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China Hits Back At U.S. With 10-15 Percent Retaliatory Tariffs; International Tech Summit Showcases Advancements In AI; LeBron James Becomes First To Score 50,000 Career Points. Aired 5:30-6a ET

Aired March 05, 2025 - 05:30   ET

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

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[05:33:52]

RAHEL SOLOMON, CNN ANCHOR: Welcome back. I'm Rahel Solomon live in New York. Here are some of the stories we're watching for you today.

Pope Francis will remain in a Rome hospital today as Catholics around the world observe Ash Wednesday, the first day of Lent. The Vatican says that the pontiff slept well through the night as he continues to fight double pneumonia. This will be just the second time in his papacy that Pope Francis will not lead the Ash Wednesday service.

BlackRock has agreed to buy the two ports at either end of the Panama Canal. The global investment firm agreeing to pay $22.8 billion to the Hong Kong-based company that owns them. President Trump has threatened to take back the canal, complaining that China now runs it. In fact, Panama operates the canal.

A powerful storm is set to reach the East Coast of the U.S. later today affecting more than 55 million people in areas from Florida to New York. It could bring gusty winds, rain and hail, with a chance of tornadoes. Meanwhile, blizzard conditions are expected in the central U.S. and the Midwest through this afternoon.

[05:35:00]

Well, the stock market hates them and retailers say that they will drive up prices, but Donald Trump is defending his new tariffs against Canada, Mexico, and China. He also told Congress last night that he will roll out dollar-for-dollar tariffs against other countries starting on April 2.

A leading farm group says that the trade war will take a toll on rural America and drive up prices for U.S. consumers. President Trump has a different outlook.

(BEGIN VIDEO CLIP)

DONALD TRUMP, (R) PRESIDENT OF THE UNITED STATES: Tariffs are about making America rich again and making America great again. And it's happening and it will happen rather quickly. There will be a little disturbance but we're OK with that. It won't be much. It may be a little bit of an adjustment period. We had that before when I made the deal with China -- $50 billion of purchases -- and I said just bear with me, and they did -- they did. Probably have to bear with me again, and this will be even better.

(END VIDEO CLIP)

SOLOMON: U.S. financial markets apparently struggling to deal with this "adjustment period," in the words of the president, and not a fan apparently of these Trump tariffs. The Dow closing down 670 points or 1 1/2 percent on Tuesday, and that follows the 650-point drop on Monday.

Here is a look at where U.S. futures stand right now at 5:30 a.m. -- 5:35. Green across the board. The Dow, Nasdaq, and S&P 500 all look set to open higher this morning with the Dow futures up about 250 points at this point.

And taking a look at Asian markets, Asian markets also closed higher across the board -- green across the board. Nikkei closing up about a quarter of a percent. The Hang Seng almost three percent.

And staying in Asia now, China is hitting back at the U.S. with tariffs against a long list of American products. Let's go to CNN's Steven Jiang who is in Beijing. Steven, give us a sense of what the reaction has been like so far.

STEVEN JIANG, CNN BEIJING BUREAU CHIEF: Yeah, Rahel. On Wednesday, Chinese officials reiterated their early response to the fresh Trump tariffs targeting China, saying if the U.S. insists on harming Chinese interests China will fight until the end.

Now, accompanying these feisty words has been a package of countermeasures from Beijing, including an additional 10 to 15 percent of tariffs on a whole range of American goods including many agricultural products. But also slapping multiple U.S. companies, although no household names just yet on the list with new export control restrictions. And also suspending imports of American logs and soybeans.

Now it's worth nothing a lot of these measures target American farmers who, of course, as you mentioned are major constituents to not only Mr. Trump but also the Republican Party. And Mr. Trump actually gave them a shoutout during his address on Tuesday night saying how they would be greatly benefited from his tariffs and how they love these tariffs. But apparently, according to many experts that's simply not a case as shown by how they are now being targeted by these Chinese countermeasures.

But experts have also said that Beijing's response so far relatively restrained, leaving wiggle room for further negotiations. Because the assessment from here is Trump is still in a dealmaking mode and want to -- he wants to reach a broader trade deal with China. So that's something Beijing seems to be -- leave the door open for.

But it's -- again, it's this backdrop of escalating trade tensions between the world's two biggest economies that makes the Chinese economic growth target for 2025 all the more noteworthy. On Wednesday morning the Chinese leadership reveals that number to be around five percent for the year. That is very ambitious considering the very strong economic headwinds they are facing both domestically but also increasingly externally given the new Trump tariffs.

But they seem to be doing this as a defiant show of confidence, but they are also really preparing for new tariffs by raising their budget deficit to the highest level in decades -- around four percent of their GDP -- obviously trying to do all they can to mitigate any impact of the new Trump tariffs -- Rahel.

SOLOMON: Yeah, hoping for the best perhaps but preparing for the likelihood that we are perhaps staring down a trade war.

Steven Jiang in Beijing. Thank you.

And joining me now, Dan Ives, the global head of tech research at Wedbush Securities. Dan, it's been a long time. Great to have you this morning.

DAN IVES, HEAD OF TECH RESEARCH, WEDBUSH SECURITIES (via Skype): Great to be here.

SOLOMON: Before Trump's joint address to Congress his commerce secretary had this to say about tariffs on Fox Business. Take a listen.

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HOWARD LUTNICK, U.S. COMMERCE SECRETARY: It's not going to be a pause. None of that pause stuff. But I think he's going to figure out you do more and I'll meet you in the middle some way, and we're going to probably be announcing that tomorrow.

(END VIDEO CLIP)

SOLOMON: Tomorrow would be today.

Dan, it didn't seem like to me that Trump was suggesting a deal was imminent last night. I mean, who do you believe here? What are you expecting?

IVES: Yeah. Look, I mean, this is all a game of high-stakes poker, right? And I thought what you saw there -- I mean, the streets (PH) going to look through this and feel like a deal specifically with Canada and Mexico. That's something that's probably in the near term horizon.

I think the bigger issue is going to be around China and just how nasty this gets in terms of the retaliatory before ultimately you sit at the table and try to get the deal done.

[05:40:05]

SOLOMON: Um-hum. Dan, you made the point in your research note earlier this week that growth stocks, tech stocks -- they've been here before. They have faced geopolitical uncertainties before. But does this period feel different to you? You have a Federal Reserve that's in a wait-and-see mode. You have rates that were set initially to fall meaningfully this year. And you have an affordability crisis that many Americans continue to feel.

Is it different this time -- the uncertainty and the volatility?

IVES: Yeah. Rahel, I'd also -- I'd say the biggest difference is that, but it's really about the AI revolution. I mean, the core of the foundation -- the hearts and lungs of this market and the bull market are chip stock, tech stocks. And when you think about chips export control of China that's the biggest worry -- what they could ultimately mean in terms of slowing down the supply chain. And that's why you've seen darlings like NVIDIA and a lot of the high growth stocks have gotten crushed here because of those worries around China. I think that's why it's been a white-knuckle moment and you've seen these reactions in the market.

SOLOMON: Yeah. So in terms of opportunities is it still the chips story, which we know last year it was? I mean, NVIDIA was white-hot or going into this period where economists are worrying about slower economic growth. Do you actually start to look at more, I don't know, Steady Eddie names? Do you start to look at defensive plays? I mean, where do you see opportunities for investors right now?

IVES: Yeah. I mean, look, in our view we're near three of what's going to be an eight- to 10-year buildout of the AI revolution. I mean, it's the biggest tech transformation in the last 40-50 years. That's why we view these selloffs as golden opportunities to own godfather of AI, (INAUDIBLE), and NVIDIA, Microsoft, Alphabet. You know, I look at things like Palantir and others and some of these mag 7 names because that's where the growth is.

I get the defensive story. I think this will be short-lived. This is not the end of the tech bull market. It's just a sort of turbulent time as we go through it in terms of this being a poker between D.C. and Beijing.

SOLOMON: So, Dan, what you're saying is if those folks -- if those investors who have not gotten into names like NVIDIA and Microsoft yet -- what you're saying is there's still time.

IVES: Oh, I think -- look, we believe this tech bull market is going to be going for another two to three years. I get -- and I just think in these situations you can't run for the hills. You tune out the noise. You own the winners. And that's really been our playbook the last few years despite obviously a lot of noise coming out of Trump and D.C.

SOLOMON: Yeah.

All right, Dan Ives of Wedbush Securities. Dan, I'll see you again, I'm sure, quite soon. IVES: Thank you.

SOLOMON: Thank you -- yeah.

All right. The Trump administration has rejected a long-awaited plan for post-war Gaza that was proposed and endorsed by Arab leaders. Officials from Egypt, Qatar, Saudi Arabia, and UAE unveiled their $53 billion proposal on Tuesday. Now, under their plan Gaza's two million Palestinians would be allowed to stay, while President Trump's plan would expel them from the enclave.

The Arab proposal outlines rebuilding Gaza by 2030 and calls for Hamas to seed power to an interim government until a reformed Palestinian Authority can assume control.

Well, it was chaos in Serbia's Parliament as opposition lawmakers threw smoke grenades and used pepper spray inside the chamber. Three lawmakers, including one who was pregnant, were injured in the scuffle. One of them suffered a stroke. The move was meant to protest against the government and show support for student demonstrators.

Serbia's political crisis started when the canopy of a train station collapsed in November killing 15 people. The tragedy has come to serve as a symbol of what many see as corruption at the heart of the Serbian state.

Well, still to come, artificial intelligence on everyone's mind at Europe's largest tech summit. We will take you live to Barcelona for the latest from the Mobile World Congress.

Plus, the NBA's all-time leading scorer LeBron James reaching yet another historic milestone.

We'll be right back.

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[05:48:35]

SOLOMON: Welcome back.

Every year the biggest names in emerging technology, social policy, and business come together to forecast the coming year and see the potential innovations that will influence change across the globe. It's called the Mobile World Congress. And the part trade show-part conference is focusing on the sweeping impact of artificial intelligence and new tech, especially in mobile devices.

Let's get to CNN's Anna Stewart who joins us now from Barcelona. Anna, always a great place to visit -- Barcelona -- even more so where you have fun toys to play with. What have you been seeing there? What have you been hearing?

ANNA STEWART, CNN CORRESPONDENT: Yeah. I mean, Rahel, I never actually see Barcelona, I just see this big trade hall, but there's plenty to see. It's been a really busy few days. Over the years it's really changed, I'd say, at this show. It's no

longer the place where smartphone makers kind of launch their latest smartphone. That was kind of back in the days of Blackberry and Nokia. And increasingly, of course, it's been dominated by the big Chinese smartphone makers. So Huawei, Oppo, Xiaomi -- they are all really big players here.

And also this year while there is still a focus on the latest camera, new lenses, foldable phones, extendable displays, the most interesting innovations this year with your smartphone is really how AI is being integrated inside the phone.

For instance, Honor is a smartphone maker and they now have a feature within the phone where it can actually tell whether a video or a photo you're looking at has been deep-faked. So it's a great security feature.

[05:50:00]

Another one -- this is from Deutsche Telekom, one of the world's largest telephone companies who owns T-Mobile in the U.S. as well. And they've actually launched phone this year. It's not available yet so I've borrowed it just for a little bit. It's called the Magenta AI phone. It's partnered with Perplexity.

And the idea behind this phone is that in the future you may not need any apps at all. So you can have apps on this phone but you don't really need them. You can ask this phone to book you a taxi, book you a hotel, call your friend, add something to your diary, and it will just do it all automatically.

And this really is the future of AI and where we're all headed in terms of consumer artificial intelligence. We have generative AI. That's been the big focus for the last few years. Building on that, we're all talking at the moment about Agentic AI, and this is becoming a feature we'll see more and more within the home and within the sort of connected devices.

You'll have an assistant on the go that has some agency, has some autonomy to be able to actually help you out. No longer just a sort of alternative to a search engine, Rahel. So that's the big feature.

SOLOMON: Yeah. And as our guest Dan Ives said a little bit earlier it's not too late to get into these AI tech stock names if that -- if that's what you're into.

Anna Stewart in Barcelona with an up-close look. Thank you.

All right. A rare piece of art by Banksy sold for $5.5 million on Tuesday. This reimagining of a painting by the late Scottish artist Jack Vettriano was owned by the co-founder of the band blink-182, Mark Hoppus. A specialist at Sotheby's says that while people loved Vettriano's work it wasn't accepted into the art world, similar to Banksy's work. Hoppus says that part of the proceeds from the sale will go to the California Wildfire Foundation and medical charities.

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ALANIS MORISSETTE, SINGER-SONGWRITER: Singing "You Oughta Know."

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SOLOMON: Thirty years after she gained fame with her "Jagged Little Pill" album, Alanis Morissette is still on the road, still making music. The seven-time Grammy winner will be headlining a Las Vegas residency this fall playing eight shows at the Coliseum at Caesars Palace between October 15 and November 2. The 50-year-old Morissette is expected to perform classic hits like "Thank You," "Ironic," and "Hand in My Pocket," along with some more recent tracks.

Meghan Markle, Britain's Duchess of Sussex, has stepped back into the TV series world with a new Netflix show.

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Clip from Netflix "WITH LOVE, MEGHAN."

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SOLOMON: The first of eight episodes of "WITH LOVE, MEGHAN" premiered on Tuesday and it marks a sort of rebrand for the former actress and "SUITS" star as a lifestyle guru and domestic goddess. The show was filmed in Montecito, California and is centered around the duchess hosting a different brand each episode. And in the episodes she offers tips and tricks for being the ultimate hostess, cook, and homemaker, such as making her own bath salts, beekeeping, candle-making, and using berries from her garden to make raspberry jam.

I'm impressed by each of those things.

Meantime, the Philadelphia Eagles shelling out some big bucks to keep one of their most electrifying players. You know who I'm talking about. The Super Bowl LIX champs will make Saquon Barkley the highest- paid running back in NFL history. The 28-year-old set new records for most rushing yards and most yards from scrimmage.

His two-year contract extension is worth $41.2 million. Barkley becomes the first running back in the league to make more than $20 million a year surpassing a deal signed by the San Franciso 49ers' Christian McCaffrey last year.

Go Birds. I'm I still allowed to say that? It hasn't been too long yet, right? Go Birds.

All right, to the NBA. From the NFL to the NBA where LeBron James has become the first player in history to score 50,000 career points, adding yet another achievement to his illustrious career. That record includes games in both the regular season and the playoffs.

Now, he reached the milestone in front of a roaring home crowd in L.A. Tuesday as he scored a team-high 34 points to lead the Lakers past the New Orleans Pelicans playing in his 22nd season. King James, as he is known, remains one of the best players in the league. (BEGIN VIDEO CLIP)

LEBRON JAMES, FORWARD, LOS ANGELES LAKERS: I'm super blessed to be able to put that many points up in the best league in the world with the best players in the world over my career. So it's pretty special.

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[05:55:00]

SOLOMON: All right. Before we go take a look at this. A new baby girl giraffe was born on Saturday at the zoo in Sacramento, California. This zoo now has five female Masai giraffes. Officials say that the calf was on her feet within two hours, and she started nursing shortly afterwards.

She will make her public debut after some bonding time with her mother. Gotta have the bonding time. The exact date also depends on their health and their welfare. So cute.

Thank you for joining us. I'm Rahel Solomon live in New York. "CNN THIS MORNING" is coming up next after a quick break. I'll see you tomorrow.

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