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Trump: Team "Actively" Talking With China To Get "Fair Deal"; Sources: Retail Execs Warn Trump of "Empty" Shelves; Trump Accuses Zelenskyy Of Prolonging the War; Mourners Pay Last Respects As Pope Lies In State; Musk To Spend More Time At Telsa As Company's Profits Plunge. Aired 3-4p ET

Aired April 23, 2025 - 15:00   ET

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

[15:01:05]

MAX FOSTER, CNN HOST: Hello and welcome to our viewers all around the world. I'm Max Foster. This is CNN NEWSROOM.

More signs tonight that the Trump administration is softening its stance on China after triggering a trade war that's wreaked havoc on global markets. President Donald Trump saying today the U.S. is actively working to reach an agreement with Beijing, signaling a potential U-turn in the high-stakes tradeoff.

(BEGIN VIDEO CLIP)

REPORTER: Can you clarify. Mr. President, on China? Aare you thinking about -- are you thinking about lowering tariffs?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We're going to have a fair deal with China? It's going to be fair.

REPORTER: Are you talking to them actively now?

TRUMP: Actively. Everything's active. Everybody wants to be a part of what we're doing.

(END VIDEO CLIP)

FOSTER: That possible retreat on tariffs didn't go unnoticed in China. Trump chickened out. Was the top trending hashtag on popular Chinese social media platforms, with more than 100 million views.

President Trump is also backtracking when it comes to Federal Reserve Chair Jerome Powell. Mr. Trump now says he has no intention of firing Powell, just days after saying Powell's quote, termination can't come fast enough.

Straight now to senior White House reporter Kevin Liptak.

Who's trying to keep up with all of this, Kevin?

KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Yeah, it's a difficult because it sort of whipsaws back and forth depending on what the markets are doing and depending on who is in the president's ear on any given day. This week, the people who are in his ear appear to be prevailing on him to ease off some of the rhetoric when it comes to Jay Powell. That's something that his advisers had warned him could cause some tumult in the financial markets, which is exactly what we saw happen when the president tweeted about him on Monday. The markets sort of plummeted at that point.

His advisers telling him that the fallout from trying to fire the chair of the independent central bank could have as bigger ramification on the markets as his trade war has been having, and also warning him of a prolonged legal fight that no one in the White House seemed particularly certain that they would win. And so, then you hear the president yesterday saying, oh, well, I had no intention of firing Jay Powell in the first place. So, it's all part of kind of this internal effort to show the president some of the real world effects that he has been having.

When it comes to China, the president heard on Monday from the executives of top American retailers, companies like Walmart, Target, Lowes and Home Depot who were warning him that this prolonged trade war with China could have a very disruptive effect on their own businesses. The CEO of Walmart, saying that it has already disrupted supply chains, and that essentially by the summer, stores are, sorry, shelves in Walmart stores could be empty.

And so, you hear the president going on to say that potentially he would be willing to substantively lower that 145 percent tariff that's currently in place on China.

Now, the big question now is how long it will take for that to happen. And the president's aides are saying today that they don't expect the president to unilaterally cut that tariff rate on China. They would need to see some easing on behalf of Beijing as well. And you hear the president there saying that he's in active discussions with China. It's not at all clear how active those actually are.

The president we have been reporting is having some trouble getting Xi Jinping on the telephone to get those trade talks started in earnest. And we heard from the treasury secretary today, Scott Bessent, who said that there would be a need to be some serious de-escalation between Washington and Beijing before those talks could really proceed in any real kind of way.

And so, certainly, the rhetoric has been ramped down at this point. But I think the real question today and going forward this week is when we'll see the actual trade war ease off. Certainly, the president not taking any steps, at least at this point, to actually cut those tariff rates.

[15:05:03]

FOSTER: Yeah, you mentioned Scott Bessent there. He's been dealing with some internal politics as well, I gather, Elon Musk involved.

LIPTAK: Yeah. And it's always kind of a snake pit in the Trump West Wing. Ordinarily, you don't hear about shouting matches with expletives in a typical White House. But obviously, Trump is running things quite differently.

And what we have learned is that last week, Elon Musk, the Tesla CEO, and Bessent really got into it in the West Wing, shouting at each other within earshot of fellow staffers. It was over this issue of who is going to run the IRS, the Internal Revenue Service. That agency has seen a revolving door of leaders since Trump came into office.

Musk had sort of applied his own pick to be the acting commissioner at a moment when Bessent was out of the country. That didn't sit well with the treasury chief. The IRS is part of the treasury department, and when he got back into town, he made his displeasure very well known in the West Wing.

I asked Karoline Leavitt, the press secretary, about this a few minutes ago. Listen to what she said.

(BEGIN VIDEO CLIP)

KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: There are disagreements amongst the president's staff and cabinet sometimes, but we think that's part of the healthy debate process. And everybody knows that ultimately, President Trump is the decision maker.

(END VIDEO CLIP)

LIPTAK: So, she says it's a healthy debate process. I think, you know, when you talk to the president's advisers, they say, you know, this kind of thing isn't all that uncommon in a Trump presidency. You do have some big personalities. And clearly that was on display last week.

FOSTER: Yeah, certainly big personalities.

Kevin Liptak, thank you so much for bringing us that inside track.

Well, the U.S. treasury secretary is also taking a slightly more conciliatory tone today, saying there's an opportunity for a big deal with China. At the World Bank, IMF meetings in Washington, Scott Bessent says the United States doesn't want to cut itself off from global trade.

(BEGIN VIDEO CLIP)

SCOTT BESSENT, U.S. TREASURY SECRETARY: America first does not mean America alone. To the contrary, it is a call for deeper collaboration and mutual respect among trade partners. Far from stepping back, America first seeks to expand U.S. leadership and international institutions like the IMF and the World Bank.

(END VIDEO CLIP)

FOSTER: It's hard to keep up, isn't it, Paula Newton?

PAULA NEWTON, CNN CORRESPONDENT: Indeed, it is. And I would say when he's talking about it is not America alone. America is alone right now, especially when it comes to this trade war. And we have seen the markets, Max, really try and make sense of this when most of the output from the White House would tell us that there isn't much sense to it right now, especially when we talk about what they're going to do with those trade tariffs on China.

Listen, Kevin Liptak gave us, you know, a good backgrounder there on what is going on in the White House. And they are listening right now to the business community that is saying there are real impacts from this.

And, Max, I'm looking at two things. One is the hard data that comes out of the American economy right now. Things still look pretty good, even though the IMF did decrease, certainly, its growth forecast for the United States. But businesses are hanging on. When does that change? It could change by summer.

There are some bills that some of these American businesses, small and large, are getting right now, that they cannot fathom, that they can hang on maybe for 30 or 60 days no longer. That is hard data that is getting into the Oval Office and Donald Trump is listening, all the while still not really negotiating with China, except apparently in the media.

The other thing, though, Max, to keep an eye on, is the fact that the American debt. So, if you're looking at whether its bonds or currency and I know this sounds highly technical to many people, it is not technical. It actually means whether or not the United States can actually convince borrowers to let it -- lend it money and what it must pay for that money, and that materially affects the United States economy and the budget. So, continue to look at all of those things.

The markets right now are still doing pretty well, given that Donald Trump did back away from firing the Fed chair and in fact, is saying that he does want to deal with China. As you can see now, the Dow up about 1 percent. It is off its session highs though and for good reason as so many in this market, Max, continue to parse what is actually true, what can I verify and what will it mean to my bottom line.

And I do want to point out that the IMF certainly is saying that, look, the uncertainty over trade is off the charts for every country around the world right now. And that is posing significant risk to the global economic outlook.

FOSTER: We obviously saw Donald Trump close down, effectively trade routes to some extent are now backtracking from it, potentially reopening. You know, those trade links with countries like China. But he's going to realize it might not be that easy.

[15:10:01]

As Kevin was saying, it doesn't look as though Xi's even taking his calls. And there are going to be companies that are going to think, well, do we really want to start throwing product back into America because it might be closed down again?

NEWTON: Yeah, you're 100 percent correct. And that is what they're hearing in the Oval Office. Despite what they say in public, they are hearing from companies, as I said, they are hearing from Trump supporters that this is happening because in the real world, in the business world, you -- your accounts payable must be paid. And if that increases by 20, 30 percent, that has a real impact.

Do you know what I thought was so interesting, Max, is that people started talking about this as a trade embargo, right, as a block. And when you have tariffs in excess of 100 percent on China, that's exactly what it is. You're not doing business with them anymore.

And, Max, to bring this right down to the level that really hits many Americans and eventually that trickles down to the world economy, back to school shopping starts in the United States in July. What is that going to look like? What is going to be stocked on shelves, and how much is it going to cost? That is something that Americans still have to deal with. Even if the Trump administration says it does want trade deals.

FOSTER: Okay, Paula, thank you for joining us from New York.

The Trump administration's patience appears to be wearing thin with peace talks as well between Russia and Ukraine. Earlier, the U.S. vice president issued this ultimatum.

(BEGIN VIDEO CLIP)

J.D. VANCE, VICE PRESIDENT OF THE UNITED STATES: We've issued a very explicit proposal to both the Russians and the Ukrainians, and it's time for them to either say yes or for the United States to walk away from this process. We're going to see if the Europeans, the Russians and the Ukrainians are ultimately able to get this thing over the finish line.

Again. I feel pretty optimistic about it. I think everybody has been negotiating in good faith, but it's now time, I think, to take, if not the final step, one of the final steps, which is at a broad level, the party saying we're going to stop the killing, we're going to freeze the territorial lines at some level close to where they are today. And we're going to actually put in place the kind of long term diplomatic settlement that hopefully will lead to long term peace.

(END VIDEO CLIP)

FOSTER: Well, go on social media. U.S. President Donald Trump accused Ukrainian President Zelenskyy of prolonging the war through, quote, inflammatory statements after Zelenskyy said that Ukraine would not legally recognize Russia's occupation of Crimea.

CNN's Nic Robertson joins us now in London.

I mean, there are plenty of independent experts out there saying, you know, what we know of this deal is completely weighted towards Russia.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: And that's been Zelenskyy's position, and that's the position that is still pushing. It's interesting. Weve also just heard from the White House that Steve Witkoff will be going to Russia to meet with president Putin on Friday, but you hear the tone and it's in capitals, you know, in President Trump's social media posting, get the deal done now. He puts it in capitals.

So, publicly, the pressure that the White House is putting on really seems to fall on Ukraine. And that's really not the position that the Europeans have right now, because they see that this deal that that the White House is pushing, at least publicly is one that leaves a weaker Ukraine, and a weaker Ukraine is a weaker Europe. And that's something they're not happy with either. They're not ready to go publicly toe to toe with President Trump over, over this.

But I think it does speak volumes that Marco Rubio, the secretary of state, who was due here for meetings, was not here working with Ukrainian foreign minister and defense minister, logistical issues and Ukraine's foreign minister and deputy minister made it here.

So, the drive, the engagement on that side doesn't seem to be there.

FOSTER: If America walks out on this deal, what does that mean? The money stops. Everything stops. What does it mean?

ROBERTSON: For potentially from the -- from the American side, again, there's a -- there's a variance. Clearly with the Europeans. You know, on the one hand, President Trump is putting the pressure on President Zelenskyy and his, you know, vice president, his secretary of state are saying, hurry up, hurry up, get this deal done.

But listen to the British defense secretary yesterday, John Healey, saying, British intelligence assessed that President Putin's 30-hour so-called Easter truce over the weekend was not that at all. And Healey said very clearly, the person that is wasting the time and prevaricating right now is President Putin.

So, there's a big gap. And the Europeans have been doing a lot of diplomacy behind the scenes, staying out of the way of how the Americans are leading with the Russians. But I think there's a lot there we've yet to hear about that's happening behind the scenes.

FOSTER: Yeah. Okay, Nick, thank you.

Now, tens of thousands of mourners are piling and filing past the casket of Pope Francis at the Vatican, saying their -- their final respects, paying their respects there ahead of his funeral.

[15:15:04]

That will be this weekend.

The pope is lying in state for three days at St. Peter's Basilica. He died of a stroke and heart attack on Easter Monday at the age of 88. Many world leaders will attend the pope's funeral, as well as the cardinals, of course, who will choose his successor.

But these next few days are meant for reflection, a time to honor the extraordinary life of Pope Francis. His humility, his compassion, his tireless work for the world's most vulnerable souls.

Ben Wedeman has more now from Rome.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: In reverence and respect, the faithful united in tribute to Pope Francis, Wednesday. From the modest chapel at Casa Santa Marta through the storied streets of the Vatican, Pope Franciss simple wooden coffin, held aloft by pallbearers and followed by his cardinals and Swiss guard in a somber cortege.

To the historic procession, was welcomed to St. Peter's Square by more than 20,000 people, the Vatican said. The applause of tourists and faithful following his open coffin as it was moved into the basilica.

Here, the pope will lie in state before his funeral Saturday. Coffin on the floor, his hands clasping the rosary, a mark of his wish for simplicity in death, as in life.

After the service, a chance for the faithful to say farewell. Lines of mourners who had queued since the early hours, flooding in.

IRMA HERRERA-RECIO, VISITING FROM LOS ANGELES: It's very sad.

WEDEMAN: Irma Herrera and her 80-year-old mother were in the crowds when the pope appeared at Easter Sunday mass. Days later, they're back to say goodbye.

HERRERA-RECIO: This has been her dream to come to the Vatican, to come to Rome and get to see the pope. We were hoping we would have him for a while because of all the wonderful things that he did.

LOUIS KEMAYOU, VISITING FROM U.S. VIRGIN ISLANDS: He's the leader of faithful and men and women of goodwill. So, I was so humbled to be among those who honored that great man.

WEDEMAN: The pope's body now back with the flock he loved ahead of his funeral and burial.

Ben Wedeman, CNN, Rome.

(END VIDEOTAPE)

FOSTER: Still to come, Elon Musk says he'll spend less time at the White House, more time at Tesla. Shareholders seem relieved. But is it too late for the embattled car company?

(COMMERCIAL BREAK)

[15:20:49]

FOSTER: Elon Musk is telling Tesla shareholders hell partly step back from his role in the Trump administration to spend more time at the embattled car company.

(BEGIN AUDIO CLIP)

ELON MUSK, TESLA CEO: I'll continue to spend, you know, a day or two per week on government matters, or as long as the president would like me to do so, and as long as it is useful. But starting next month, I'll be allocating far more of my time to Tesla.

(END AUDIO CLIP)

FOSTER: But is it too late? Tesla's profits have plunged 71 percent compared to the same time last year. The Tesla brand taking a huge hit amid backlash against Musk's controversial role in slashing government services. Tesla's stock price recovering today on the back of Musk's announcement. But still, Donald Trump's return to the White House, Tesla's share price has been plummeting ever since.

Ross Gerber is the CEO of Gerber Kawasaki Wealth and Investment Management, which holds shares in Tesla.

Thank you so much for joining us.

Were you on that call yesterday? How did he come across?

ROSS GERBER, CEO, GERBER KAWASAKI WEALTH AND INVESTMENT MANAGEMENT: Well, it was -- wasn't much different than many of the other calls in the past. I think for me, what was upsetting was he continues to use the same jargon and, and mottos that he's used year after year, you know, oh, it'll be done by the end of the year. Oh, it'll be done by the middle of next year.

You know, he's been saying this for so many years. After a certain amount of point, you're just like, you know. Yeah. Right, man. Show me the money.

So, until full self-driving really works, it just doesn't work.

FOSTER: Can we directly say that he's having to move away from the White House due to pressure from investors to spend more time on his main projects?

GERBER: I don't know if that's what it is. I would argue more that probably people in the White House want him to spend more time away from the White House. So I'm not really sure all the forces involved, but what I do know is there was a limit to how long he was legally allowed to work for the government, and that's through May, and that's why he's making this announcement. It wasn't surprising to me in any way, because he's only allowed to really work through May.

So, you know, I think the perception that he's going to come back to Tesla and that he's going to put a lot more energy into Tesla might be a false reality, because he's also spending a tremendous amount of time launching and raising money for xAI. And that's really his passion and focus right now, is building A.I. systems, not necessarily Tesla.

FOSTER: Also, if we look at Tesla's position in the market it's only going one direction, isn't it? If you look at these Chinese competitors and the batteries they're creating and the cars they're creating, lower price, better performance. Tesla needs to do something quite substantial. It needs a, you know, a huge technological shift, really, to catch up with them.

Can he do that even if he dedicates his time?

GERBER: Well, I think you're hitting on the point of the tremendous competition that they're starting to see, many of which were sort of born and raised through the Tesla ecosystem and now have, you know, blossomed into pretty good companies here in China and also in Europe. I don't want to discount the competition in Europe or in other countries in Asia, like, you know, Kia is making really nice EVs as well, selling a ton of them here.

So, you know, at a time that's critically important for Tesla, you know, most companies in the world have one CEO, some have two CEOs. And it's a lot of work running a big public company. And it usually takes more than full time to run a big public company.

And so the idea that Tesla is going to compete on a global scale against highly focused companies, while their CEO spends very little time at the actual company and isn't focused on it, I think that puts Tesla at a competitive disadvantage versus if Elon was working full time at Tesla, I think it would be much more beneficial for Tesla and Tesla's shareholders.

FOSTER: It must have been a big frustration for you to see the backlash against the brand because it had such a strong brand, didn't it? But many of the drivers of Teslas are liberal. They don't like what's going on in the White House. And we've seen this collapse in the secondhand market, haven't we?

[15:25:01]

GERBER: Well, yeah. And so you have your core customer group who is just being constantly attacked and insulted by Elon. So that's not usually a great way to sell products, you know. And then, you know, I'm -- live in the sort of heart of Tesla land here in Santa Monica. And you know, people want to be green and they believe in climate. And they didn't have choices before and they have choices. And that's why you've seen so many Teslas go onto the used market and go for sale on such really low prices. You can get a Tesla used, you know, for an incredibly low price. Some are even at $20,000 now. So anywhere between $20,000 and $25,000, you can get a pretty new Model Y.

And -- and so, you know, this is not good for Tesla also because the cars last a long time. So as more drivers give up their Teslas to drive other EVs, these cars will sit on the market for a long time and in a way compete for selling newer Tesla models. So, you know, the Tesla ecosystem needs new customers, and Tesla doesn't seem that focused on creating new customers. It really just sells to its existing customers. And that's why if your existing customer base is shrinking, that their sales are down 20 percent, which is what we've seen with automotive sales now down 20 percent.

FOSTER: Okay. Ross Gerber, really appreciate your insights today and being on that call yesterday. It was a big moment.

Tesla's fortunes take a tumble. One of its biggest competitors, Chinese car company BYD, is unveiling its latest offerings. Due to President Donald Trump's trade war with China, Chinese manufacturers say they're avoiding U.S. imports, instead focusing on the domestic market.

CNN's Marc Stewart attended China's largest auto show in Shanghai.

(BEGIN VIDEOTAPE)

MARC STEWART, CNN CORRESPONDENT: When we look at this U.S.-China trade war, technology is a big part of it. We're on the ground here in Shanghai at the largest auto show in China. It's a chance for Chinese companies, of course, to show off their innovations, but it's also a chance for China to show that it's a force and it doesn't need the U.S. to thrive.

The unveiling of this blue car here is one of the most anticipated events of the entire show. It's from Chinese auto giant BYD and its Denza brand, its first concept sports car. As you can see, it's very aerodynamic. It's got a spoiler on the back.

This is a big deal because BYD is really a fierce competitor to Tesla. This isn't just about style. These cars have a potential for speed. This is the 7GT from the brand Zeekr. It can go from zero to around 60 in just about three seconds.

This car is attention getting not just for its bright color, but for its connectivity. It's from a company called Xiaomi. It's a phone company. A lot of people have their phones. One feature is that you can control some of the different appliances from your car, from this very panel in front.

Because of tariffs, Chinese car makers are locked out of the American market, but they're firmly planted in China, which is the world's largest automobile market. They've also been expanding to places like Europe and to Africa, showing that they don't have to have American buyers to be successful.

Marc Stewart, CNN, Shanghai.

(END VIDEOTAPE)

FOSTER: Still to come, new details in the case of Homeland Security Chief Kristi Noem stolen handbag. What happened on that surveillance video?

(COMMERCIAL BREAK)

FOSTER: Well, stocks on Wall Street are rallying today as investors seem to be welcoming yet another potential U-turn in the Trump administration's trade war with China and President Trump's backtracking, really, on his threats to try to remove Fed Chair Jerome Powell. Stocks are up for a second straight day, pretty significantly more than 2 percent on the tech shares. We're joined now by CNN's Vanessa Yurkevich in New York.

I guess the Fed chair was one thing, but this potential deal with China is much bigger.

VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Yeah, certainly. And analysts I've been speaking with say that these are the two story lines that they have been following for the past several days now, and encouraging news on both fronts.

On the trade front, the president and the treasury secretary both indicating -- indicating that there may be some sort of de-escalation at some point. And then, of course, on the Jerome Powell of it all, the president yesterday sort of walking back his comments, saying that he has no intention of firing the fed chair, Jerome Powell, which had investors very, very nervous, especially because they saw the Federal Reserve in particular, as sort of the safety net for the U.S. economy amid this trade war.

Now, if you look at CNN's fear and greed index, you will see on your screen that we are in fear territory right now. We were for many weeks in extreme fear. And this is just notable because it's been the best reading since March 27th. This is tracking investor sentiment, but it doesn't erase the fact that markets have lost more than $7 trillion since the highs in February.

And I was speaking to Greg McBride. He's the chief financial analyst at Bankrate. And he kind of summed up how markets are feeling and investors are feeling right now. He said that, quote, a softer tone about the Federal Reserve is welcome news to investors. And the market has responded to that. Excuse me, responded to that.

Turning down the heat in the trade war with China is nice to hear, but, excuse me, my -- my quote is off the screen here, but it will ultimately need to be followed up by action. Where the rubber meets the road is in the details of an eventual trade agreement. Until then, uncertainty will continue to hang over the economy and financial markets.

So essentially just reiterating what the market is showing us that all of this is good news. But analyst traders want to see deals on the table. They want to see the fine print. They want to see the details. And we know that there are many, many more countries besides China that have been negotiating with the United States on what possible trade deals may look like.

However, nothing in fine print yet that explains what those details are. But for now, a little bit of a breath of fresh air for investors who were both rattled by the uncertainty in those high tariffs with China, and as well as the president's indication that he was trying to remove the head of the Federal Reserve, which he has since walked back, Max.

FOSTER: It does come to something, doesn't it, when fear is seen as positive --

YURKEVICH: Right.

FOSTER: -- amongst investors. Thank you so much, Vanessa. Thanks.

The former economic adviser to Donald Trump says we could see more market gains to come if the White House manages to carve out new trade deals.

[15:35:01]

Stephen Moore told our Brianna Keilar that one person's U-turn is another person's progress.

(BEGIN VIDEO CLIP)

STEPHEN MOORE, FORMER ECONOMIC ADVISER TO DONALD TRUMP: You guys started this conversation, Brianna, talking about this being a Trump retreat. I don't think I would use that word. I think this was kind of a strategic advance where Trump is being realistic about, you know, what's happened with the markets over the last few weeks.

And also, I'm hearing from my -- my friends over there in the White House who are working on this issue every hour, that they are making some advances with China. And that's good news for everybody, because you're quite right that what, what the outcome here we all want to see is that China is more cooperative. They have incredibly aggressive and policies on trade that are I would describe as -- as being unfair to Americans.

And so, if those deals continue to be made, I think you'll continue to see the stock market rise the way it has in the last couple of days. Theres still a lot of ground to be made up based on the losses we've seen in the last month or so.

(END VIDEO CLIP)

FOSTER: Long lines have stretched across the Vatican today as thousands of mourners await their turn to pay their respects to Pope Francis. His body is lying in state at St. Peter's Basilica for three days ahead of his funeral, which is on Saturday.

CNN's Clarissa Ward has been inside the basilica.

(BEGIN VIDEOTAPE)

CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT: We've just exited the basilica where the body of Pope Francis is lying in state and will be for the next few days. There were hymns being sung softly by a choir, prayers being said. And this long line of largely silent people filing in quietly to pay their last respects to the leader of the Catholic Church, who many really viewed as transformative.

And looking at the crowds who were waiting to go and pay their last respects, you could see that some of them were there to mark a moment in history. Some of them perhaps, had already been here in Rome when Pope Francis died. Others clearly deeply moved by his life, by his legacy, quite a bit of emotion from some people trying to take the time to pray and have some reflection.

We saw a lot of families, babies, children hoisted on shoulders and of course a lot of people. As is common in the world today with their iPhones, trying to capture this moment.

And although Pope Francis was very emphatic about his desire to live a simple and humble life, when you're standing in that basilica, in that extraordinary space, there is certainly an air of majesty. Now, we're outside and you can see some people are exiting, but over here, long lines snaking around as people wait for their turn to go and pay their respects.

When Pope John Paul II died, hundreds of thousands came and we spoke to one person who has been covering the pope for many years, who said that the more people saw the images on television of visitors filing past to see the body of Pope John Paul II lying in state, the more visitors then began to flock to St. Peter's Square to be part of this historic moment. And so, we will see in the coming days, as more and more people gather to remember Pope Francis.

(END VIDEOTAPE)

FOSTER: Well, still to come. After a devastating massacre, tensions are rising between India and Pakistan. Details ahead on India's efforts to downgrade its diplomatic ties with its neighbor.

(COMMERCIAL BREAK)

[15:42:07]

FOSTER: India now plans to downgrade its ties with Pakistan, a day after gunmen killed at least 26 people in the disputed region of Kashmir.

CNN's Will Ripley is tracking this assault on tourists.

(BEGIN VIDEOTAPE)

WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: This is not the first time that violence has rocked the Himalayan, Jammu and Kashmir region, but attacks on this scale targeting civilians in a popular tourist destination that is rare. Pahalgam set against the Himalayas, draws visitors from across India, but now it's become the site of a suspected terror attack, with gunman opening fire on a group of tourists. More than two dozen are dead or injured.

For decades, this region has been contested, claimed by both India and Pakistan. Armed groups have fought there, some pushing for independence, others for union with Pakistan. In recent years, attacks have been rare. But Tuesday's violence is a grim reminder that this remains a deeply volatile area.

India's Prime Minister Narendra Modi has condemned the attack, calling the perpetrators agenda evil and vowing justice.

U.S. President Donald Trump has also weighed in, saying that the U.S. stands in solidarity with India. He later called Prime Minister Modi to offer condolences.

Protests erupted in the aftermath, with locals turning out expressing grief and outrage.

SHIVSHANKAR RATHORE, PROTESTER (through translator): Innocent people have been killed. A newlywed couple has been killed. Bullets were fired at tourists who came here for a tour.

RIPLEY: Now we should point out, Pakistan is denying involvement in this, but they are likely watching very closely as tensions between the two nuclear armed neighbors ratchet up yet again.

Will Ripley, CNN.

(END VIDEOTAPE)

FOSTER: My next guest is the international security director at the Asia Pacific Foundation. Sajjan Gohel joins us now from London.

I mean, it's always a very -- it's a disputed area. There are always tensions there. It's a very beautiful area, but it has been relatively stable in recent years. And there was talk about a peace process.

SAJJAN GOHEL, INTERNATIONAL SECURITY DIRECTOR, ASIA-PACIFIC FOUNDATION: Well, Max, there have been those underlying tensions between India and Pakistan. In fact, in the past few years, there were skirmishes back in 2016 and in 2018, both of which resulted in the reduction in diplomatic engagement. In both instances, India accused Pakistan of sponsoring terrorists across the border, which resulted in short term skirmishes.

Now we've seen another escalation take place. I think what is very clear is that India is going to react. It's just a question of when, not if. We've already seen the diplomatic and political measures, such as suspending the Indian waters treaty, which is unprecedented. Not since 1960, when it was signed has it ever been suspended.

So, you're looking at a major escalation, and I dare say that this is just the beginning.

FOSTER: But when -- you know, they're not accusing Pakistan of carrying out this attack, are they?

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It's a group within the Pakistan administered Kashmir. What do we know about the -- I know the government hasn't declared the group that they're after, but what do we know about the sort of groups they will be looking at?

GOHEL: Well, I don't think the Indian government is drawing any separation between these groups and the connections to the Pakistani state. So, the group in particular, that's being accused of being behind this terrorist attack is the resistance front, TRF, which is deemed to be an offshoot of the Pakistan-based Lashkar-e-Toiba. The LET, you may recall, Max, was behind the 2008 Mumbai siege attacks, in which over 165 people were killed, including several Americans.

The concern that there has been in the past is that these terrorist groups have very murky ties with Pakistan's intelligence agency, the ISI. And what is perhaps interesting is the timing of this particular attack.

Last week, the chief of army staff of Pakistan, Asim Munir, gave a very fiery speech about Kashmir, describing it as part of Pakistan's jugular vein. And then you see this attack taking a place just as U.S. Vice President J.D. Vance was in India to talk about a trade deal.

So, all of this is combined at this time and it is eerily similar to past instances where U.S. engagement with India seems to cause a provocation next door with Pakistan.

FOSTER: These are two nuclear powers that is at the back of everyone's mind, isn't it? And things can escalate very quickly between these two nations, which, you know, have traditional tensions between them. How concerned are you about what happens next?

GOHEL: Well, it's definitely a tense situation. Keep in mind that during the 1999 Kargil war between India and Pakistan, General[Pervez Musharraf, who was then chief of army staff, he was actually threatening to use nuclear weapons against India. So, this has been a major concern that the U.S. has had for a very long time. The hope is that because both countries have nuclear weapons, that they wouldn't necessarily wish to escalate tensions beyond a certain point.

But the challenge always remains, Max, that when you have these terrorist groups, some that are ideologically aligned with groups like al Qaeda, if they are allowed to operate in Pakistan, have safe sanctuary, cross the border, carry out these attacks, especially against civilians. This wasn't against the military in India. This was against local ordinary Indians.

Then what that does is it creates a further problem. And these this attack was seen on camera. You saw the fact that young people were murdered, husband and wife on their honeymoon. The husband was killed. His bloodstained body has now gone viral on social media.

There's a lot of anger in India, and there's an expectation on the government to react.

FOSTER: Yeah. Sajjan Gohel, thank you for your analysis.

A very strong earthquake shaking parts of Turkey today. The 6.2 magnitude quake struck just off the coast of Istanbul. It is the largest quake to strike the city in recent years.

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FOSTER: Frightening situation. That is our affiliate CNN Turk, live on air when it happened. You can see the anchor, the whole studio shaking. The city is still facing aftershocks. But authorities say no one was killed in the Istanbul area. However, there were more than 150 people injured. Back in a moment.

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FOSTER: The American flag at the White House is about to get a lot bigger. President Trump has announced he's paying for and installing two new flagpoles for the residence. The flagpoles will flank each side of the White House. They'll stand at nearly 100 feet. That's 30- meter tall. The president says they'll arrive in about a week.

We're learning more about the person who the secret service accuses of stealing Department of Homeland Secretary Kristi Noem's handbag. Now it was at a restaurant in Washington. Investigators say about $3,000 in cash were inside the bag for some reason, along with Noem's driving license, passport, security badge, all sorts of other items. New surveillance video shows how it all unfolded.

CNN's chief law enforcement analyst John Miller joins us now.

First of all, the video, take us through what you saw.

JOHN MILLER, CNN CHIEF LAW ENFORCEMENT ANALYST: So what the video shows with the Secret Service looked at in the manager's office in the back of the restaurant, the minute they discovered the bag was gone, shows an individual walks in. He's dressed in dark clothing, dark baseball cap, wearing an N95 mask the way many people did during COVID.

The table behind the secretary, the group that's there gets up and leaves. So, he wanders over, sits himself at that table, angles his chair towards where the secretary is, and he sits -- he comes in at about 7:52. By 7:55 he sits down. He's only there a couple of minutes, but a close examination of the video shows he takes his left leg and he puts it where the secretary's bag is.

And he basically sweeps the bag under his table. He takes his jacket and then covers the bag under the table, and then picks it up as if he's picking up his jacket with the bag underneath it. Looks around again, as if he's looking for someone he was supposed to meet, and then calmly walks out of the restaurant.

So, the bag contains her house keys, the key fob, two American Express cards, two bank cards, $3,000 in cash, her passport, even. But it's a Gucci B large version shoulder bag with a strap. So, this goes for about $4,400, which is if you're a bag thief, that's something that you're going to as you're walking around pretending to look for something, that's something you're going to zero in on.

FOSTER: And do we know what happened to the, you know, the elements of the bag that would cause a security concern?

MILLER: Well, I mean, it means it turns the secretary's personal life upside down for a couple of days. She needs a new driver's license. She needs to cancel those credit cards and get them replaced. She'll need a new passport. Thankfully, I bet she knows someone in the government who can expedite that process. And she probably has an official passport or a diplomatic passport.

But it's a lot of personal information. Blank checks. And aside from that, a large amount of cash and a Louis Vuitton purse inside the Gucci bag worth another $630. So, it's a significant loss, in a larceny.

And from what you would see if you looked at the tape and watched this thief, this is not his first rodeo. This is probably what he does for a living. And Washington, D.C. metro police, along with the Secret Service, are looking at those patterns in that same neighborhood of other similar thefts, similar descriptions to figure out if that is one guy or just a couple of guys who dress in those dark clothing who are doing these bag thefts.

FOSTER: Okay. John Miller, thank you very much indeed.

Finally, happy birthday to Britain's Prince Louis, the youngest son of Prince William and Princess Catherine turned seven years old. Today, this image of the young prince was posted on the royal family's social media accounts. It's become a family tradition to release a new photo of the children on their birthdays. Prince Louis is fourth in line to the British throne.

Thanks for joining me here on CNN NEWSROOM. I'm Max Foster.

"QUEST MEANS BUSINESS" with Paula is up next.