint, and now the vote's back on. We're going to take you to Capitol Hill to figure out what exactly is going on this morning.

And how are Americans feeling about the economic chaos that we've seen over the last, oh, I don't know, week or 24 hours?

We're going to dive into the numbers.

(COMMERCIAL BREAK)

BERMAN: New this morning, the Trump administration is scaling back on the number of those with access to the president's highly classified daily briefing. The move comes at a time when the president is deeply distrustful of career intelligence officials. A new source says the director of national intelligence, Tulsi Gabbard, is now the gatekeeper of that document.

Let's get right to CNN senior reporter Katie Bo Lillis for the latest on why this decision was made and what it really means. KATIE BO LILLIS, CNN SENIOR REPORTER: Yes, John, so this is something that the Trump administration has wanted to do since the earliest days of the administration. Initially, it was Chief of Staff Susie Wiles who was approving or disapproving who got to have access to this book.

[08:30:00]