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Trump Agrees to Pause Major Tariffs on Canada and Mexico; Trump's Tariffs Could Disrupt U.S. Economy and Raise Costs; Secretary Rubio Announces State Department Takeover of USAID; Investigating Trump's Claims on Panama Canal. Trump Pauses Tariffs on Canada, Mexico for 30 Days. Aired 12-1a ET
Aired February 04, 2025 - 00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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ROSEMARY CHURCH, CNN INTERNATIONAL ANCHOR: Hello, and welcome to our viewers joining us from all around the world and everyone streaming us on CNN MAX. I'm Rosemary Church.
Just ahead, trade war on pause. U.S. President Donald Trump puts a hold on his tariffs for Canada and Mexico. We'll explain the agreements they reached and what's next for China.
Agency takeover. The Trump State Department says it's now in control of USAID. Why Democrats are calling this move unconstitutional and blaming Elon Musk.
And U.S. citizens convicted of violent crime could serve their sentence in a prison in El Salvador. The details of this unprecedented deal just ahead.
ANNOUNCER: Live from Atlanta, this is CNN NEWSROOM with Rosemary Church.
CHURCH: Good to have you with us. Well, just a few days after the U.S. president claimed there was nothing Canada and Mexico could do to fend off punishing new U.S. tariffs, it turns out they were indeed avoidable, at least for now.
Well, Donald Trump spoke to his Canadian and Mexican counterparts on Monday and agreed to put those tariffs on hold for 30 days. In exchange, Mexico will deploy around 10,000 troops to the U.S. border to keep migrants and drugs from crossing. The Mexican president says the U.S. agreed to try to prevent high powered weapons from getting into her country.
Meanwhile, Canada will implement its previously announced border plan as well as list drug cartels as terrorist groups and implement a so- called fentanyl czar even though small amounts of fentanyl are seized at the Canadian border.
Without this 11th hour pause, America's neighbors would have been hit with 25 percent tariffs on almost everything they send to the U.S. However, Chinese goods are still facing a 10 percent levy, which goes into effect this hour. President Trump said on Monday that he'd be speaking with Beijing soon.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We'll have some good meetings with China. We have meetings planned and we'll see what happens. But that was just an opening salvo. If we can't make a deal with China, then the tariffs will be very, very substantial.
(END VIDEO CLIP)
CHURCH: The White House press secretary told CNN, quote, "Canada is bending the knee just like Mexico." But it was President Trump who backed away from his original tariff threat.
More now from CNN's Jeff Zeleny.
JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT (voice-over): President Trump backing off a trade war with Mexico and Canada. For now at least. Even as tariffs on China are still looming.
TRUMP: When you're the pot of gold, the tariffs are -- the tariffs are very good. They're very powerful.
ZELENY: Trump reached a last-minute deal with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau, agreeing to a month long delay on 25 percent tariffs on all goods imported to the U.S. Both Mexico and Canada agreed to bolster security at the U.S. border and increased resources to crack down on fentanyl.
As he signed executive orders in the Oval Office, we asked Trump if he blinked in striking a deal with Mexico.
Did you blink this morning?
TRUMP: There was no blinking. No. She's a wonderful woman. But she did agree to 10,000 soldiers on the border. I would say that's a lot.
ZELENY (voice-over): Talks between Trump and Trudeau continued throughout the day. Following an afternoon phone call, the prime minister announced a deal saying Canada is making new commitments to appoint a fentanyl czar. We will list cartels as terrorists, ensure 24/7 eyes on the border. But Mexico accounts for the vast majority of fentanyl, with more than 21,000 pounds crossing the southern U.S. border last year and only 43 pounds coming in from Canada.
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While Trump vowed to press ahead with a long term plan for tariffs in these countries and beyond, he said there could be short term economic pain through higher prices or inflation.
TRUMP: Tariffs don't cause inflation. They cause success and cause big success. So we're going to have great success. There could be some temporary short-term disruption and people will understand that. ZELENY: Among Americans, that remains an open question. Among
Canadians, their resentment was clear as the "Star Spangled Banner" was met with jeers at a weekend hockey game.
Trump remained steadfast in his longstanding belief in tariffs, which the conservative "Wall Street Journal" editorial page blasted as the dumbest trade war in history. Rupert Murdoch, whose media empire includes the newspaper, visited the Oval Office and was on hand as Trump spoke with reporters.
TRUMP: I'm going to have to talk to him. Not only is it not dumb, you're going to see, you're going to see every single one of those countries is dying to make a deal.
ZELENY (on-camera): President Trump said he was very pleased with the deals reached with both Canada and Mexico. The White House Press Secretary Karoline Leavitt, she put it a slightly different way, saying both countries were bending their knee to the U.S.
For the next month, though, as this trade war still looms and lingers, the question is, what is the risk for both countries? It certainly is. Which country blinked? We do know the market reaction watched very carefully here at the White House and it was not a positive one.
Jeff Zeleny, CNN, the White House.
(END VIDEOTAPE)
CHURCH: Justin Wolfers is a professor of economics and public policy at the University of Michigan. He joins me now from Ann Arbor in Michigan.
Good to have you with us.
JUSTIN WOLFERS, PROFESSOR OF ECONOMICS AND PUBLIC POLICY, UNIVERSITY OF MICHIGAN: What a week it's been, Rosemary.
CHURCH: Indeed it has. So just hours before President Donald Trump's 25 percent tariffs on Canada and Mexico were to go into effect, those tariffs were put on hold for 30 days after both nations agreed to boost security at their respective borders. So Trump got some of what he wanted, for now at least, using tariffs as a negotiating tool.
What is your reading of all this from an economist's perspective?
WOLFERS: Well, it's all really much ado about nothing and just fantastic television and terrible economics. He announces he's going to put tariffs on. He announces he'll take a phone call. He takes the call. He announces he'll pull the tariffs off. So one answer is that nothing happened. And in fact, what he got from Mexico and Canada is pretty much what those countries were already doing.
And so that makes it sound like nothing happened at all today, but actually something far more fundamental happened. Trump has made it clear that access to American markets is not to be taken for granted. Now, if you are a transactional sort of person who thinks that if I win, you lose, you might think of that as giving you bargaining power. But I think that's the wrong frame for thinking about economics.
Economics is about relationships. What can we do better together than we could do apart? And Trump has shown himself, frankly, to be an unreliable partner. I'm not sure I'd want to invest in the United States right now if I were a foreign entity, given that these sorts of shenanigans can be on again, off again according to the president's whim.
CHURCH: And so what's your message to the markets? Because, I mean, they're sort of all over the place, panicking here, there and everywhere, aren't they?
WOLFERS: Well, I try not to talk to the markets and they try not to listen to me. But I think my message to the president is to listen to the markets. And the markets didn't like the tariffs when he went to put them on. And then they breathed a big sigh of relief when he pulled them off. And what you're getting here is the markets are sort of like my mood. And I think the mood of the electorate, which is up and down like crazy. And do we really need all this much hassle in our lives?
CHURCH: And President Trump may have averted a trade war with Canada and Mexico, but now the president is hinting that the E.U. is next. What does he want from Europe to stop that from happening and to avert a global trade war?
WOLFERS: The easy way to avert a global trade war is to wake up and do nothing. And most other American presidents have managed every day to wake up and not put tariffs and not threaten tariffs and not go on with this nonsense. So there's no third party causing a trade war. There's a president who I think doesn't understand the true effects of what he's doing, but loves the theatrics of it all.
What does he want from Europe? Honestly who knows? Like on whose bingo card was it that he would wake up after the election in which he campaigned against China and think, you know what, we're going to go after Canada? Canada? Who hates Canadians? No one. They're our nearest trading partner, our dearest friends, and we put them through the wringer for what seems to be pretty much nothing.
CHURCH: And of course, any tariffs that are eventually applied will raise prices for Americans. Even President Trump acknowledges this, despite repeatedly promising during the election campaign that he'd fight to bring prices down.
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How painful will these tariffs potentially be for consumers if and when they're applied?
WOLFERS: Yes. I think quite painful. A calculation I saw earlier today from the Peterson Institute for International Economics suggests that this -- if the Mexico, Canada, China tariffs had gone ahead, they would have raised costs for the typical American family by over $1,000 a year. So that's talking about real money right there. And the thing to realize about this form of inflation, so I want to separate things out for your viewers.
What happened during the pandemic is a form of inflation where prices move ahead and then wages catch up, and eventually people are made whole. But when you raise prices because of tariffs, there's no reason to expect wages to catch up. This is a much more painful form of inflation because it undermines your living standards, not just for a short period of time, but in an enduring sense.
CHURCH: And critics are warning that Trump's tariffs could embolden China to expand ties to Latin American countries and Russia to continue advances in Ukraine. What's your reaction to that criticism?
WOLFERS: Well, I'd go a step further than that, which is the United States is showing itself as an unreliable ally. And it's showing itself as an unreliable trading partner. And so all of these shenanigans are going to lead everyone to, if you get a better offer and get a better dancing partner than the United States, maybe you'll take it. So the end result of all of this, even when the tariffs come on and they come back off again, there's going to be the United States is somewhat more isolated.
In some respects that means that some of our adversaries are going to find themselves better integrated in the global trading system. But it also means that countries around the world are just going to be looking elsewhere for reliable trading partners.
CHURCH: Justin Wolfers, thanks so much for joining us. Appreciate your analysis.
WOLFERS: A pleasure, Rosemary.
CHURCH: The Trump administration says it is now in full control of USAID. Secretary of State Marco Rubio announced he is now the acting director of the U.S. Agency for International Development, and is looking to align its foreign aid activities with a, quote, "America first agenda." Up until Monday, USAID was an independent federal agency. It dispensed billions of dollars in famine, aid, poverty and disaster relief, and funded democracy building programs around the world.
Donald Trump claims he has the power to scrap it, but the U.S. Congress is the only entity that can form and abolish federal agencies and offices and lawmakers and legal experts alike say Mr. Trump's unilateral takeover is unconstitutional. They also take issue with billionaire Elon Musk's role in dismantling federal agencies and accessing critical government information and systems. Democratic lawmakers say all of this is leading to a uniquely dangerous moment for the United States.
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SEN. CHRIS MURPHY (D-CT): This is a constitutional crisis that we are in.
REP. ILHAN OMAR (D-MN): That is how dictators are made. SEN. BRIAN SCHATZ (D-HI): In the last 10 days, Donald Trump has done
more to destabilize things across the planet than perhaps any other president in recent memory.
REP. JAMIE RASKIN (D-MD): You don't control the money of the American people. The United States Congress does that. We don't have a fourth branch of government called Elon Musk.
(END VIDEO CLIP)
CHURCH: CNN's State Department reporter Jennifer Hansler runs us through what happened to USAID on Monday.
(BEGIN VIDEOTAPE)
JENNIFER HANSLER, CNN STATE DEPARTMENT CORRESPONDENT: Secretary of State Marco Rubio on Monday said he was the acting administrator of the U.S. Agency for International Development, confirming the de facto takeover of the government's humanitarian agency by the State Department.
Rubio said in remarks to the press that he was not trying to stop all of U.S. activities per se. But that he -- there are things that it does that are good and things that it does that are bad, and that they have strong questions about. Rubio said in a letter to lawmakers later in the day that he had delegated the authorities of acting administrator to Pete Marocco, a Trump appointee who was working at the State Department.
Aid officials have accused Morocco of intentionally trying to dismantle the U.S. Agency for International Development. Democrats have argued that the move to fold USAID under the State Department's authority is not legal, and they said they will be fighting.
REP. GERRY CONNOLLY (D-VA): We are going to fight in every way we can. In the courts, in public opinion, with the bully pulpit, in the halls of Congress. And here at AID itself. We are not going to let this injustice happen.
HANSLER: In remarks at the White House later in the day, President Trump said he does believe that he has the authority to dismantle USAID. Elon Musk has also played a role in demonizing the organization, and his DOGE effort has played an outsized role in the administration's decisions about federal agencies.
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Over the weekend, there was a confrontation between DOGE officials and security officials at the U.S. Agency for International Development that led to two senior officials being put on leave. A number of other USAID officials have also been put on leave over the past week.
In Washington, there was confusion around the rapidly changing developments around USAID, as officials were told not to report to work at the headquarters on Monday. Some have been locked out of their e-mails and others say they have gotten no answers from their leadership about what is to come.
Humanitarian aid organizations have also expressed concerns about the impact that USAID shuttering would have on the broader national security and foreign policy interests of the United States.
Jennifer Hansler, CNN, Washington.
(END VIDEOTAPE)
CHURCH: Still ahead, reaction from China on President Trump's unfounded claims about the Panama Canal as he once again threatens to take it back.
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CHURCH: El Salvador has agreed to receive deportees from the U.S. of any nationality. U.S. Secretary of State Marco Rubio announced the unprecedented deal on Monday after meeting with the country's president. As part of the agreement El Salvador says it will accept convicted criminals, including U.S. citizens, into its, quote, "mega prison system" in exchange for a fee.
With more than 80,000 people in its jails, El Salvador is believed to have the highest incarceration rate in the world.
Well, China is denying U.S. President Donald Trump's claims that Beijing manages or operates the Panama Canal. China's U.N. ambassador is calling the accusations totally false. Mr. Trump is vowing to, quote, "take back the Panama Canal" in an escalating diplomatic dispute with the Central American country.
CNN's Phil Mattingly investigates the U.S. president's unfounded claims.
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PHIL MATTINGLY, CNN CHIEF DOMESTIC CORRESPONDENT (voice-over): President Trump is not giving up his obsession with linking China and the Panama Canal. Punctuated by this remarkable moment in his inaugural address.
TRUMP: China is operating the Panama Canal, and we didn't give it to China. We gave it to Panama, and we're taking it back.
MATTINGLY: That drew an immediate public condemnation and rejection from Panamanian President Jose Raul Mulino. And privately, sources tell CNN, letters to the U.N. secretary general and the U.N. Security Council lodging protest over their view Trump went so far as to violate the U.N. charter with his threat.
So what is the truth? Well, I toured the canal and its operations, getting exclusive access to try and separate fact from fiction.
There's no question Beijing's influence in Panama has grown over the course of the last couple of decades. Take a look at this memorial, this monument right near the base of the Panama Canal's Pacific entrance. It underscores 150 years of relations between Panama and China. This one, of course, in relation to the building of the Panama railroad. Not exactly the Panama Canal.
(Voice-over): It goes without saying a monument celebrating cultural ties, no matter its location, is far from what Trump claimed last month when he wished Merry Christmas to Chinese troops he said were operating here.
Well, you can look, there's no actual Chinese soldiers on the ground. No Chinese troops. But Beijing's influence is obviously a number one issue.
(Voice-over): Put that in the absurd fiction column.
ILYA ESPINO DE MAROTTA, DEPUTY ADMINISTRATOR OF THE PANAMA CANAL: This is the Atlantic side.
MATTINGLY: I also checked with Ilya Espino de Marotta, deputy administrator of the canal, the autonomous agency that actually operates the canal. Not China.
DE MAROTTA: We're very transparent. You can know that this is run 100 percent by Panamanians.
MATTINGLY: And I haven't seen any Chinese soldiers operating.
DE MAROTTA: No.
MATTINGLY: I'm not missing anything?
DE MAROTTA: And you will not. No.
MATTINGLY (voice-over): In fact, the canal authority says it had 8,549 employees in 2023. 8,541 were Panamanian. Mark another under fiction. But here's an undeniable fact. China's investment and influence here is substantial.
Right across the water, you see a port that was built by a subsidiary of a Hong Kong based company.
(Voice-over): That's the Port of Balboa, one of the busiest ports in Latin America and one of two operated by Hong Kong's Hutchison Ports located at each end of the canal. While not state owned, they are subject to China's national security laws. At the same time, Beijing's nearly sevenfold acceleration in direct investment in the country was readily apparent around the waterway that serves as a fulcrum in U.S. strategic and economic power. A brick-and-mortar window into a reality. Trump's broad concern about China's influence is widely shared.
GEN. LAURA RICHARDSON (RET.), COMMANDER, U.S. SOUTHERN COMMAND: I worry about the, you know, they look like civilian companies or state owned enterprises that could be used for dual use, and could be quickly changed over to a military capability if they needed that, too.
MATTINGLY: That warning from the commander of U.S. Southern Command back in 2022 has been echoed by National Security officials and bipartisan lawmakers alike in recent years. But Trump, ironically, was never one of them in his first term because that's exactly when China's rapid push into Panama really accelerated.
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Panama President Varela stunned U.S. officials when he cut ties with Taiwan and established formal relations with Beijing in 2017, just six days before Varela visited with Trump, a meeting where Trump never actually raised China, according to two sources in the room. Dozens of bilateral agreements between Panama and China followed. Then Panama's entrance into China's Belt and Road initiative, then a push toward a free trade agreement.
And just a few hundred yards from where I stood just a few days before Trump's inauguration is where Xi Jinping became the first Chinese leader in history to visit Panama and the canal itself. A trip Trump never made in his first term, nor did he ever have his own ambassador here to represent his administration.
The reality, though, is for all of Beijing's attempts to influence Panama, that influence has seemed to wane over the course of the last several administrations, most particularly the current administration, which has made very clear it is U.S. focused and wants to be a U.S. ally.
(Voice-over): Phil Mattingly, CNN, the Panama Canal.
(END VIDEOTAPE)
CHURCH: Benjamin Netanyahu is visiting Washington to meet with U.S. President Donald Trump. The Israeli prime minister will be the first world leader to have a formal meeting with President Trump since his inauguration. This comes against the backdrop of the Gaza ceasefire and hostage release agreement.
Mr. Netanyahu says Israel is sending a delegation to Doha to work on the second phase of the ceasefire. But on Monday, Mr. Trump said there are, quote, "no guarantees" that the peace is going to hold.
In the Democratic Republic of Congo, rebel soldiers are calling for a ceasefire starting Tuesday amid a growing humanitarian crisis. It comes after rebels captured the eastern city of Goma last week, clashing with foreign peacekeepers and the region's military. The U.N.'s Humanitarian Affairs Office warns local health care facilities are overcrowded with a growing need for medicine and equipment. The agency says at least 900 bodies have been recovered from the streets of Goma and is reporting nearly 2900 injuries since the end of January.
Well, counting the cost of President Trump's tariff threat, the U.S., Mexico and Canada may have agreed to delay the tariffs, but we'll hear why the incident may have a lasting impact. Back with that and more in just a moment.
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ROSEMARY CHURCH, CNN INTERNATIONAL ANCHOR: President Donald Trump says he will pause 25 percent tariffs on Canada and Mexico for 30 days, hours before they were set to go into effect.
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CNN's Richard Quest counts the cost of the tariff tussle.
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RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT/ANCHOR: We now know the price that has been paid for transactional tariffs to be suspended, at least for 30 days.
QUEST (voice-over): In the case of Mexico, it is 10,000 border troops. In the case of Canada, a variety, a mishmash of policies and border czars, all around fentanyl and immigration.
But nothing actually gets away from the core issue of the trade imbalance between the three partners. And that will now be revisited, probably in 30 days' time.
QUEST: The debts (ph) and deep unease that has come about from the last 48 hours is quite extraordinary, and it really must beg the question, was it necessary?
QUEST (voice-over): "The Wall Street Journal" had called these the dumbest tariffs in the world, because could we have got to the same position without the tariffs and without the threats?
If the answer is no, then yes. Donald Trump's strategy has worked and worked to his and everyone's advantage.
QUEST: If the answer is yes, you could have done it through negotiation. You didn't need to threaten and bully long-standing allies, then the damage is going to be long-held.
Because you're talking about allies, partners and friends. And that sort of hurt and offense won't be forgotten that easy.
Richard Quest, CNN, New York.
(END VIDEOTAPE)
CHURCH: U.S. President Donald Trump announced Monday that TikTok could be acquired by a newly-proposed sovereign wealth fund.
The popular app, which is owned by a Chinese company, is under pressure to find a new owner by April to avoid being banned in the United States.
Trump floated the idea but provided few details as he signed an executive order directing officials to set up the fund in the U.S.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: As an example, TikTok. We're going to be doing something, perhaps with TikTok, and perhaps not. If we make the right deal, we'll do it. Otherwise, we won't.
But I have the right to do that, and we might put that in the sovereign wealth fund. Whatever we make, or if we do a partnership with very wealthy people. A lot of options. But we could put that, as an example, in the fund. And we have a lot of other things that we could put in the fund.
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CHURCH: The U.S. Sovereign Wealth Fund will be modeled after state- owned investment funds used in countries like Norway and Saudi Arabia, which direct their national budgets into assets like stocks, bonds and real estate.
Coming up after the break, why people are fleeing Greece's so-called Instagram island. We'll have all the details. Thats next.
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CHURCH: This just in to CNN. China is announcing it is imposing tariffs on U.S. imports, including crude oil, agricultural machinery, and liquefied natural gas, in a move that coincides with the Trump administration's imposition of a 10 percent tariff on Chinese imports into the United States. That is, an additional tariff. We'll continue to watch that story.
Meantime, the Greek island of Santorini continues to be hit by dozens of tremors, with authorities closing schools, and airlines scheduling additional flights to help people leave.
The popular tourist destination has recorded over 200 earthquakes over the past four days, reaching magnitudes of up to 4.6.
Many are now trying to leave the island, including by ferry, although the mayor of Santorini denies there's a mass exodus. He says those leaving are mostly seasonal workers.
Former President Joe Biden is finding his voice again after leaving the White House last month. The Hollywood talent agency CAA has signed the former president, marking a return for Biden as a client.
Following his vice presidency in 2017, the agency oversaw Biden's memoir publication and nationwide book tour before he returned to the Oval Office in 2020.
Notably, CAA also represents the Obamas and their Higher Ground production company. I want to thank you so much for joining us this hour. I'm Rosemary
Church. WORLD SPORT is coming up next. Then I will be back in about 15 minutes with more CNN NEWSROOM. Do stick around.
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