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U.S.-Iran Ceasefire Remains Fragile Amid the Failed Peace Talks in Pakistan; Eric Swalwell Withdraws California Gubernatorial Race Owing to Sexual Assault Allegations; Peter Magyar Unseats Long-Reign Incumbent Prime Minister Viktor Orban in a High Stakes Hungarian Parliamentary Polls; Rory McIlroy Retains Masters Title for Two Straight Years. Aired 3-4a ET

Aired April 13, 2026 - 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)

ROSEMARY CHURCH, CNN ANCHOR: Hello and welcome to our viewers here in the United States and all around the world, I'm Rosemary Church.

Ahead on "CNN Newsroom," the U.S. is just hours away from closing off traffic in the Strait of Hormuz. Donald Trump's threat coming as worries grow that already steep oil prices will skyrocket.

A Democratic congressman ends his campaign for California governor amid allegations of sexual assault and misconduct.

And crowds celebrate into the early morning hours as Hungary says goodbye to the era of Viktor Orban.

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

CHURCH: Good to have you with us.

And we begin in the Middle East where U.S. President Donald Trump has ordered a blockade on all traffic entering and exiting Iranian ports in the Strait of Hormuz. U.S. Central Command says it will begin enforcing the blockade in the coming hours. Markets have already reacted to the news with oil prices surpassing $100 a barrel.

The future of the Strait of Hormuz and the war is still unclear after U.S.-Iran talks ended with no deal. But President Trump says the temporary ceasefire is still valid, take a listen.

(BEGIN VIDEO CLIP)

DONALD TRUMP, U.S. PRESIDENT: It's holding well. Their military is destroyed, their whole Navy is underwater. You know that 158 ships are gone, their Navy's gone.

Most of their mine droppers are gone. I think they're very desperate. We had a meeting that lasted 21 hours. We understand the situation better than anybody and Iran's in very bad

shape. And just so you understand, Iran will not have a nuclear weapon.

(END VIDEO CLIP)

CHURCH: Meanwhile, the Speaker of Iran's Parliament posted this warning about the blockade and I'm quoting, "enjoy the current pump figures with the so-called blockade. Soon you'll be nostalgic for $4- $5 gas."

Oil prices are on the rise again as global markets brace for the potential U.S. blockade on maritime traffic near the Strait of Hormuz. Both U.S. crude and Brent crude, the global benchmark, remain high after climbing back above $100 a barrel on Sunday. You can see up more than 6 percent there, WTI up nearly 7 percent.

Well for more on this, CNN's Eleni Giokos joins us live from Dubai. Good to see you again, Eleni. So what's all this doing to global markets?

ELENI GIOKOS, CNN CORRESPONDENT: Yes, I mean, obviously, it wasn't taken very well. And you can see it in the reaction in Brent crude, which is the global benchmark and WTI, which is the U.S. benchmark. And importantly, it was, I guess, very wishful thinking that the talks in Islamabad were going to reach or yield any kind of agreement.

So no breakthrough there. And the big sticking point is Iran's nuclear program. And then importantly, something that's plaguing the entire world, what happens with the Strait of Hormuz, where Iran still has de facto control.

In response, the United States wants to seize control and President Trump is talking about a naval blockade that would come into effect 10:00 a.m. Eastern Time today, that would be 6:00 p.m. here in Dubai. And he says, and he used these words, all or nothing. He said no vessel going in, no vessel coming out of the Strait, and that naval blockade would then be operational.

We still don't know how that's going to be implemented. But he also says this, I have instructed our Navy to seek and interdict every vessel in international waters that has paid a toll to Iran.

Now importantly, we have been reporting on the news that a lot of the shippers have been forced to pay a toll fee to transit through the Straits, up to $2 million, Rosemary, and it's paid either in crypto or Chinese Yuan. President Trump now looking for legal ramifications for some of these shippers that have paid that toll fee.

But the other questions that we're asking, and this is important, is whether countries that have been friendly to Iran, that have been able to secure transit, how are they going to respond to this new naval blockade? And importantly, Lloyd's List that's monitoring marine traffic says that all traffic has come to a complete standstill when President Trump announced the naval blockade.

[03:05:07]

So no movement there. In fact, two tankers that were attempting to transit then eventually turned around.

The other question that we're asking is, in terms of seeking permission to transit through the Strait, how is that going to look? Does the United States now have a hand and some control over the Strait, given that CENTCOM post this on X saying the blockade will be enforced impartially against vessels of all nations entering or departing, and this is important, they say, Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman.

So the way that we're looking at the statement is that perhaps any other vessel that's transiting from other ports might be able to move through the Straits in the coming hours.

The other big question, are we going to start seeing assistance from Gulf States, from international partners? President Trump says this is going to be in coordination with other partners around the world. And then how is Iran going to respond to this naval blockade?

Could we be seeing a maritime front opening up here at a time where this two-week ceasefire, Rosemary, is very fragile, it's very tentative, even though President Trump says it is still intact.

We will know in the coming hours how the U.S. Navy plans to enforce this. The United States also says they're going to be sending minesweepers to clear the Strait of all the mines that Iran says has put within the Straits and Iran over the last few days and frankly since the start of the ceasefire has said that there's certain routes that vessels need to take when transiting the Strait because of the mines there.

Now, shippers have consistently said they're very reticent to transit through the Strait. The risk is still absolutely enormous. Over 20 vessels have been targeted since the start of the war.

Iran, of course, doubling down saying the United States Navy is not going to be able to block the Strait as President Trump says it will. So I think we're going to see in the next few hours exactly how this will transpire. For now though, shippers are absolutely hesitant, worried what the repercussions and ramifications might be.

CHURCH: Yes, understandably, of course. Eleni Giokos live in Dubai with that report, many thanks.

And CNN's Nic Robertson joins us now live from Islamabad where the U.S.-Iran talks took place. So Nic, what is the latest on this imminent U.S. maritime blockade in the Strait of Hormuz and what more are you learning about the collapse of those marathon talks in Islamabad?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, one of the things we learned from Pakistani officials over the weekend following the talks was that they thought that both sides remained optimistic, positive that a deal could be achieved. So I think that is still out there. But there was a very real concern in Pakistan, again, surprised by the Pakistani interlocutors here who were in the same room, these trilateral talks, marathon session, the highest level between U.S. and Iranian officials since the Iranian -- when the Ayatollahs took over back in 1979.

So historic marathon talks, but that concern that there could be spoilers in the region. And here, when they talk about that, they talk about two, implying two things.

One is that tensions between Israel and Hezbollah ratchet up, that would sort of, you know, bring the war back into play in the Gulf region that Iran would want to support Hezbollah. They said from the get-go that Hezbollah and Israel conflict should be part of the biggest ceasefire with the U.S. So there's that.

And then the other thing people talk about here, when they talk about spoilers in the region, is really the hard liners in Iran. And it's interesting because there have been sort of two strains of thought, I think, principally, you can say, coming out of Iran, the doves and the hawks, the doves, like the President saying that, look, this deal is still achievable.

You've had a minister saying that the U.S. came in with a maximalist position, that they moved the goalposts. I know from a Pakistan perspective, they wished the United States had stayed longer, that there was more chance of getting a deal done if the talks had gone over a longer time frame. The U.S. didn't feel that Iran was making the right concessions on its nuclear weapons aspirations, all of that.

So you have on the political side a framing here that says, absent the blockade in the Strait of Hormuz by the United States, then you could actually bring this deal to a conclusion, which is under the implication of what President Trump is saying. The ceasefire really has about another eight or nine days to run his position, we're going to get what we want, we're going to get everything.

So is this part of a deal just to push the talks down to the wire in another eight days?

[03:09:55]

But then there is the spoiler part of it. And this is the messages that we've heard coming from the military factions inside of Iran, which is when and if the United States blocks Iranian ports in the Strait of Hormuz. And remembering over the weekend during the negotiations here, the United States sent two guided missile destroyers into the Strait of Hormuz to clear a path from mines.

And according to the Iranian side at the time, they threatened the United States and said, if you don't turn those ships around, we're going to target them. U.S., we didn't ever get clarity on what actually took place on those shipping lanes with the U.S. ships with Iran's threat over the weekend. But the hardliners in Iran are doubling down on those threats. Now they're saying if the United States closed down the Strait of

Hormuz against Iranians, then the Iranians are going to respond via their proxy in the Red Sea and shut down the throttle point there. The equivalent of the Strait of Hormuz in the Red Sea, Bab al-Mandab off the coast of Yemen, they would use the Houthi proxies there, which is the implication, as the Houthis did last year and the year before, targeting shipping, they said, was associated with Iran. So there's that possibility that comes into play.

So it's doves or hawks in Iran. It's not the first time we've had this discussion who is in the ascendancy. But the blockade certainly has the possibility of returning or breaking the ceasefire more quickly than letting it run out on the clock, which would be until about Tuesday night, Wednesday morning, local time in the region here next week.

CHURCH: Nic Robertson in Islamabad with that live report, I appreciate it. Thank you so much.

Another story we're following, Democratic U.S. House representative Eric Swalwell has withdrawn from the California governor's race as he faces numerous allegations of sexual misconduct. Now, lawmakers, including many Democrats, are urging him to resign from Congress or face expulsion.

Now, this comes days after CNN and the San Francisco Chronicle published separate reports in which women accused him of sexual misconduct, including rape in one case. Since then, Swalwell's staffers have quit and prominent Democratic supporters have demanded he drop out of the race. Swalwell denies the allegations. Before his announcement, several lawmakers were asked whether he should end his gubernatorial campaign, take a listen.

(BEGIN VIDEO CLIP)

REP. PRAMILA JAYAPAL (D-WA): I absolutely do. This is, as you know, I've been very vocal on behalf of survivors of the Epstein scandal. And I think that what we are seeing now is an emergence of women across the country who have been dismissed, told to shut up, told to move on, who have been abused by men in powerful positions.

This is not a partisan issue. This cuts across party line and it is a depravity of the way that women have been treated.

REP. EUGENE VINDMAN (D-VA): We need to be crystal clear on this. The accusations are absolutely heinous and his admissions betraying his family are deplorable. So Eric Swalwell needs to resign.

(END VIDEO CLIP)

CHURCH: CNN's Brian Stelter brings us the latest.

(BEGIN VIDEOTAPE)

BRIAN STELTER, CNN CHIEF MEDIA ANALYST: Hey there, yes, dramatic end of the weekend news in California and a real testament to the power of investigative reporting. Eric Swalwell ending his campaign for California governor just about 48 hours after CNN and the "San Francisco Chronicle" both reported on allegations of sexual misconduct in his past.

Taken together, the stories portrayed an abuse of power by the California congressman, who was, until Friday, a leading contender in the race to replace Gavin Newsom as governor. The Chronicle story contained sexual assault allegations made by a former staffer. The CNN story also described those allegations, which Swalwell denied, and included accounts from three other women alleging various kinds of sexual misconduct over the years, ranging from inappropriate messages and pictures to unwanted kissing and touching.

Swalwell's attorney denied that Swalwell had ever had non-consensual sex with any woman or had ever had sexual relations with any member of his staff. His support evaporated when those reports landed on Friday, with Democrats criticizing him, donors drying up, and some aides wanting to quit.

And on Sunday, Swalwell wrote this on X, quote, "I am suspending my campaign for governor. To my family, staff, friends, and supporters, I am deeply sorry for mistakes in judgment I have made in my past. I will fight the serious, false allegations that have been made - but that's my fight, not a campaign's."

So Swalwell is admitting to some mistakes in judgment without describing those, but he's again denying some of the allegations against him. On Sunday night, questions immediately swirled about whether he will remain in the House of Representatives. His term expires in January, but he's under pressure to leave now, with some Democrats in Congress calling on him to step aside.

[03:15:01]

And there is the possibility of criminal charges in the future, with the Manhattan District Attorney's office saying it is investigating the allegations against Swalwell.

Now, there had been whispers about Swalwell's behavior, and in recent days those rumors were louder online. But it's important to note that this took meticulous reporting by news outlets, a really important vetting process, and that is why these allegations broke through and were taken so seriously. What stood out to me about the CNN story was the sheer level of corroboration.

Text messages, photos, contemporaneous accounts, both the Chronicle story and the CNN story, were hard but really important to read in full. The reporting was detailed, and it was taken seriously by Democratic Party officials. Now, with Swalwell out of the race, the California governor's race has been reshaped ahead of the June 2nd non-partisan primary.

Back to you.

(END VIDEOTAPE) CHURCH: A record voter turnout in Hungary has ended Viktor Orban's 16- year grip on power. We will go live to Budapest next, where massive crowds gathered to celebrate, relieved that change is coming. We'll take a look.

(COMMERCIAL BREAK)

[03:20:02]

(VIDEO PLAYING)

CHURCH: Hungarians are celebrating after a stunning election that ousted Prime Minister Viktor Orban. A key ally to both Donald Trump and Vladimir Putin, Orban has conceded defeat after 16 years in power.

Voters are sending a clear signal that they want to see a shift away from his far-right politics. A record number of Hungarians came out to vote, with thousands pouring onto the streets of Budapest to celebrate Peter Magyar's victory.

The opposition leader said he received 3.3 million votes, the highest number any Hungarian party has ever seen. He told supporters that together they liberated Hungary from the Orban regime.

(BEGIN VIDEO CLIP)

PETER MAGYAR, TISZA PARTY LEADER (through translator): We did it. Tisza and Hungary won this election, not in a small way, but in a big way, a very big way.

Together, we replaced the Orban regime. Together, we liberated Hungary. We took back our country.

(END VIDEO CLIP)

CHURCH: So let's go live now to CNN's Melissa Bell, who joins us from Budapest. Good to see you. So cheers and celebrations on the streets there, tell us more about that and of course the results that came out of this historic election.

MELISSA BELL, CNN SR. INTERNATIONAL CORRESPONDENT: -- so amazing last night was this sort of spontaneous outburst of celebration across the city and the demographics were fascinating. There were so many very young people, Rosemary, people in their early 20s or late teens even, who'd voted for the first time, for whom most of their life had been about having Viktor Orban in power.

In fact, they'd never really seen democratic change. They'd never been part of that. So there was this feeling of, as a few of them told us, a sort of revolution rather than just election victory and that's how the streets felt last night.

A great deal of joy and yet it is now the beginning of a new phase that will be very carefully watched, not least by the United States and MAGA, because it is the dismantling of this liberal state that Viktor Orban had built over 16 years that now begins. Now Peter Magyar has vowed to return Hungary to the rule of law with

his supermajority of two-thirds of parliament. He can now begin to do that and that's how you saw the enthusiasm mounted over the course of the evening. Once he'd won, it was seat after seat in this parliamentary election that seemed to be being lost not just by Fidesz, Orban's party members, but by founding members of Fidesz, people who'd been ministers and suddenly found themselves unseated, people who'd been European commissioners out of a seat.

So the sense of a real collapse of Fidesz's support and of course the corresponding growth of Tisza won. Now that means that the real work begins because you heard even last night Peter Magyar, even as he celebrated this victory in that clip you just heard, he went on to call for the resignation of some dozen or so officials who had things at the helm of things like Hungary's central bank, Hungary's highest court, the constitutional court, a number of these agencies and public bodies meant to be independent that had been stacked as had the courts by Fidesz loyalists.

So what happens after that party collapses from within, what happens when its support collapses, when it's replaced with a super majority and a new party intent on returning to the rule of law. That's what's going to be fascinating in the next few days and certainly from what he said last night, Peter Magyar seems determined to do it, Rosemary.

CHURCH: And Melissa what does this mean for Europe going forward?

BELL: I think the other big capital where there were huge celebrations last night undoubtedly Brussels because Viktor Orban has over the course of the last 16 years been a thorn in the side of the European Union, he's been in the no camp, he's been the arch blocker of the E.U., more often siding with the interests of Moscow than those of any of his European allies.

So it is going to make a big difference to European cohesion, to European unity, to its ability to do things like help Ukraine and bring policies that lead to substantial change within the E.U. He's been very quiet about it on the campaign trail because he was wary of stepping into traps that might be exploited by Viktor Orban, he spoke relatively little of the war in Ukraine or of European unity and yet what we expect is a huge break from what had been and for Hungary to return to the European fold, Rosemary.

CHURCH: Melissa Bell bring us that live report from Budapest, many thanks, I appreciate it.

Well with a new blockade in the Strait of Hormuz and still no U.S.- Iran peace deal, what's in store for the Middle East at large? We will discuss that with an expert just ahead.

[03:25:05]

(COMMERCIAL BREAK)

CHURCH: Welcome back everyone, I'm Rosemary Church, I want to check today's top stories for you. Voters in Hungary dealt Viktor Orban a crushing defeat in a

parliamentary election on Sunday, ending his 16 years in power. The outgoing Hungarian Prime Minister known for his nationalist and conservative values congratulated opposition leader Peter Magyar, calling the result painful but clear.

U.S. House Democrat Eric Swalwell has announced he is withdrawing from the California governor's race. Swalwell is facing several allegations of sexual misconduct separately reported by CNN and the "San Francisco Chronicle." Swalwell denies the allegations but he's facing calls from Democrats in Congress to resign.

U.S. President Donald Trump has announced a blockade on all traffic entering and exiting Iranian ports in the Strait of Hormuz. U.S. Central Command says it will begin enforcing the maritime blockade in the coming hours. President Trump's announcement comes after U.S.-Iran peace talks in Islamabad failed to reach a deal over the weekend.

And for more on this, I'm joined now by H.A. Hellyer, senior associate fellow at the Royal United Services Institute for Defense and Security Studies. He joins us live from Cairo, Egypt. I appreciate you being with us.

H.A. HELLYER, SR. ASSOCIATE FELLOW, ROYAL UNITED SERVICES INSTITUTE FOR DEFENSE AND SECURITY STUDIES: My pleasure. Thank you for having me, Rosemary.

CHURCH: After 21 hours of talks, U.S. Vice President J.D. Vance declared an impasse, saying Iran would not agree to give up its nuclear ambitions. What impact will the collapse of these talks likely end up having on the region?

[03:30:07]

HELLYER: So the talks in Islamabad over the last few days, it doesn't mean that the collapse of negotiations. I think that what we've had is the last two week period or this ongoing ceasefire of two weeks, it's still in place. I think that we still have that.

We haven't seen a return to war, which I think is in everybody's best interest in that regard. I think that we also have the potential for further negotiation rounds as well, which I think we'll see over the coming days.

Of course, there has been the effort from Washington to keep the pressure on Tehran by invoking this blockade. It could work in Washington's favor. I suspect it won't because I think what the Iranians have shown is that they would prefer to go down fighting, even if that's not entirely a rational decision as far as the rest of us are concerned, then sign a deal that they view to be surrender.

All of the messaging that we got from these Islamabad talks was that the Trump administration was going there to basically make them surrender, to sign conditions, to sign terms that would be interpreted by them as surrender and capitulation. The Iranians aren't going to do that. But I do think that the fact that the talks even took place in the first place is a sign that we hopefully will be able to see more in the future.

Keeping in mind, these were the most high-level talks, direct talks between the Iranians and the Americans that I think that we've seen since the establishment of this republic in Iran under this Iranian regime, because J.D. Vance was directly involved. And we wait to see what's going to happen over the coming few days.

The two-week ceasefire period is not up yet. And I suspect we will see other rounds being discussed quite shortly.

CHURCH: So how do you expect Iran to respond to this blockade just hours away?

HELLYER: The Iranians have other cards that they can play, particularly Bab al-Mandab in the Red Sea. The Houthis, of course, in Yemen are aligned and allied with Tehran.

They generally stayed out of the war thus far. That could change. And if it does change, then you could see a problem not just in one street, but in two, at the street of Hormuz and Bab al-Mandab.

Having said that, from the Iranian perspective, they can't keep this going indefinitely. They've got to find some sort of way past this impasse. And they're not simply against the U.S. when it comes to closing off traffic or restricting traffic through the street of Hormuz.

And if something happens in Bab al-Mandab as well, it's not simply about the U.S., it's not simply about the U.S. and Israel, which is how I think that they package it. Rather, it's much further beyond that. Of course, it's the entirety of the Arab Gulf, but also more widely the international community.

The impact on the international economy, if either of these streets are closed, is quite tremendous. And I think that they will, over time, they're going to feel that pressure to come to some sort of arrangement. The question is really about time, how much time it needs to actually take place before the regime in Iran recognizes that it simply can't go on like this.

CHURCH: H.A. Hellyer many thanks for joining us. I appreciate it.

HELLYER: Thank you.

CHURCH: Well, the Vatican is responding to President Trump's criticism of Pope Leo. President Trump strongly criticized the Pope for his ongoing condemnation of the war with Iran.

First, he posted on social media that Pope Leo is weak on crime and terrible for foreign policy. Then he continued to slam the leader of the world's Roman Catholics to reporters.

(BEGIN VIDEO CLIP)

TRUMP: I don't like it. I'm not a big fan of Pope Leo. He's a very liberal person and he's a man that doesn't believe in

stopping crime. He's a man that doesn't think that we should be toying with a country that wants a nuclear weapon so they can blow up the world. I'm not a fan of Pope Leo.

(END VIDEO CLIP)

CHURCH: A Vatican official says the U.S. leader was taking aim at, quote, "a moral voice because he cannot contain it." The post on social media went on to say "Trump doesn't debate Leo: he begs him to retreat into a language that he can dominate. But the Pope speaks another language, one that refuses to be reduced to the grammar of force, of security, of national interest".

And we'll be right back.

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[03:35:09]

CHURCH: A woman in Thailand is turning her traumatic past into a bright future. Kat was saved from being trafficked and has since become a businesswoman. She now helps women who were once like her find a solid foundation.

CNN's Hanako Montgomery shares her story.

(BEGIN VIDEOTAPE)

HANAKO MONTGOMERY, CNN CORRESPONDENT (voice-over): Behind the simmering pot of noodles with her mother-in-law beside her, Kat's days are filled with the joy of cooking and the pride of supporting her family.

KAT, HUMAN TRAFFICKING SURVIVOR (through translator): These are the egg tarts I made at home.

MONTGOMERY (voice-over): But for Kat, a name she chose for her privacy, her journey to this point began in circumstances no child should ever face.

When Kat was just 15, she was staying with an older friend she trusted. She tells us that friend trafficked her and recruited other girls. At the time, Kat was desperate to find money to fix a broken motorbike and didn't realize what kind of work she was being lured into.

KAT (through translator): I thought we were going to a party or something. Then when a group of men walked in, I started to become suspicious. I was afraid, shocked, and sad.

MONTGOMERY (voice-over): For nine months, she was exploited. Eventually, Thai anti-trafficking police rescued Kat.

She later came to Freedom Home, a safe space where she could receive deeper care and develop skills to build a better future. The CEO and co-founder of the Exodus Road, Laura Parker, says when "Kat" first came to Freedom Home, she was looking for the best way forward to provide for herself.

LAURA PARKER, CEO AND CO-FOUNDER, THE EXODUS ROAD: Economic sustainability and the ability for a survivor to be able to provide meaningful income and a dignified job is so critical, and that was one of the biggest things that she needed.

MONTGOMERY (voice-over): At the shelter, Kat found stability and opportunity and completed vocational training before graduating from technical college specializing in baking.

[03:40:07]

KAT (through translator): When I started baking, it helped me relax and let go. I don't overthink.

MONTGOMERY (voice-over): Today, she sells her own baked goods and helps run a noodle shop, earning enough to support her small family.

KAT (through translator): I'm proud of myself that I've come this far. I feel much more grown up.

MONTGOMERY (voice-over): Kat continues to lead, mentoring other survivors and encouraging them to pursue their dreams.

PARKER: They trust her because in so many ways she has been where they currently are, and there's nothing like that sisterhood of survivorship. The investments and the connection and the inspiration that one survivor can give to another survivor is absolutely unmatched.

KAT (through translator): I want them to have hope and push themselves to the highest possible point. I want them to fight.

MONTGOMERY (voice-over): From exploitation to empowerment, Kat's story shows that a life once defined by abuse can heal towards safety.

KAT (through translator): My name is Kat, I'm 20 years old. I'm a baker, a mother, and a graduate from the Freedom Home.

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

(END VIDEOTAPE)

CHURCH: And join CNN for "My Freedom Day" on Wednesday, a student- driven worldwide event to raise awareness of modern-day slavery.

"World Sport" is next for our international viewers. And for those of you here in North America, the news continues after a short break.

(COMMERCIAL BREAK)

[03:45:00]

(COMMERCIAL BREAK) CHURCH: Welcome back, everyone.

Well, new data shows economic uncertainty is growing among Americans amid the war with Iran. Fuel prices and other expenses are starting to rise steadily, and one economist warns this is only the beginning.

Speaking with Fox News, President Trump seemed unsure about whether there was any relief on the horizon. Take a listen.

(BEGIN VIDEO CLIP)

TRUMP (on the phone): Well, it's going to be eventually, it's going to be lowered. No, it might not happen initially, but it's going to go down.

(END VIDEO CLIP)

CHURCH: A consumer survey from the University of Michigan shows consumer sentiment fell to its lowest level on record due to the war. Economists fear the pessimism could affect consumer spending and possibly trigger a recession down the road.

CNN's Matt Egan breaks down the numbers.

(BEGIN VIDEOTAPE)

MATT EGAN, CNN SR. REPORTER: This is the highest that inflation has ever been under President Trump, in either of his two terms in the White House, and it's all about the war in the Middle East.

Consumer prices, they surged by almost 1 percent between February and March, that's triple the pre-war monthly inflation rate, and it's the highest in almost four years. The annual inflation rate, it was actually a little bit lower than expected, but it still surged to 3.3 percent, that is the highest level in nearly two years, and when you look at the trend for annual inflation, you can see that at the start of the year, it was trending in the right direction, and then, boom, the war hit, and inflation went straight up.

Now, not surprisingly, the biggest driver here is the fact that gasoline just got so much more expensive. This is a 21 percent increase between February and March. That's the most since when the BLS started tracking back in the 1960s.

It's not just about gas, though. Delivery costs going up by 3 percent, and that's likely linked to some of those fuel surcharges.

Also, airfare going up by 3 percent. That's strong demand, and it's starting to be the early impact of the fact that jet fuel costs have almost doubled since the war started.

Toys also went up in price, and we know a lot of toys are imported, so that could be linked to the President's historically high tariffs.

The news wasn't all bad. Eggs went down dramatically in price again, and groceries overall, groceries actually got a little bit cheaper in March.

Unfortunately, that's not likely to continue because we know that diesel has skyrocketed, and that's going to make it more expensive for farmers to operate their machinery and more expensive to get all that food to the grocery store.

Now, the good news here is that core inflation, which excludes food and energy, core inflation remains relatively tame. So that does suggest that this inflation shock, at least in March, was mostly contained to food and energy.

The bad news is that's not likely to continue. As the energy shock continues to ripple through the economy, we're likely to see those price increases spread out beyond food and energy.

Now, the fact that cost of living has gotten worse is the biggest reason why consumer sentiment unexpectedly plunged in early April to all-time lows. University of Michigan says sentiment fell by 11 percent from March, and these were widespread declines across income group ages and political affiliation. A survey found that consumers are bracing for higher prices to come, and they're blaming the war in the Middle East.

Now, we should note that this survey took place early in the month, most of the responses came in before the ceasefire was announced, and this is a preliminary figure. As it gets finalized, it could get revised higher, depending upon what happens next in the war and gasoline prices.

But look at the trend for consumer sentiment. This chart goes back to 1980.

Here we are now. You can see that consumer sentiment in early April was at lower than at any other point in history, which is pretty stunning when you think about it, right?

Lower than when gasoline was at $5 a gallon a few years ago, lower than the worst points of COVID, lower than even during the Great Recession. And this is a reflection of how sensitive consumers are to high prices.

Now, this is not just an economic problem, it's a political problem for the White House too, right?

President Trump, he promised to not just fix the cost of living, he promised to make prices plunge, but the latest reports show that the war in the Middle East is making inflation worse and that the American public is increasingly frustrated. Back to you.

(END VIDEOTAPE)

[03:50:00]

CHURCH: And the war with Iran, specifically the closure of the Strait of Hormuz, is having a deep impact on farmers here in the United States. Just as their growing season begins, surging fuel and fertilizer prices are taking a heavy toll. Some farmers in Iowa, a state President Trump won three times, say they are at a breaking point.

CNN's Jeff Zeleny has more.

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AARON LEHMAN, IOWA FARMER: A lot of farmer discouragement out there. Prices of our soybeans, prices of all our commodities started going down. Prices of fertilizer and other things we import to plant a crop started going up.

So for a year we've seen some real chaos on all sorts of trade tensions.

JEFF ZELENY, CNN CHIEF U.S. NATIONAL AFFAIRS CORRESPONDENT: There's always uncertainty obviously with farming, but as you start this season, are there more uncertainties than most?

LEHMAN: Oh yes. So many farms are reporting that they're on the brink of something bad, that their communities are on the brink of something bad.

ZELENY (voice-over): Aaron Lehman is a fifth generation Iowa farmer and worried like never before with fallout from the Iran war.

LEHMAN: No one anticipated that we would have a shock to the system like a massive increase in fertilizer prices. All the experts did not see this coming when we received this rise in fertilizer prices because of this war. And really, no one's really seen a way out.

ZELENY (voice-over): Spring planting is just around the corner here in Iowa, where the cost of fertilizer and diesel have soared since the war began.

LEHMAN: We're filling over 100 gallons in our fuel tank multiple times a week.

ZELENY: So that costs thousands of dollars.

LEHMAN: Thousands of dollars. And it's not just for what we put into our combine. It's not just what we put in our tractor.

In addition to that, what it takes to get my grain to my market, the trucks that are using diesel fuel there, they're feeling it as well.

ZELENY (voice-over): President Trump's promises on trade and tariffs face even more scrutiny here now, in a state he won three times.

ZELENY: Have you felt the whiplash of that tariff policy this past year?

WES RIETH, MANAGER, LONGVIEW FARMS: Yes, I mean, I think it's hard to say for any farmer that we haven't, right?

ZELENY (voice-over): Wes Rieth is farm manager at Longview Farms, navigating an ever-growing set of obstacles.

RIETH: You can look at futures prices for soybeans, you know, again, and kind of watch the pendulum swing a little bit. And I think, yes, that kind of lends itself to, you know, these parallels that we see in geopolitics or, you know, conflicts in the Middle East, et cetera, that, yes, create some of this uncertainty.

ZELENY (voice-over): This year, the optimism of a new season comes with even more risk.

RIETH: So we get one chance to plant, and we get one chance to harvest, and that's it for the year. So we get one try every single year.

And so even, like, in my lifetime, I might get 30 tries at this. That really puts things into perspective, like, I only, you know, the prices of fertilizer, seed, whatever, like, could go crazy. But, like, we can't not plant.

We still have to go out and plant the crop.

ZELENY (voice-over): For the next seven months, as the crops begin to grow--

LEHMAN: Just starting to poke through --

ZELENY (voice-over): -- a political season will also unfold, testing whether any of these challenges influence the midterm elections.

LEHMAN: But in addition to that, I think farmers are becoming more and more aware that you need to say to our elected leaders, what are you saying about the fertilizer situation? What are you saying about the trade situation? Are we going to stand up to these things that are hurting us, or are we not?

(END VIDEOTAPE)

CHURCH: And it's not just farmers who are concerned with high fuel prices.

A new CBS poll shows that those increases are already hitting Americans in the wallet. More than half of those polled say gas prices are causing financial hardship. And while right now it may be just an inconvenience to others, further increases could change their opinion.

Well, Northern Ireland's Rory McIlroy has clinched a second straight title at the Masters Golf Tournament. His victory was hard won after a dramatic day on Augusta National's famous greens. It puts him in a rare brotherhood of just three other players who have won back-to-back green jackets.

CNN's Andy Scholes brings us the highlights of the day.

(BEGIN VIDEOTAPE)

ANDY SCHOLES, CNN WORLD SPORT: Well, this was quite the rollercoaster here in Augusta, but somehow Rory did it. Ever since he had the largest 36-hole lead in Masters history, Rory's been trying to hang on for dear life.

And on Sunday in the final round, Rory actually fell behind to Justin Rose by two shots at one point. But the difference, like it's been at so many Masters, came down to Amon Corner.

And on 12, Rory, a fabulous shot off the tee. He would birdie the hole. Rose, meanwhile, had bogeyed 12 moments before.

[03:55:05]

Rory then went to 18 up two strokes, but then he made that an adventure, hitting his tee shot way right. But he was able to get around those trees and would putt in to win the Masters, letting out a huge scream. He then shared an awesome moment with his daughter Poppy, wife Erica, and his parents, as he's the champ once again.

RORY MCILROY, TWO-TIME MASTERS CHAMPION: I was a little kid with a dream. And the support that I have from my family, my friends, everyone back home. You know, some people probably thought it was outlandish to dream of the things that I wanted to do, but I had amazing support from back home and can't thank them all enough for that continued support.

SCHOLES: And the win makes Rory just the fourth golfer ever to win back-to-back Masters, joining Jack Nicklaus, Nick Faldo, and Tiger Woods. And this is the sixth major win of his career. And Rory had said this week that he was playing here in Augusta this time around with the weight lifted off of his shoulders because he had finally won here at the Masters.

Well, now he's on top of the world as the Masters champ once again.

(END VIDEOTAPE)

CHURCH: Well done, too.

Well, Miami's Skyline is now missing a huge hotel after it was demolished on Sunday.

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People cheered as the Mandarin Oriental Hotel came down in what was reportedly the city's largest implosion in more than a decade. The developer told CNN affiliate WFOR this implosion took years of planning because it happened on a tiny man-made island just off the mainland. Two new towers with hotel rooms and residences are now planned for that site.

I want to thank you so much for your company, I'm Rosemary Church. Have yourselves a wonderful day. "State of the Union" is next, then stay tuned for "Early Start" with Brian Abel and Becky Anderson at 5:00 a.m. in New York, 10:00 a.m. in London.

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