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China Assessing Proposals for Trade Talks with the U.S.; U.S. Urges Restraint as India-Pakistan Conflict Looms; Trump Sacks Mike Waltz, Replaces Marco Rubio as National Security Adviser; Coco Gauff Barges Into the Madrid Open Finals. Aired 3-4a ET

Aired May 02, 2025 - 03:00   ET

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

[03:00:00]

(COMMERCIAL BREAK)

KIM BRUNHUBER, CNN ANCHOR: Welcome to all of you watching us around the world. I'm Kim Brunhuber. This is "CNN Newsroom."

A shift in tone with potentially big implications. China says it is assessing proposals to begin trade talks with the United States.

Tensions simmer in India and Pakistan. What it may take to prevent out and out warfare between the two nuclear powers.

And a shake up in the top leadership of the Trump administration. What's behind Mike Waltz's removal as national security advisor?

UNKNOWN (voice-over): Live from Atlanta, this is "CNN Newsroom" with Kim Brunhuber.

BRUNHUBER: A new development in Donald Trump's trade war. China now says it's considering a U.S. proposal to hold trade talks.

CNN's Kristie Lu Stout is live in Hong Kong. So Kristie, parse this for us. What are we to make of this new development from China?

KRISTIE LU STOUT, CNN CORRESPONDENT: Kim, it is subtle, but it does appear to be an off ramp. Today, China's Ministry of Commerce said it is evaluating the possibility of trade talks with the United States. And this would mark a very subtle but significant tone shift and potentially could open the door for tariff negotiations.

Now, this came in the form of an official statement that was released by a spokesperson of the Ministry of Commerce earlier today, this Friday. In this statement, the spokesperson said and emphasized it's the U.S. that's been reaching out to China while also adding this.

Let's bring up the statement for you. Quote, "The U.S. has recently sent messages to China through relevant parties hoping to start talks to China. China is currently evaluating this," unquote.

Now, China has been standing firm as it has been tussling with the United States over U.S. President Donald Trump's trade war and tariff war. Donald Trump has slapped tariffs of an eye-watering level of 145 percent against China.

China striking back with its own retaliatory tariffs of 125 percent. We've heard in recent days and weeks U.S. President Donald Trump say that he is in talks and his administration is in talks with China. China has been disputing that.

An interesting development on Thursday that we've been monitoring as well. We heard from America's top diplomat, the U.S. Secretary of State Marco Rubio, who told Fox News that it is the Chinese who have been reaching out. Watch this.

(BEGIN VIDEO CLIP)

MARCO RUBIO, U.S. SECRETARY OF STATE: That's what they want. I mean, the Chinese are reaching out.

They want to meet, they want to talk. We've got people involved in that. Obviously, our treasury secretary, Scott Bessent, is involved in those efforts, and their talks will come up soon.

(END VIDEO CLIP)

LU STOUT: Look, putting aside who reached out to who first, there have been signs of de-escalation in this trade war between these two economic powers. Import agencies have told CNN that China has been rolling back retaliatory tariffs on some U.S.-made semiconductors.

Suppliers in China have also been telling CNN that major American retailers like Walmart, like Target, are resuming orders. We also heard from the American Chamber of Commerce that it said some U.S.- made pharmaceutical products have been able to enter the Chinese market tariff-free. And now, this note of being open to negotiations from the Ministry of Commerce, all this creating a much more positive attitude and outlook on the markets.

And if we bring up the market activity for you this day, you will see Asian trade has been largely in positive territory, and we're also keeping an eye on U.S. futures as well. Back to you.

BRUNHUBER: All right. So many possible consequences here for businesses and customers around the world. Kristie Lu Stout in Hong Kong, thank you so much.

The U.S. is putting on a diplomatic press trying to prevent open warfare between India and Pakistan. Tensions flared after a gunman killed 26 civilians in Indian-controlled Kashmir last week. India accuses Pakistan of being involved in the attack, Pakistan says it wasn't.

On Thursday, the U.S. Defense Secretary spoke with his Indian counterpart. And Wednesday, the U.S. Secretary of State spoke with Pakistani and Indian officials.

CNN's Nic Robertson is in Islamabad with more on the concerns about a possible conflict.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR (voice-over): Pakistan's army tested combat readiness Thursday, training they say meticulously planned to simulate battlefield conditions. Tanks, troops, artillery and fighter jets brought together far from the front lines with India, but a message for India nonetheless.

Pakistan's army chief of staff saying, "Let there be no ambiguity. Any military misadventure by India will be met with a swift, resolute and notch-up response."

[03:05:05]

"While Pakistan remains committed to regional peace, our preparedness and resolve to safeguard national interests is absolute."

India too, testing its readiness for war, battleships bristling with weapons launching salvos of cruise missiles.

On the Indian side of the border, in disputed Kashmir, a safety drill these schoolchildren hope they'll never need. Practicing what to do if rising tensions along this de facto border with Pakistan flare to real fighting.

BALVIR KAUR, FORMER VILLAGE HEAD (through translator): Usually 90 percent of the children living near border areas are aware of the safety measures, but we still need to make sure that they understand the need to keep themselves and their juniors safe.

ROBERTSON (voice-over): A week after a brutal attack killed 26 civilians in Pahalgam, some survivors still in hospital.

UNKNOWN (through translator): I heard two gunshots and saw a large gathering of people. When I reached the firing site, I rescued three individuals.

We could not see a lot. We fled immediately after hearing gunshots.

ROBERTSON (voice-over): India says it has identified the attackers. Two of them, they claim, are from Pakistan and is blaming Islamabad, promising revenge.

NARENDRA MODI, INDIAN PRIME MINISTER: India will identify, track and punish every terrorist and their backer. We will pursue them to the ends of the earth.

ROBERTSON (voice-over): Pakistan also warning India's retaliatory move to end a previously inviolate decades-old water-sharing agreement would be an act of war if they followed through.

Tensions ratcheting up Wednesday. Pakistan's Minister of Information warning India was planning an imminent attack. Asked by CNN Thursday, he demurred on details.

BECKY ANDERSON, ANCHOR, "CONNECT THE WORLD": Can you share what that intelligence is? ATTAULLAH TARAR, PAKISTANI MINISTER OF INFORMATION AND BROADCASTING:

We had very reliable, very authentic intelligence at the operational level. Obviously, operational details cannot be shared, but we had confirmed reports that India will attack Pakistan, and this is not the first time.

ROBERTSON (voice-over): Along the tense frontier, tourists are returning close to the scene of the attack. But security, however, much tighter than before. The sudden escalation in historic tensions.

UNKNOWN: Actually, we knew about the terrorist attack, but we still decided to come here. And we feel very safe when we come here. There are many army standing day and night to protect us, so we feel very safe and calm here.

ROBERTSON (voice-over): U.S., China and U.N. officials are urging calm, hoping, as it has in the past, diplomacy will prevail. But these two nuclear-armed neighbors have blown past international interventions before. Thursday, India taking tensions a tiny notch up, banning Pakistani airlines from their airspace, matching Pakistan's move last week.

Nic Robertson, CNN, Islamabad, Pakistan.

(END VIDEOTAPE)

BRUNHUBER: And for more on this, I want to bring in Sushant Singh, a lecturer at Yale University, who joins us this hour from New Delhi. Thank you so much for being here with us.

So you say Modi's comments after the attack, we'll quote here from an article, "was a signal to the world that India was preparing a forceful military response." And that's certainly been the pattern in the past.

So do you actually expect a military response from India? And what form could that take?

SUSHANT SINGH, LECTURER, SOUTH ASIAN STUDIES COUNCIL, YALE UNIVERSITY: Thank you. No, it is almost expected that India will undertake some kind of a military strike, some kind of a kinetic operation.

What the exact nature and contours of that operation will be, that is not pretty clear. And the reason is very simple. The political rhetoric, the media rhetoric around, you know, some kind of revenge that needs to be taken and the kind of punishment that needs to be given to Pakistan is already there.

And as you rightly said, in 2016 and 2019, some kinds of -- some kind of kinetic operations were taken after a large number of Indian soldiers were killed by Pakistani militants inside Indian Kashmir. So there's a lot of expectation that something will happen.

What would be its nature? It could be an air strike, like in 2016. It could be a missile strike fired from a naval ship or a submarine. It could be a weapon, a missile fired from the ground across from Indian Kashmir into Pakistani-administered Kashmir.

[03:10:07]

It could be special forces soldiers going across for a limited rate. It could be anything. But it is not at this point.

It doesn't seem it's going to be an outright war because that requires massive mobilization of soldiers, equipment, platforms. That mobilization, at least I have not seen on the Indian side at all so far. So it has to be limited in scope, but it has to be something which would generate a lot of attention within India.

BRUNHUBER: Yes, OK. So but even if it is limited now, it might still escalate. And if, you know, something happens, for example, an airstrike, a military, some kind of military response, presumably you'd see a response then from Pakistan. And that country's army chief seems to be taking a more confrontational stance than his predecessor.

So how does Pakistan's internal political crisis kind of influence its military leader's approach to this conflict?

SINGH: Absolutely. The Pakistani army chief, Asim Munir, is under tremendous pressure because the most popular leader in Pakistan -- political leader in Pakistan, Imran Khan, is behind bars. And that has completely discredited Munir and the army. And he has to retaliate strongly, demonstrate resolve to salvage the credibility of the Pakistan army as an institution.

And therefore, the response that he promised yesterday, which you just showed in your report, as well as what the Pakistani military's constant line has been, that this will be a quid pro quo plus response, which will give to India, seems more than likely.

But then Pakistan has its own other constraints. You know, it has trouble with the Taliban in Afghanistan, with Iran. Its economy is not in great shape.

So, you know, these are all kinds of compulsions which are there. But Pakistan cannot afford to not retaliate. And that is the fear of escalation which you are talking about.

BRUNHUBER: Right. Now, to prevent that, we've heard from the U.S., which has stepped in. You mentioned 2019 in that previous crisis between the two countries. The Trump administration actually played a crucial role in de-escalation.

And as I mentioned in the intro, we heard from the U.S. Vice President urging de-escalation. We know the U.S. secretary of state has spoken to both Pakistani and Indian officials.

So what role do you expect Washington to play here? And also fold in Beijing as well, because, of course, you know, China has its interests in the region.

SINGH: So historically, going back many decades, the United States has played a very important role in diffusing the crisis, in de-escalating the crisis.

Out here, the big interest for the United States would be that the thing should not escalate to a level where nuclear weapons come into play or the whole or the whole region blows up. Of course, the United States is distracted by what's going on in Ukraine, what's going with tariffs and other things.

I think what they would want is, in the worst case scenario, it should be a limited escalation where there could be one strike by either side, a limited kind of a strike where they can both claim victory and the thing then de-escalates and the two sides disengage.

It should not escalate, climb up the escalation ladder and become into a major crisis where nuclear weapons or even the threat of using nuclear weapons comes into play, because it's a distraction that the United States just cannot afford at this point, at this point in time in South Asia.

As far as China is concerned, China has clearly, you know, cast its vote with Pakistan. Pakistan is its very, very close partner, 80 percent of Pakistani military equipment comes from China. China has massive investments inside Pakistani Kashmir in something called the China-Pakistan Economic Corridor, which is a showpiece BRI project of Xi Jinping.

So China is an interesting factor and Indian soldiers are still deployed on the China border and China could start putting pressure on the India border to make sure that India does not do something pretty strong against Pakistan.

And these are all factors, you know, imponderables, which we really do not know how they're going to play out as time goes by.

BRUNHUBER: Yes, let's hope certainly there is de-escalation there, because the consequences for not just the region, I mean, the world could be huge here. Sushant Singh, thank you so much. I really appreciate it.

SINGH: Thank you so much.

BRUNHUBER: U.S. Secretary of State Marco Rubio is reiterating that the White House wants a breakthrough soon in its peace effort between Russia and Ukraine. If there isn't one, he says President Donald Trump may reassess the U.S. involvement in the push for peace.

He spoke hours after Russia struck the city of Zaporizhzhya, reportedly killing one person, leaving eight others wounded. Ukraine says one man was trapped under rubble after the strikes and emergency crews were working to reach him.

Meanwhile, Ukraine is denying accusations that it targeted civilians in the Russian-occupied part of its Kherson region. Russia claims seven people were killed in a drone strike on a market southeast of the city of Kherson on Thursday.

[03:15:06] Ukraine says it didn't strike the market. It also says the attack only hit military personnel who were hiding among civilians.

Multiple sources tell CNN that new intelligence suggests Vladimir Putin may have shifted his short-term priorities in Ukraine. Until recently, intelligence officials believed Putin thought he might have enough momentum to seize all of Ukraine. But now U.S. and Western officials say Putin wants to focus on holding the territory he already controls.

They also say he wants to improve relations with the U.S. to help Russia's struggling economy. In addition, senior U.S. officials say even if Putin signs a peace deal, he may try to resume the war later.

A flotilla says it's carrying humanitarian aid for Gaza and issued an SOS not long ago after what it claims was a drone attack off the coast of Malta.

The Freedom Flotilla Coalition told CNN 30 activists were on board the ship when the attack happened in international waters just after midnight local time. They say the vessel caught fire, has a hole in its side and is sinking and no word yet on whether there were casualties.

CNN can't independently verify this information or these images that were posted online. The Freedom Flotilla Coalition calls itself a network of pro-Palestinian activists working to end Israel's blockade of Gaza.

Israel's Prime Minister has revealed what he considers the supreme objective of the war in Gaza as not bringing home the hostages. CNN's Jeremy Diamond has details.

(BEGIN VIDEOTAPE)

JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Well, the Israeli Prime Minister is now making clear for the first time that he believes defeating Hamas is more important than securing the release of the hostages. The Israeli prime minister, in comments that came on Israel's Independence Day, said that while Israel has many objectives in the war and that releasing the hostages is a, quote, "very important goal," he said that in this war there is one, quote, "supreme objective."

And he said that that supreme objective is, quote, "victory over our enemies." This is the first time that we've heard the Israeli Prime Minister be so explicit about something which many of his critics have long suspected, that the Prime Minister was more concerned with the defeat of Hamas than with securing the release of the hostages.

And these comments quickly drew criticism from representatives of the 59 hostages still today being held in Gaza. The Hostages Family Forum saying in a statement that the release of the hostages is not less important, but rather that it should be the, quote, "supreme goal that should guide the government of Israel." They say that the hostage families are very concerned to hear these

comments from the Israeli prime minister. And they also note correctly that a majority of the Israeli public, in fact, disagrees with him. A majority of the Israeli public, as many as 70 percent, according to one poll, support a deal to free the remaining hostages and end the war in Gaza.

This puts the Israeli Prime Minister, though, in the same camp as his right-wing finance minister, Betzalel Smotrich, who said last week, a very similar comments last week, saying that while releasing the hostages is important, it is not the most important goal of this current war. And as the Israeli prime minister makes these comments, he is set to sit down with his security advisers on Friday to discuss plans to expand the war in Gaza.

This is something that we've heard for over a month now from Israeli officials, these plans to expand ground operations in Gaza. If Hamas doesn't agree to a new ceasefire to release additional hostages, it's largely been viewed as a negotiating tactic up until now.

But the Israeli Prime Minister, by having this meeting tomorrow, very much telegraphing that there is some real seriousness behind these plans to expand operations in Gaza. No clear timeline yet on when that will happen. As we know, those negotiations still ongoing to see whether or not a ceasefire deal and hostage release deal can be reached to avert that expansion.

Jeremy Diamond, CNN, Tel Aviv.

(END VIDEOTAPE)

BRUNHUBER: Iran says nuclear negotiations with the U.S. tentatively scheduled for Saturday have been postponed for logistical and tactical reasons, but didn't offer any additional details.

Meanwhile, Donald Trump has now threatened to slap sanctions on anyone who gets oil from Iran. The U.S. President wrote, quote, "All purchases of Iranian oil or petrochemical products must stop now," adding that any country or person who buys those products from Iran won't get to do business with the U.S. in any way, shape or form.

Now, that appears to be a veiled swipe at China, which is a huge buyer of Iranian crude oil. New sanctions would be separate from the 145 percent tariffs President Trump placed on China during the trade war.

[03:20:04]

And Donald Trump is making some changes in the White House. National Security Adviser Mike Waltz is out, but he could soon have a new job in the administration.

Plus, we'll see why some on Capitol Hill are saying President Trump fired the wrong man. That's next here on "CNN Newsroom." Please stay with us.

(COMMERCIAL BREAK) BRUNHUBER: Alright. I want to show you some live pictures right now. Those are fire crews who are on the roof of the Sistine Chapel this morning.

Now, to explain why they're there, next Wednesday, the Catholic Church will begin the process of choosing the next pope.

[03:25:03]

So that chimney there, that will be the one the Cardinals will use to signify their daily vote results. After the conclave begins, smoke will billow out from the chapel.

Black smoke means no decision, white smoke means the next pope has been chosen and will make his appearance shortly thereafter. During the last two conclaves, Cardinals selected the church's new leader on the second day of voting.

U.S. President Donald Trump is looking for a new full-time national security adviser. He removed Mike Waltz from The Post on Thursday, several months after Waltz mistakenly added a reporter to a Signal chat about U.S. military plans in Yemen.

Now the President says he wants Waltz to be an ambassador to the United Nations, and that could mean a messy confirmation hearing in the Senate.

In the meantime, Secretary of State Marco Rubio will be the temporary national security adviser. He also currently serves as national archivist and acting administrator of the U.S. Agency for International Development.

We get more now from CNN's Jeff Zeleny reporting from the White House.

(BEGIN VIDEOTAPE)

JEFF ZELENY, CNN CHIEF U.S. NATIONAL AFFAIRS CORRESPONDENT: In one of the first big staff shake ups of this new Trump administration, President Trump sending his National Security Adviser, Mike Waltz, to the United Nations and sending Marco Rubio, the Secretary of State, into the West Wing to be the temporary National Security Adviser.

This has been long in the works. Mike Waltz, who, of course, initiated one of the biggest scandals of this administration with the group chat on Signal about those war plans in Yemen a couple months ago. The President finally decided that it was time to send him away.

Now, this was a decision that could have been reached quite a while ago, but we are told that the President, the White House, did not want to essentially give the satisfaction to "The Atlantic" magazine or other reporters who had written skeptically about this. But Mike Waltz will be elevated, if you will, but it's a Senate confirmed position to be the ambassador to the United Nations.

But for the President, it is not a position that he is that interested in. He has never thought very highly of the U.N., to say the least. So there's no doubt that Marco Rubio, a one-time rival to Donald Trump, now is one of his closest advisers. He'll be working just steps away from the Oval Office as well as being Secretary of State.

But the bottom line to all of this is in this big shakeup of this administration, the president clearly wanted to keep Mike Waltz on the line, if you will, by giving him this other position. He well remembers the four national security advisers from his first administration. Two of them wrote very harsh books about the President.

So the President does not want that narrative to a set in, he also thank the administration, one administration official telling us the President was eager to change the conversation about the economy to be talking about this.

Jeff Zeleny, CNN, the White House.

(END VIDEOTAPE)

BRUNHUBER: Well, now many Democrats and even some Republicans on Capitol Hill are wondering if President Trump is holding the right person accountable for the Signal scandal. CNN's Manu Raju went looking for answers.

(BEGIN VIDEOTAPE)

MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Republican leaders were blindsided by Donald Trump's move to shake up his National Security team, take Mike Waltz off the post of the National Security Adviser and nominate him to be the next ambassador to the United Nations.

In fact, when I asked John Thune, the Senate majority leader, about the news that Waltz would no longer be the National Security Adviser, he said he was unaware. Also, who was unaware was Roger Wicker, the chairman of the Senate Armed Services Committee. And it's still unclear exactly how Waltz's confirmation hearings will go, given the fact that the news broke after senators had left town for the weekend.

Very few senators are objecting on the Republican side of the aisle to Waltz getting named to that position. But many Democrats were critical of Donald Trump shaking up his national security team, but not shaking up what's happening at the Pentagon.

Many of them blame Pete Hegseth in particular for communicating in that Signal app, an unsecure app, talking about information that appeared to be classified. Although Hegseth says it was not classified. But it did include military strikes against the Houthis in advance of that operation and sharing that information also in a separate chat with his wife and his personal attorney as well.

A lot of questions about Hegseth's role, particularly from Democrats who are calling for accountability.

SEN. MARK KELLY (D-AZ): I think they're holding the wrong guy accountable. The intentional piece of this was sharing incredibly sensitive information about a strike off of an aircraft carrier, putting pilots at risk.

SEN. RICHARD BLUMENTHAL (D-CT): The question is whether the right person's being held accountable. I think there has to be accountability for the mistakes and the errors that have been made. But I think the Secretary of Defense ought to bear that responsibility.

RAJU: Should there be an accountability for Hegseth?

SEN. KEVIN CRAMER (R-ND): The real problem with it, of course, to your point, is the sharing of at least confidential, if not classified, information on an insecure platform or at least a less secure platform than it should have been. I don't know that Mike Waltz is the last person to lose his job.

[03:30:00]

RAJU: What do you think his constituency would be like? I mean, considering what we know about Signal Gate.

UNKNOWN: I think it would be pretty brutal.

RAJU: Now, in order to be confirmed, Waltz can't lose more than three Republican votes. And there's no indication at the moment that he would lose that many. But this is obviously very early in the nomination process, given that it just happened here.

But Democrats plan to ask him in depth about his use of Signal and all the other controversies that have emerged in Trump's first hundred- plus days.

Manu Raju, CNN, Capitol Hill.

(END VIDEOTAPE)

BRUNHUBER: Alright, still ahead here on "CNN Newsroom." President Trump's trade war might not have affected some Americans yet, but it could and very soon. We'll explain.

Plus, how these tariffs are forcing one Japanese businessman to revamp his operations. We'll have more on that and plenty more after the break. Please stay with us.

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[03:35:00]

(COMMERCIAL BREAK)

BRUNHUBER: Welcome back to all of you watching us around the world, I'm Kim Brunhuber. This is "CNN Newsroom." Let's check today's top stories.

The U.S. is putting on a diplomatic press trying to prevent open warfare between India and Pakistan. The U.S. Defense Secretary and the Secretary of State urged restraint when they spoke with Indian and Pakistani officials. India accuses Pakistan of involvement in last week's attack in disputed Kashmir, which killed 26 civilians, Pakistan says it wasn't involved.

Donald Trump has removed his national security adviser, Mike Waltz, in the wake of the Signal chat scandal, but the U.S. president says he will nominate Waltz to be ambassador to the United Nations. Waltz admitted he mistakenly added a journalist to a chat about U.S. military plans in Yemen.

China now says it's evaluating U.S. proposals to begin trade talks, but China says it has preconditions for the talks, including the U.S. ending its increased tariffs. Chinese leaders have been defiant amid heightened tensions over Donald Trump's trade war.

Now, words of those potential trade talks between the U.S. and China comes as a massive tariff on millions of American purchases is now in effect. The de minimis exemption, as it's known, allowed goods worth under $800 to come into the U.S. duty-free, and it reshaped the way Americans shopped.

The loophole allowed ultra-low-cost Chinese commerce sites like Shein and Temu to send everything from yarn to patio furniture to U.S. homes, but with the loophole expired, those items will face tariffs of up to 145 percent.

For more on this, I want to bring in Ryan Young, who joins us from Chicago. He's a senior economist with the Competitive Enterprise Institute. We appreciate you making the time early this morning for us here.

So we'll get to the tariff deadline passing in a second, but just on the latest news, what do you make of China potentially opening the door to trade talks? I mean, to this point, Beijing's been saying essentially it won't be pushed around by the U.S. So could this development be considered a win for President Trump?

RYAN YOUNG, SR. ECONOMIST, COMPETITIVE ENTERPRISE INSTITUTE: I doubt it. China's getting leveraged by the day, and we're going to see more evidence of that next week. The last ships to depart China that would not be subject to the 145 percent tariffs have already left, and next week is when they're going to start arriving at U.S. ports, first on the West Coast, then in the Gulf of Mexico and on the East Coast.

And when those ports are seeing a fifth to a third less traffic than they were just a year ago, that's going to cause serious problems. UPS has already announced layoffs. Consumers are going to face shortages and higher prices.

Most of what we import is actually intermediate goods that U.S. businesses use to make their products here in the U.S. So everyone is going to be feeling the pinch. And the more that happens and the longer that drags on, the less leverage that President Trump is going to have.

BRUNHUBER: Right. OK, so you're saying for U.S. consumers, they will see prices go up basically starting in a week or so. I mean, businesses will now have to make a tough decision as well, right?

Sell products from China at more than double their previous prices or just stop selling them altogether. So what will this mean for small sellers?

YOUNG: They're going to get hit harder. These minimis exemption that you mentioned earlier, that doesn't apply so much to the Amazons or the Walmarts of the world. They import in bulk.

So they already pay the same tariffs. Nothing changes for them.

It's the small sellers who weren't paying tariffs, but now we're going to start paying tariffs. We're going to get hit. They're going to see reductions in orders.

A lot of them are going to go out of business altogether. Consumers are seeing prices more than double for some of the goods that they're importing. And they're going to get hit much harder than the big companies are.

BRUNHUBER: So you talked about how shipping is going to be affected here. J.P. Morgan expects a 75 to 80 percent drop in imports from China. So what will that mean more broadly for the supply chain?

[03:40:08]

YOUNG: That's tough to tell at this point because there is no plan. Some companies we saw were in a midnight rush to buy up supplies. Some consumers were doing the same thing.

If you need a new laptop, buy it now before the tariffs hit, that sort of thing. Other companies are standing pat. They're making a bet that maybe the tariffs will be gone in a month or in six months.

Nobody knows who's right. Hopefully, the upcoming talks will happen and they'll go smoothly and we'll see some at least some tariff reduction. But nobody knows what's going on.

All we know is it's going to put a drag on the economy for as long as those tariffs are in effect.

BRUNHUBER: Yes, certainly people don't appreciate all the chaos in the system right now. In the meantime, speaking of chaos, from a logistical point of view, I mean, what does that mean in practical terms for U.S. customs? They now have to check every package coming from China, no matter how small?

YOUNG: Yes, and they don't have the manpower to do it. President Trump tried to end that de minimis exemption back in January, and he had to draw it back within a week because packages were already piling up in warehouses. It was already creating delays.

And now U.S. customs is in a position where it has to hire 20,000 people or more on very little notice of who knows what kind of facilities problems they're having. It's going to be unworkable, it's going to cause delays, it's going to

cause supply chain problems all over. It's not just for consumers, also for U.S. businesses.

BRUNHUBER: Yes. All right. So given now that there could be trade talks, do you see the administration now maybe pausing this before prices actually rise?

YOUNG: My guess is that they'll lower tariffs somewhat, but they'll still be higher than they were when Trump took office. So a partial rollback, not a full one.

The best hope for everyone involved, especially people in the U.S., is that while the president's never going to admit that he made a mistake, maybe someone can convince him to change his mind. I think that is the best way to proceed with negotiations.

BRUNHUBER: Yes, we shall see. So hard to predict, as you say. Ryan Young, I really appreciate getting your expertise on this, thank you so much.

YOUNG: Thank you.

BRUNHUBER: Japanese automakers as well are bracing for Trump's tariffs as concerns have caused the Bank of Japan to slash its economic growth forecast. CNN's Hanako Montgomery spoke to one local businessman who's aiming to revamp his operations.

(BEGIN VIDEOTAPE)

HANAKO MONTGOMERY, CNN CORRESPONDENT (voice-over): For 40 years, Hiromutsu Hamaguchi has run his car parts factory, taking pride in supplying major Japanese automakers with parts used by drivers around the world.

But with Donald Trump back in the White House, Hamaguchi says he's forced to try something new.

HIROMUTSU HAMAGUCHI, CEO, HAMAGUCHI URETHANE (through translator): Rescue boats are something we manufacture entirely in-house with our brand name, so we can sell them ourselves. Right now, it makes up for about 5 percent of our total sales, but we'd like to double it to around 10 percent.

DONALD TRUMP, U.S. PRESIDENT: You got to see what's happening.

MONTGOMERY (voice-over): In his 100 days back in the Oval Office, Trump has driven the U.S. economy to the brink of a crisis and waged a tariff war no country wants. A new executive order signed Tuesday eased some auto tariffs. But that help doesn't trickle down to small suppliers like Hamaguchi, who are struggling to stay afloat.

MONTGOMERY: Now, all the car parts being made here, like part of a car seat, headrests, are all going to be 25 percent more expensive thanks to the U.S. President Donald Trump's new tariff on all auto imports. Now, that could be devastating for Japan's economy. About 3 percent of

its GDP comes from the auto manufacturing industry, and it also employs millions of people in Japan.

MAYU FUJIMORI, FACTORY WORKER, HAMAGUCHI URETHANE (through translator): If I lost this job, I'd have no choice but to look for another one. But I've only ever worked in factories, so I'm a bit worried about whether I'd be able to do something different.

MONTGOMERY (voice-over): Trump has threatened auto tariffs since his first term, using them as leverage to cut deals with friends and foes alike.

TRUMP: And I said, one thing, you're going to have to open up your country because we sold no cars, like zero cars in Japan, and they sold millions of cars into our country.

MONTGOMERY (voice-over): It's true that U.S. cars don't sell well in Japan, where only 0.3 percent of cars sold last year were American. But for very good reason.

SANSHIRO FUKAO, AUTO ANALYST, EXECUTIVE FELLOW AT ITOCHU RESEARCH INSTITUTE: American cars are large and have poor fuel efficiency. So fundamentally, their vehicle size doesn't fit Japan's road and traffic conditions. Cars are too big, for example.

In Japan, highly fuel-efficient cars like hybrids are mainstream, and American manufacturers often don't offer hybrid models.

MONTGOMERY (voice-over): As Japan's top tariff negotiator is in Washington for another round of talks, suppliers like Hamaguchi say a deal can't come fast enough.

[03:45:02]

HAMAGUCHI: I want to say to Trump, please do it better. Don't be so intimidating.

MONTGOMERY (voice-over): Hanako Montgomery, CNN, Shizuoka, Japan.

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BRUNHUBER: All right, when we come back, a federal judge says President Trump exceeded his authority while cracking down on immigration. More details on the ruling, coming up. Please stay with us.

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[03:50:03]

BRUNHUBER: A judge in Texas has ruled that President Trump unlawfully invoked an 18th century wartime authority to speed up some deportations. Use of the Alien Enemies Act is being challenged in several courts across the country, but this is the first time to have reached a final decision. CNN's Priscilla Alvarez reports.

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PRISCILLA ALVAREZ, CNN CORRESPONDENT: A federal judge in Texas issued a significant blow to the Trump administration and its immigration agenda on Thursday in a ruling that called the invoking of the Alien Enemies Act unlawful. That is an act that the administration has leaned on to swiftly deport migrants out of the United States.

Now, the basis of the act, according to administration officials, is that the Venezuelan gang known as Tren de Aragua was engaged in an invasion of the United States. But a federal judge who was appointed by Donald Trump cast some doubt on that, saying that the President exceeded his authority by relying on this sweeping wartime authority that has only been used three times and all during wartime.

Also, noting that there is no underlying invasion or predatory incursion, which would need to be met for the invoking of this 1798 law.

Now, in the ruling, the judge said the following. Quote, "Allowing the president to unilaterally define the conditions when he may invoke the AEA and then summarily declare that those conditions exist would remove all limitations to the executive branch's authority under the AEA and would strip the courts of their traditional role of interpreting congressional statutes to determine whether a government official has exceeded the statute's scope."

Now, the American Civil Liberties Union attorney (inaudible) told me in a statement that quote, "This is the first court to squarely rule on the fundamental question of whether a wartime authority can be used during peacetime and properly concluded it cannot."

So this is the key difference from the many other legal challenges that have popped up with the invoking of this wartime authority. Of course, there have been legal challenges nationwide to block the deportation of migrants who the administration has deemed eligible to be deported under this authority because the administration alleges they have ties to that gang, Tren de Aragua.

Now, as far as what this means for the individuals in this district, they cannot be deported under this authority in the southern district of Texas. Of course, this is likely to be appealed by the Trump administration. But for now, it serves or rather will be a hurdle for the administration, which up until this point has touted this authority and sought to use it.

Priscilla Alvarez, CNN, Washington.

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BRUNHUBER: Well, this is a May Day march in Bogota, Colombia. Thousands rallied for social reforms proposed by the government of President Gustavo Petro.

Petro was asking Congress to approve a referendum that would let Colombians vote for an eight-hour workday. Protesters in other parts of South America, including neighboring Bolivia and Peru, also took to the streets to demand workers' rights.

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And in Germany, some 10,000 people took to the streets of Berlin. They were rallying for workers' rights and against war, fascism and capitalism. There were close to 6,000 police officers on the streets.

In the past, the rallies have led to violence and property damage. But in recent years, they have been largely peaceful.

We will be right back.

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[03:55:00]

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BRUNHUBER: Well, the first day of summer is more than six weeks away, but London is already feeling the heat. The city saw record-breaking temperatures on Thursday that reached 28 degrees Celsius. Britain's Met Office says it was the warmest start to the month of May on record in the U.K. Londoners can spend the next couple of days enjoying the unseasonably warm weather, but things will return to normal on Sunday, with high temperatures expected in the teens.

And the warm weather made for a lovely day in the garden of Windsor Castle on Thursday. Have a look.

King Charles and Queen Camilla were joined by the King and Queen of Sweden in a rare joint engagement, the two couples planted a tree in the home park to mark the upcoming second anniversary of the British monarch's coronation. Charles and Camilla were crowned at Westminster Abbey on May 6, 2023.

Now, in women's tennis, American Coco Gauff is heading to the final of the Madrid Open for the first time after trouncing defending champ Iga Swiatek. Gauff had never beaten the Polish star on a clay court before Thursday's victory.

The 21-year-old was lights out with her serve, winning a stellar 19 of 21 first serve points and notching seven aces. She won in two sets 6- 1, 6-1, in a bit over an hour. Gauff now faces world number one and two-time champ Aryna Sabalenka of Belarus for the title on Saturday.

All right, thanks so much for joining me. I'm Kim Brunhuber, in Atlanta. "Amanpour" is next, and then "Early Start" with Rahel Solomon begins at 5 a.m. in New York, 10 a.m. in London.

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