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CNN International: Trump's Tariff Reprieve; Auto Tariffs Delayed for One Month; Trump and Trudeau Talk on Tariffs; Democrats Protest Trump's Speech with Signs and Walkouts; U.S. Pause Intelligence Sharing with Ukraine; Europe Moves to Bolster Defenses; Fears for Taiwan's "Silicon Shield"; U.S. Directly Negotiating with Hamas. Aired 6-7p ET

Aired March 05, 2025 - 18:00   ET

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

[18:00:00]

JIM SCIUTTO, CNN ANCHOR: Hello and welcome to our viewers joining us from all around the world. I'm Jim Sciutto in Washington.

Just ahead, stocks bounced back after President Donald Trump paused tariffs on cars only from Canada and Mexico for one month, just a day after imposing those tariffs. Also, today, the president somewhat friendly phone call with Canadian Prime Minister Justin Trudeau, we'll explain.

And in a prime time address, France's Emmanuel Macron suggests protecting allies with his country's nuclear arsenal. Another sign that Europe is beefing up its defensives because it can no longer rely, it believes, on U.S. support.

And fears that Taiwan's so called silicon shield of safety is at risk by the chipmaker TSMC opening a multibillion-dollar plant here in the U.S. We will hear how the island is reacting. That conversation and plenty more straight ahead.

President Trump giving temporary ground in his tariff war, granting a one-month exception on automobile tariffs for Mexico and Canada, other imports not getting a reprieve. Trump spoke with the Canadian Prime Minister Justin Trudeau on Wednesday, posting on social media that their call ended in a quote, "somewhat friendly manner."

Trump added that a key sticking point was fentanyl trafficking from Canada. We should note, to be clear, only a small fraction, as you can see there, of fentanyl entering the U.S. comes in over the northern border as compared to that coming over the southern border.

Joining me now is Paula Newton in Ottawa. Paula, I'm imagining that it's U.S. automakers making their case rather than the Canadian prime minister's case that may have prompted that reprieve. I wonder how Canadian officials are receiving this. Do they see this as progress or just a temporary pause in a broader trade war?

PAULA NEWTON, CNN CORRESPONDENT: I mean, look, any kind of a reprieve, I suppose, is good, but Canadian officials really aren't celebrating. They're not certainly popping any champagne over this. And they only see it, really, as, you know, a delayed pain here. And I'm going to, you know, quote directly the foreign minister, Jim, who I know you've interviewed, who just said in the last hour that Canada can no longer go through this, her words, psychodrama every 30 days.

And, Jim, that is what Canada continues to face here. OK. So, we do have the carve out for the auto industry. You astutely point out that that was likely the auto executives themselves that got that. Nothing that Canadian officials said and it's only for 30 days.

Now, officials are still speaking, Jim. The commerce secretary, Mr. Lutnick, is speaking with our finance minister here in Canada, Dominic LeBlanc. Things are moving, but not necessarily in a direction that would lead to a lifting of tariffs altogether. And now, I want you to listen to Doug Ford, who, again, on CNN in the last hour, made it clear that, look, as far as he's concerned, he's the premier of Ontario, Canada's largest economy, he's saying it's an all or nothing situation. Listen.

(BEGIN VIDEO CLIP)

DOUG FORD, ONTARIO PREMIER: We will not relent. And I apologize to the American people. It's not your fault. There's one person, again, to be blamed, and that's President Trump. But we're going to go full steam ahead, and we have to protect our families, our workers, our businesses.

(END VIDEO CLIP)

NEWTON: Now, look, he is apologetic, and at the same time, as I've told you before, Jim, Canadians have stiffened their spines here, and at this point in time, they want some clarity, businesses want clarity. It will hurt. Canada will certainly lose any trade war with the United States, but at this point, they want to just get on with it, Canadian officials, and mitigate any damage.

Because these negotiations going back and forth also do not help businesses in any way, shape, or form. They're still completely confused as to where any of this is going.

SCIUTTO: Canada though has cards as it were in that Canada is the number one market for many U.S. states in terms of exports, and on that point, we're seeing American liquor stripped from supermarket shelves. Do we know what impact that is having? Is it measurable in terms of American exports into Canada?

[18:05:00]

NEWTON: It seems not to have a measurable effect so far, and you're right to point that out. In fact, two dozen states in the United States call Canada their first and most important export market. It seems not to matter, even when it comes to things that are strategic, Jim.

I mean, look, we've been covering the Ukraine deal with critical minerals. Canada arguably could have some of the most -- some of the highest reserves of those critical minerals. President Trump isn't trying to make a deal here in Canada.

And also, to the detriment, in some cases, of his own constituencies, including farmers, who, as you know, American farmers voted in majority for Donald Trump. They get most of their potash, their fertilizer from Canada. They're going to pay 25 percent more for that potash when it crosses the border, it seems to be falling on deaf ears.

And of course, we heard from J. D. Vance again, just a few hours ago said that, look, the president isn't looking to have all these carve outs across dozens of industries. Again, they continue to speak, Jim, but at this point in time, it does seem as if, you know, the Trump doctrine is what is first and foremost here.

SCIUTTO: No question. And listen, it's hard for businesses to make plans when the tariffs change every other day. Paula Newton in Ottawa, thanks so much.

Well, Canada, of course, not the only country worried about and a target of President Trump's tariffs, Mexico, a key part of North America's supply chain for cars and trucks. Canada made more than a million cars last year. Mexico made almost four times that.

China, as well, ramping up the saber rattling. China's embassy to the U.S. echoed earlier comments by the foreign ministry on social media. The embassy posted in part, if war is what the U.S. wants, be it a tariff war, a trade war, or any other type of war, we're ready to fight till the end.

Joining me now is Jorge Guajardo the former Mexican ambassador to China. Thanks so much for joining. You know given your experience in China, of course your long service here in the U.S. as well, I wonder what your reaction is to seeing the U.S. treat Mexico, an ally, a key trading partner and neighbor, in effect, the same as it treats its strategic adversary, China, in terms of targeting with punish -- targeting it with punishing sanctions?

JORGE GUAJARDO, FORMER MEXICAN AMBASSADOR TO CHINA AND PARTNER, DGA GROUP: Awkward to say the least. I, for a long time, have been warning Mexican publics that there's a big threat from China in terms of its exporting overcapacity. Something that we are very aware in Mexico and that we want to partner with the United States to keep that overcapacity out of North America.

Now, obviously, that meets with some resistance in Mexico. People who are importing products from China, but the idea is that we partner with the United States. In fact, Mexican President Sheinbaum, I think, has aligned Mexico with the United States against China closer than any other country in the world, even stalwart allies like U.K. and Israel have not aligned themselves with the U.S. as closely as President Sheinbaum has aligned Mexico with the U.S. economically and commercially. So, it's obviously awkward.

SCIUTTO: Yes. No question. And listen, given that that is apparently not enough to stop these tariffs, and given as well that Trump seems to change his justification for the tariffs, it's fentanyl, it's migrant flows, it's this desire that Trump has talked about of moving all manufacturing from Canada and Mexico to the U.S. Does that make it impossible, in effect, for Canada to satisfy Trump, to avoid these tariffs?

GUAJARDO: I think so. And again, going back to what President Sheinbaum has been doing in Mexico, I think she's been trying to meet Trump where -- President Trump where he needs to be met. So, he asked for help on immigration, Secretary Noem, said that crossings in the southern border are at a historic low. He asked with help with fentanyl, which is a huge problem, and I'll grant President Trump that, and in Mexico, everybody will grant him that.

So, she extradited 29 organized crime leaders, something that had never been done in Mexico. So, this is a huge step in Mexico, a huge step. And of course, has been doing -- conducting operations against organized crime in Mexico with the help of the United States. In fact, there was a report that the United States is stationing drones in Mexico. That's also a huge deal in Mexico.

SCIUTTO: Yes.

GUAJARDO: Remember, Mexico is a country with a history of having been invaded by the United States, having had our territory stolen. That's what we were taught. So, to allow a U.S. military hardware station in Mexico is a huge concession, but it's a recognition of the importance of fighting the trafficking of fentanyl, so she has met him there.

[18:10:00]

He has requested help stopping imports from China. There are reports that she has offered to match U.S. tariffs on China. And here we are. So, it's difficult.

SCIUTTO: You must be thinking, what else can you do? Well, when I speak to Canadian officials, they say that even if Trump lessens the tariffs or pulls them back, there's so much back and forth, so much targeting that the relationship has been damaged and will not recover. I wonder do Mexican leaders, officials feel the same way, that Trump has so upset the apple cart as it were, that there's no going back in this relationship?

GUAJARDO: I think the feeling in Mexico is still that we want to partner with the United States. So, I think if you pull Mexican people, they will say, we will -- we want to find an agreement to work with the United States as good partners.

Having said that, I think President Sheinbaum has said that she would -- in case there is no agreement, that she would provoke a meeting at the Zocalo, the big plaza in Mexico. And my guess, and I am not speaking for her because I have no insight, but my guess is she would start that national dialogue with Mexico, with Mexican people, and sort of educating and sort of trying to bring the people on board to understand and realize that maybe the United States is no longer the partner that we thought we had.

Hopefully, it doesn't come to that because I do think that Mexican people want to partner with the United States and that we can be good partners.

SCIUTTO: Yes. And listen, you're not going to stop being neighbors. That's just a geographical fact. Jorge Guajardo, thanks so much for joining. We appreciate it.

GUAJARDO: Thank you.

SCIUTTO: Coming up as well, U.S. stocks bounce back from two days of sharp losses on Wednesday as President Trump, as we mentioned, paused auto tariffs for Canada and Mexico. All the major averages finished the session up by over 1 percent. Shares of GM, Ford, and Chrysler all soared on the news as well. Crude oil prices, however, fell due in part to the tariff showdown and global trade war -- fears.

President Trump defended his trade policy when he spoke to Congress on Tuesday. He said reciprocal tariffs against all trading partners will kick in on April 2nd. That is to say, he's planning to add more tariffs. He played down the repercussions and the costs.

(BEGIN VIDEO CLIP)

DONALD TRUMP, U.S. PRESIDENT: Tariffs are about making America rich again and making America great again, and it's happening and it will happen rather quickly. There'll be a little disturbance, but we're OK with that. It won't be much.

(END VIDEO CLIP)

SCIUTTO: Trump dedicated large parts of his speech to trade and tariffs, along with immigration and crime, as you can see at the top of this chart. He spent less than two minutes discussing inflation, however. One of the deciding issues for voters in the most recent election. Also notable, the president's hostile tone towards Denmark and its territory, Greenland.

(BEGIN VIDEO CLIP)

TRUMP: We need Greenland for national security and even international security. And we're working with everybody involved to try and get it. But we need it really for international world security. And I think we're going to get it. One way or the other, we're going to get it.

(END VIDEO CLIP)

SCIUTTO: I mean, they're laughing there. This is the U.S. talking about taking territory from a treaty ally, Denmark. The White House on Wednesday criticized Democrats for some of the protests we saw during the speech. Congressman Al Green was ejected from the House floor after heckling Trump. Republican House members moved to censure Green today.

Other Democrats protested more quietly, holding up signs during the speech, some walked out as well before the speech was over. For more on President Trump's speech, I'm joined now by Stephen Collinson. Stephen, listen it was doubling, tripling, quadrupling down on many of Trump's positions, both in terms of the culture war here domestically, but also his international positions.

I mean, to see the vice president and the speaker of the house laughing as Trump described there taking territory, he said, we're going to get it however we want to, in effect, from his treaty ally, Denmark, seems to be part of a broader message from Trump to allies around the world.

STEPHEN COLLINSON, CNN POLITICS SENIOR REPORTER: Yes, and I think it plays into what you were talking about with the tariffs. People are starting to get a little tired of this. This was a great speech if you were a MAGA supporter, a Trump supporter, perhaps that 40 percent of Americans who support the president. There was nothing in there for the rest of the U.S. citizens who didn't vote for him.

[18:15:00]

Often during these presidential addresses, you do see a president try at least to make lip service to reach out and the message to the rest of the world was that there are no friends, there are no allies for the United States, there are just people on the edge of the side of a negotiating table and Trump is strong and everyone else is going to be weak.

So, domestically and internationally and you saw the pictures of the divided house there, the Republicans standing up and cheering, the Democrats sitting stone-faced, rigid in their seats, not applauding, I think this graphically gave a very real indication of where the United States is domestically and around the world last night.

SCIUTTO: No question. I wonder how the White House is framing this partial retreat on tariffs, a one month pause, and just focused on the auto industry, which might be more about giving a concession to U.S. automakers than to U.S. allies and neighbors, Mexico and Canada. Are they saying that this is a broader pause or broader retreat or just a temporary one?

COLLINSON: So, we're getting conflicting messages. As Paula was saying, J. D. Vance said the president's not looking for big opt outs. There were some comments coming out of the White House today that perhaps there could potentially be some more areas where the president might listen to people coming in to him and saying their industries could be damaged.

But in any normal White House, if you came out and imposed 25 percent tariffs one day and the next day you put a month-long freeze on some of them, some of the most significant terrorists, for example, here on the autos, it would be seen as somewhat of a farce. I mean, the idea that suddenly Trump has realized that if you put 25 percent tariffs on an auto industry that is very reliant on moving components back and forward across the Canadian and U.S. border and the Mexican and U.S. border, and that would be a disaster for the industry. It's a bit odd because that was what everyone was saying before these tariffs were imposed.

I think it speaks for very ad hoc administration. We're seeing government again by whiplash. CEOs who can get the president's ear may be able to get better treatment than CEOs who can't. So, we're getting government by chaos again in the second term already.

SCIUTTO: Listen, and let's be frank. I mean, the markets are showing that there are economic consequences to this. Consumers are in terms of their own confidence. It's difficult to make business plans when, well, it could change by the day. Stephen Collinson, thanks so much.

Coming up, another pause, this one relating to Ukraine. The Trump administration has paused critical intelligence sharing for Ukraine. This has consequences not just for offensive operations, but defensive ones, including air defense. We're going to have the details just ahead.

(COMMERCIAL BREAK)

[18:20:00]

SCIUTTO: French President Emmanuel Macron says that he is ready to begin discussions on sharing his country's nuclear deterrent force with European allies. This, as Washington raises questions, not just about its continuing defense of Ukraine, but about its role in defending Europe.

(BEGIN VIDEO CLIP)

EMMANUEL MACRON, FRENCH PRESIDENT (through translator): Our nuclear deterrence protects us, protects French sovereignty right across the board. And this has always played a part in the security and peace of Europe. But responding to the historic appeal off the German chancellor, I decided that we have to increase our protection amongst our allies in Europe.

(END VIDEO CLIP)

SCIUTTO: It's a remarkable development. This is France discussing the possibility of expanding its nuclear deterrent around Europe because, as he's saying there, they can no longer trust the U.S. to defend Europe.

Meanwhile, Ukraine President Volodymyr Zelenskyy's chief of staff says that Kyiv and Washington have agreed to meet in the near future. This after a phone call with the U.S. national security adviser, Michael Waltz. In his speech to a joint session of Congress, President Trump welcomed a letter to the White House from the Ukrainian leader.

(BEGIN VIDEO CLIP)

TRUMP: Earlier today, I received an important letter from President Zelenskyy of Ukraine. The letter reads, Ukraine is ready to come to the negotiating table as soon as possible to bring lasting peace closer. Nobody wants peace more than the Ukrainians, he said. I appreciate that he sent this letter. Just got it a little while ago.

(END VIDEO CLIP)

SCIUTTO: We reported last night that the U.S. has paused not just military assistance to Ukraine, but also intelligence sharing with Ukraine. And this is significant because Ukraine uses this intelligence not just for targeting Russian forces that continue to invade its country, but also uses that intelligence to help in the defense of its cities from Russian air and missile strikes and bombing, without that overwatch provided by U.S. intelligence, those Ukrainian cities and targets remain in greater danger. Here's what the CIA director John Ratcliffe had to say.

(BEGIN VIDEO CLIP)

JOHN RATCLIFFE, DIRECTOR, U.S. CENTRA INTELLIGENCE AGENCY: President Trump said, as he asked for a pause, in this case, as everyone saw play out, President Trump had a real question about whether President Zelenskyy was committed to the peace process. And he said, let's pause. I want to give you a chance to think about that.

(END VIDEO CLIP)

SCIUTTO: He's talking about pausing again intelligence support that helps Ukraine defense itself. Now, Ratcliffe and Waltz have suggested that pause in U.S. assistance could be short lived if President Trump is satisfied that Ukraine has taken steps towards negotiations to end the war. It is not clear what the U.S. is demanding of Russia in the meantime for those talks. Nick Paton Walsh has more from Kyiv on a tumultuous day for Ukraine.

(BEGIN VIDEOTAPE)

NICK PATON WALSH, CNN CHIEF INTERNATIONAL SECURITY CORRESPONDENT: Again, whiplash here in Kyiv. It had seemed yesterday that pause in military aid that Kyiv had been moving to potentially fix that rift with the White House, statements from Zelenskyy on video and on social media saying he found the Oval Office blow up to have been regrettable, and a letter that President Trump talked about Zelenskyy having written to him during his speech suggesting that Zelenskyy was willing to sign the rare earths mineral deal at the White House's convenience and wanted to commit to peace.

But still, the following day this morning, Kyiv waking up again to more bad news with senior Trump security officials saying that aid intelligence sharing had been paused. Now, that, according to CIA's director John Ratcliffe, was something that he thought, he said, might end up being reversed at some point and resumed. But the national security adviser, Mike Waltz, suggested that there needed to be further signs from Ukraine that it was willing to come to the negotiating table to sign on to a process.

The big problem, I think, for Ukrainians and their European allies is it's not really clear what process the White House is hoping Ukraine will sign up to. Is it the one that the U.S. is negotiating with Russia without Ukraine or European allies? Is it the one the Europeans are putting together themselves, which has Ukrainian backing and may end up seeing a reassurance force, boots on the ground to some degree, inside of Ukraine if indeed there is a ceasefire? Or is it something else, more general, a feeling that President Trump wants to have that Zelenskyy is more willing to negotiate? We simply don't know.

[18:25:00]

But the Europeans appear to be moving forwards relatively quickly. Public address from French President Emmanuel Macron, ahead of tomorrow's key meeting in Brussels of European leaders, their second, in just five or six days, which Zelenskyy will indeed attend. Macron suggesting that Europe needs to do better to defend itself, saying that Russian aggression is unchecked at its own borders, reminding French people that Russia is spending 40 percent of its GDP on defense at the moment. Also saying that France might need to expand its nuclear umbrella to protect neighbors like Germany.

A lot moving in the European sphere. A European official telling me that the British, French, and Turkish may up contributing the significant part of this reassurance force if it is needed inside of Ukraine. This European official saying, without the possibility of American psychological or practical logistical assistance, it would be very high risk, if not impossible, to pull this off.

But real questions as to whether the Trump administration fits in all of this. Macron making it clear he feels Europe may have to go this alone, although they do urgently accept they need the U.S. on side during this.

All of this fascination, and at times it seems, collapse in the transatlantic and western alliances, leaving Ukrainians deeply worried about what support they can rely upon, and indeed, for the moment, when Russia may take advantage.

Just in the last hours, we've heard of a ballistic missile strike hitting one city in Ukraine, Kryvyi Rih, the hometown of Zelenskyy, in which two people have been killed, and many more injured. Horrific scenes, possibly, because of the lack of air defense missiles that form part of U.S aid.

Nick Paton Walsh, CNN, Kyiv Ukraine.

(END VIDEOTAPE)

SCIUTTO: Taiwan also a topic of President Trump's speech. Trump touted that Taiwanese Chipmaker, TSMC, of course, the largest producer of advanced chips in the world, has made a decision to invest some $100 billion in chip manufacturing here in the U.S.

(BEGIN VIDEO CLIP)

TRUMP: Taiwan semiconductor, the biggest in the world, most powerful in the world, has a tremendous amount, 97 percent of the market, announced a $165 billion investment to build the most powerful chips on earth right here in the USA. All that was important to them was they didn't want to pay the tariffs. So, they came in their building and many other companies are coming. We don't have to give them money.

(END VIDEO CLIP)

SCIUTTO: That massive investment plan is raising some concerns in Taiwan over its very security from a potential Chinese invasion. Taiwan relies on its semiconductor industry as in effect a strategic asset. The idea being that, well, the U.S. and others won't let China invade because of how central that industry is. And TSMC and Taiwan make more than 80 percent of the advanced semiconductors in use in the world.

Will Ripley joins me now from New York. And I wonder, listen, Taiwan is making a balancing act here, right? Because they want to improve relations with President Trump and show their seriousness to meet President Trump's desire to bring more manufacturing in the U.S. But of course, they don't want to lose all their chip manufacturing because then they become less useful, not just to President Trump, but to others. So, I wonder how seriously those concerns are rising today following that investment decision?

WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, certainly, everywhere you went in Taiwan, my team there told me people were talking about this at restaurants, at the markets. This was the topic of conversation, because this is $165 million, the largest foreign direct investment in U.S. history.

And when you hear TSMC talking about building three fabrication plants, known as Fabs, two advanced packaging facilities, one research and development center in the U.S., hiring 40,000 construction workers over the next four years, providing tens of thousands of high-end jobs, it sounds like, on the surface, you're sending a lot of what Taiwan relies on to produce most of the advanced chips in the world could be exported to the United States.

However, in the short-term, they're going to continue producing all those advanced chips in Taiwan because it takes a long time to build these Fabs. And the existing projects in Arizona have been plagued with chronic delays because of bureaucracy and other issues, not to mention the manpower shortage itself. They've actually been importing a lot of Taiwanese workers to the U.S. because the culture inside TSMC, and I visited the company, it's almost a military-like culture.

You have highly educated workers who are willing to work long days, sometimes six days a week, come into work on a moment's notice, just the entire work culture, very different in Taiwan than what they're finding exists in Arizona. And there's certainly been some growing pains in terms of, you know, shifting from being a primarily Taiwanese company to a global company.

[18:30:00]

So, the government is talking about the need to protect these advanced chips manufacturing because they call it the Silicon Shield of Taiwan. If these chips are made in Taiwan, it's too important of an island to attack and potentially disrupt the supply chain.

Let me read you this statement that the presidential office released on the heels of President Trump's announcement, which they say did not take them by surprise. They knew about it ahead of time. They said, the government will review the proposed investment in accordance with the law to ensure the interests of shareholders and the nation that TSMC keeps its most advanced production technology in Taiwan as it expands its footprint into the U.S. Jim.

SCIUTTO: Will Ripley, thanks so much. Something to watch closely. Still ahead, Mexico and Canada, as we noted, get a one-month reprieve on tariffs just for autos from the White House. We're going to hear from the former U.S. trade representative Michael Froman on the potential path ahead. That's next.

(COMMERCIAL BREAK)

SCIUTTO: Welcome back to CNN Newsroom. I'm Jim Sciutto. Here are more international headlines that we are following today. Millions of Christians around the world have been observing Ash Wednesday. Pope Francis, however, was absent from mass today as he continues to recover in the hospital. The Vatican says the pope has remained stable through the day with no new breathing issues. The 88-year-old has been hospitalized since mid-February as he battles double pneumonia.

A suspect in the Kabul airport bombing of August 2021 has now made his first appearance in the U.S. court. The ISIS attack, you'll remember, killed 13 American troops, 170 Afghan civilians, marking a devastating end to the chaotic U.S. withdrawal from Afghanistan after more than 20 years of war, Mohamed Sharifullah appeared in court only a day after President Trump announced his arrest in his State of the Union.

[18:35:00]

And a massive winter storms continuing to march east across the U.S. It brought white out conditions to part of Iowa early Wednesday. Check that out. Strong storms have also been racing across the Carolinas and mid-Atlantic. In Mississippi severe winds knocked off a portion of the roof, wow, at the county jail. Several inmates were inside.

Returning now to our top story. The White House has announced Wednesday it is pausing tariffs that relate to autos against Mexico and Canada for one-month. This after U.S. car makers lobbied for leniency. The White House says President Trump is open to additional tariff exceptions for other industries. Trump and Canadian Prime Minister Justine Trudeau held a 50-minute phone call earlier in the day to discuss the ongoing trade war.

President Trump said on social media that Canada still has not made enough progress on the fentanyl crisis to allow him to ease tariffs further. We should note again, only a very tiny percentage of fentanyl entering this country enters via the northern border.

Trump also accused Prime Minister Trudeau of using trade as a justification for remaining in power. Trudeau, in fact, is set to step down as prime minister when the next Liberal Party leader is announced later this month.

During her briefing on Wednesday, White House Press Secretary Karoline Leavitt pushed back against a reporter's suggestion that Canada's fentanyl problem is much less a problem than Mexico's.

(BEGIN VIDEO CLIP) UNIDENTIFIED MALE: It's just 43 pounds that were found last year. That's less than a carry-on suitcase. Is that a lot of fentanyl compared to, say, Mexico? The vast majority of the fentanyl is brought in through Mexico, not Canada. So, what else does Canada need to do?

KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: Well, I just told you, last year alone, there was a 2,000 percent increase in illegal fentanyl.

UNIDENTIFIED MALE: But it's only 43 pounds.

LEAVITT: You're asking me for what the president's justification is for these tariffs. It's not up to you. You're not the president, Gabe. And frankly, I think it's a little bit disrespectful to the families in this country who have lost loved ones at the hands of this deadly poison.

(END VIDEO CLIP)

SCIUTTO: You'll note there, she did not answer on the statistical question of how much actually comes in. Joining me now, Michael Froman, the president of the Council on Foreign Relations, also served as U.S. trade representative under President Barack Obama. Good to have you, sir. Thanks so much for joining.

MICHAEL FROMAN, PRESIDENT, COUNCIL ON FOREIGN RELATIONS AND FORMER U.S. TRADE REPRESENTATIVE: Thanks for having me.

SCIUTTO: When I speak to Canadian officials, what strikes me is they say that even if there's some walk back of the tariffs partially, pauses, et cetera, that the relationship is fundamentally changed. That they can no longer trust the U.S. not just as a trading partner, but also as a defense partner. And you hear similar from European nations, as you know. And I wonder, the function of the council, of course, is to speak to folks from all sides, all countries. Do you hear something similar, that this has changed, America's relations with its allies has fundamentally changed?

FROMAN: Well, look, I think in the case of Canada, there's a lot of anger up there right now, which is understandable. But I don't think over the long-term it's going to fundamentally change the relationship. Canada is stuck. Living to our north. 70 percent of their population lives with 100 miles of our border. Their economy is heavily dependent on ours. And my sense is our security is still a security blanket that they will continue to benefit from.

Having said that, I think the real question is, what is it we want Canada to do? As your previous report just said, there's very little fentanyl that has come in from Canada. Something like 40 pounds. There are very few illegal migrants that have come in from Canada, like tens of thousands versus the millions that have come in over the Mexican border. What is it we want Canada to do to make things right?

President last night talked about reciprocity. Well, under NAFTA and the USMCA, basically, Canada and Mexico have no tariffs on our exports. Very small. There are only a couple areas of protection, like sugar and dairy. And so, they have an average tariff of about 0.25 percent on us, and we're imposing a 25 percent tariff on them. I'm not sure what reciprocity means in that context.

SCIUTTO: Do you know what President Trump is seeking here? Because in terms of both Canada and Mexico, the justifications seem to change. It's fentanyl one day, it's migrant inflows the other day. And Trump has also said publicly he wants all manufacturing from those countries to move back to the U.S., which of course is, seems a bridge too far given that those countries, I imagine, want to keep some manufacturing themselves.

FROMAN: Look, the president has made clear that he views tariffs as a really important tool, both for economic and non-economic reasons. As a source of leverage, as a source of negotiating leverage, they -- it can be a very powerful tool and witness that other countries have come to try and make deals with the United States to avoid tariffs.

[18:40:00]

But you have to know what it is you want them to do for that leverage to be useful. With Mexico, there are a whole series of issues around the border around the cartels around law enforcement. With Canada, it's just much less clear.

You know, the second reason you put tariffs on is to raise revenue. And our experience with Trump one administration was they raised about $70 billion of revenue from China on the tariffs, but 92 percent of that went to pay off the farmers that China retaliated against. So, it did not contribute very much to the overall treasury.

And the third reason you put tariffs on, as you said, Jim, is to encourage companies to make their production -- to move their production to the United States. I think companies right now are looking to see, is there enough stability? Is there enough predictability in the tariff regime for them to be able to make those kinds of capital decisions?

And when the president announces tariffs one day and removes them the next day, or kicks them down the road a month, a third day, it's very hard for companies to say, OK, I'm willing to commit it billions of dollars to put -- to move my factory from one country to another.

SCIUTTO: I want to ask a bigger picture national security question. You write that it would be in Trump's interest to work in tandem with our European partners in terms of the security of Europe. But when you read his moves, not just on Ukraine, but the way he speaks about the NATO alliance and their interpretation of America's dwindling commitment to Europe's security, that Trump appears to be reorienting America's relationship with the world, diminishing alliances, even going so far as to propose spheres of influence with adversaries. Is that an accurate description based on what you know of where he's taking the U.S.?

FROMAN: Well, first, I think he has been very focused on burden sharing and getting the other NATO allies to bear a higher percentage of their defense spending, and that is appropriate. And hopefully, they'll also make the reforms necessary. So, it's not just what they spend, but what they spend it on and make sure they're spending it on the right sorts of defense material.

But I think, Jim, there's a debate going on, or at least it appears so from the outside. There's the spheres of influence argument that he's going to leave Eurasia to Russia and the Europeans to work out amongst themselves that will take Greenland to -- or excuse me, from Panama to Greenland. And the question is what to do about the Indo-Pacific.

Because there's some in his administration who feel like China is the existential threat, and we need to take all of our resources away from Europe, away from the Middle East, and focus them on deterring and containing China. The other argument is, well, we'll leave the Indo- Pacific to China. And I don't -- we have not heard an indication from the president himself as to where he comes down in that argument.

His rhetoric about China has been quite moderate up to now, in the inaugural address since, it was hardly even mentioned last night at all. And so, it's unclear whether he thinks China is a significant security threat to the United States or whether he feels like he personally has a relationship with President Xi and can cut an overall grand bargain with him to resolve the many outstanding issues we have.

SCIUTTO: Yes, and some of it is rather far harsher against America's allies than against, say, well, China, but also Russia as well. Michael Froman, president of the Council on Foreign Relations, thanks so much for joining.

FROMAN: Thanks for having me.

SCIUTTO: Coming up next, as the Gaza ceasefire and hostage deal faces new uncertainty, I'm going to speak to the father of a U.S.-Israeli hostage who remains in Gaza next about what his hopes are going forward.

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SCIUTTO: The White House has now confirmed that the U.S. is now negotiating directly with Hamas about U.S. hostages still held in Gaza and the ceasefire. The move upends Washington's long policy of not speaking with groups deemed terrorist organizations. An Israeli official told CNN Israel is aware of those direct contacts between the U.S. and Hamas. The White House says it did consult Israel.

Ruby Chen is the father of Itai Chen, a 19-year-old U.S.-Israeli citizen, taken on October 7th, still held, his body still held in Gaza. And Ruby met with the attorney general, Pam Bondi, earlier. He also traveled to Qatar in January to speak to negotiators there.

Ruby, good to have you. Thanks so much.

RUBY CHEN, FATHER OF U.S.-ISRAELI CITIZEN ITAY CHEN WHO WAS KILLED OCTOBER 7: Thanks for having me, Jim.

SCIUTTO: I always want to ask you, given your loss, how are you and your family doing, all these 516 days later?

CHEN: Yes, we're tired, Jim. I don't think anybody thought that we would be at this place after so many days. You know, when we started, we thought we were in a sprint. But actually, it was a marathon. Just nobody told us that.

SCIUTTO: Yes. You met with the attorney general, Pam Bondi, today. Can you say what assurances you were given?

CHEN: Well, it's more about seeing that it's a team effort. You know, we got the quarterback, you know, that's the president, you know, and we have our running back, which is Mr. Witkoff. But, you know, you need the other players to be on the same team and pushing towards the same goal. And the DLJ and Mrs. Bondi, she has, you know, inside of her jurisdiction tools that can make the life of Mr. Witkoff much more easier, such as indictments, such as sanctions, and others. And this administration can do more and is doing more, but we also need that part to be in correlation with the main push that Mr. Witkoff is doing.

SCIUTTO: What's your reaction to hear that the U.S. is now speaking directly with Hamas? In other words, not leaving it to Israel, as the previous administration largely did.

CHEN: Yes. So, the prime minister has said that, you know, he doesn't feel like there's nobody to talk to on the Hamas side. So, I'm happy that Mr. Trump, the president, has took the initiative and sent out (INAUDIBLE) And see how he could get out the U.S. hostages. And we've always said that if the U.S. hostages come out, all the hostages will come out.

SCIUTTO: The other news today is that Trump issued, via social media, an ultimatum to Hamas saying that they must release all the hostages now, or there will be hell to pay later. Do you believe that that has impact? For Trump himself to make such a threat, do you think that pushes potentially these negotiations further?

CHEN: I think it does. You saw the Arab League this week come out with a plan. You know, it's a plan that is in the right direction. I think if the president has not been so forceful as he has been, I don't think that even elements of that plan would have been out. And I think the president basically said, you need to come back with a better plan.

SCIUTTO: Yes.

CHEN: And if that doesn't happen, then hell is going to happen. And I think that the Arab countries, such as Egypt and Qatar, we've waited so long for them to be more active in getting us to a place that we could get hostages out. Hopefully, they also get the memo of the president and do what they can, which is to get the last hostage coming out.

SCIUTTO: Your son, he was abducted from the Nahal Oz base while on active duty. This, of course, right -- for folks who don't know right on the border with Gaza. It's where so many of the casualties took place and so many of the hostages were taken.

[18:50:00]

As you know, an internal investigation published yesterday has found that Shin Bet security had failed in its mission to prevent October 7th ignoring repeated warning signs. It must be difficult for you to read such a report. Who do you hold responsible for that security failure on October 7th?

CHEN: Well, it's a more bigger issue. I think, you know, it's -- it goes to the government and it goes to theses or hypotheses that they had about, is Hamas capable, willing to go on such a massive attack? How safe and how much of a premium do you put on protecting those bases and the people inside of them?

SCIUTTO: Yes.

CHEN: Unfortunately, it comes down to priorities and money. And it's unfortunate that my son needed to sacrifice himself because of a money issue, because of someone not understanding what the priorities are. He is one of the five U.S. hostages still in Gaza. You know, this administration is doing so much to help us, and we have to trust in the president to get these five U.S. citizens out, including my son, and all the other hostages.

SCIUTTO: Yes, understood. Well, Ruby Chen, it's always good to see you, and I do wish you the best, and I do hope that you finally get resolution.

CHEN: Thank you, Jim.

SCIUTTO: And we'll have much more news right after the break.

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SCIUTTO: To sports now. The Champions League, some of the biggest names in European football battled it out in the first leg of the round of 16, most notably in France, where Paris Saint-Germain took on Liverpool. Patrick Snell has been following all of the action. How did it look?

PATRICK SNELL, CNN WORLD SPORT: Hi, Jim. Let's just focus in on that one key game from Wednesday night. PSG, you know, they've never been crowned champions of Europe and they gave it absolutely everything in this first leg encounter in the French capital. The hosts came flying out of the traps and they thought they'd taken the lead when the brilliant Khvicha Kvaratskhelia curling the ball superbly into the back of the Liverpool net. Amazing goal, right? Wait though, the officials check it. And somehow it seemed to be offside. It was so close though, so tight. No goal as the Georgian international is denied.

Then we're just over 10 left, it's an amazing piece of goalkeeping from Liverpool's Alisson to keep out PSG sub, Diside Due (ph), a wonderful goal. Some say that when you see it from that angle. Now, Liverpool star player Mo Salah is rarely subbed off, but this was one of those occasions. But look what happens literally seconds later, three minutes from time, Salah's replacement, young Harvey Elliott finishes in style. Liverpool with the ultimate smash and grab. They win it 1-nil against all the odds. The Reds head coach now on his goalie's high-class performance.

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(BEGIN VIDEO CLIP)

ARNE SLOT, LIVERPOOL MANAGER: I had some very good players as a manager, but never had the best goalkeeper in the world. And that I think he is, he showed that today. I did experience once or twice. We had to defend so much, but normally you come away then with a 1-nil loss or 2-nil or 3-nil. That happened -- That didn't happen a lot though. But to go away with a win over here was probably a bit more than we deserved.

(END VIDEO CLIP)

SNELL: And that is putting it mildly, Alisson, the Liverpool goalie, absolutely brilliant. Liverpool trying to win it for the seventh time.

Elsewhere on Wednesday night, Jim, in the Champions League, important wins for Inter Milan, for Bayern Munich, Harry Kane with two in that game. And Barcelona, thanks to Athenea (ph), winning 10 men of Barcelona winning against Benfica. This, though, remember, these are two legged ties. So, it's only effectively halftime, Jim. Back to you.

SCIUTTO: No, quite. How was that off sides on that first goal? You showed, I don't --

SNELL: I don't know.

SCIUTTO: I looked at that hard, I don't get it.

SNELL: A toenail, maybe, Jim, a toenail. I don't know.

SCIUTTO: Yes, exactly. I mean, those are the worst moments, especially when it's a nice on goal.

SNELL: Pretty goal. Lovely goal.

SCIUTTO: Yes. Patrick Snell. Thanks so much as always. And thanks so much to all of you for joining me today. I'm Jim Sciutto in Washington. Much more news to report. Please do stay with CNN.

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