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Trump Agrees to Pause Major Tariffs on Canada and Mexico; China Announces Retaliatory Tariffs Against U.S. Imports; Elon Musk Sparks Outrage; Lawmakers: Trump's Takeover of USAID is Illegal, Dangerous; El Salvador to Accept U.S. Criminals; Investigation into Trump's Claims on Panama Canal. Aired 4-4:30a ET

Aired February 04, 2025 - 04:00   ET

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


[04:00:00]

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UNIDENTIFIED MALE: What Trump and Musk have done is not only wrong, it's illegal.

UNIDENTIFIED MALE: This is a constitutional crisis that we are in.

UNIDENTIFIED MALE: We don't have a fourth branch of government called Elon Musk.

UNIDENTIFIED MALE: He has offered to house in his jails dangerous American criminals, including those of U.S. citizenship and legal residence.

UNIDENTIFIED MALE: It kind of brings you closer together when people are rooting against you. You kind of become a tighter brotherhood.

UNIDENTIFIED MALE: You just got to take it all in. This is part of it. You got to enjoy it, so I'm happy to be here.

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ANNOUNCER: Live from London this is CNN NEWSROOM with Max Foster and Christina Macfarlane.

CHRISTINA MACFARLANE, CNN ANCHOR: Hello, and a very warm welcome to our viewers joining us from around the world. I'm Christina Macfarlane. It's Tuesday, February 4th, 9 a.m. here in London, and 5 p.m. in Beijing, where the Chinese government slapped retaliatory tariffs on some American imports right after the U.S. president's broad-based 10 percent tariffs against China's exports took effect.

Now the new duties from China add a 15 percent tax to certain types of American coal and liquefied natural gas and a 10 percent tariff on crude oil, farm equipment, large displacement cars and pickup trucks. These measures kick in next Tuesday. China also announced new export controls on more than two dozen metal products and related technologies, effective immediately, and confirmed its further complaint with the World Trade Organization.

Donald Trump said on Monday that he'd be speaking with Beijing soon.

Just a few days after President Trump claimed there was nothing Canada and Mexico could do to prevent punishing new U.S. tariffs, it turns out they were indeed avoidable, at least for now. The U.S. president spoke to his Canadian and Mexican counterparts on Monday and agreed to put those tariffs on hold for 30 days. In exchange, Mexico will send 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 a list drug cartels and terrorist groups, and it will instill a so-called fentanyl czar, even though only small amounts of fentanyl have actually been seized at the Canadian border.

Despite the deal, President Trump took additional jabs at the United States' northern neighbor.

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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Canada is very -- you know, we're not treated well by Canada. Canada is very tough. They're very, very tough to do business with, and we can't let them take advantage of the U.S.

What I'd like to see, Canada become our 51st state. If people wanted to play the game right, it would be 100 percent certain that they'd become a state.

(END VIDEO CLIP)

MACFARLANE: Well, let's have a quick look at how this has been affecting markets. A rollercoaster morning, as you can imagine. Shares this morning in Asia have been rallying, not quite back to where they are. The Nikkei, Hang Seng and Seoul Kospi they're in the green, but the Shanghai Composite down minus 2.3 percent.

And let's go straight out to our Marc Stewart. He's been covering all of this from Beijing in the last few hours. And Marc, so China has retaliated here with this list of tariffs. It's a long list, but is the view here that their response has largely been symbolic more than anything majorly impactful?

MARC STEWART, CNN CORRESPONDENT: Indeed, Christina. In fact, I was looking at some remarks by an analyst who pointed out it's what's not on the list that really tells the story. Things such as high end chips, pharmaceuticals, very valuable products that China depends on from the United States. They are not subject to the tariffs. We look at things like liquid natural gas and crude oil. Yes, those are important commodities, but China gets those energy sources from other places.

So in many ways, this is a symbolic move for China to show that it's not sitting idle to tell the Chinese population that it takes these moves by the United States seriously and very much falls in line with Chinese foreign policy. That being tit for tat, you harm us, we're going to harm you back. But as far as having any kind of deep fiscal impact, that remains to be seen at this point.

[04:05:00]

The other big headline that we're really watching from here in Beijing, especially in these next few hours ahead, is a phone call, a potential phone call between Chinese President Xi Jinping and President Donald Trump. President Trump yesterday in the United States in the afternoon hours indicated that perhaps a call between the two world leaders would take place in the next 24 hours.

So if we look at the timetable, it is getting into the evening hours here in China, the early morning hours in the United States. So perhaps the time is right for that conversation to take place. And if it does, it won't be the first time these two leaders have talked since President Trump took office for the second term.

It was just about two weeks ago that the two leaders spoke after the TikTok decision came down from the U.S. Supreme Court. From the Chinese side of things, it was portrayed as a very positive call. And that's very much the feeling that we're getting from Beijing.

Despite this trade tension, a lot of diplomatic talk, a lot of phrasing about win-win cooperation, mutual agreement, that's very much the speaking point that we're getting from Beijing. And it comes at a time when the Chinese economy is facing a lot of challenges. So a trade dispute such as this may not necessarily be in China's best interest.

So, Christina, as we look ahead for the hours, this phone conversation between the leaders of the two world's largest economies may be telling. Also will be interesting to see that if the United States chooses to retaliate, that's been a threat that we've heard from the president if these nations were to throw tariffs back in return, Christina.

MACFARLANE: Yes, well, given what we've seen transpire with Mexico and Canada in the last 24 hours, we will be watching that phone call with interest. Marc Stewart there, live from Beijing for now. Thanks, Mark.

Our Jeff Zeleny takes a closer look at the wheeling and dealing over North American tariffs.

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JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT (voice-over): President Trump backing off a trade war with Mexico and Canada for now at least.

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.

UNIDENTIFIED MALE: 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.

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, 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: 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)

MACFARLANE: Well, the Trump administration says it's now in full control of USAID. The Secretary of State, Mark 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, quote, an America-first agenda.

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MARCO RUBIO, U.S. SECRETARY OF STATE: It has to be aligned with American foreign policy.

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USAID has a history of sort of ignoring that and deciding that there's somehow a global charity separate from the national interest. These are taxpayer dollars.

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MACFARLANE: Well, 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.

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TRUMP: Not when it comes to fraud. If there's fraud, these people are lunatics.

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MACFARLANE: 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. Over the weekend, Elon Musk posted this about it, saying, quote, USAID is a criminal organization. Time for it to die.

And Monday, Musk said --

ELON MUSK, U.S. SPECIAL GOVERNMENT EMPLOYEE UNDER TRUMP: As we dug into USAID, it became apparent that what we have here is not an apple with a worm in it, but we have actually just a ball of worms. And so at the point at which you don't merely -- If you've got an apple and it's got a worm in it, maybe you can take the worm out. But if you've got actually just a ball of worms, it's hopeless.

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MACFARLANE: Well, Democratic lawmakers say all of this is leading to a uniquely dangerous moment for the United States.

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REP. DON BEYER (D-VA): President Trump directed his corrupt billionaire friend, Elon Musk, to ransack a critical agency of the U.S. government. Musk and his band of unelected acolytes at DOGE have locked out USAID employees from their offices, improperly accessed highly classified information, purged the agency of its nonpartisan leadership and thrown the agency into chaos.

What Trump and Musk have done is not only wrong, it's illegal. USAID was established by an act of Congress, and it can only be disbanded by an act of Congress.

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MACFARLANE: Well, the White House has attempted to clarify what Musk is doing in the administration, saying that he is serving as a special government employee and is not being paid. This is what the president said about the world's richest man.

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TRUMP: He's got access only to letting people go that he thinks are no good, if we agree with him. And it's only if we agree with him. He's a very talented guy from the standpoint of management and costs.

Elon can't do and won't do anything without our approval. And we'll give him the approval where appropriate, where not appropriate, we won't.

He's running, obviously, a big company. It has nothing to do, if there's a conflict, that we won't let him get near it. But he does have a good natural instinct.

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MACFARLANE: Well, Senate Minority Leader Chuck Schumer was less complimentary about Musk and his Department of Government efficiency. Here he is speaking at a Democratic news conference.

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SEN. CHUCK SCHUMER (D-NY), SENATE MINORITY LEADER: Let's be very clear. DOGE is not a real government agency. It has no authority to make spending decisions. It has no authority to shut programs down or ignore federal law.

To give DOGE a chokehold on Treasury payments is outlandishly dangerous. It's like putting a tiger into a petting zoo and then hoping for the best.

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MACFARLANE: Well, El Salvador has agreed to receive deportees from the U.S. of any nationality. U.S. Secretary of State Rubio announced the unprecedented deal on Monday after meeting with the country's president.

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RUBIO: He has agreed to accept for deportation any illegal alien in the United States who is a criminal from any nationality, be they MS- 13 or Tren de Aragua, and house them in his jails. And third, he has offered to house in his jails dangerous American criminals in custody in our country, including those of U.S. citizenship and legal residence. No country's ever made an offer of friendship such as this.

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MACFARLANE: El Salvador's president said in a social media post that his country is willing to receive incarcerated criminals, including convicted U.S. citizens, in its mega prison 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.

Defense Secretary Pete Hegseth traveled to the U.S. southern border on Monday to reinforce the Trump administration's hardline approach to undocumented immigration. Hegseth visited troops deployed by Trump in support of the U.S. Customs and Border Protection Agency. This was part of his America First message to those troops.

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PETE HEGSETH, U.S. DEFENSE SECRETARY: Guys and gals of my generation have spent decades in foreign countries guarding other people's borders. It's about time we secure our own border. Tens of millions of people have poured across this border under Joe Biden's administration, unchecked.

[04:15:02]

We have no idea who they are. We have no idea where they're coming from. We have no idea what their intentions are.

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MACFARLANE: Meanwhile, in the U.S., protesters across Southern California participated on Monday in A Day Without Immigrants, a campaign aimed at underlining the importance of immigrants in the U.S. On Sunday, thousands descended upon downtown Los Angeles in support of the protests and, at one point, temporarily blocked a major interstate freeway. California is home to some nearly 11 million immigrants, more than any other state in the U.S., according to the Public Policy Institute of California.

Still to come, calls for a ceasefire in the Democratic Republic of Congo. Why rebel fighters want a pause in fighting after violent clashes with government forces.

Plus, reaction from China on President Trump's unfounded claims about the Panama Canal, as, once again, he threatens to take it back.

And later, the NFL's opening night to kick off Super Bowl week. We'll bring you all the action from the Superdome in New Orleans.

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MACFARLANE: Welcome back. Now, China is denying President 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.

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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 (voice-over): 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.

MATTINGLY: 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.

MATTINGLY (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.

MATTINGLY: 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.

MATTINGLY (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 (voice-over): 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.

MATTINGLY: Right across the water, you see a port that was built by a subsidiary of a Hong Kong based company.

MATTINGLY (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 (voice-over): 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.

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.

[04:25:00]

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.

MATTINGLY: 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.

Phil Mattingly, CNN, the Panama Canal.

(END VIDEOTAPE)

MACFARLANE: Now the threat of tariffs, then a dramatic turnaround. We get the view from Canada and Mexico on their deals with President Trump to delay tariffs.

And a toddler with a life-threatening illness has been evacuated from Gaza for urgent medical care. We'll have an update on how she's doing.

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