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CNN This Morning

Federal Court Strikes Down Trump's Sweeping Tariffs; Musk Knocks Budget Bill as He Exits DOGE; Buy Now, Pay Later: What the Growing Demand Says About Economy. Aired 6-6:30a ET

Aired May 29, 2025 - 06:00   ET

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

RAHEL SOLOMON, CNN ANCHOR: Want revenge. Love a good rematch. Love a good rematch.

[06:00:06]

Thanks for joining us here on EARLY START. I'm Rahel Solomon, live in New York. CNN THIS MORNING starts right now. I will see you tomorrow.

AUDIE CORNISH, CNN ANCHOR: It is Thursday, May 29. And here's what's happening right now on CNN THIS MORNING.

President Trump's sweeping global tariffs blocked. A court says he overstepped his authority. How the Trump administration is responding.

Plus.

(BEGIN VIDEO CLIP)

DONALD TRUMP, U.S. PRESIDENT: Harvard has to show us their lists.

(END VIDEO CLIP)

CORNISH: It's graduation day at Harvard. But just down the road, the fate of international students will be in the hands of a federal judge.

And when you hear crypto crime, you probably think about someone behind a keyboard, not someone with a wrench. Why wealthy people in crypto are an even bigger target.

Also, buy now, pay later. More and more people seem to be using apps like Affirm and Klarna. Is this a sign of economic strain?

It's 6 a.m. here on the East Coast. Here's a live look at the White House. Good morning, everybody. I'm Audie Cornish. I want to thank you for waking up with me.

And we're going to begin today with a conversation about the president's tariffs, because they are on pause again, but not because of him. This time, it's because of a court ruling.

So, the U.S. Court of International Trade in Manhattan ruled that the president overstepped his authority when declaring an emergency economic power to slap tariffs on, essentially, the entire world.

So, the ruling even applies to the president's Liberation Day tariffs, which he unveiled with a ceremony and a chart at the White House just last month.

(BEGIN VIDEO CLIP)

TRUMP: So, we're going to be charging a discounted reciprocal tariff of 34 percent, I think. In other words, they charge us, we charge them.

We're going to charge them 20 percent. So, we're charging them essentially half.

We're going to charge them 46 percent tariff.

We're going to charge them 32 percent, Switzerland 61 percent to 31 percent. Indonesia, Malaysia, Cambodia. Oh, look at Cambodia, 97 percent.

(END VIDEO CLIP)

CORNISH: OK, that was on April 2.

The mood at the White House now very different after this ruling, White House deputy chief of staff Stephen Miller posting, quote, "The judicial coup is out of control."

World markets, however, seem a little bit happier, even as the Trump administration plans to appeal.

So, joining me now to discuss, CNN's Marc Stewart in Beijing. Hi there, Marc. Good morning.

MARC STEWART, CNN INTERNATIONAL CORRESPONDENT: Hi, Audie. Great to see you.

CORNISH: So, I think the thrust of this case, essentially, found that the court said your ideas of what the emergency is, whether it be the fentanyl crisis or your other concerns, they don't quite meet the bar; and therefore, your power to do -- to take these actions is limited.

What does this mean for China? Does this affect that big swath of tariffs that -- that they were still dealing with from the U.S.?

STEWART: Well, look, from the very start, China had said this was unfair and that it was going to appeal to the World Trade Organization.

But now it's getting some validation, if you will, from this judge in the United States.

Here's one thing which I have observed by my time here in China. The Chinese government is really consistent in its messaging.

When this whole trade dispute first unraveled, what, eight plus weeks ago, you know, it said that there were no winners in the trade war and that protectionism is harmful.

Well, the response that we heard today from the Chinese government to this action by the court in New York was the exact same verbiage. There are no winners in a trade or tariff dispute, and that protectionism is harmful.

So, China, I mean, give it credit, is being very narrow-focused as to -- as to how it views this. No indication as to what it will do next.

I think that there is hope by both nations. We have the world's largest and second largest economy. I think there is hope that there would be some kind of trade deal. This perhaps gives China a little bit more leverage, because the United States is not holding these tariffs, you know, as a tool for punishment.

You know, both nations have ways they can hurt each other. I mean, the United States can certainly do things. China holds all of these precious rare earth minerals, which are so valuable.

[06:05:03]

So, the road ahead, at least from the Chinese perspective, you know, China is not revealing its cards, what it's going to do next. But I think it would be safe to say that, at least on the surface, perhaps, it feels some kind of validation, Audie.

CORNISH: Yes. I mean, the tariffs aren't the only issue they are dealing with when it comes to U.S. policy. We have an announcement from the secretary of state, Marco Rubio, saying that the U.S. will begin revoking visas of students from China, including those with connections to the Chinese Communist Party or studying in critical fields.

Can you talk about what's behind the thinking here? And again, like, is this something that China can or will react to?

STEWART: Right. Well, as soon as I heard that news, my first reaction is, how is this going to impact these trade talks? It's yet another point of contention.

And Beijing really isn't weighing in on that so much, only to say that this is harmful and that this is -- it's unfair, and it's hurting students.

Yet at the same time, I don't think anyone here in Beijing is really surprised by this. I mean, let's think back to when Marco Rubio was in Congress. I mean, he established himself very early on as taking a very firm stance against China, you know, China hawk. And the government was critical of him when he was in Congress.

So, this is not that much of a surprise.

If we look at the numbers, about 275,000 Chinese students have come to the United States to study. I mean, there are some analysts who feel that this could actually help China in the sense that all of the smart minds that went to Harvard and other universities, well, maybe they'll choose to stay back in China and help develop things when it comes to technology or -- or for medicine.

So, I think that's where China stands right now. Not a surprise, though. I think that Marco Rubio was -- was waiting to flex his muscle as secretary of state. And this -- this was the time, and this was the opportunity.

CORNISH: That's CNN's Marc Stewart. Thanks so much for speaking with us.

STEWART: You bet.

CORNISH: Coming up on CNN THIS MORNING, the first buddy goes back to his day job. Why Elon Musk is getting out of DOGE.

Plus, the big, beautiful bill lives up to its name, in that it's over a thousand pages long. But what are the key issues that could actually impact your daily life?

And testimony about burnt-out cars, freak-offs, and violence. But could Sean Combs take the stand?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I don't know that I could keep him off the stand. I think he is very eager to tell his story.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

[06:12:26]

CORNISH: Elon Musk going back to his day job as he leaves Washington and his role with DOGE.

In a post, Musk thanked the president for letting him reduce what he calls wasteful spending and said, "The DOGE mission will only strengthen over time as it becomes a way of life throughout the government."

He appears to be somewhat disillusioned with Washington and took a swipe at the president's agenda on the way out the door.

(BEGIN VIDEO CLIP)

ELON MUSK, OUTGOING HEAD OF DOGE: I was, like, disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decrease it. And undermines the work that the DOGE team is doing.

I think a bill can be -- can be -- can be big or it can be beautiful, but I don't know if it can be both.

(END VIDEO CLIP)

CORNISH: Joining me now in the group chat, Camila DeChalus, CNN White House reporter; Margaret Talev, senior contributor at Axios; and Jasmine Wright, politics reporter at "NOTUS."

OK. Good morning, everybody. Welcome to the chat.

I have to admit, I feel a little bit surprised that this is happening not with a bang, but with a whimper in terms of how it's playing out. His goodbye.

Did we see -- and, Camila, I want to start with you -- any cracks in this relationship that we should have paid closer attention to?

CAMILA DECHALUS, CNN WHITE HOUSE CORRESPONDENT: Definitely in the first few days in office, Trump kind of put out that he really wanted to do this cutting of -- waste cutting.

And you saw what DOGE just going into these federal agencies and making these cuts. And doing it in a way that there was this little bit of turmoil, and there was this backlash that Trump received, of just saying, hey, are we doing this the correct way?

You had some Republican lawmakers --

CORNISH: But did Trump receive it, or did Elon? Like for a while, I thought Elon was the heat shield for the criticism of DOGE.

JASMINE WRIGHT, POLITICS REPORTER, "NOTUS": I think he was. And I actually am not surprised by this kind of whimper that you see Elon going out of.

In the last like 72 hours, you've seen him express regret. You've seen him express some kind of, you know, tension, upsetness [SIC] with the way that D.C. works.

He obviously slammed that one big, beautiful bill. You just heard that right there.

CORNISH: Not just slammed it but undermined its very premise.

WRIGHT: And undermined exactly what it does, which is what Trump wants it to do.

But I think, frankly, if you look back at Elon's tenure, it was kind of always going to end this way. No, it didn't end up with this big --

CORNISH: Was it personalities or clash of --

WRIGHT: Well, you haven't seen it end up with this big fight. When you talk to White House aides, they say that Trump still loves Elon.

Trump was asked -- kind of teed up in the Oval Office yesterday to discredit and slam Elon for his comments. And he didn't. He defended the bill, said there's some things he didn't like about it, but he didn't attack Elon directly.

And so -- but I think that they've been kind of setting up this whimper for him to leave.

[06:15:04]

CORNISH: Yes. Well, Margaret, let me let you jump in, because I want -- your eyebrow is doing a thing. People can't see it.

(CROSSTALK)

CORNISH: You can't see it under the frames, but it's wiggling under there.

MARGARET TALEV, CNN POLITICAL ANALYST: That's the beauty of these frames. You can't actually see what's going on.

Well, first of all, I don't think this means the relationship between the two of them is over.

CORNISH: No. All those DOGE workers are still there.

TALEV: He and his folks had a huge impact on -- internally in what government -- what the federal government looks like and what --

CORNISH: They still have access.

TALEV: And still have access to a ton of data. And he used this time to maneuver his many companies and investments and holdings into much stronger position, including the potential for federal contracts.

And just because you're out of the Trump administration doesn't mean you're out of Trump universe. We've seen this with --

CORNISH: Not if you're a donor of that scale.

TALEV: Or if you are influential. Look at Steve Bannon, for example. You remember some people who just landed on Earth might not realize that Steve Bannon was hugely important to Trump's, you know --

WRIGHT: Yes.

TALEV: -- the beginning of Trump's first administration. Now has huge influence on the outside.

CORNISH: Yes. Camila.

TALEV: So, I just -- yes.

DECHALUS: Margaret has a great point there. It's the term of access. And who has the president's ear. And that is what we're going to see in the coming months and even years while he's still in office.

There's still a lot of things that Elon Musk has made it clear that he would still like to see the government do, and that is in terms of how this can actually carry out in these federal agencies that play a very big role in everyday American lives.

And that's what we're going to see, is that there might be things that we're hearing behind the scenes that he wants to see Trump do, and he's going to have a very big influence. I think that's the term here, is access and influence to actually

carry out some of the policies that he still wants to see implemented.

CORNISH: You know, I'm going to be watching it, too, because Musk has also expressed some disappointment with politics in general, talking about like, well, maybe I'm not going to be --

WRIGHT: Doing less.

CORNISH: -- doing that as much. He's got plenty of other things to spend his money on. I'm sure we're not going to hear the end of this. Group chat.

TALEV: Tesla needs a rehab.

CORNISH: Yes, exactly. Stay with me. We've got a lot more to talk about.

Ahead on CNN THIS MORNING, eat now, pay later. You can now finance your takeout. What could go wrong?

Plus, graduation day at Harvard. And at the same time, the lawyers are in court, battling it out with the White House.

Here's a live look at Boston this morning.

(COMMERCIAL BREAK)

[06:21:36]

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I have spent $32,196.23 on Affirm and Klarna since 2022, and the big question is, what did I purchase?

All kinds of stuff. I think I've even gotten gift cards for random stuff. You can pretty much purchase anything you want almost on Affirm and Klarna.

(END VIDEO CLIP)

CORNISH: You can, but should you? Buy now, pay later services are more popular than ever. I wanted to dig into this in this week's episode of my podcast, "The Assignment," because this is all coming as household debt is increasing and credit card debt is falling.

In the meantime, you've got past due student loans that are hitting credit reports for the first time in five years. So, those delinquencies saw a big jump in the first quarter of this year.

So, that's why I actually got to talk with Klarna CEO Sebastian Siemiatkowski to get his take on whether the demand for services like this is actually saying something about the state of this economy.

(BEGIN VIDEO CLIP) SEBASTIAN SIEMIATKOWSKI, CEO, KLARNA: I am mostly focusing on what's happening with the jobs, because in the end, it's the jobs that impact whether you can pay off or not. Right?

And if you look at the jobs, I'm concerned that A.I. may start having an impact on the employment rates in the U.S. And the question is how?

CORNISH: Yes. And we should say, you say this as a person who actually tried to do some restructuring where you used more A.I. Rather than workers.

We have also -- like despite like, you know, mixed writings about it. But the truth is, we were 5,500 people about two years ago, and we're 3,000 now. So we are, you know, and we're a significantly bigger business.

So, we have been able to utilize A.I. to become fewer, to do the same amount or even more work. Right. And I think that that is becoming a reality.

And it's different this time around, because maybe, like, as I remember as a kid, when -- you know, when things got worse and in the economy, it would usually hit blue-collar workers. You would hear, like, now they have -- you know, they have let go of like a lot of blue-collar workers. Right? Like that was always the thing. People lost their jobs in the factories.

I think this time around, the risk is that -- and I hear that now as I hear a lot of, like, you know, manufacturing companies announce they're, like -- they're not touching their blue-collar workers.

CORNISH: Yes. Or for the record, the bank, like no one's coming to a bank teller anymore. So, glad I found another line of work.

SIEMIATKOWSKI: Like, all the factory workers are staying, but they are reducing the size of their headquarters, their offices, the knowledge workers. And so, the white-collar jobs are at risk this time around.

(END VIDEOTAPE)

CORNISH: The group chat is back. The reason why I wanted to bring this to you guys is because I have been, like, digging way deep on A.I.

And one of the things people are talking about is where it disrupts the workforce is actually kind of entry-level, low-level. And it feels like the Venn diagram between I have student loans and a low-level white-collar job, and I have thousands of dollars in stacked loans on buy now, pay later services might soon become a circle. And that you have people making their lives work with credit.

TALEV: Yes.

CORNISH: With these tiny micro -- they're not even loans.

TALEV: It's interesting, because I think we've been thinking about this trend with Klarna and with buy now, pay later, BNPL. There's even an acronym for it.

CORNISH: Oh, yes.

TALEV: That's how big it's become.

[06:25:00]

We -- I think we've been thinking about it in terms of the way the current economy feels. What impact are Trump's tariffs going to have? And, you know, what's the -- you know, kind of post-COVID blowback, the economic situation.

CORNISH: Yes.

TALEV: But what he's talking about is actually next wave. It's the thing that hasn't come yet. And -- or the thing that's starting to happen but hasn't really hit us yet.

My colleagues at Axios, Jim VandeHei and Mike Allen, have just been also writing about this this week. The massive hit to entry-level white-collar jobs and how -- whether it could impact the 2028 race.

There is an obvious danger to this, which is that this would be like putting everything on your credit card if you had no ability to pay.

CORNISH: But that's what they say. I mean, the Klarna CEO was, like, look, it's just another credit card option. Do you think it is?

WRIGHT: Well --

CORNISH: Do you have any --

WRIGHT: -- it's higher interest.

CORNISH: -- Klarna, Affirm?

WRIGHT: OK, let me tell you, I have done Klarna, and I -- I'm just going to say don't do it. No, sorry, Mister.

CORNISH: Yes. Well, I mean, he was, like, doing it for essentials is not a great idea.

WRIGHT: It's just -- I mean, who would have thought that people buying Chipotle on Klarna would not be able --

CORNISH: To pay back their loans? But --

WRIGHT: Yes, pay back their loans. I mean, particularly with the interest rates.

I mean, just a personal story. My brother is about to graduate from college, and he's a coder. And my dad, my 70-year-old dad, has been talking my ear off the last two weeks about how he's nervous that my brother won't be able to get an entry level job because --

CORNISH: Yes. Because A.I. can do all the coding. WRIGHT: -- they're embracing code entry-level A.I.'s -- with A.I.

And so, I think it's a real thing that's not just -- we're talking about on this panel. People in the real world are talking about this issue.

But it's also antithesis to what Donald Trump is trying to project, right, with these tariffs. He's talking about reimagining or reconfiguring the way that American manufacturing works.

But is that necessarily the type of changes that the American public wants right now or needs?

CORNISH: Yes.

WRIGHT: I think that's a pivotal (ph) question.

CORNISH: Even as we look at good economic numbers. One of the things I learned in reporting this story was about phantom debt, that BNPL services, they are not licensed banks, that usually -- and as a result, they're not reporting everything.

TALEV: They just got some regulatory relief, too.

CORNISH: From what regulator? I think they were DOGE-ed. So, I don't know who's going to -- who's going to be enforcing that regulation.

Camila, I don't know if this is something you've used, you know about. But kind of how are you thinking about how this -- in terms of our economy?

DECHALUS: I think a lot of when we're talking about the economy and what's going to impact Americans. Credit's one. But Jasmine just mentioned a really great point of just saying -- is this what's coming of them paying their debt?

Also, he's talking about manufacturing jobs. And entry-level jobs are going to be heavily impacted, but it's also looking at the people that are graduating. Like you mentioned, are they going to go in and actually get a job where they can pay off their debt?

And a lot of this, when he's talking about initiatives for education and preparing the next generation to use A.I., it's really putting them in a position that there -- is going to be sustainable.

CORNISH: Yes.

DECHALUS: And that is to think this isn't an A.I. It's just one of those type -- archetypes that is changing, and the evolution of it is changing by the day.

And we're still learning the actual impact of it and how to use it in our systems.

And so, this is something where, too, if we're talking about making jobs -- like Trump has talked a lot about, we're creating more jobs. We're trying to boost this economy.

Talking about a lot of the job loss that could potentially come in the next few years --

CORNISH: Yes.

DECHALUS: -- and potentially impact the next generation.

CORNISH: People are more aware of it.

DECHALUS: That is something to look at.

CORNISH: Yes.

DECHALUS: And how to really prepare them for the next future.

CORNISH: OK, you guys, thank you for talking with me about this, because it's the kind of thing where you do an interview and then you go around to everyone like, oh, my God, did you know about buy now, pay later?

There's new episodes of "The Assignment" every Thursday. If you want to listen to this one, it's out right now.

And still ahead on CNN THIS MORNING, the latest in the trial of Sean "Diddy" Combs. What a celebrity stylist said about the rap mogul's relationship with Cassie Ventura.

Plus, the House passed the president's tax and spending bill. What's actually in it? One congressman learned about part of it after the vote. Going to have more from the group chat.

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