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: U.S. and Ukraine Sign Critical Minerals Deal; Trump Blames Biden for Shrinking Economy; Gaza Nears Famine After Israel's Total Blockade; China Standing Firm in the Face of Trump's Tariffs. Aired 12-12:45a ET

Aired May 01, 2025 - 00:00   ET

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

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JOHN VAUSE, CNN INTERNATIONAL ANCHOR: A new deal and a fairer deal for Ukraine, ahead on CNN NEWSROOM.

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JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: A diplomatic breakthrough of sorts between the United States and Ukraine.

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VAUSE: An economic agreement on rare earth minerals, removing a U.S. demand for Ukraine to repay billions of dollars in financial assistance.

Who to blame for a shrinking U.S. economy?

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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: That's Biden. That's not Trump.

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VAUSE: But this is on 47, not 46, whose tariff-mageddon threw robust economic growth into reverse. And starvation as a weapon of war.

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UNIDENTIFIED FEMALE (through translator): There is no food, no nothing. Death is easier than this life.

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VAUSE: Israel's blockade of Gaza puts almost two million Palestinians at risk of a slow, cruel death from famine.

ANNOUNCER: Live from Atlanta, this is CNN NEWSROOM with John Vause.

VAUSE: After months of on again, off again negotiations, as well as the now infamous Oval Office confrontation, the U.S. and Ukraine have signed a modified economic agreement which will give American investors preferential access to Ukrainian rare earth minerals. And in return, Ukraine will get a long term economic partnership with the United States, which the U.S. Treasury secretary says will send a message to Russia that the Trump administration is committed to a peace process centered on a free, sovereign and prosperous Ukraine over the long term.

Ukrainian resources will remain under Ukrainian ownership and control. Mining costs will be shared 50-50, future U.S. military aid could be counted as financial contributions as well. Revenue also split 50-50. And the agreement is expected to help fund Ukraine's post-war reconstruction. But all of this was put on hold in February after a blow up in the Oval Office during a visit from the Ukrainian president, who was publicly berated by President Trump and other senior White House officials.

But now this modified agreement on rare earth minerals removes an earlier demand by the White House for Ukraine to repay billions of dollars in past funding.

More now from CNN's Jeff Zeleny, reporting in from the White House.

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ZELENY: Diplomatic breakthrough of sorts between the United States and Ukraine, with both countries coming together on Wednesday to sign that long awaited deal, a reconstruction, and investment fund between the two countries all over the rare earth minerals. Of course think back to a little more than two months ago, when Ukrainian President Volodymyr Zelenskyy traveled to the White House for that meeting in the Oval Office, with the U.S. president, Donald Trump.

That was the day that this deal was originally intended to be signed. Of course, that meeting ended in a spectacular fashion with a dramatic diplomatic breakdown and then a bit of a stalemate between the two countries. But we are told it was that meeting in the Vatican at Saint Peter's Basilica right before Pope Francis's funeral, such powerful images as we all remember the two presidents sitting there together one on one. That got this deal back on track and nearly over the finish line.

Some last minute hurdles as well but they also were resolved. We're told one of those is the U.S. will not be able to essentially profit, get money back from some of those rare earths if they are able to be mined or the like, for the money that the United States gave to Ukraine. Of course, that money was never intended to be a loan. It was intended to stop the incursion of Russia after illegally invading Ukraine.

But the U.S. Treasury Secretary Scott Bessent, he hailed it like this. He said, "This agreement signals clearly to Russia and the Trump administration that they're committed to a peace process that's centered on a free, sovereign and prosperous Ukraine over the long term."

The deputy prime minister of Ukraine also signing the deal here in Washington. She's writing, "Together with the U.S. we are creating the fund that will attract global investment in our country."

So certainly a major diplomatic breakthrough. Now, of course, the hard work continues for reaching a ceasefire between Russia and Ukraine.

Jeff Zeleny, CNN, the White House.

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VAUSE: Gracelin Baskaran is a mining economist specializing in critical minerals and trade with the Center for Strategic and International Studies.

Welcome back.

GRACELIN BASKARAN, DIRECTOR, CRITICAL MINERALS SECURITY PROGRAM, CSIS: Thank you for having me.

VAUSE: OK, so this deal will give the U.S. preferential access, rather, not just to Ukraine's rare earth minerals, but also oil and gas. It establishes the United States-Ukraine Reconstruction Investment Fund, each country going half on costs associated with extraction of rare earth minerals, as well as oil and gas.

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Revenue will be split 50-50. And here's the U.S. Treasury secretary talking about the big picture.

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SCOTT BESSENT, TREASURY SECRETARY: This partnership allows the United States to invest alongside Ukraine to unlock Ukraine's growth assets, mobilize American talent, capital and governance standards that will improve Ukraine's investment climate and accelerate Ukraine's economic recovery.

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VAUSE: So taking all of this into consideration and thinking in terms of art of the deal, does this agreement benefit one side more than the other? How do you see this deal?

BASKARAN: Ukraine has a pretty good deal here. There's a couple reasons for that. So first of all, this fund is jointly owned, jointly owned and managed by the United States and Ukraine. Second, we see that Ukraine still retains full control of soil, natural resources. Three, neither side is paying tax on it. And importantly, both the U.S. is going to put money in this fund and Ukraine is going to put money in this fund, and it can fund future development in Ukraine, which is really important given the amount of infrastructure that has to be rebuilt.

Now, the U.S., on the other hand, I mean, this deal does not include current producing oil, gas or mineral projects. So it's only in the future and developing a project on average globally takes 18 years. So it's a long runway before Ukraine has to put 50 percent of those mineral revenues. But until then, they really will become a preferential destination for investment.

VAUSE: OK. Well, here's a reminder of what is at the center of this agreement. Listen to this.

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JULIE KLINGER, GEOGRAPHER AND SENIOR VISITING FELLOW, INSTITUTE FOR HUMAN SCIENCES: Rare earth elements are not actually rare. They've held on to that name since the late 1700s. They're used in all manner of electronics, technologies and high performance alloys. They're often described as the vitamins or the spice of industry because they have over the past several decades they've enabled through advances in materials science our technologies to get smaller and faster and stronger, and more resilient.

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VAUSE: I know you know all of that already. But here's another key point. Global production of rare earth minerals and other strategically important materials has long been dominated by China, leaving Western countries desperate for other alternative sources, which includes Ukraine. So 90 percent of rare earth minerals are sourced from China, sourced, not found. It's a big difference.

So what is the secret source here which gave China the upper hand in the extraction and processing of these rare minerals?

BASKARAN: China has had an advantage for over 40 years now. So what they've done is, as you noted, they don't have all the minerals. Big landmass doesn't have all the minerals. But what they've been doing strategically is sourcing minerals from around the world, including rare earths, and bringing them back home to process. In the case of rare earths, we didn't really build a lot of those separation capabilities outside of China, so it basically began to grow a monopoly that it's continued for many years to present.

VAUSE: OK, so that's where Ukraine comes in, right? Because there are significant deposits of these minerals. Here's a map showing where they are actually located. And if you take a closer look at that map, you can see the division line marking Ukrainian territory under Russian occupation. And that's on the right of screen. And that's where some very big deposits of rare earth minerals can be found.

So accessing those reserves in territory occupied by Russia right now, that's a more immediate problem, I imagine. But long term is the bigger problem that none of these reserves can actually be mined in an economically viable way? And if that's the case, does that mean that this isn't such a great deal after all for the U.S.?

BASKARAN: The short answer is actually that we don't know because the majority of Ukraine was actually geologically mapped 30 to 60 years ago by the Soviet Union, which means we don't actually have a modern mapping of a lot of materials. So, for example, the Ukrainian, former Ukrainian director, director of the Ukrainian Geological Survey has come out and said there is no modern mapping of rare earths. So one of the first things we're going to need to undertake, if we want to think about what successful, you know, mining looks like in the future, the first is we need a complete mapping of Ukraine to understand where the resources are, how deep they are, what are they found with, and if we can cost competitively extract them.

Second thing, we have to rebuild a lot of infrastructure. Mining uses 16 percent of the world's electricity but about half of Ukraine's energy infrastructure has been damaged in the war. So there are certain kind of prerequisites that we need to do. And that's actually going to determine if we can cost competitively mined these resources in the long term.

VAUSE: So there are a lot of ifs, to say the least, as we move forward.

Gracelin, thanks so much for being with us. Appreciate it.

BASKARAN: Thanks for having me.

VAUSE: Well, first quarter GDP numbers for the U.S. economy are out and they're bleak with a forecast for dire.

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The Commerce Department reports for the first time in three years negative economic growth. U.S. GDP shrank by three-tenths of a percent. Most were expecting an economic slowdown, not a contraction, with growth at eighth-tenth of a percent. That sent the Dow into negative territory for most of the day before closing about a third of a percent higher but finishing the month in the red.

And keep in mind, this is only the beginning of the impact from sweeping U.S. tariffs. During a Cabinet meeting, President Trump said American consumers may need to adjust their spending and consumption. And while almost every economist and investor blames Donald Trump and his tariff chaos for the negative growth, Donald Trump blames someone else.

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TRUMP: We came in on January 20th. So this is Biden. And you could even say the next quarter is sort of Biden because it doesn't just happen on a daily or an hourly basis, but we're turning it around.

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VAUSE: Joining us this hour is Rana Foroohar, CNN's global economic analyst, as well as associate editor for "The Financial Times."

It's good to see you.

RANA FAROOHAR, CNN GLOBAL ECONOMIC ANALYST: Great to see you.

VAUSE: OK, so there's some question over the first quarter decline in GDP. Other data indicating the economy slowed but did not contract. Regardless, there is clearly one person, one individual above all others, who is responsible for taking the strong economic growth at the end of last year and throwing it into reverse.

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TRUMP: And that's Biden. That's not Trump. I was very against everything that Biden was doing. This is Biden. This is Biden's economy. This is the Biden economy.

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VAUSE: It wasn't Joe Biden. He's not to blame. This ones on 47, not 46.

FAROOHAR: I think so.

VAUSE: Yes.

FAROOHAR: I mean, look, we came in to this administration in the best recovery, post-COVID recovery in the rich world. I mean, people were dying to have our recovery. Within 100 days President Trump has managed to turn it into what is almost certainly by most Wall Street analysts' assumptions, going to be a recession by the second or third quarter of this year.

Everything from the trade wars to the market crash to the general uncertainty of not knowing whether what you're hearing today is going to hold tomorrow has just put an absolute dampener on business, on trade and on consumer spending. So hard to argue that this isn't about Trump.

VAUSE: Well, let's hear some alternative facts then from White House trade adviser Peter Navarro. Here he is.

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PETER NAVARRO, WHITE HOUSE TRADE ADVISER: This was the best negative print, as they say in the trade, for GDP I've ever seen in my life. It really should be very positive news for America.

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VAUSE: All you have to do is strip out the negative effects from a surge in imports. Click your heels three times. Bada bing, bada boom. The U.S. economy grew by 3 percent. You know, I don't think you get to take the bad numbers out, right, to get a better result. That's not how it works.

FAROOHAR: You know, a lot of people feel that the American economy and American society is becoming more like China, and Peter Navarro is going a fair way towards making that happen. Made-up statistics. You know, John, I just don't know what to say. Can't make heads or tails of that.

VAUSE: And when it comes to possible shortages in stores because of Trump's tariff-mageddon as well as higher prices for U.S. consumers, President Trump seemed kind of dismissive about all of that. Here he is. (BEGIN VIDEO CLIP)

TRUMP: Somebody said, oh, the shelves are going to be open. Well, maybe the children will have two dolls instead of 30 dolls, you know, and maybe the two dolls will cost a couple of bucks more than they would normally.

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VAUSE: There's a couple of things here, but I just want to get your reaction. Did that comment sound totally and completely out of touch to you?

FAROOHAR: It sounded flippant. It's Trump's take on something that has been said in more coherent ways by some others in the administration and particularly in Trump one, you know, Bob Lighthizer, the former USTR, was a big fan of, look, we don't need more cheap stuff. You can argue that. You can argue that, you know, we don't need 30 dolls that are going to go into landfills.

But I think what the president is doing there is a little bit disingenuous, because he's trying to sort of, with a wave of the hand, make light of something that really isn't going to be about dolls. It's going to be about cars and about factories and whether they can stay open and get their inputs. It's about rare earth minerals, and whether were going to be able to actually have a clean energy revolution in this country. So, you know, I think he's trying to have a little bit of both ways there.

VAUSE: He did seem to acknowledge that prices are going up because of tariffs. And that does seem to be an achievement. But they're going up not by a couple of bucks. They're going up by a lot of bucks. And there also seem to be kind of a tacit acknowledgment, if you like, that things just aren't really going according to plan.

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FAROOHAR: Yes, I would say so. I mean, I think that it's hard for the president at this stage to argue that, hey, it's all sunshine and roses. I mean, you know, we haven't had 100 days that's been this devastating for the market in, you know, almost 100 years. So I think he's trying to find some way to square this circle. But the truth of the matter is, there's more pain coming, you know, tariffs take effect slowly, and we don't seem to have any clear deals in place.

Whether or not that happens in the summer, who's to say. What we are seeing is hoarding, inventory hoarding, which has the effect of actually driving inflation up because people don't know if they're going to be able to get things tomorrow. And again, I think that you can see in the poll numbers that this president has got some of the worst numbers for a sitting president at this stage than we've seen in 100 years.

VAUSE: Yes, the picture isn't looking great from a variety of different angles right now.

Rana, great to have you with us. Good to see you.

FAROOHAR: Good to see you.

VAUSE: Still to come here on CNN, where in the world to send deported migrants? The U.S. search for countries willing to accept your poor, your tired. And in Gaza, hundreds of thousands of parents struggling to feed their children because of a two months' long Israeli blockade. A closer look at this man-made crisis.

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VAUSE: Libya and Rwanda may soon join El Salvador as a destination for forced deportations from the U.S. of migrants with criminal records. That's according to multiple sources. But the White House plan is likely to face a raft of legal challenges. U.S. officials want to replicate a deal with El Salvador, with hundreds of deported migrants now held in a notorious supermax prison.

Secretary of State Marco Rubio confirmed talks are underway with several other countries.

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MARCO RUBIO, U.S. SECRETARY OF STATE: We are actively searching for other countries to take people from third countries. So we are actively -- not just El Salvador. We are working with other countries to say we want to send you some of the most despicable human beings to your countries. Will you do that as a favor to us? And the further away from America, the better. So they can't come back across the border.

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VAUSE: But wait, there's more. The White House could take this a step further. Sources say the U.S. wants to send asylum seekers detained at the border to Libya through a safe third country agreement. Rwanda had a similar deal with the United Kingdom, but it was discontinued amid a lot of legal problems.

Almost two million Palestinians in Gaza are facing a very real threat from an entirely preventable famine. Israel reimposed a blockade of Gaza almost two months ago, preventing humanitarian supplies from crossing the border. It was a plan to pressure Hamas into releasing all the Israeli hostages still being held there. But rights groups say starvation is being used as a weapon of war, with thousands now suffering from severe malnutrition.

CNN's Jeremy Diamond has our report and a warning, it contains images which are difficult to watch.

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JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT (voice-over): Inside her fly-infested tent, Iman Rajab is doing her best to keep her six children alive. Today, survival looks like this, sifting the half bag of flour she found on a garbage dumpster in Gaza City after all of its bakeries shut down. It is rancid, crawling with pests, and clear signs of contamination. But Rajab hopes she can salvage enough to make bread for her children.

My kids are vomiting after they eat it, it smells horrible, she says. I keep cleaning it and it won't get clean. But what else can I do, she asks. What will I feed my children, if not this?

Rajab is one of hundreds of thousands of parents in Gaza struggling to feed their children, an entirely man-made crisis that is rapidly spiraling.

For nearly two months now, Israel has carried out a total siege of Gaza, refusing to allow a single truck of humanitarian aid or commercial goods into the strip. Israel says it is trying to pressure Hamas into releasing the hostages, but it is civilians in Gaza who are paying the heaviest price.

There is no food, no nothing. Death is easier than this life, this elderly woman says.

This soup kitchen in central Gaza can now only provide one meal a day to those who are growing increasingly desperate.

This man says he has been standing in line for hours, hoping to feed his family.

These scenes an echo of last summer when hunger swept across Gaza, killing 52 Palestinians according to the Ministry of Health. The Biden administration pushed Israel then to let in aid. There is no such public pressure from the White House now, which says it backs Israel's tactics.

Food warehouses are now barren.

YASMIN MAYDHANE, EMERGENCY COORDINATOR, WORLD FOOD PROGRAMME: We are in a position now where over 400,000 people that were receiving assistance from our hot meal kitchens, which is the last lifeline for the population, is in itself grinding to a halt.

DIAMOND: Cases of acute malnutrition are now spiking. United Nations said nearly 3700 children were diagnosed in March, 85 percent more than the previous month. Five-year-old Usama al-Raqab is among those most severely affected by Israel's blockade, which has exacerbated his pre-existing medical conditions.

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He has lost eight pounds in the last month and now weighs just 20 pounds. His skin sticking to his bones. Every movement is painful.

Because of this war, my son has reached this state, she explains. Now he can barely walk. I have to carry him everywhere.

Every day, his condition worsens. Every day Israel prevents food from getting into Gaza, Usama's life becomes more at risk.

Jeremy Diamond, CNN, Jerusalem.

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VAUSE: Welcome back. You're watching CNN NEWSROOM. I'm John Vause. Let's check today's top stories.

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U.S. and Ukraine have signed an agreement giving Washington access to Kyiv's rare earth minerals in exchange for a joint investment fund to help pay for Ukraine's postwar reconstruction.

The U.S. treasury secretary says the deal sends a message to Russia that the United States is committed to the peace process and a free and sovereign Ukraine.

The U.S. economy is moving in reverse under President Donald Trump. The Commerce Department reports gross domestic product fell 3/10 of a percent in the first three months of the year.

It's the first quarter of negative growth in three years.

President Trump blames his predecessor, Joe Biden.

And sources tell CNN the Trump administration is considering sending migrants to Libya and Rwanda. Potential deals would apply to migrants in the U.S. with a criminal record.

The White House already has discussions with both countries about the matter.

Donald Trump's trade war with the rest of the world is mostly on hold for now, with China the notable exception. And now the impact of those record-high tariffs are being felt by consumers in both countries.

And with no end in sight, the question now is which economy -- the world's biggest or the world's second biggest -- is best prepared to tough it out?

Here's CNN's Kristie Lu Stout, reporting in with the answer from Hong Kong.

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UNIDENTIFIED MALE: This will be a fast war.

KRISTIE LU STOUT, CNN INTERNATIONAL ANCHOR/CORRESPONDENT (voice-over): "The Battle at Lake Changjin" is one of China's biggest ever blockbusters. Commissioned by the Chinese government, it glorifies the Chinese soldiers who fought American troops in the Korean War.

STOUT: Fast forward to today, and China and the U.S. are locking horns in another epic battle.

KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: China needs to make a deal with us. We don't have to make a deal with them.

LIN JIAN, CHINESE FOREIGN MINISTRY SPOKESPERSON (through translator): Be it a tariff war, a trade war, or any other type of war, we're ready to fight till the end.

STOUT (voice-over): Trump started this war with China, aiming in part to bring manufacturing back to the U.S.

Chinese netizens mocked the idea with A.I.-generated videos showing a post-tariffs world of dingy American factories with downcast workers.

Decades of trade have brought bumper profits to both countries. And as U.S.-China trade withers, fortunes are turning.

In the U.S., the price of goods could shoot up, fueling inflation, and putting the U.S. at real risk of recession. And in China, a prolonged trade war could put countless factories out of business.

STOUT: The question is, how much pain can the people of China handle in the event of a long trade war with the U.S.?

EDWIN LAI, HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY: I think the pain threshold is probably higher for Chinese society. The Chinese government, being an authoritarian government, may have its own advantage, because it can more easily reallocate resources.

STOUT (voice-over): The Chinese have endured famine, the Cultural Revolution, and more recently, three years of strict COVID-19 lockdowns before protesters bravely took to the streets.

And in this trade war, pain is already being felt. On social media, Chinese factory owners post images of their products piling up in warehouses, while workers show how machines and production lines have shut down.

Despite a dire economic forecast, many patriotic entrepreneurs are standing firm.

UNIDENTIFIED MALE: Even if the tariffs increase to 500 percent, I'm not afraid. Please rest assured: we can hold on.

UNIDENTIFIED MALE: Stop all the orders. Stop all the export orders. I will not chicken out.

UNIDENTIFIED MALE: We can give up the U.S. market. I can let this batch of orders rot in the warehouse. You must give up illusions and prepare for struggle, for China.

STOUT (voice-over): In "The Battle at Lake Changjin," U.S. soldiers are seen gorging on Thanksgiving turkey while Chinese troops chew frozen potatoes in the trenches. Yet, they still beat the Americans later. Trump's trade war pits the U.S. and China in a new challenge of resilience that's not about business or money. It's about honor and national pride.

Kristie Lu Stout, CNN, Hong Kong.

(END VIDEOTAPE)

VAUSE: Still to come, Elon Musk's time at the White House has come to an end. And as he plans to return to Tesla, does he still have a job? More on that in a moment.

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VAUSE: Sometimes opposites actually do really attract, even in the animal kingdom.

Pearl, the world's shortest living dog at just over nine centimeters. And Reggie, the world's tallest dog, about a meter in height, recently got together in Idaho as part of the Guinness World Records 70th anniversary celebration.

Despite the difference in size, the Chihuahua and Great Dane apparently got along happily and played very well together. That's according to their owners, with Reggie being extra careful and gentle around his itty-bitty, tiny new friend.

"The Wall Street Journal" reporting that Tesla's board is looking to replace Elon Musk as CEO. "Journal" quotes anonymous sources and reports it's not known if the search is ongoing and if Musk even knows about it.

Last week came word that sales and profits at Tesla plummeted in the first quarter, and Musk announced the same day he was stepping back from his government work to focus on his work at Tesla.

He received a very friendly farewell at a cabinet meeting on Wednesday.

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DONALD TRUMP, U.S. PRESIDENT: A lot of eyes as to what could be done, and we just want to thank you very much. And, you know, you're invited to stay as long as you want.

ELON MUSK, CEO OF TESLA: Thank you.

TRUMP: At some point, I guess he wants to get back home to his cars.

(END VIDEO CLIP)

VAUSE: According to Musk, the Department of Government Efficiency cut about $160 billion in government spending. That figure has been widely disputed, and it's far short of the initial goal to cut $2 trillion. I'm John Vause, back at the top of the hour with more CNN NEWSROOM.

Stay with us. WORLD SPORT starts after a short break. See you back here soon.

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