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Strikes Pummeled Day Five Of Israel-Iran Conflict, Iran's State Broadcaster Knocked Off By Airstrikes; Trump Abruptly Leaves G7 Summit To Monitor Israel-Iran Situation; Chinese Factories Slowed Down Production Due To U.S. Trade Wars. Aired 3-4a ET

Aired June 17, 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)

UNKNOWN (voice-over): This is CNN Breaking News.

LYNDA KINKADE, CNN ANCHOR AND CORRESPONDENT: Hello and welcome to our viewers joining us here in the United States and from all around the world. I'm Lynda Kinkade.

We begin in the Middle East where sirens are sounding in areas of Israel after Iran fired a fresh wave of missiles. New images show some of the missiles passing just north of Jerusalem. It's becoming clear that some of them got past the Iron Dome. Explosions were heard in Tel Aviv where smoke could be seen hanging over the horizon.

But we're hearing that while there was some damage, no one was injured. The Israeli military says it's safe for people to leave their bomb shelters.

Israel says overnight strikes in Iran killed Iran's wartime chief of staff just days after he was appointed. But Iranian state media says air defenses were activated over Tehran where explosions rang out. A local official says Iran shot down an Israeli drone near the country's Natanz nuclear facility.

Earlier, the U.S. President abruptly left the G7 summit for what he called obvious reasons, telling his national security staff to convene in the White House Situation Room.

He posted, "Iran should have signed the deal I told them to sign. What a shame and a waste of human life. Simply stated, Iran cannot have a nuclear weapon, I said it over and over again. Everyone should immediately evacuate Tehran."

And it seems many are heeding that advice. These images show a long line of cars trying to escape the Iranian capital.

The Israeli Prime Minister says the strikes have set back Iran's nuclear program, quote, "a very long time and made it clear that additional targets remain." Israel's ambassador to the U.S. says Iran's Fordow nuclear site, which is buried deep in the mountains, can only be destroyed with a special American bomb. (BEGIN VIDEO CLIP)

YECHIEL LEITER, ISRAELI AMBASSADOR TO THE U.S.: In order for Fordow to be taken out by a bomb from the sky, the only country in the world that has that bomb is the United States. And that's a decision the United States has to take, whether or not it chooses to actually pursue that course.

(END VIDEO CLIP)

KINKADE: Well CNN's Kristen Holmes has more on Donald Trump's very short trip to Canada for the G7.

(BEGIN VIDEOTAPE)

KRISTEN HOLMES, CNN SR. WHITE HOUSE CORRESPONDENT: President Donald Trump leaving the G7 early. He was supposed to spend Tuesday with several meetings as well as holding a press conference. But Monday, the press secretary, Karoline Leavitt, posted that after the day that Donald Trump had had a series of good engagements, that he needed to get back, given what was going on in the Middle East.

Now, I talked to a number of White House officials who said throughout the day, Donald Trump kept asking to be briefed on what exactly was happening in the Middle East, where things stood between Iran and Israel. And it became clear as things began escalating in the Middle East that it would be better for him, at least they believe so, to be in Washington with all of his officials nearby. They are likely going to convene in the Situation Room.

I do want to note one thing that I was told by a White House official is that their posture has not changed. We've seen a lot of speculation swirling about why he left early. Was this a change in posture from the United States?

We are told pretty definitively that at this time, of course, anything can change. At this time, the U.S. is still maintaining a defensive posture, meaning they are helping Israel with deflecting, with interfering with those missiles.

They have used the argument that there are U.S. military assets in Israel they need to protect, there are U.S. citizens in Israel they need to protect. But they are not, at this point, going on the offensive.

Now, part of that reasoning, we are told, is that Donald Trump is still really hoping to get Iran to the table in terms of a nuclear deal. They are hoping to have their top intermediaries meet, their top officials meet, to try and work something through.

And throughout the last several days, Donald Trump has been urging these officials, these U.S. officials, to maintain contact with their Iranian counterparts, but if not them, with the intermediaries around the globe to try and ensure that this still happens, that Iran comes to the table. We've obviously seen him calling for that publicly as well. So unclear what the next steps are going to be. But right now, what we do know is that Donald Trump is not staying the full time at the G7. He had a set of meetings on Monday and then is heading back to Washington.

Kristen Holmes, CNN, Calgary.

(END VIDEOTAPE)

KINKADE: We want to bring in CNN's Paula Hancocks, who joins us live from Abu Dhabi. Good to have you with us.

The Israeli military has just said it's eliminated Iran's most senior military commander. What more can you tell us about that, as well as the latest wave of missiles we're seeing right now?

PAULA HANCOCKS, CNN CORRESPONDENT: Yes. Lynda, this is from the Israeli military just in the past half hour or so.

[03:05:01]

Ali Shadmani, who we understand had taken the role of chief of staff just in the past couple of days after his predecessor was killed by the Israeli military in the early days of this conflict.

And so what it shows is that the Israeli military and the government is still very much focused on taking out the top layer of the military personnel, the military leadership within Iran itself, clearly in the hope of being able to affect Tehran's ability to retaliate against Israel.

Now, we also heard from the Israeli Prime Minister, Benjamin Netanyahu, speaking in an interview. He was asked about the Supreme Leader as well and said that he didn't rule out targeting the Supreme Leader of Iran, Ayatollah Ali Khamenei. So certainly this is something that Israel is being very clear about.

Now, what we have seen is that just in the past hour or so, there has been another wave of missiles from Iran hitting in Israeli territory. Now, we understand that some did get through, not all of those missiles were intercepted. It certainly seems a smaller salvo of missiles than we saw in the early hours of Monday morning, where hundreds of missiles were launched and a number of Israelis killed.

We understand at this point, and it's still early days, they're still assessing the damage, that there was some damage, but there have not been injuries or casualties. That's the latest the Israeli side is telling us. Linda?

KINKADE: And of course, we've been reporting, Paula, that the U.S. president left the G Summit early, taking to social media, telling everyone in Tehran to evacuate immediately. What's been the reaction in the Iranian capital? And what else are you hearing about the potential of further U.S. involvement?

HANCOCKS: Well, what we've heard publicly so far and also from officials within the Trump administration is that the U.S. stance is very much defensive at this point, that they're not looking at the offensive part of this. We're hearing publicly from the U.S. President that he is keen to make a deal.

We hear from U.S. officials familiar with this matter that he has asked some of those close to him to reach out to Iranian officials and see if there is the possibility of a deal being done. So he has not given up on the diplomatic angle at this point, at least that is what we are hearing.

We're not hearing that from the Israeli side. The Israeli narrative is very much focused on military and the success that they believe they are having in the military sense against Iran. We're not hearing suggestions of a ceasefire, suggestions of diplomacy taking over any time soon.

Again, the Israeli Prime Minister, Benjamin Netanyahu, has wanted to target the Iranian nuclear program for years, if not decades, Lynda.

KINKADE: Our Paula Hancocks for us in Abu Dhabi, good to have you staying across the door for us. Thanks very much.

Well, last hour, I spoke with H. A. Hellyer, Senior Associate Fellow at the Royal United Services Institute and asked him why he thinks the U.S. president cut short his trip to Canada to meet with his national security team. Take a listen.

(BEGIN VIDEO CLIP)

H.A. HELLYER, SR. ASSOCIATE FELLOW, ROYAL UNITED SERVICES INSTITUTE: I mean, there are a number of reasons. This is a very serious war that is broken out. It doesn't simply impact Israel and Iran, it impacts the wider GCC Middle East region.

The repercussions for energy, the repercussions for international law are quite phenomenal. So I'm not surprised that President Trump left a little early in order to have this meeting.

I do think that it's quite ominous, though, as well, especially given the backdrop of precisely that interview that you just aired. Netanyahu, who I think we need to remember has already been indicted by the International Criminal Court for war crimes, is speculating about assassinating the leader of Iran, the leader of the Iranian regime, a thoroughly disreputable regime, a regime that's been responsible for much suffering in the region.

But this is a war that the Israelis began a few days ago. In the midst of negotiations that were taking place between Washington, D.C. and Tehran. So I think this is a very, very careful moment and unsurprising that the American president would return to discuss the situation with his national security team.

KINKADE: Yes. And Netanyahu also spoke about how this operation could lead to regime change in Iran. Is that a realistic goal or does this operation have the potential to strengthen hardliners in Tehran?

[03:10:08]

HELLYER: So I don't think it's a realistic goal in terms of bringing down the regime, because I think that the regime is more than simply the supreme leader on top of it. I think that when you've had a regime like the Iranian regime that's been in existence in Iran since 1979 for 45 years, there are contingency plans, there are hierarchies of command and control.

So, you know, one person goes, another one takes over. I don't think it's quite so brittle that we can imagine that any one person's death is simply going to lead to its disappearance. I do think that the attempt to do so would be gravely destabilizing, would probably be against the backdrop of, you know, a lot of killing of different people that have nothing to do with this.

Your reporter just mentioned the death toll in Tehran. Of course, there will be military, there will be different security officials that would have been killed, but alongside them, because many of them were killed in their homes, alongside them will be civilians, people that are not legitimate targets in any war. So I think that that's very concerning.

When it comes to strengthening the hardliners, I think right now the hardliners are pretty strong in Tehran, are pretty strong in the Iranian regime, because the argument for going into negotiations with the United States in the first place was one that was very carefully debated, right?

And when you have this turn of events where in the middle of negotiations the United States did not hold back its closest ally in the region from embarking on a war, I think it's very difficult to see how it wouldn't be that the hardliners in Tehran would be immensely strengthened.

KINKADE: It's interesting when you hear Republican lawmakers here in the U.S., they're quite divided over how the U.S. should respond. The U.S. has voiced support for Israel, but also urged restraint. And of course, Donald Trump campaigned on ending foreign wars.

How does this all align with that foreign policy and what role is Washington actually playing behind the scenes?

HELLYER: So there is an interesting debate that's going on within MAGA on this particular point, because of course, Donald Trump did campaign on ending wars, not starting them.

Now people argue, well, he didn't start this one. And I think that to some extent that's accurate. Of course, the United States did not declare war on Iran.

But the United States has an incredible power over Israel's range of options. So it doesn't even need to be that the Israelis took permission from Washington, D.C., before embarking on this action. They simply needed to make sure that there wasn't a red light.

And I think that they very clearly got that absence of a red light. They let the Americans know that they wanted to do this and the United States did not hold them back. And it would have been very easy for the United States to hold them back.

(END VIDEO CLIP)

KINKADE: Well, leaders at the G7 summit in Canada have signed a joint statement calling for a resolution to the Israel-Iran crisis. U.S. officials say Donald Trump was initially reluctant to support it, but eventually signed the statement after changes to the language were made. The final version calls for the protection of all civilians in the conflict.

It also refers to Iran as, quote, "the principal source of regional instability and terror" and says Iran can never have a nuclear weapon. Before President Trump announced his early departure from the summit, he signed a trade deal with British Prime Minister Keir Starmer. The U.K. still faces a minimum 10 percent tariff on most of its exports, both leaders appraising the deal.

(BEGIN VIDEO CLIP)

DONALD TRUMP, U.S. PRESIDENT: So we have our trade agreement with the European Union and it's a fair deal for both. Going to produce a lot of jobs, a lot of income.

And we have other -- many other ones coming. But you see the level of enthusiasm is very good. But the relationship that we have is fantastic.

So I just want to congratulate you.

KEIR STARMER, BRITISH PRIME MINISTER: But Donald, thank you very much. This now implements on car tariffs and aerospace, a really important agreement. And so this is a very good day for both of our countries, a real sign of strength.

(END VIDEO CLIP)

KINKADE: Well, the suspect in the Minnesota lawmaker shootings faces federal and state charges. The U.S. attorney says the shooter stalked his victims like prey. We'll have more on that when we come back.

Plus, the death toll is rising following a series of Russian strikes on Kyiv overnight. We'll have the latest on the aftermath in the Ukrainian capital.

[03:15:09]

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KINKADE: Residents of Brooklyn Park, Minnesota, held a vigil to honor the lives of murdered lawmaker Melissa Hortman and her husband. Under which shooting victim, Senator John Hoffman and his wife, a successful recovery. People at the gathering called for reason and tolerance to prevail against extremism.

(BEGIN VIDEO CLIP)

PAUL BRANDT, BROOKLYN PARK RESIDENT: We just can't allow the violence to permeate and skew our political process.

[03:20:02]

We need democracy. We need public participation. We need to be able to talk freely about the issues without fear of retribution.

(END VIDEO CLIP)

KINKADE: Well, the suspect in the shootings, Vance Boelter, has appeared in court. Police say he had many targets in mind beyond the four people he shot. CNN's Whitney Wild has more on the investigation.

(BEGIN VIDEOTAPE)

JOE THOMPSON, ACTING U.S. ATTORNEY: It's the stuff of nightmares.

WHITNEY WILD, CNN LAW ENFORCEMENT CORRESPONDENT (voice-over): The photo captures the end of the largest manhunt in Minnesota history. Police say 57-year-old Vance Boelter started his rampage around 2 a.m. Saturday.

THOMPSON: Boelter went to the homes of four Minnesota state politicians with the intent to kill them. He had a list of other elected officials, their home addresses. Boelter stalked his victims like prey.

WILD (voice-over): The U.S. attorney says the terrifying plot began much earlier, detailing the planning, surveillance and Internet searches Boelter allegedly made to organize his attacks. He says the key to Boelter's plan was dressing in uniform to imitate a police officer.

THOMPSON: He arrived in a black SUV with emergency lights turned on and with a license plate that read police. He carried a flashlight and a Beretta nine millimeter handgun. He also wore a hyper-realistic silicone mask.

WILD (voice-over): Authorities say Boelter began his shooting spree at the home of state Senator John Hoffman, banging on the door and shouting, this is the police, then opened fire. The two survived and are still hospitalized. After the attack, police went to perform a wellness check on several lawmakers.

According to a federal complaint, Boelter headed to the home of an elected official in nearby Maple Grove, but the family was away. He left and then traveled to the home of a state senator where a local law enforcement officer was on the way to perform a wellness check and found Boelter sitting in a black SUV nearby. The officer says she thought Boelter was law enforcement, but when she stopped to speak with him, he continued staring straight ahead and didn't respond.

That officer then headed to the senator's home to do a wellness check and Boelter left the area. Officers went to the home of state Representative Melissa Hortman to check on her as well. When they arrived, they say Boelter was standing outside.

THOMPSON: He drew his weapon and began firing. He rushed into the house through the front door, firing into it, he repeatedly fired into the house. And when he entered, he murdered Representative Hortman and her husband, Mark.

WILD (voice-over): Police officers say they began shooting at the gunman, but he escaped. He left behind his car, where police say they found multiple weapons, including semi-automatic weapons and ammunition, passports and about $10,000 in cash.

He was captured Sunday night in the woods after a massive manhunt. A resident saw him on a trail camera and contacted police.

THOMPSON: This was a political assassination, which is not a word we use very often. It's a chilling attack on our democracy, on our way of life.

WILD (voice-over): Boelter allegedly texted his family shortly after the shootings, according to a federal complaint, saying, "Dad went to war last night. I don't want to say more because I don't want to implicate anybody."

Officials say there is still no clear motive for the attacks.

THOMPSON: I've seen nothing like a Unabomber style manifesto in his writings. Obviously, his primary motive was to go out and murder people. Now they were all elected officials, they were all Democrats.

(END VIDEOTAPE)

KINKADE: Well, Boelter remains in federal custody. That was CNN's Whitney Wild reporting.

Well, the FBI has said Boelter planned a campaign of stalking and violence against elected officials. CNN spoke with a criminologist about the mindset behind a crime like this.

(BEGIN VIDEO CLIP)

CASEY JORDAN. CRIMINOLOGIST AND BEHAVIORAL ANALYST: We not only know that he did a tremendous amount of research and got not just the names of them, but their addresses, but he chased the joint, he surveilled them. He had notes next to their names, like married with two children, big house by the golf course, two different ways in and out. And this is the thought process of an incredibly dangerous, methodical, systematic criminal.

(END VIDEO CLIP)

KINKADE: We also spoke with a former FBI agent about what investigators will be focusing on. This is what he had to say.

(BEGIN VIDEO CLIP)

CHRISTOPHER O'LEARY, FORMER FBI AGENT: The FBI is now looking back and most terrorist attacks or incidents of political violence, those incidents happen and now you're piecing the investigation together afterwards. So the FBI is trying to illuminate his entire life.

Who were his friends and associates? Family members, obviously. But who did he interact with? And really getting down to what is his ideology or his grievance? There has been a lot of assertions that, well, this is political violence and it certainly has the hallmarks of it because of the lists.

But why did he go after these individuals? Was it a single issue? Was it the abortion rights issue? Was he, as has been alluded to also, a Christian nationalist?

[03:25:04]

Is this an act of terrorism and political violence? Or was this an individual at a grievance against these individuals for some unknown reason and he was just acting out for that? Or, I mean, he's clearly a homicidal maniac. Did he just want to go after people? Now that it's going to make a splash. I mean, it's really hard to get inside of his mind to determine why he did this.

(END VIDEO CLIP)

KINKADE: Well, the nightly curfew for downtown Los Angeles will now go into effect two hours later, starting at 10 p.m. until six in the morning. Mayor Karen Bass started the curfew a week ago after days of protests over federal immigration raids. The mayor says law enforcement can assure public safety and there's no need for National Guard troops or U.S. Marines.

Israel is hitting military targets in Iran and also infrastructure. We'll have the details on Iran's response next.

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[03:30:00]

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KINKADE: Welcome back to "CNN Newsroom," I'm Lynda Kinkade. Let's check today's top stories.

The suspect in the Minnesota lawmaker shootings has been charged with murder and attempted murder. He appeared in court Monday and remains in federal custody. The U.S. attorney in Minnesota has called the crimes a staff of nightmares and said the suspect stalked his victims like prey.

U.S. President Donald Trump has left the G7 summit in Canada a day early to monitor the Iran-Israel crisis, he also ordered his national security team to convene in the White House Situation Room. He has directed members of his team to try to meet with Iranian officials as quickly as possible to see if diplomacy is still possible to resolve the conflict. And President Trump sent an anonymous warning to the people of Tehran, telling them to evacuate immediately. Israel is recovering from a new round of Iranian missile strikes. The military says there was some damage, but no injuries have been reported. It's now safe for people to leave bomb shelters.

On Monday, Iran warned Israel to evacuate the headquarters of two Israeli television channels after an explosion at an Iranian T.V. station.

(VIDEO PLAYING)

Two employees were reportedly killed in that explosion and outside footage shows the flames and smoke shooting from that building.

The senior Iranian official tells CNN that civilians are a red line and if they're targeted, Iran's armed forces will take decisive action. CNN's Frederik Pleitgen reports.

(BEGIN VIDEOTAPE)

FREDERIK PLEITGEN, CNN SR. INTERNATIONAL CORRESPONDENT (voice-over): Iranian fire trucks racing to the scene of yet another strike in central Tehran. CNN exclusively attained this video, authorities say shows the aftermath of a hit on a residential building leading to a partial collapse.

People on the ground trying to evacuate the area. As Israel continues its aerial blitz, hitting military targets but also infrastructure, in Tehran, many shops remain closed, the streets nearly empty.

They're truly afraid. When they hear the sound of bombings, they get scared, the shopkeeper says. Just now, we had a customer who was really frightened, she cried and quickly left the store in a hurry.

But Iran says after initial setbacks with many top generals killed, the Revolutionary Guard has now regrouped. The assassinated IRGC commander, Hossein Salami, replaced by Mohammad Pakpour, a veteran of the Iran-Iraq war in the 1980s.

Iran now launching waves of missile strikes against Israel. A senior Iranian official telling CNN that Iran will make Israel pay if it hits Iranian civilians. And a military spokesman even giving evacuation orders to Israelis.

We currently possess a complete database of all your sensitive and critical locations and vital points, he says. Therefore, we emphasize, do not allow the criminal regime to use you as human shields.

While President Trump says despite the aerial bombardments, he still wants a nuke deal with Iran, Tehran pouring cold water on that idea, at least for now.

We cannot imagine that such an action by the Iranian government would be the Zionist regime could have taken place without coordination, cooperation and support from the United States, he says. This has, in effect, stripped the diplomatic process and negotiations of their meaning and substance.

And so many Tehran residents are bracing for more strikes on the capital as Iran says it will continue to hit back.

Fred Pleitgen, CNN, Berlin.

(END VIDEOTAPE)

KINKADE: And earlier, CNN spoke with Lieutenant Colonel Navdav Shoshani, a spokesperson for the IDF. He echoed the words of Israeli Prime Minister Benjamin Netanyahu, who says Israel, quote, "controls the skies over Tehran." Here's more from the IDF.

(BEGIN VIDEO CLIP)

LT. COL. NAVDAV SHOSHANI, ISRAEL DEFENSE FORCES SPOKESPERSON: All the way from Western Tehran to Western Iran to Tehran, and we're expanding that for more areas. We've put out statements saying that we've been able to, for example, neutralize two fighter jets of the Iranian regime in Eastern Tehran.

[03:35:06]

We've been able to carry out strikes against different targets, military and nuclear, all around Iran. And we're operating, as we speak, to remove more aerial defense system and to expand our aerial supremacy throughout all Iran.

The Iranians, since the beginning of this operation, have been putting up fake news about incidents regarding our aircraft. I think they've already four or five times claimed that they have downed one of our fighter jets. I do not know to this moment of any hits or any damage to our aircrafts in Iranian skies.

I can tell you our aircrafts are safe. I can tell you all our pilots who are operating in Iran have returned safely. But we have to stay vigilant, we have to stay on our guard and make sure this is not a simple operation.

People are starting to take it for granted. But we're operating over a thousand miles away from Israel. Our aircrafts are operating hours at a time and it's a complex operation that even though we have been able to establish aerial supremacy over many parts of Iran, doesn't mean that nothing can happen and we must stay vigilant when we're operating.

(END VIDEO CLIP)

KINKADE: Well Lieutenant Colonel Navdav Shoshani with the IDF speaking there.

We also heard from Abas Aslani, a journalist and senior research fellow at the Center for Middle Eastern Strategic Studies. He says Israel's tactic is to create chaos in Tehran and create a sense of fear.

(BEGIN VIDEO CLIP)

ABAS ASLANI, JOURNALIST AND RESEARCH FELLOW FOR CENTER FOR MIDDLE EASTERN STRATEGIC STUDIES: We have been seeing that in the past couple of days, Israel has been trying to create a sense of fear and intimidate the public in order to escape from the city. But I think one of the main points have been to create a chaos in the capital city against the government.

But what we are seeing from the public, even including those who have been critical of the government and establishment, is calling for a strike or response against Israel. And they have been supporting what Iranian Armed Forces have been doing in reaction against Israeli aggression.

Iran has been responding to the attacks coming from the Israeli side. But, you know, the media in Israel, they have not been allowed to report much on those, let's say, areas that have been hit by Iran. But when it comes to the ceasefire, I mean, some Western leaders are talking about Iran coming back to the negotiating table on the nuclear issue.

Iran was already at the table. They also made a deal in the past years. But the U.S. withdrew from that deal.

And at the same time that the negotiations were taking place, Israel attacked Iran. That's why Tehran now says that those talks are meaningless. And if the aim was to gain more concessions from Tehran, meaning zero enrichment, that will not happen.

In case of a ceasefire limited to this, I mean, conflict and war, I think that that could depend on the field developments. I think Iran will continue by the time that there is a deterrence that will stem from further additional attacks in future. Unless I think seeing, without that balance, I think seeing a ceasefire could not be, I think, feasible.

(END VIDEO CLIP)

KINKADE: Our thanks to Abas Aslani for his insight.

Well, the conflict in the Middle East is raising serious concerns about energy costs and the impact on the global economy. CNN's Vanessa Yurkevich has more on what's ahead for the cost of oil and the potential effect on consumers.

(BEGIN VIDEOTAPE)

VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Anytime there's a geopolitical conflict, especially in the Middle East, we look to oil prices and then to gas prices to see what the domestic impact may be.

Now, after spiking by 7 percent last week and crossing $70 a barrel, Brent crude, the global benchmark for oil and U.S. oil, fell by about 2 percent on Monday. Oil prices inform gas prices for consumers. And if things between Iran and Israel continue to escalate, some

economists suggest prices could surge to $100 a barrel for oil. And then we're talking about inflation.

But right now, gas prices are sitting relatively low at $3.11 a gallon. And that's compared to about $3.12 a month ago and $3.60 a year ago. So coming down substantially in the last year.

But according to GasBuddy, prices are expected to rise nationally about $0.10 to $0.20 in the coming days following this spike in oil prices.

Now, the reason that we're watching this so closely is because Iran is part of OPEC, the largest oil producing countries in the world. And the most critical choke point of all oil flow on the planet happens in the Strait of Hormuz, which is -- which Iran is a bordering country. And about 21 million barrels flow through that strait every single day.

[03:39:59]

Now, there are fears that Iran could decide to block the flow of oil, which would have serious implications for the price of oil and thus gas prices. And oil supply shocks often lead to recessions. But there has been some signal or signs that Iran is trying to cool down the war instead of escalating.

And that, along with oil prices cooling off, had investors on Wall Street doing an about-face with the Dow closing up more than 300 points compared to Friday, where the Dow dropped 760 points.

Back to you.

(END VIDEOTAPE)

KINKADE: Our thanks to Vanessa.

Well, a new wave of Russian drones and missiles triggered sirens across the Ukrainian capital overnight.

(VIDEO PLAYING)

A 62-year-old American was among the 14 people killed in the strikes on Kyiv. That's according to the city's mayor. The U.S. citizen had been sheltering in a house close to where medics were treating wounded victims.

At least 55 people were injured in the attack. Several districts across the city were targeted, sparking fires and power outages. Officials say an apartment building was hit and several warehouses damaged.

Well, still to come, G7 leaders are trying to steer President Trump away from his massive trade war. We'll look at whether they've made any progress.

(COMMERCIAL BREAK)

[03:45:00]

(COMMERCIAL BREAK)

KINKADE: Welcome back.

Before U.S. President Donald Trump announced his early departure from the G7 summit in Canada, the main focus was to try and convince him to walk back his aggressive trade war. Trump did sign a trade deal with the British Prime Minister Keir Starmer on Monday. However, the U.K. still faces a minimum 10 percent tariff on most exports.

Trump and Canadian Prime Minister Mark Carney also agreed to pursue economic and security negotiations within the next 30 days. The U.S. President says he's still partial to tariffs.

(BEGIN VIDEO CLIP)

TRUMP: I think we have different concepts. I have a tariff concept. Mark has a different concept, which is something that some people like.

But we're going to see if we can get to the bottom of it today. I'm a tariff person, I've always been a tariff. Simple, it's easy, it's precise, and it just goes very quickly.

And I think Mark has a more complex idea, but also very good. So we're going to look at both and we're going to see what we're going to come out with something.

(END VIDEO CLIP)

KINKADE: Justin Wolfers is a professor of economics and public policy at the University of Michigan and joins us now. Good to see you.

JUSTIN WOLFERS, PROF. OF ECONOMICS AND PUBLIC POLICY, UNIVERSITY OF MICHIGAN: A pleasure.

KINKADE: So President Trump has dropped tariffs on British cars and opened up the door to more U.K. steel and aluminum, even after raising tariffs on other countries. How big of a win is this for a post Brexit Britain? And what's the upside for the U.S. in this shifting trade landscape?

WOLFERS: Look, this is tiny. First of all, the U.S. and the U.K. are not particularly close trading partners, 3 percent of American imports come from the United Kingdom. And they've opened up trade in 100,000 cars.

And for those American middle class families who might have been hoping for a break on paying tariffs on imported cars, I'm sorry, but the stuff that America imports from Britain is Rolls Royces and Bentleys and Aston Martins and Jaguars and Land Rovers, and all the sorts of cars that you'd see in the parking lot at Mar-a-Lago. So calling this a deal or calling this a big deal would be a pretty dramatic overstatement.

KINKADE: Yes, it certainly sounds that way. I do want to turn to Israel and Iran. Tensions obviously are rising as this conflict continues, yet oil prices haven't surged. Talk to us about why the market hasn't really reacted and under what conditions could we see a change.

WOLFERS: So we have seen some reaction, oil prices up maybe $10 a barrel, if you're looking at the right moment. That I agree is quite muted. And that's of course, because nothing yet has happened to threaten global oil supply.

The concern is that Iran could basically block tankers from the Middle East coming over to the rest of the world. And if that were to occur, you'd see oil prices spike pretty dramatically.

The U.S. is less dependent on foreign oil than it once was, but still quite dependent. Oil prices would rise even if the U.S. weren't dependent. If you reduce the global supply, global prices would rise. And that in turn would set off inflation and potentially slow the economy.

Look, the one thing we know from all past wars is they're bad for the economy. There's a million ways in which the generals tend to be a little bit too optimistic. These things go on longer, they are more expensive, they're more costly, and they can create ripple effects that we're yet to imagine.

KINKADE: Yes. Of course, just back to the G7, they have agreed, at least in a draft document to a strategy to secure critical minerals. Is this a direct response to China's recent export restrictions, even though China has since walked them back? And how real is the push to cut dependency?

[03:50:05]

WOLFERS: Look, it's a real and very direct response. Lynda, we could go all the way back three months ago, and my guess is you and I had never uttered the word rare minerals in our lives. And your viewers probably were going about their lives without having to think about them even once.

And so what's subsequently changed is, of course, Trump started the trade war with China.

China understood very quickly the leverage that it had. There's obviously going to be a movement towards reducing that dependence. That dependence does create leverage for China.

But it's very hard to do. Rare earth minerals are not, in fact, rare.

They're in lots of places. They're just incredibly costly and expensive to mine. That's something that China has been willing to do.

And it also is specialized in refining. And it would be a long time before the rest of the world could start to generate enough to do without China.

KINKADE: Justin Wolfers, always good to see you. Thanks for joining us.

WOLFERS: A pleasure.

KINKADE: Well, China's factories are slowing down amid trade tensions with the U.S. Industrial output grew 5.8 percent last month, down from 6.1 percent in April. Outbound shipments to the U.S. are also falling.

Kristie Lu Stout went to the port in Hong Kong to look at how goods are moving.

(BEGIN VIDEOTAPE)

KRISTIE LU STOUT, CNN CORRESPONDENT (voice-over): The race is on to try to meet looming deadlines on tariffs.

LU STOUT: As the trade truce holds, a shipping rush is underway to get the goods out of China. And the clock is ticking.

LU STOUT (voice-over): We're on Ocean Network Express, part of the massive operation to move goods out of China into the U.S., a task made tougher by the constant whiplash on policy changes. The current 90-day pause on higher tariffs on China expires on August 12th, after which they could go back up to 145 percent.

ROBERTO GIANETTA, CHAIRMAN, HONG KONG LINEAR SHIPPING ASSOCIATION: The indices for unpredictability and chaos are actually at an all-time high.

LU STOUT (voice-over): At the frontline of this chaos --

LU STOUT: All right, let's get to the top.

LU STOUT (voice-over): -- we get a closer look at what's on board.

LU STOUT: There we go, we made it.

Now, behind these metal doors is what global trade is all about, the goods. And on this ship, what they have on board includes clothing, furniture, medical equipment and car parts, all mostly made in China that will be sold over in the United States.

LU STOUT (voice-over): This ship is loading up here in Hong Kong before making stops in China and South Korea, then heading through the Panama Canal and on to Houston, Texas.

TRUMP: We made a great deal with China. We're very happy with it.

LU STOUT (voice-over): The U.S. and China are hammering out details on a deal, but the shipping industry is not taking any chances, with Trump previously shrugging off the potential impact of tariffs on U.S. consumers.

TRUMP: 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.

LU STOUT: Is he right?

GIANETTA: Probably, yes. There's probably not going to be 30 choices on the shelves.

LU STOUT: Wow.

GIANETTA: And those choices that are on the shelf would cost more. So it comes down to priorities.

LU STOUT (voice-over): The toy industry is being hit particularly hard by the trade war, as nearly 80 percent of all toys sold in the U.S. are made in China. The impact on some companies is so devastating, they're even suing the Trump administration.

RICK WOLDENBERG, CEO, LEARNING RESOURCES: Of course we had to fight. I can't accept a knockout punch.

LU STOUT (voice-over): Rick Woldenberg is the CEO of Learning Resources, a Chicago-based company selling educational children's toys, 60 percent of which are made in China.

WOLDENBERG: We will run out of product, and retailers will run out of product. That is absolutely, certainly going to happen.

LU STOUT: At one point, is the tariff slapped on the merchandise, and who has to pay for it?

WOLDENBERG: You're looking at who has to pay for it. It has to be passed on for our companies to remain financeable. They can call it tariffs or whatever they want, but it's a tax, and they've turned our company into a tax collector.

LU STOUT (voice-over): Those at the forefront of this supply chain chaos are clear that any financial pain will be passed on to the public.

GIANETTA: Assuming that these tariffs remain in place, all of these charges actually get pushed down to the consumer.

LU STOUT (voice-over): In the whirlwind of tariffs, it's higher prices and rough seas ahead.

Kristie Lu Stout, CNN, in the Port of Hong Kong.

(END VIDEOTAPE)

KINKADE: Over Tourism is having ugly consequences at the world's most famous art museum. Staff at the Louvre refused to take up their posts on Monday in protest over unmanageable crowd sizes, chronic understaffing and work conditions. The spontaneous walkout left tourists waiting in an unmoving line beneath the glass pyramid.

[03:55:00] 8.7 million people visited the home of the Mona Lisa last year, that's more than double what the museum's infrastructure was designed to accommodate. President Emmanuel Macron unveiled a sweeping plan to renovate the museum, and staff say those changes can't come soon enough.

Well thanks so much for your company. That does it for this edition of "CNN Newsroom," I'm Lynda Kinkade. Have yourselves a wonderful day.

Stay with us if you can, "Early Start" with Polo Sandoval is next.

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