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Trump Meets Xi for High-Stakes Summit; Starmer Under Pressure in British Parliament; Iran War Pulls Billions from Pentagon Budget. Aired 3-3:45a ET

Aired May 14, 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]

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POLO SANDOVAL, CNN CORRESPONDENT: Hey, everybody. Great to have you with us. I'm Polo Sandoval live in New York. This is "CNN Newsroom," and here's what's coming your way. Trump and Xi meeting in Beijing. We're live from the region with the latest from the first day of the summit. And Keir Starmer facing new pressure in the British Parliament. How he's responding to calls for him to step down and who could emerge as a potential challenger. Plus, the Iran war pulling billions from the Pentagon budget. What this may mean for American taxpayers.

UNKNOWN (voice-over): Live from New York, this is "CNN Newsroom with Polo Sandoval."

SANDOVAL: It is 3 p.m. in Beijing where the first round of talks between U.S. President Donald Trump and Chinese Leader Xi Jinping have come to an end. Taiwan, it appears to really emerge as the central focus. President Xi calling it the most important issue in China-U.S. relations. The Chinese leader also spoke with U.S. business executive who joined the president on his trip to China. The president in China predicting broader prospects for American companies in China.

So, the day also started with an elaborate welcoming ceremony just outside the Great Hall of the People. You can hear there the military band that played both national anthems for both countries before the presidents then went inside for their bilateral talks.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: You and I have known each other now for a long time. In fact, the longest relationship of our two countries that any president and president has had, and that's to me an honor. We've had a fantastic relationship. We've gotten along. When there were difficulties, we worked it out. I would call you, and you would call me. And whenever we had a problem, people don't know, whenever we had a problem, we worked that out very quickly. We're going to have a fantastic future together.

(END VIDEO CLIP) SANDOVAL: Let's take you live now to the Chinese capital and CNN's Beijing bureau chief, Steven Jiang. So, Steven, what is on top for what's left of today, and then perhaps you can help us preview what we can expect tomorrow before the president returns to Washington.

STEVEN JIANG, CNN BEIJING BUREAU CHIEF: Yes, Paulo, I think the main takeaway so far is the summit has -- seems to have gone according to plan, which must be such a big relief for Chinese officials although, as you say, they still have the next 20 hours to watch everything. Clearly, there is a state dinner plan for the two leaders, and they will have tea inside the very heavily-guarded Chinese leadership compound, Zhongnanhai, tomorrow morning before Trump leaves Beijing.

But, you know, as you just heard the president say in his opening remarks, he sounded very diplomatic, very complimentary, even made a point of calling Xi Jinping a great leader in front of him, and then, of course, quickly pivoting to his favorite topic, that is trade and economic issues, which, obviously, are his top priorities for this agenda. Now, he, of course, highlighted the caliber of his CEO delegation.

And Xi Jinping seems to be keenly aware of Trump's focus, also very much made a point of using some of the favorite Chinese buzzwords like win-win cooperation when describing this trade relationship. Xi Jinping even revealed the pre-summit trade negotiation between the two sides which, by the way, took place less than 24 hours ago in South Korea, seems have gone well as well and saying the two sides have produced, as Xi Jinping put it, overall balanced and positive results. So, all of that must be music to the ears of all the CEO in that room.

Now, before the summit, of course, a lot of people think the Iran war will be looming large over everything else. The Chinese readout only make a passing reference to that, saying the two leaders have also discussed issues or the situations in the Middle East, Ukraine, and North Korea, but that didn't mean they didn't have extensive discussions behind closed doors.

As you pointed out, as widely expected as well, Xi Jinping did bring up Taiwan as the most important issue in this relationship, saying if not handled well, it could lead to not only clashes but even conflict, and calling Taiwan independence the biggest threat to peace.

All of this kind of rhetorical language, we have heard before. So, it's more about Xi Jinping trying to set the tone in terms of how the Chinese see this issue. So, maybe they will have more specific asks to the Americans later.

[03:05:00]

But for his part, President Trump has been uncharacteristically quiet about the issue when he was asked about Taiwan. Later, after the meeting, he has kept very, very quiet. Overall, Polo, it seems, you know, behind or beneath all the pomp and pageantry, all the smiles and warmth, lies this relatively cold reality of low expectations from Summit. Based on everything we have seen, the two leaders have cleared the spar, and that is they have injected certainty in this often contentious relationship or, as Xi Jinping put it, providing some constructive strategic stability in this relationship. Polo?

SANDOVAL: Steven Jiang with that live report from Beijing. Thank you, Steven. I want to get now some analysis and head over to Jakarta, Indonesia with Bert Hofman. He's a professor at the East Asian Institute over at the National University of Singapore. He's also the former country director for China at the World Bank. Bert, welcome back. It's great to see you again.

BERT HOFMAN, PROFESSOR, EAST ASIAN INSTITUTE, NATIONAL UNIVERSITY OF SINGAPORE: Thanks for having me.

SANDOVAL: So, what are your expectations of what may come out of this summit, especially when it comes to the U.S. war with Iran, as you mentioned in Steven's report -- as we just heard in Steven's report a little while ago, just a brief mention there thus far, but also China's possible request for the U.S. to scale back its assistance to Taiwan? I mean, just hours ago, the Chinese said Taiwan is, as they put it, the most important issue.

HOFMAN: Right, it is the most important issue for China. No question about it. And they would love to see U.S. policy change. There has been a lot of debate on changing the language to rather than does not support to oppose Taiwan independence. That would be a big win for China. Frankly, I don't see it coming. The U.S. policy towards Taiwan has been longstanding and has been well embedded in statements, in agreements, and in law. So, I don't think Trump has that much maneuverability.

But China also likes to see stability, the stability in the trade relationship. What was agreed last year, October, in Busan, in Korea, they hope that this will continue. And if that takes a board of trade, what the U.S. is proposing, they would probably be able to agree on that.

For China, though, the situation is quite different from the way Trump looks at it. I mean, China looks at it from a very big relationship, the most important relationship. And we have the changes not seen in a century, ongoing. And the U.S.-China relationship should be stabilizing, should help the world live through this very difficult phase, and then come to a livable agreement.

SANDOVAL: Going into this summit, I mean, China certainly has to have a pretty high level of confidence. When you look at their economy, there's that stability that you point out just a short while ago as well. So, you bear all that in mind, just how comfortable should the Chinese president be going into these bilateral with President Trump?

HOFMAN: So, I think, from the optics, he was very confident this morning. But there's good reason to be. Growth last year was five percent, exactly as targeted. First quarter was also looking good. Despite all the tariffs and the turmoil and the Iran issue, the first quarter looked good and, therefore, the urgency on Xi Jinping's side may not be that great.

At the same time, export is very important for the Chinese economy. And if the world economy were to be affected by the situation in the Strait of Hormuz, I believe then there would be more inclination from the Chinese to help the U.S. out on this issue. Obviously, the U.S., from the Chinese perspective, is in a bit of a bind in the Gulf, and the Chinese take advantage of that diplomatically, but they would help out if the world economy starts to turn sour.

SANDOVAL: Yes. And then, of course, President Trump under some pretty immense pressure back home to at least take a baby step towards trying to bring this conflict in the Middle East to a close, to see if perhaps this Chinese counterpart will help him.

I'm just curious what your read is also on just this general mood between both leaders, this apparent warm relation between the two leaders in front of the cameras. Do you think that that that is quite different behind closed doors?

HOFMAN: I'm not sure. There seems to be a true personal report. I remember the photos released by the White House in Busan, and that's where Xi Jinping was basically bursting out laughing about something that Trump showed him. We never found out what.

[03:09:58]

And this time around, again, chatting on China man. It seemed to be a really strong, warm relationship.

Now, it seems to also be translating into concrete outcomes. There was a remarkable thing reported by the China news agency, Xinhua, and they said that Xi Jinping had said that they had agreed that -- on the definition of the bilateral relationship, and that it is a constructive, strategic, stable relationship. Now, that's a really good thing to do and to have. And if that can be agreed, then much more can be agreed.

SANDOVAL: I don't know about you, but I always find these photo ops between world leaders awkward as they are fascinating as well to be a fly on the wall as the world's attention is focused on them. Bert Hofman, as always, really appreciate your insight. Thank you for your time.

HOFMAN: Thanks for having me.

SANDOVAL: And while President Trump is in China, he's also expected to encourage Mr. Xi to push Iran toward a peace deal with the U.S., as we just discussed, and potentially even try to get even closer to the reopening of the Strait of Hormuz.

Vice President J.D. Vance, who's back in the United States, he says that negotiators are still making progress, and that's even though the U.S. has been unhappy with Iranian proposals in recent weeks. The vice president says that the administration remains focused on ensuring Tehran can never obtain a nuclear weapon.

(BEGIN VIDEO CLIP)

J.D. VANCE, VICE PRESIDENT OF THE UNITED STATES OF AMERICA: Look, I think that we are making progress. The fundamental question is, do we make enough progress that we satisfy the president's red line? And the red line is very simple: He needs to feel confident that we've put a number of protections in place such that Iran will never have a nuclear weapon. That is the question. Do we meet that threshold or not?

(END VIDEO CLIP)

SANDOVAL: And the U.S. energy secretary is warning that Iran is -- quote -- "frighteningly close to constructing nuclear weapons." Chris Wright telling lawmakers that Tehran is mere weeks away from enriching one ton of its uranium to weapons-grade levels.

President Trump has said that he expects Iran to surrender its enriched uranium as a part of any peace deal. And the Trump administration claiming that it has obliterated Iran's nuclear program and destroyed its military capabilities.

But CNN national security analyst Alex Plitsas explains why that may not necessarily be the case.

(BEGIN VIDEO CLIP)

ALEX PLITSAS, CNN NATIONAL SECURITY ANALYST: It sounds like some of it actually may have been recovered as well. So, some of the entrances to the tunnels to underground facilities and caves or things of that nature had been struck. Iranians have been able to dig some of that and get access to things that were buried.

And even with the missiles, it's a question of how many launchers they have left, right? So, they've got, you know, six, 8,000 missiles, but they've only got a couple hundred launchers. That's a strategic chokepoint. But it's clear the Iranians have been able to recover since then.

And also, I mean, when speaking to Central Command and asking about battle damage assessments, even in the beginning they said, look, it's very difficult for us to get there, it's going to take a little time for us to figure this out. So, I think there has been a little clarity after action there. I think the Iranians have recovered some, but it is quite clear that they retain substantive military capabilities at this point.

(END VIDEO CLIP)

SANDOVAL: Still to come on "CNN Newsroom," chaotic scenes inside the Philippine Senate. Shots rang out as a senator accused of crimes against humanity tries to avoid arrest. What we know about this incident. And as the British prime minister struggles to hold on to his job, a potential challenger emerging. We'll have details on the Labor Party's possible power struggle.

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[03:15:00]

(COMMERCIAL BREAK) SANDOVAL: The president of the Philippines has called an emergency meeting of the nation's top officials after shots were fired in the Senate on Wednesday.

(BEGIN VIDEO CLIP)

UNKNOWN (voice-over): (SPEAKING IN FOREIGN LANGUAGE).

(GUNSHOT)

UNKNOWN (voice-over): (SPEAKING IN FOREIGN LANGUAGE).

(GUNSHOTS)

(END VIDEO CLIP)

SANDOVAL: We know that no injuries have been reported. Actual details and specifics remain unclear about what prompted the shooting. And this happened as a Philippine senator has been barricaded inside the Senate compound for days. He's wanted by the International Criminal Court. He has resisted arrest after being accused of conspiring with former president, Rodrigo Duterte, in alleged crimes against humanity. Current president, Ferdinand Marcos, Jr., vowing that the government will find out who is responsible.

(BEGIN VIDEO CLIP)

FERDINAND MARCOS, JR., PRESIDENT OF THE PHILIPPINES: We agree that the thing to do now is to tell our people all to calm down. And we will get to the bottom of this.

MARCOS (through translator): We will find out who did this disturbance. The government did not do this. There were no outside soldiers, military, NBI in the Senate. We don't know who did it.

(END VIDEO CLIP)

SANDOVAL: President Marco says that those shots apparently were fired by an unidentified armed man and Senate security personnel. Reuters reporting that just hours earlier, the accused senator called for his followers on social media to mobilize, fearing law enforcement was coming for him.

Well, no contender has come forward yet to challenge Britain's beleaguered prime minister, but all that could change, literally, at any moment. British media reporting that Keir Starmer's health minister, Wes Streeting, that he's on the verge of resigning. He could then launch a former Labour Party leadership contest with the prime minister under pressure to step aside. The political upheaval, all this is really stealing some of the spotlight from King Charles who appeared in Parliament to lay out the legislative agenda.

Richard Johnson is a senior lecturer in U.S. politics at Queen Mary University of London. He's joining us now from Oxford. Richard, it's great to see you. Richard, you can hear us?

[03:20:00]

Maybe having some audio issues. But, perhaps, maybe that did the trick. I tell you what, let's see if we can iron out that issue with Richard's audio. Hopefully, we'll get back to you to get some more -- to get some more analysis on this ongoing situation in the U.K. And still ahead, you're in "CNN Newsroom," just how much is the war with Iran actually costing U.S. taxpayers? A new analysis is estimating that as much -- it's really much higher than the official Pentagon estimate is. That story on the way.

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[03:25:00]

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SANDOVAL: Hey, everybody. Welcome back. I'm Polo Sandoval in New York. These are today's top stories. Chinese leader Xi Jinping says that Taiwan is the most important issue in China-U.S. relations. His comments come on the first day of a summit in Beijing with U.S. President Donald Trump. Chinese state media says that they also exchange views on the Middle East and on Ukraine.

U.S. Vice President J.D. Vance says that the United States is making progress in peace talks with Iran, and that despite a series of recent Iranian proposals that have been rejected by the U.S. Vance says that any peace deal must include assurances that Tehran can never get access to a nuclear weapon.

And there's growing speculation that the British prime minister could soon face competition from within his own Labour Party. British media reporting that Keir Starmer's health minister is expected to resign today and hard launch a Labour Party leadership challenge after that. Wes Streeting met with Prime Minister Starmer earlier, but no word on what was actually discussed.

Richard Johnson is a senior lecturer in U.S. politics at Queen Mary University in London. He's joining us from Oxford. Richard, thank you so much for sticking around with us. My understanding is we've eliminated those technical gremlins.

RICHARD JOHNSON, SENIOR LECTURER OF U.S. POLITICS, QUEEN MARY UNIVERSITY OF LONDON: I hope so.

SANDOVAL: Yes, we did. Wonderful. So, we're going to get into these possible challenges -- challengers in a moment, but I'm curious if you could just bring our viewers up to speed around the world who are not perhaps familiar with these procedures in place in the U.K. What needs to happen to trigger a leadership challenge against the current prime minister?

JOHNSON: So, the way that you trigger a leadership challenge in the British Labour Party is that a candidate needs to collect the nominations of 20 percent of the Labour MPs sitting in the House of Commons in good standing. So, no one who has lost the whip for misbehaving. And to be eligible to stand for the leadership of the Labour Party, you must be a sitting Labour M.P. And that's a really important detail because it takes out the person who is the most popular Labour politician in the country at the moment, which is the mayor of Greater Manchester, Andy Burnham.

SANDOVAL: And where are we currently in that process?

JOHNSON: Well, there's intense speculation that there are some senior labor figures who are ready to announce their candidacies, and they will either already have sort of pre-collected their backers. So, they may come out and say, I already have 20 percent of MPs supporting me, or they say, I'm standing, please support me, and in the coming days, I would like you to nominate me.

At that point, the ruling body of the Labour Party, the sort of bureaucratic arm of it called the National Executive Committee, will lay out a timetable for candidates to formally collect signatures. That could be over, you know, two or three days where MPs would literally go into a room in the House of Commons and fill out a piece of paper, say, this is the candidate that I nominate. And then at the end of that window, we'll see who has 20 percent.

Keir Starmer, if he chooses to stand and fight for his job, does not need to collect the signatures, but I suggest that maybe he might want to collect the signatures anyway as a bit of a show of strength.

SANDOVAL: What can you tell us about possible challengers? We know there's so much speculation right now.

JOHNSON: Well, the person on everyone's lips at the moment is Wes Streeting, who is the health secretary. Streeting is a younger M.P., well in his 40s. And he was elected the same year as Keir Starmer in 2015. Streeting is someone, in Labour terms, he's on the right of the Labour Party, meaning he's, you know, on the right of politics. But within the left, he's on the right. And he is going to, I think, be possibly the first one to come out.

Others include the former deputy prime minister, Angela Rayner, who had to resign last year over her tax. But she announced very conveniently this morning that our version of the IRS, HMRC, have cleared her of any wrongdoing with her tax affairs. So, now, she's in the clear. And she has been quite popular with the sort of more left or soft left, as we sometimes say, grassroots in the Labour Party.

[03:30:03]

So, I think those two are the most prominent. There's also some speculation that former Labour leader, Ed Miliband, who was leader of the opposition in the David Cameron years, may try and make a comeback. He's currently in the cabinet as energy secretary. But once you start having more than three, it gets quite difficult to get that 20 percent of nomination. So, I wouldn't expect it to be any more than that. You may have a few people who declare their candidacy, but I doubt they'll reach the 20 percent threshold.

SANDOVAL: Richard, you've given us a lot to keep in mind as we wait for any potential developments in the hours or days ahead. Richard Johnson joining us from Oxford, Thank you.

JOHNSON: Thank you.

SANDOVAL: And there's a new analysis that's now raising questions about the true cost of the U.S. war with Iran. A public policy expert at the Harvard Kennedy School estimating that the conflict will likely cost American taxpayers at least $1 trillion in total, and that is far higher than the latest projection that's coming from the Pentagon.

CNN's Haley Britzky has more on the estimate from the Defense Department.

(BEGIN VIDEOTAPE)

HALEY BRITZKY, CNN SENIOR NATIONAL SECURITY REPORTER AND WRITER: Senior Pentagon official Jay Hurst, the Pentagon comptroller, telling lawmakers that the total cost estimate for the war with Iran has risen to $29 billion. That's up $4 billion from the estimate he provided roughly two weeks ago. Jay Hurst saying that that's largely because of updated repair and replacement costs for equipment in the Middle East, as well as the total cost for keeping troops in the region.

But as we have reported, the cost is not including, as of right now, repairs to U.S. Military installations in bases, in the region that have sustained a lot of damage from Iranian drones and missile strikes. All of that could lead the estimate to being closer to 40 to 50 billion, as my colleagues recently reported. And all of that coming obviously as the president is in Beijing meeting with Xi Jinping.

Knowing that he will be discussing Iran, asked before he left for China, saying that the financial burden on Americans is not really factoring into his decisions about the ceasefire with Iran. We know the ceasefire is on particularly shaky ground. The U.S. military has said it's prepared to restart operations if asked to do so.

When asked if the financial strain on Americans was playing into his decision-making, President Trump's saying not at all, that the one thing he thinks about is that we cannot let Iran have a nuclear weapon.

So, somewhat striking comments from the president coming as the cost for the war with Iran is surely growing frustration among lawmakers, that they felt they were not getting transparent enough information about this war that could restart at any time and does not appear to have a clear end in sight.

Haley Britzky with CNN, Washington.

(END VIDEOTAPE)

SANDOVAL: Rescue operation is clearly underway after Russian strikes partly collapsed a residential building in the capital city of Kyiv. President Volodymyr Zelenskyy says that some people may still be trapped beneath the rubble following the strikes just a few hours ago. One person has been confirmed killed with dozen others injured and have been rescued. Mr. Zelenskyy says that Russia launched more than 700 drones and missiles overnight, mainly targeting Kyiv.

And that's happening after one of Russia's biggest strikes since the war started. At least 800 drones were launched on Ukraine on Wednesday, killing six people and leaving dozens injured. Kyiv's foreign minister says that the timing of the Russian attacks while the U.S. and Chinese leaders are meeting, that that shows that Moscow is not interested in peace.

Still on the way, new concerns about the U.S. economy as data is showing that inflation is accelerating after weeks of the war with Iran. Let's take a closer look at the numbers.

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[03:35:00]

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SANDOVAL: Welcome back. Let's get you some of your business headlines at this hour. The Trump administration is draining America's emergency oil stockpile at a fast pace, one of its fastest paces on record, and that's according to federal data. The Strategic Petroleum Reserve had plunged by 8.6 million barrels last week, and that marks the largest weekly drop since records began in the early 1980s. The previous record set in September 2022 during the COVID pandemic.

The Trump administration is delaying $1.3 billion in Medicaid payments in the state of California. This is the government's latest effort to crack down on fraud in federal health care programs. The administration has been criticized for focusing its anti-fraud efforts on mostly democratically-led states. But Vice President J.D. Vance is insisting that this is not politically motivated.

New data is showing that the war with Iran is raising costs for U.S. businesses at a rate not seen in nearly four years with higher gas prices driving up wholesale inflation. The Producer Price Index surged to six percent in April on an annual basis. On a monthly basis, it was up more than expected, to 1.4 percent.

And energy, it is a big driver of the jump in producer prices, and it comes as Americans are already feeling the pain at the gas pump.

[03:39:58]

I spoke about the latest inflation data with one expert, Gbenga Ajilore. He's the chief economist at the Center on Budget and Policy Priorities. I want to play a portion of our interview.

(BEGIN VIDEOTAPE)

GBENGA AJILORE, CHIEF ECONOMIST, CENTER ON BUDGET AND POLICY PRIORITIES: We had terrorist from a year ago, Liberation Day around April 2025. That has been having an impact. But it was a smaller impact. But since the war, we are going over 60 days, caused a real huge increase in prices, particularly gas prices. We've seen gas prices go up over 50 percent over the last two months, and that has led into a lot of other factors.

SANDOVAL: When you look at the data also that shows that paychecks grew about 3.6 percent from April of last year, problem is so did the prices rising at about 3.8 percent. For our viewers, I wonder if you can explain what that means, especially for Americans that were perhaps finally catching up with their finances over the last several years if their pay was rising at a faster rate than inflation. It seems now, if you look at these, that's really not the case anymore.

AJILORE: It is not the case. It was actually kind of one of the more surprising things that we saw this month. For the past couple of years, we've had that the average wage growth has been about four percent per year, and then inflation was two and a half percent, maybe up to three percent. So, that means that the average American was able to get more money and be able to have their purchasing power increase.

Now, for the first time in a long time, in about a couple of years, we have that price -- price has grew by 3.8 percent, wages grew by 3.6 percent. So, over the month, they're basically losing ground in terms of being able to afford goods.

SANDOVAL: And then, of course, the question of whether or not we may see a breaking point when it comes to the war with Iran. It seems that both sides, at least Iran and the United States, are still deadlocked. We'll see if President Trump's current visit to China may potentially move the needle and advance some progress in negotiations with the Iranian regime. But, ultimately, when you look at it as an expert here, is there a breaking point if we continue to see no end in sight in this war?

AJILORE: Yes. Just people are not going to be able to continue to spend money. Right now, you know, we have gas prices that are the kind of the one -- the most salient that people see every day. But we're looking at increases in food prices, we're looking at increases in electricity. As we get towards the summer, people are going to be using A.C., spending more money there.

(END VIDEOTAPE)

SANDOVAL: The co-founder of a national cosmetics brand says that he is making this life-changing commitment.

(BEGIN VIDEO CLIP)

SCOTT-VINCENT BORBA, CO-FOUNDER, E.L.F. COSMETICS: I had everything in the world, but I just felt this -- this sincere loss in my life.

(END VIDEO CLIP)

SANDOVAL: That's Scott-Vincent Borba, He's the co-founder of E.L.F. Cosmetics, reflecting on his decision, as you see there, to become a Catholic priest. Borba telling CNN affiliate KGO that a turning point happened in his 40s when he experienced what he described as sincere loss of happiness and joy.

Appreciate you joining us this hour. I'm Polo Sandoval in New York. World Sport is next. I'll join you again at the top of the hour with more of the headlines.

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