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Trump Agrees To Pause Tariffs On Mexico For One Month; Musk's "DOGE" Team Gains Access To Treasury's Payment System. Aired 11-11:30a ET
Aired February 03, 2025 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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PHIL MATTINGLY, CNN ANCHOR: Top of the hour. You are live in the CNN Newsroom. Pamela Brown is on assignment. I'm Phil Mattingly in Washington. And we begin the hour with the breaking news on President Trump's trade war postponed. President Donald Trump just announced he will pause the 25 percent tariffs on Mexican imports. We have reporters in Mexico City and in the North Lawn of the White House. Let's go straight to CNN's Valeria Leon in Mexico City for the latest. Valeria, midnight was the deadline here where tariffs were supposed to be implemented. They're not now. Why?
VALERIA LEON, CNN CORRESPONDENT: So in a surprising shift, tariffs on Mexican goods are now on pause after. President Sheinbaum and President Trump reached an agreement. So rather than presenting today, Mexico's response to the Trump administration tariffs, President Sheinbaum confirmed that she had a conversation with President Trump this morning, what she described as a long call of 45 minutes to talk about immigration issues and the interest that both countries have in reducing fentanyl consumption.
Both governments reached an agreement to secure the border. Mexico has agreed on deploying national guards to the Mexico-U.S. border. And the Mexican president said that she asked Trump to cancel tariffs on Mexican products, which Sheinbaum said that Trump agreed to. Mexico's economy minister, Marcelo Ebrard, will be in charge of this negotiation with U.S. government officials. Let's put the tariffs on pause forever.
That's what Mexico's president suggested to Trump this morning, but they agreed to pause tariffs for one month. Part of the agreement, she explained, has to do with the U.S. government committing to reducing the traffic arms into Mexico.
MATTINGLY: Valeria Leon, thanks so much. I want to turn to CNN's Kevin Liptak, who joins me now from the North Lawn at the White House. Kevin, there was also a call with Canadian Prime Minister Justin Trudeau this morning. We haven't heard of any pause there, but there is supposed to be another one this afternoon. Is this just a bilateral Mexico-U.S. thing or do we expect another pause also applying to the Canadians? KEVIN LIPTAK, CNN WHITE HOUSE REPORTER: Yes, at this point this only applies to Mexico. And I'll tell you after that Phone call with Justin Trudeau, officials I talked to on the Canadian side were not all that optimistic about a last minute reprise from these tariffs. But of course, they have scheduled up this follow up conversation at 3:00 p.m. Eastern time. And it, you know, remains to be seen whether Trump will extend the same one month pause on those 25 percent tariffs on Canada as he did on Mexico.
One thing that we've heard from officials this morning is that the negotiations with the Mexicans that occurred throughout the weekend were going much better than the conversations were going with the Canadians. We heard that from Kevin Hassett, one of the top economists here at the White House, earlier this morning. No, I think the big question is whether or not this is a huge surprise.
You know, we did hear from Donald Trump just last night that he didn't expect anything dramatic to come out of these telephone calls. But on the other hand, look at those numbers on the screen. The stock market, at one point the Dow Jones Industrial average was down almost 600 points this morning. Donald Trump is attuned to nothing more than the stock market.
And I think there was a sense, at least among some of his outside allies that he was looking for an off ramp here. Now, one of the big questions in this tariff battle is what exactly Trump was looking for from Canada and Mexico. That had been a point of extreme frustration among Canadian and Mexican officials. What quantifiable metric did he want to see them take in order to ease off these tariffs?
You know, just on Friday, a delegation of Canadian officials was here at the White House meeting with Donald Trump's border czar, they were supposed to meet around 4:00 p.m. Donald Trump at 4:00 p.m. says he wasn't looking for any concessions. So there was an incredible amount of confusion. Today, this morning, I think we are getting a good idea of what he's looking for, which is troops on the border, 10,000 troops on the border that Mexico says it will send to try and cut down on those fentanyl flows. Phil?
MATTINGLY: We'll see what Canada offers in their negotiations. Obviously, 10 percent tariffs also on China. No indication right now of any calls there. Kevin Liptak, Valeria Leon, thanks so much.
[11:05:01]
It is important to note that tariffs, as I noted on China and Canada have not been paused, at least at this moment. That might explain some of the market reaction. We've seen a pop, but not an entirety of a turnaround. CNN business correspondent, Vanessa Yurkevich, joins me now. Do we expect a complete rebound here?
VANESSA YURKEVICH, CNN BUSINESS & POLITICS CORRESPONDENT: I think investors are being cautious, cautiously optimistic. This news, obviously, of this pause on tariffs with Mexico has encouraged invent -- investors. And you've seen markets recover just a little bit. They were down almost 2 percent, all of them, earlier this morning. But we've see -- seen a pop, we've seen a recovery. But if you look at specific stocks, specific industries that were expected to be targeted with these tariffs, you see a mix. You see General Motors down, down over 2 percent.
You see 3M, which is manufacturing, down about 1 percent. And Constellation Brands, this is a company, an alcohol company that imports and exports from around the world. You see them still down over 2 percent. So investors still feeling a little bit shaky about whether or not tariffs will also be paused with Canada and Mexico, two of our key trading partners.
As it stands right now, tariffs are set to go into effect with Canada, 25 percent and about 10 percent with China. And the goods that are going to be impacted for everyday Americans, you see it right there, grain, livestock, sugar, fertilizer, lumber, oil and gas, only going to be targeted at about a 10 percent tariff coming in from Canada. And then from China, electronics, home appliances, toys and footwear. Americans, we buy about 50 percent of our footwear from China. So that's a significant amount.
So we are waiting to see what happens. And of course, Phil, retaliatory tariffs happen. That's already -- we've already heard from Canada that they're expecting to retaliate with 25 percent tariffs against goods that are coming out of the U.S. and into Canada. We'll see. There's another call, as you mentioned, scheduled with Trudeau later this afternoon. Will there be a turnaround like there was with Mexico, Phil? We'll have to wait and see.
MATTINGLY: All right. Vanessa Yurkevich, thanks so much.
Joining me now for more on this, former Michigan Congressman and Governor James Blanchard also served as the U.S. Ambassador to Canada. Sir, the biggest question right now is -- is this the start of a complete turnaround or is Donald Trump planning to split this on some level and Canada is still going to have to face the tariffs? Do you have any insight right now?
JAMES BLANCHARD, FORMER MICHIGAN GOVERNOR: No. You know, I think there are people hoping there'll be some sort of deal soon and work things out. It's harder with Canada because the basis for attacking them is -- it's ridiculous. Trump is accusing them of being a national security threat. That's absurd. We share all intelligence. We've been allies with Canada since World War I. There's minuscule amounts of fentanyl coming in from Canada. And there are more migrants going north to Canada than south from Canada to the U.S.
So the basis of all this is absurd. Hopefully it'll get worked out. But if we don't, the prices in Michigan and elsewhere, cost of living on food, cars, automobiles will go up. It's inflationary. And look, everybody who knows anything about Canada and trade knows what I'm saying is true.
Beyond that, though, if we get a deal or a reprieve or something, the long term damage to our relations with Canada has really, really been severe. This is not -- the feelings of Canadians, our best friend, our best partner, our best allies have been really devastated. They're not only hurt, they're at this point angry. It's going to take a lot of time, many months, maybe years, to repair the damage to our partnership with our trusted ally, Canada.
And everyone in Canada watching this knows what I say is true. This is tragic for no reason, no excuse here for us to do this to Canada. And with Mexico, again, you don't want to treat your partners and your neighbors this way. And by the way, it's disgusting to watch Trump constantly threaten Canada and Mexico, but in Canada's case, constantly threaten Canada and belittle them as he's moving on with his policies. It is really insulting and it is a terrible representative of the leader of the United States of America. No American president has ever acted like this toward Canada --
MATTINGLY: Can I ask you --
BLANCHARD: -- but frankly almost anybody else.
MATTINGLY: To the point --
BLANCHARD: You broke up.
MATTINGLY: To the -- to the point you're making right now, when you talk to your diplomatic contacts in Canada, what -- what is their view? I understand the anger. I understand the frustration. What are they telling you about what the end game is kind of the bilateral relationship, what it means going forward.
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BLANCHARD: I mean, look, they need to work something out. You know, every trade deal, every trade agreement has off ramps being the U.S., Canada, Mexico trade agreement was scheduled to be reviewed next year. So there's probably a fig leaf that Canada can give Trump if they want to, that Trump will accept and proclaim victory like invading Normandy or something.
Look, we're dealing with an abnormal guy in the White House. We all know that. The problem Canadians have is they don't understand why the United States Senate is standing up to him. They really wonder about that. Sure, there could be a short term solution, a few more border guards, something like that, which Canada can easily do and would do.
I mean, look, we share -- we share the patrol of the Great Lakes. We have Americans, Coast Guard and Canadian in the same boat, all right? And I'm sensitive to that being from Michigan. So cooperation has been the hallmark, not conflict. They can work something out. But I'm telling you, this has gone too far. And I think most people, as I said, who are friends of Canada and United States agree with me. Canada does not deserve this. They deserve their respect and friendship. And we're going to repair the damage.
MATTINGLY: Wait. Can ask in terms of Michigan itself, you know the state very well. You've been talking about the direct impact on the economy. I've driven over the bridge to Windsor many times, being from Toledo. What -- what actually will --
BLANCHARD: Yes.
MATTINGLY: -- if this goes into effect at midnight, what are we going to see in the state of Michigan, a state that matters a lot to Donald Trump, electorally?
BLANCHARD: Well, it could disrupt the auto industry for sure because we have a totally integrated auto industry. As a matter of fact, we're about to celebrate the -- the opening of a brand new bridge, the Gordie Howe Bridge, next fall. It's -- it's really one of -- it's the busiest corridor in the northern part of the United States. So it's an integrated auto industry. It'll really complicate the auto industry. I don't know that it'll shut it down. It'll shut down some models perhaps.
Look, they're all trying to prepare for this and try to find a way to survive it. It'll certainly affect the cost of living in terms of agriculture products from Canada, beef, poultry, grains. So from Mexico it's going to be more fruits and vegetables, but you'll have some of those from Canada. Utilities, utilities, Detroit is heated by natural gas coming from Canada. Home heating in the Upper Peninsula. People there, their homes are heated by propane. That comes in from Canada.
That -- we have a completely integrated economy. You know, I grew up in suburban Detroit, like 14 miles from the Windsor City Hall. And then you have -- you have -- you have tourism. You know, Canadians are beginning to boycott coming to the United States. That's revenue. Tourism is an important industry. So the -- the integration of our two countries in -- in everything from national security to trade to economy to -- to environment, it's so strong that anyone who tries to put that asunder is making a grave mistake.
And so I'm hoping our friends in the Senate, I think, by the way, the Senate Republican leader from South Dakota, Senator Thune, knows about agriculture. They need to put a stop to this. This isn't just going to happen at the White House.
MATTINGLY: Yes. Governor James Blanchard, former ambassador to Canada, thank you so much for your time, sir. Appreciate it.
BLANCHARD: Thank you. Thank you very much.
[11:13:43]
MATTINGLY: Well, still ahead this hour, does Elon Musk know your Social Security number? Under his role in the Trump administration, the SpaceX CEO has just been given new access to the Treasury Department's payment system. Our reporting, next.
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MATTINGLY: Elon Musk and his Department of Government Efficiency team, his members now have access to the U.S. Treasury's payment systems. Now, the top civil servant at the Treasury Department left abruptly on Friday, the same day Trump affiliated officials asked about stopping certain payments made by the federal government. Now this is kind of the plumbing here, the system that doles out more than $5 trillion in payments each year. That includes Social Security benefits, tax refunds and payments to federal workers, nearly 90 percent of the government's payments.
CNN's Katelyn Polantz joins us now. Katelyn, we've been covering this, working on this, reporting it out over the course of weeks now I think at this point. What does the team have access to right now? Do we know what's happening at the Treasury Department?
KATELYN POLANTZ, CNN SENIOR CRIME AND JUSTICE REPORTER: Well, it appears they have access to a super secret, super sensitive system within the Treasury Department. It's so sensitive and so low key in the way the Treasury Department operates that other administrations political appointees were barely paying attention to it. But what this is it's the essentially the accounting department for the entire federal government. It is the payment processor. So any time an agency says yes to a payment or says no to a payment, they refer that information back over to the Treasury Department, the Bureau of Fiscal Service, and then they just cut the checks.
What one person told me about that is that in looking at what Elon Musk, people affiliated with Trump, people affiliated with Elon Musk are doing now that they are working at the Treasury Department, they seem to be want -- they seem to want treasury to be the choke point on payments. And that's unprecedented. That's what one source told me about what seems to be happening in the agency and what evolved over the last couple of weeks there is that during the transition, there were people working with Trump who had come in and started asking questions, really detailed questions. What kind of software is used for the federal government to cut its checks, trillions of dollars a year to deliver? Can we visit centers in Kansas and in Philadelphia where low level government employees are working on I.T. to keep these systems running? They do not fail in delivering these payments.
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And that is something that is very core to the reliability of the federal government and the nation's economy. And the Treasury initially was, didn't really respond to that. And then they, this top civil servant over this bureau, the Bureau of Fiscal Service, he got into a fight with the people affiliated with Trump and with Elon Musk, the Department of Government Efficiency last week ended up leaving the agency very abruptly. And that's how they appear to get access to that. We don't know exactly what's happening now, but it's a scary situation for a lot of people, especially at the Treasury Department who've been there a long time and protected these systems. Because Elon Musk is now out there on Twitter saying the DOGE team is rapidly shutting down illegal payments.
But at the core of this, it is not the Treasury Department's choice whether these payments are illegal. It depends on other things in the federal government to decide yes or no on what payments.
MATTINGLY: Right. It's not how the system works. I think, look, candidly, there was probably a lack of imagination on my part when we're reporting this out in terms of what intentions may have been and what they were actually trying to do. And I think at treasury they were confused as well, because they'd never gotten asks for briefings like this, for access like this before. But I think one of the interesting things, and -- and you've kind of followed this from the start, there's a broader picture here that's being painted across the federal government. This isn't treasury specific, this isn't BFS specific. What is it?
POLANTZ: Well, we -- we know that there are people like Musk who want to shut off certain payments that the federal government makes. We don't know how their decision making is being made. We don't even know if Musk right now is a federal government employee. Like that question has not been answered by anyone. But there is bigger issue that's evolving in the administration where, you know, last week the Office of Management and Budget said, we want to freeze outgoing grants and loans. And then the courts got involved and said, hold up, don't do that. You can't do that. We're putting court orders on you not to do that.
We don't know if what's happening at the Treasury Department is -- is sort of a workaround to what's happening in court related to the OMB freeze, that proposal that was rescinded. But it's -- it's a question that is on the table. Are there levers of payments across the federal government that Musk and Trump are trying to turn off in different ways? And one of the things that just happened last night is that after the courts last week said this OMB freeze on grants stop, it's -- you can't go forward with it.
One of the nonprofit groups that is suing said, we found a -- a group of non -- a nonprofit group that has five employees in West Virginia. They operate paycheck to paycheck, building wheelchair ramps for people with disabilities in West Virginia, taking people to dialysis appointments, to pharmacies, to groceries to get food. That's what this charity in West Virginia does. The money has shut off. That charity cannot get access to the payment system where it funds itself through what the federal government disperses to them.
So even with the courts saying you can't freeze grants and loans to nonprofits, there is evidence from at least one nonprofit in the country that says we can't access the money that the courts say we're entitled to now. And it just raises more questions, what is happening here and what happens next with the administration and in court.
MATTINGLY: Yes. A lot of questions right now. It's kind of the biggest takeaway. Katelyn Polantz great reporting. As always, thanks so much.
[11:24:21]
Well, still ahead, Vice President Vance is on his way to East Palestine two years after the toxic train derailment. That as a major new lawsuit is filed against Norfolk Southern. One of the plaintiffs joins me next.
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MATTINGLY: Vice President J.D. Vance just touched down near East Palestine, Ohio. You can see the plane there waiting for the door to open and the Vice President to walk out. The town, of course, is marking two years since a train derailment that sparked a massive fire and sent toxic fumes into the air.
And new this morning, a new lawsuit against train operator Norfolk Southern, alleging seven wrongful deaths and allegations that Norfolk Southern botched the cleanup. We're joined now by Zsuzsa Gyenes. She lived in East Palestine at the time of the crash and is one of the participants in the lawsuit. Thank you so much for joining us. To start, why did you decide to join this lawsuit?
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ZSUZSA GYENES, LIVED NEAR SITE OF OHIO CHEMICAL SPILL: Well, we definitely needed some answers, my family and I. My son was 9 years old at the time. We both got very sick the night that it had happened. We waited several months, displaced for 18 months total, living in hotels. My son had to re -- repeat the fourth grade because of the loss of his education.