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Connect the World
Trump Defends Tariffs as Global Markets, U.S. Futures Plunge; Markets Plunge with Larger Tariffs to Take Effect Wednesday; Video Showing Final Moments of Gaza Emergency Workers Casts Doubt on Israeli Account of Killings; U.S. Markets Drop at Open Amid Global Trade War, Sell-Offs; Trump Downplays Market Chaos, Says He's Open to Tariff Talks; Trump Tariffs Drive Steep Losses on Global Markets. Aired 9-10a ET
Aired April 07, 2025 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
CHRISTINA MACFARLANE, CNN HOST, CONNECT THE WORLD: The White House Wall Street and the Frankfurt Stock Exchange, three of many places around the
world focused on what's next with Donald Trump's tariffs. It's 09:00 a.m. in Washington and New York, 03:00 p.m. in Frankfurt and 02:00 p.m. in
London. I'm Christina Macfarlane. This is Connect the World.
Also coming up, Benjamin Netanyahu will meet with U.S. President Donald Trump today, following the fatal shooting of a 14-year-old Palestinian
American boy by Israeli forces in the West Bank. And France's Emmanuel Macron, calls for an immediate return to the ceasefire in Gaza, following
talks with Egypt's El Sisi.
And a reminder, if you need it, that the U.S. markets are about to open in 30 minutes from now, stay with us for that. Here is a snapshot of how the
three major indices are looking in the pre-trading hours. Tariff panic, as we know, is spreading across the globe, with markets in a sea of red across
the board, and we are well into the trading day in Europe, with all the major indices showing steep losses.
Right now, Luxembourg EU trade officials are holding their first block wide meeting to hash out a response to the White House's sweeping tariffs. And
moving over to Asia, things are looking even worse. Hong Kong's HANG SENG closing down over 13 percent this is the stock market's worst start to a
presidential term of the United States in modern history.
But Donald Trump is standing behind his decision, claiming in a post today that there is no inflation and that the United States is already pulling in
billions of dollars from his tariffs. The reality is, prices have continued to rise under President Trump, and the tariffs are expected to make it
worse.
Many of the big banks on Wall Street are increasingly worried about an economic downturn. Goldman Sachs has raised its recession odds for the next
12 months to 45 percent and says it will raise that even further if Trump's tariff go into effect this week. The U.S. is set to place a 54 percent levy
on China and a 20 percent levy on the EU on Wednesday. And here's what Mr. Trump had to say about negotiations with Beijing.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: Hundreds of billions of dollars a year we lose with China, and unless we solve that
problem, I'm not going to make a deal. Now I'm willing to deal with China, but they have to solve this surplus.
(END VIDEO CLIP)
MACFARLANE: Well CNN's Melissa Bell is in Paris, and Stephen Collinson is in Washington, D.C. to discuss. Melissa to you, first, we're talking now
how European stocks have opened sharply lower Monday. That's, of course, ahead of that 20 percent tariff kicking in on Wednesday.
We're hearing European leaders this morning are calling for a dialog with Donald Trump, but given what we just heard there from Donald Trump speaking
about Beijing, do we expect Europe are going to get one?
MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, there's so much mixed messaging coming from Washington right on whether that question of
whether there's going to be a window for negotiations or not. And I think Europeans who are meeting this morning in the shape of their trade
ministers in Luxembourg in this emergency meeting to try and figure out how best to respond, are first and foremost insisting on the fact that that's
what they want.
They seek negotiation. They want the conversation, the dialog to begin. And they hope to lead to something enough they say of the shoot, first talk
later, response to tariffs. They're also and I think this is interesting Christina, compared to what happened last week, when there were great deal
threats about what sort of reciprocal tariffs might be brought to bear on the American economy.
But on services, specifically, European trade ministers arriving at that meeting this morning saying, look, that would mark an escalation. We're
looking at goods for now. We're looking at what reciprocal measures might come, but really looking for negotiation ahead of that 20 percent.
Because, as you say, European markets, again, hit really hard this morning. It was a German DAX open, minus 9 percent the FTSE 100 minus 5 percent
really it had been a good five years since any of these indices have fallen that sharply, that early on, Christina.
MACFARLANE: Yes. Stephen to you, I mean, Trump says he's willing to deal with China. But over the weekend, we saw a lot of conflicting messages
coming from Trump's aid as to what the actual strategy was here, and I just want to play a snippet to our viewers now.
(BEGIN VIDEO CLIP)
JAKE TAPPER, CNN HOST: Are these tariffs here to stay as Howard Lutnick and President Trump seem to be suggesting?
BROOKE ROLLINS, U.S. AGRICULTURE SECRETARY: Listen, we've got 50 countries that are burning the phone lines into the White House.
UNIDENTIFIED FEMALE: Is the president considering postponing implementation to negotiate?
HOWARD LUTNICK, U.S. COMMERCE SECRETARY: There is no postponing. They are definitely going to stay in place for days and weeks.
UNIDENTIFIED FEMALE: Is President Trump willing to negotiate, or are these tariffs permanent?
UNIDENTIFIED MALE: Well, I think that's going to be a decision for President Trump.
PETER NAVARRO, WHITE HOUSE SENIOR COUNSELOR: This is not a negotiation. This is a national emergency based on a trade deficit that's gotten out of
control because of cheating. We're always listening. We're always willing to listen. That's what Donald Trump does best.
(END VIDEO CLIP)
MACFARLANE: Stephen, whether this is about bringing jobs back to America or a negotiating tactic, still not clear?
[09:05:00]
STEPHEN COLLINSON, CNN POLITICS SENIOR REPORTER: Yeah, I mean, what you have there is complete incoherence inside the administration, and I think
it speaks to the fact that this decision to impose these tariffs was solely down to one person, and that's Donald Trump, who thinks tariffs are the
most beautiful word in the English language and has long been obsessed with them long before he got into politics.
So, it's a little difficult to work out what the administration's response will be if nations do indeed come to them and say, well, we'd like to
negotiate. Peter Navarro, the Trade Advisor, there has already said that zero tariff rates won't be enough. They want to get rid of currency
barriers and non-tariff issues that thwart trade, that seems like a non- starter.
And to the question of Trump's willingness to negotiate with China, it doesn't seem very much like China is willing to negotiate with him, judging
by the hardened rhetoric coming out of Beijing. I think a lot of this perhaps will defend politically in the United States on if markets continue
to tank.
And when the tariffs come into force later this week, how quickly prices rise to Americans? I was just reading, for example, about how the cost of
an iPhone could go up by 50 percent that kind of thing, I think would really concentrate political pressure on the White House.
MACFARLANE: Yeah, Melissa, we had a significant moment from Elon Musk at over the weekend calling for something particular as regards to Europe.
Just take a listen to this.
(BEGIN VIDEO CLIP)
ELON MUSK, TRUMP PRESIDENTIAL ADVISER: At the end of the day, I hope it is agreed that both Europe and the United States should move, ideally, in my
view, to a zero-tariff situation, effectively creating a free trade zone between Europe and North America, and also more freedom of people to move
between Europe and North America. So that has certainly been my advice to the president.
(END VIDEO CLIP)
MACFARLANE: So, suddenly out of nowhere that is one of Trump's supposedly closest billionaire allies calling for unrestricted trade between the
United States and Europe. How is that being received?
BELL: That's right. And along with that statement that he made to the Italian far right party conference that was meeting over the course the
weekend, we also saw him slam Peter Navarro Donald Trump's Senior Adviser on these matters. So, it's a remarkable about face, it seems.
And in such stark contrast to what the president, he's been so close to over the course the last few months, has had to say, enact on this issue.
And arriving at that conference of trade ministers that I mentioned a moment ago in Luxembourg, was the German Minister who had this to say in
direct response.
(BEGIN VIDEO CLIP)
ROBERT HABECK, GERMAN MINISTER OF ECOMONIC AFFAIRS: I think it's a sign of weakness and maybe of fear, because the acting politics are completely
different. So, if he has something to say, he should go to his president and say, before we're talking about zero tariffs, let's stop the nonsense
you have just -- the mess you have just made in the last week. He now sees that his own companies, but even the economies are going to crumble because
of the mess they have made. So, he's afraid.
(END VIDEO CLIP)
BELL: Now all of those ministers, as I mentioned, meeting to discuss what Europe's response should be. And I think what does seem to be emerging from
Europeans this Monday morning, given all that's happened on the stock market, and we've heard one of those ministers arriving at the meeting
speaking of the $5 trillion that were wiped off the U.S. markets on Thursday and Friday.
Is it essentially a Europeans are adopting a sort of wait and see response. They believe that the pressure that needs to be brought on the American
administration to change its tune may well come from the markets themselves. So, for now, they're taking their time. They're considering
their options.
And they're watching this all unfold with a great deal of fascination, trepidation, but determination to remain united in order to answer to these
tariffs. Should they stay in place, Christina?
MACFARLANE: Yeah. Should they stay in place? Stephen, important to note that Elon Musk actually wasn't the only billionaire. We had Hedge Funds
Manager Bill Ackman coming out to publicly criticize President Trump as well and call for a 90 day pause on tariffs. Are we beginning to see the
start of the sort of billionaire fight back as the tariff reality begins to bite here?
COLLINSON: You're certainly getting more and more reaction from people around Trump, who you might think would have some influence. The problem
here is, I think, two-fold. There is a hope on Capitol Hill, I think among some people in Wall Street, that Trump will return to the transactional
nature that has many people believing that tariffs all along have been leveraged, that he's looking to get deals to bolster his image as a great
businessman.
On the other hand, ever since he was re-elected, there has certainly been a sense that Trump feels he's all powerful, that he's not subject to the
constraints that normal presidents face, even that his survival of an assassination attempt was some kind of divine intervention. He said that
publicly during the campaign and since being inaugurated for a second term.
[09:10:00]
So, it's very difficult to see into his mind. He has created such a position for himself here that to reverse course would require him to climb
down and -- you know he'd need to find some kind of face-saving way of doing that. So, he's in a position throughout American history when
presidents have tried to prove to everyone else who thinks they're wrong that they're right.
You know, Hoover during the Great Depression, Johnson during Vietnam, it's become very painful and bad things have happened, so I think we're in quite
a tenuous position politically here.
MACFARLANE: Yeah, indeed, reversal doesn't sound at all Trump like at all, does it, especially in this moment. Stephen Collinson and Melissa Bell,
appreciate you both. Thank you. Well, our next guest is Leland Miller. He's the CEO and Co-Founder of China Beige Book, International and Economic
Forecasting Firm focused on China. Welcome to you.
I just want to begin by talking about what we've seen in the Asia markets. This morning, Asia stocks experiencing their worst drop in decades. I think
we can have another look at the markets here, the HANG SENG, in particular, the biggest one day drop since 1997 that's down by 13 percent. Can you
explain why that in particular has been that drop has been so dramatic?
LELAND MILLER, CEO, CHINA BEIGE BOOK INTERNATIONAL: Well, if the tariff rates that were announced stay and have become permanent, then it would
restructure the entire global economy and all supply chains as we currently know it. So, I think that the reaction by markets is a reflection the fact
that there's great -- that there's great ambiguity over what Trump wants to do with this plan.
But also, how far he will push it? How much his administration wants to continue to push this, despite financial markets dropping before he starts
switching into to deal making more?
MACFARLANE: We had a bit of a significant moment a few hours ago where JP Morgan's CEO, Jamie Dimon released a statement saying that the risk of
inflation is real. And quote, If the western world's military and economic alliances were to fragment, America itself would inevitably weaken over
time. Do you agree with that assessment that this tariff move could lead the whole -- to the whole world order here being upended?
MILLER: Well look, there are orderly ways to do -- to do two tariffs, and there's fewer orderly ways to do tariffs. I don't think you have to guess
which one this is. What they want -- what the Trump Administration wants, a paradigm shifts on global economic relationships. They want to bring
manufacturing home.
They want to eliminate the trade deficit, both bilaterally, multilateral, because they see it as a national security crisis. The problem is, is that
if you're -- if you don't want prices to rise, if you have to have import substitutability, you have to be looking at which supply chain makes sense
if you want to steer things away from China because you're worried about the China threat.
Then then you have to -- then you have to adjust policy that way. There doesn't seem to be a grand thesis behind what's happening right now, beyond
the fact that tariffs are going to be very, very high, and hopefully everything will come back this way. So, I think that what they have to do
is -- they have to -- they have to have more of a thematic approach this explain what they're trying to do.
We're going to see tariff rates brought down quite substantially from here. The question is, is, how? What is the timeline for doing this? How long
will the Trump Administration hold tight?
MACFARLANE: So, I just have to pick up there, because you said you expect that we are going to see tariffs dropping. So, is it your view that these
initial tariffs are not going to stick, and if they don't, how quickly will markets correct?
MILLER: Well look, I think that people are approaching this too binary. They're either saying we're going to have these enormous tariff rates that
were set extraordinarily and shockingly high in order to allow for negotiation that would still keep them down at a high level, even after the
negotiation.
Or you're going to have Trump said, oops, I made a mistake, and you're going to go back to the status quo ante. Either of those are likely. What
you're going to likely see is, is a move towards foreign countries which have already been contacting us government, saying, we want to negotiate
things down.
They're going to negotiate things down, but they're not going to get rid of terrorists. They're just going to bring them down. Just going to bring them
down from the level they're here. So, what you're going to see over the coming weeks, months could be days, is a -- is a change in in the levels
that we're seeing right now, so that we're bringing the levels down, they're becoming more a little bit more sensical.
But the same time, there will be a new regime based around the fact that they're more tariffs will be placed by the United States and around the
world. So, we're not going back to the old ways, but we're not going to stay here. Very unlikely we stay at these levels.
MACFARLANE: And I just want to get your assessment as we consider those words of Jamie Dimon about the possibility of recession and the idea that
this is going to lead to job losses, because that is the margin on which the Fed will be looking at this and basing any moves, isn't it?
[09:15:00]
MILLER: I think people are looking at the Fed as too important to factor in all this. You know, the issue here, in terms of recession is, even if this
is successful tariff program, you can't bring manufacturing back overnight. So, every if -- even if everything is done, well, you can't bring it back
overnight. Some of us can have to go to Mexico, Canada, because of the -- because of differences in production.
So, there's a -- there's a question that, if you're -- if you're coming up world trade right now, and you're looking down the road, and you're trying
to have a long-term view and bring manufacturing home, I think they do have that long term view. I'm not sure what their short term and medium-term
pain tolerance, though, is in terms of this.
Because you can't just snap your finger and change the global regime. Supply chains have to shift. You know, global trade has to move and so
we're in the position where it can't even move yet, because people aren't sure where the rates are going to settle. So there needs to be a lot more
coming from the administration in order for folks to sort of rejigger themselves to the new regime.
MACFARLANE: Howard Lutnick has been very vocal over the weekend. He brought up one specific example among this long list of tariffs. I just want to
have a listen to what he had to say on CBS.
(BEGIN VIDEO CLIP)
LUTNICK: It's not just tariffs. Like I'll give you an example, like Vietnam said they'd like to be 00 remember, Vietnam sends us $120 billion worth of
goods every year.
UNIDENTIFIED FEMALE: Yes, manufacturing...
LUTNICK: -- we send them about $12 billion wait, we send them $12 billion. So, it's not the tariffs. It has nothing to do with tariffs. If they went
to 00, they would go to 200 billion with us. We need to stop the rip off.
(END VIDEO CLIP)
MACFARLANE: I mean, Vietnam, of course, one of the countries really feeling the pain of these tariffs, as many would say, unfairly so. Can you just
help us explain why the trade deficit between countries like Vietnam, the U.S. are not really easily addressed by tariffs, even steep ones like this.
MILLER: Well, I think Vietnam is a great place to start, because the entire reason that the Vietnam trade deficit is skyrocketed the last few years is
that we put tariffs on China and we --- and we sort of reroute trade through other countries. Part of that was, you know, other folks not want
to produce in China because the tariffs meet the cost of production too high.
Some of it was China rerouting things their own factories, trans-shipment, whatever it might be through Vietnam. So, Vietnam, other countries in
Southeast Asia, became very popular destinations and intermediary points for foreign trade. So, part of the problem with having a tariff shifting
regime is you have to always look out for the trans-shipment angle.
Otherwise, folks will just play whack a mole and find the lowest tariff rate. This is why whatever the current regime, whatever Trump is doing
right now, has to settle in a way that not only does the supply chain settle and you see the certainty you also avoiding trans-shipment from
countries you don't want.
If your process, if your priority, is to make sure that we're not increasing our trade deficit with China, that you have to make sure that
China can't either directly ship or trans-ship through a third-party country. This takes a lot of stage managing and sequencing.
MACFARLANE: All right. Leland Miller, there's a lot to unpack there, but we appreciate your time and your thoughts. Thank you. All right, still to
come, Israel's Prime Minister meets with Donald Trump at the White House today, we'll take a look at what's up for discussion.
(COMMERCIAL BREAK)
[09:20:00]
MACFARLANE: We are watching the White House for you this hour ahead of a meeting between President Donald Trump and Israeli Prime Minister Benjamin
Netanyahu. It's Mr. Trump's first in person visit from a foreign leader since his announcement of tariffs last week. The U.S. slapped Israel with
17 percent tariffs, but a senior adviser has told CNN that a bespoke trade deal between the countries may be on the cards.
Well CNN's Jeremy Diamond is following that trip and other developments for us this hour. And Jeremy, there have been some analysts saying that if this
trip was just about trade negotiations, you know, Benjamin Netanyahu could have picked up the phone and had a conversation that way. So, what else are
we expecting the two leaders to be talking about on this trip?
JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Well, certainly a lot more. But do not mistake the real substance, but also the theatrics of the
Israeli Prime Minister going to the White House to negotiate directly with President Trump over these tariffs, and doing so in quite a deferential
manner.
That not only highlights the fact that the prime minister, you know, recognizes the seriousness of these tariffs. The United States is Israel's
largest trading partner, but also shows the special relationship that he wants to highlight, between the U.S. and Israel, and between himself and
President Trump.
Pointing to the fact that he is the first foreign leader of all of the countries that have had tariffs slapped on them in the last week to
actually get the chance to meet face to face with President Trump and try and negotiate these tariffs away directly. But as you note, there are a
number of other agenda items that will certainly be a key part of this meeting.
There is, of course, the war in Gaza and the fate of the 59 hostages who still remain in the Gaza Strip. We know, of course, that the families of
many of these hostages, and former hostages who were released and held alongside those who still remain, have made direct appeals to President
Trump for the release of those hostages.
They believe that he holds the keys, and so it will be interesting to see whether he pressures the Israeli Prime Minister to bend his position to
agree to a new ceasefire with Hamas that would secure the release of at least some of those hostages.
We know that the Israeli government, the Israeli military, as it's been ramping up its attacks in Gaza from the air and on the ground, has
certainly been enjoying a lot more support, a lot fewer guardrails from the Trump Administration than it did from the Biden Administration.
But beyond that, there are questions about kind of strategic approaches between Israel and the United States over the Iranian nuclear threat as the
Israeli Prime Minister and certainly as President Trump sees it, what we've seen in recent weeks is that President Trump has kind of opened the door to
diplomacy with Iran, to direct negotiations, to ending Iran's nuclear program, while also making clear that more forceful kinetic options, in
terms of military options, are also very much on the table.
And certainly, that has been a top priority for the Israeli Prime Minister in decades. So, you can make no mistake that they will be discussing that
as well as a few other issues as well.
MACFARLANE: And Jeremy, over the weekend, a video emerged, which appeared to cast doubt on Israel's claims about an incident where Israeli troops
shot and killed Palestinian emergency workers. What's the latest wearing on that?
DIAMOND: Yeah, that's right. This is relating to an incident that actually took place on March 23, a week after that incident, the United Nations and
Palestine Red Crescent Society recovered the bodies of 15 paramedics and Civil Defense responders in a shallow grave that we later learned had
indeed been dug by Israeli troops who had killed those workers in this attack.
The Israeli military acknowledged its responsibility for the attack, but it initially claimed that this convoy of ambulances was traveling
suspiciously, that they were doing so without any lights on. And then over the weekend, we saw this video emerge, showing very clearly that these
ambulances and one fire truck were indeed moving together as a convoy with, you know, brightly lit emergency signals on.
And moments as after they arrived to the scene of another ambulance that the Palestine Red Crescent Society says had come under fire, did they
themselves also come under fire from the Israeli military.
[09:25:00]
And that video, of course, directly contradicted previous claims by the Israeli military, it prompted a kind of renewed investigative effort
internally in the military to look into this attack. So far, the Israeli military has acknowledged that its previous account of those lights being
on was erroneous.
But what they haven't done yet Israeli acknowledged any kind of wrongdoing in this incident. They are continuing to insist that several of the
paramedics who were in those vehicles were in fact, Hamas members, but they have provided absolutely no evidence to back up that claim.
The Palestine Red Crescent Society just held a press conference in the last couple of hours and called for an independent investigation into this
incident. There is no indication that Israel will agree to that. What we do understand is happening is that all of their internal investigative facts
are being presented to the Israeli military's Chief of Staff, and we are now waiting for the results of that investigation to be released.
MACFARLANE: We're also following a developing story about a Palestinian- American teen who was shot dead by Israeli soldiers in the West Bank and two other Palestinian American teenagers injured as well. Talk to us more
about what you're learning on that, Jeremy.
DIAMOND: Yeah, that's right. Last night, Israeli soldiers killed a 14-year- old Palestinian-American in the occupied West Bank. The Israeli military claims that the boy was throwing stones at cars that were passing by. They
did release a black and white, quite blurry video that shows three figures that were one of whom you can see kind of doing a throwing motion.
It's not clear what he is throwing or what he is throwing it at, and then very shortly after, kind of falls backward, which could be the moment that
he was shot by Israeli forces. There were actually two other Palestinian- American boys, 14 and 15 years old, who were also injured in this incident.
It is not the first time that we have seen Palestinians with American citizenship shot or attacked by Israeli soldiers or settlers in the
occupied West Bank. Notably, this incident came hours before the Israeli Prime Minister landed in Washington.
But as I mentioned before, the Trump Administration has really been taking a very different tack, whereas previously, you might have heard some kind
of official statement, words of protest from the Biden Administration, words of concern, at least for this incident.
We have seen nothing of the kind from the Trump Administration so far, and no indication that it's something President Trump will bring up in his
meeting with the Israeli Prime Minister.
MACFARLANE: All right. Jeremy Diamond, there from Tel Aviv. Appreciate it. Jamie, thank you. Well Prime Minister Netanyahu is in D.C. French President
Emmanuel Macron is in Cairo, making it clear he is not on the same page with the U.S. and Israel on Gaza.
(BEGIN VIDEO CLIP)
EMMANUEL MACRON, FRENCH PRESIDENT: We firmly oppose the displacement of populations and any annexation of Gaza or the West Bank. This would be a
violation of international law and a serious threat to the security of the entire region, including that of Israel. I also reiterate my full support
of the reconstruction plan for Gaza.
(END VIDEO CLIP)
MACFARLANE: Well Mr. Macron also called for the immediate return to a ceasefire in Gaza. Those discussions continuing in Cairo, with the Egyptian
President Abdel Fattah El-Sisi and Jordan's King Abdullah sitting down for a trilateral summit on Gaza. At least one rocket hit the southern Israeli
City of Ashkelon, Sunday.
It comes after Hamas launched its largest barrage of rockets since Israel renewed its offensive in Gaza last month. The Israeli military says 5 of 10
rockets were intercepted. Israel says it has struck the rocket launcher used by Hamas for the attack, and then it will again ramp up its military
operations in Gaza in response. OK. Still ahead, U.S. Markets open in just a few minutes as global turmoil spreads in response to Trump's tariffs.
(COMMERCIAL BREAK)
[09:30:00]
MACFARLANE: Tariff turmoil is spreading all major U.S. indices opening lower this hour. This is the stock market's worst start to a presidential
term in the United States in modern history, and many of Wall Street's biggest banks are increasingly worried about an economic recession.
CNN's Matt Egan is in New York, and Anna Stewart is joining me here in London. Anna, just, first of all, talk us through the numbers we're seeing
here as the markets open.
ANNA STEWART, CNN CORRESPONDENT: We are getting the market data in now, and is taking time to refresh. Looking at futures, we were looking at markets
being down anywhere between sort of 3 and 4 percent. This is after trillions of dollars were wiped off markets last week on Thursday and
Friday.
Looking at the DOW, I believe we're starting to see the beginning of trade here with the numbers beginning to move, you're looking at the DOW, the
NASDAQ, the S&P, or significantly lower. The S&P not quite in what we would term bear market territory yet, but it's looking pretty, close. And as you
know, there's a lot of confusion with some of the terminology.
MACFARLANE: Well, I was going to ask you about bear market. For those of us who are uninitiated in the world of finance. Just talk, walk us through
what that is and how close we are to that point?
STEWART: You and our viewers will hear a lot of terms like correction, bear markets, and also terms like crashing, plunging, nose diving.
MACFARLANE: Yeah.
STEWART: There is sort of different metrics for all of these things. Bear market territory is when an index falls 20 percent from a recent high. And
we say bear market territory when it enters into that and if the market closes at that point, then you're in a bear market. That's the simplest
definition I can give.
MACFARLANE: OK, we will wait to see if we get there. Matt, talk to us about how American businesses have been responding to market. Well, we're not
calling it crashes. Are we calling it meltdowns that we're seeing globally.
MATT EGAN, CNN REPORTER: Yeah, well, look, there's a lot of fear in financial markets around the world, including here in New York, and you
guys are talking about a bear market. Just to give you some context here, even though we're not quite at a bear market yet, should the S&P 500 close
in a bear market today?
This would be the second fastest bear market in history, second only to the COVID crash in 2020 and surpassing even the 1987 market meltdown. So just
to give you some perspective here. And look, make no mistake, this is all about the president's decision to skyrocket tariffs to levels that we have
not seen in more than a century.
This is causing so much fear and anxiety among investors, but yes, also among business owners and CEOs. We're hearing from more and more business
leaders speak up, some of whom have been relatively quiet up until now. A JP Morgan CEO, Jamie Dimon, he said in a shareholder letter that came out
this morning that, yeah, tariffs, they could cause inflation.
And he said whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth. And he also said America First
is fine, as long as it doesn't end up being America alone.
[09:35:00]
Some economists are even invoking Smoot-Hawley, which is that infamous 1930 law that sent tariffs skyrocketing and made the great depression worse than
it had to be. Take a listen to Former St. Louis Fed President Jim Bullard on CNBC this morning. OK, well, he went on to say that there is a risk,
because of tariffs, that there's going to be a repeat of Smoot-Hawley, where global trade grinds to halt.
And he noted again that Smoot-Hawley made the great depression worse than it had to be. Another really important voice to take a listen to from this
morning was actually out on social media. That's Bill Ackman, the billionaire hedge fund supporter of President Trump. He is basically
pleading with the president to hit the pause button on this trade war.
And he said that if that doesn't happen, we are headed for a self-induced economic nuclear winter, and we should start hunkering down, and perhaps
we'll find out in the next few hours and days whether or not the president is going to heed these warnings from business leaders. Back to you.
MACFARLANE: Yeah, Anna, really important to kind of note these business leaders, CEO Jamie Dimon, coming out this morning and with the warning of
fears of recession. I mean, how do the markets react when they know that, that is on the horizon? What is the outlook currently for recession? Do we
have any kind of any figures on the -- possibility --
STEWART: Absolutely. I mean, the liability, the possibility, is increasing g day by day. I think as banks and economists are trying to take into
account what they're seeing on the markets, but also the policy uncertainty that we're seeing. I mean, Goldman, Sachs has increased the possibility of
a U.S. recession to 45 percent over the next 12 months, from 35 percent that's the most recent forecast we've had.
But also, over the weekend, there were hopes from some investors that perhaps would see some negotiations, perhaps we'd see some pulling back or
pausing of some of the tariffs, given the market route we saw, Thursday, Friday, and they didn't get that. That did, that was not delivered, and
that is why we have started the week with such steep declines, particularly in Asia.
Just want to show you the HANG SENG, which, frankly, nosedive down more than 13 percent in the trading session. All the Asian markets down. Europe
has followed the -- in Germany was down more than 10 percent when it opened. Now looking at 4, 5 percent. Significant losses at this stage, hard
to find any bright spots.
MACFARLANE: The likes of which we haven't seen what since COVID --
STEWART: I was trying to think about this in my head, because you can compare day to day and some of the losses, but then when you see a few days
start to stack up. For me, this is reminding me of maybe 2020, sort of pandemic era.
MACFARLANE: Yeah.
STEWART: But we'll have to wait and see. The question is, if nothing changes, these tariffs are in place, if we see retaliation for Europe and
this gets worse, then we could be looking at a market crash.
MACFARLANE: And Matt, certainly in the historical context of presidential terms. I mean, we were just saying that this is the worst start to a
presidential term in modern history. Talk to us about where we are at the precedent this says.
EGAN: Yeah, it's been an atrocious start for the market during this Trump Administration. RBC Capital ran the numbers, and they found that the S&P
500 is down the most during the Trump second term, that it has ever been for any presidential term at this point. So worst start for the market to a
presidential term in modern history since the S&P 500 launched back in the 1950s.
It's really staggering, especially when you recall how often and how much the president looked at the stock market as sort of a real time barometer
of his own success during his first term. However, President Trump and his officials, they've signaled that they are willing to stomach a lot more
financial pain than they were during his first term, right?
I mean, clearly that has already been demonstrated by the fact that the president continues to go forward with these tariffs, despite the message
from the market, and the message from the market is stop the tariffs. Don't do this. It could really end badly. But I do think it's just important to
remember that although the stock market is not the economy, and the Main Street and Wall Street are different.
They are still linked together. I mean, a lot of everyday Americans own stocks. And a lot of CEOs are going to take their cues from what the market
is saying. And so, it's easy to see how business leaders who are worried about the fact that the value of their companies just collapsed by 20 or 30
percent.
Some of them are going to stop hiring. Some of them may actually decide to start laying workers off. And the same thing with consumers, right? I mean,
if you're looking at your 401 K, your investment portfolio, and it's down by 16 to 20 percent, maybe you're not going to book that vacation or buy
that next car.
And so, there is a risk that some of this becomes a self-fulfilling prophecy, and that's why, hopefully we're going to start to see markets
stabilize soon, but not so much at this point with the S&P down by 4 percent and the DOW off by 1400 points, almost 4 percent on the day.
Christina.
[09:40:00]
MACFARLANE: Yeah. And as you're speaking the markets, they're fluctuating down somewhat. Will, of course, wait to see how these numbers, what these
numbers do in the in the hours ahead, given what we've seen of falls in the Asia and European markets. But for now, Matt Egan, Anna Stewart here in
London. Thank you.
All right. Still to come, President Trump says he's been taking calls from world leaders who want to negotiate their country's tariffs that while
these top officials are sending mixed messages about any tariff, talks. More in a live report straight ahead.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
TRUMP: I've spoken to many countries, they all wanted to just understand the power of what I'm doing. Every country is calling and being very
solicitous of us, very, very nice. We're going to have surpluses, or we're, at worst, going to be breaking even.
(END VIDEO CLIP)
MACFARLANE: That was President Donald Trump returning to Washington Sunday night ahead of the opening of the global markets today. President Trump
added that the U.S. economy has gotten a lot stronger as a result of his reciprocal tariffs. And while he contends, he's open to negotiating with
countries.
His team have been sending out mixed messages on Sunday about whether he is open to that. Well CNN's Alayna Treene is joining us now from the White
House. Alayna, so talk to us about this mixed messaging that we heard over the weekend. What are you hearing? Any clarification this morning?
ALAYNA TREENE, CNN WHITE HOUSE REPORTER: Well, we actually just heard recently from President Donald Trump himself. He's been posting online to
his website, Truth Social this morning, one message, he says he tells Americans to don't be weak, don't be stupid, don't be a panic.
And he says that would be a new party based on weak and stupid people. So obviously, in that post, trying to tell people to calm down about these
tariffs. And then in another post, he said that countries from all over the world are talking to us. He said, quote, spoke to the Japanese Prime
Minister this morning.
He is sending a top team to negotiate. I just spoke with two White House officials who confirmed that the president spoke with Japanese Prime
Minister Shigeru Ishiba this morning. But look, I think the messaging from the White House, yes, it has been missed messaging, but I think two things
can be true at the same time, Christina.
One is that, there is no question that the president himself is committed to these tariffs. The goal here is not necessarily to make some short-term
wins that he can put on the board with other countries, but to really have this longer-term policy of breaking and then reordering the way that trade
is done globally.
However, there is also these talks behind the scenes here about how they do need to give Americans some sort of hope, particularly as we're continuing
to see the markets go down. People's 401(k)s are shrinking. There are major concerns going on. And so that's why you're starting to hear a lot of the
top economic advisors, kind of do this tour to try and explain the thinking behind a lot of this.
[09:45:00]
MACFARLANE: There's also some indication that there's a change of mood in Washington as well. Here's what some Republicans are saying about Trump's
so called reciprocal tariffs. Have a listen if you can.
(BEGIN VIDEO CLIP)
SEN. TED CRUZ (R-TX): If the result is our trading partners jack up their tariffs and we have high tariffs everywhere. I think that is a bad outcome
for America. Tariffs are a tax on consumers.
SEN. RAND PAUL (R-KY): Let's be very clear. Tariffs are simply taxes. Tariffs don't punish foreign governments. They punish American families.
SEN. THOM TILLIS (R-NC): Anyone who says there may be a little bit of pain before we get things right, need to talk about farmers who are one crop
away from bankruptcy.
(END VIDEO CLIP)
MACFARLANE: Republicans beginning to speak out more vocally and openly there about their feelings. Is Trump in danger of losing some of his
political capital over this, Alayna?
TREENE: I think for sure. I think there's definitely a danger of that. I think the question is if it would happen so immediately. Look, I think a
lot of Republicans, particularly those closest to the president, those who have been fierce defenders of him in the past, they are trying to be
patient.
They are telling people to be patient and saying, let's see how this all works out. But increasingly, as we're seeing again, we just saw the markets
open the United States, they're down again today, again 401(k)s shrinking. People very much concerned about their retirements, about their wallets.
I mean, there's only, I think, so much time a lot of these people will take before they you know, they're hearing from their constituents, these
Republican senators and congressmen. They just came back from a weekend at home in their district. So, it would be interesting to see whether or not
that rhetoric changes even further today when they are on Capitol Hill.
But again, I think there's this mix between wanting to wait and see what happens, see if the president is able to at least in the near term,
negotiate some sort of deal that would perhaps make them feel a little bit easier, or they are really going to dig in on this and have this be a much
longer-term thing.
As we are hearing many of his top economic advisers say it will be, then we could probably hear more of those concerns echoed more publicly and more
forcefully, Christina.
MACFARLANE: All right, we will wait and see. Thank you for now, Alayna Treene at the White House. And today is the deadline for the Trump
Administration to return a man who was mistakenly deported to a prison in El Salvador. Kilmar Abrego Garcia was deported last month in what ICE calls
an error. CNN's Priscilla Alvarez has the details.
PRISCILLA ALVAREZ, CNN CORRESPONDENT: That is an argument that they have maintained over the course of this case, saying that they have no control
over him because he is in Salvador in custody. It's true for him, as well as the other migrants that they said to this notorious prison last month.
But a federal judge disagrees. She says that it is because, quote, their lack of desire. The key point in this case that is unique is that not only
did they deport someone. They deported someone to El Salvador. When an immigration judge in 2019 said that couldn't be the case while he was
removable from the United States.
He just couldn't be sent to that country for fear of persecution. And that is exactly what happened here, and it is an error that the administration
has conceded to. Another part of this is that there is very little evidence in this case. The federal judge asking for this repeatedly during the
hearing on Friday and going on to reaffirm the fact that there was little evidence, in additional writings this weekend.
She said this, quote, that silence is telling that in regards to the lack of evidence, as defendants acknowledged they had no legal authority to
arrest him, no justification to detain him, and no grounds to send him to El Salvador, let alone deliver him into one of the most dangerous prisons
in the Western Hemisphere.
So, she gave the government until 11:59 p.m. today to return Kilmar Abrego Garcia. Now this is still sitting before an appeals court. The federal
government had asked that the appeals court rule by 05:00 p.m. yesterday. That deadline has come and gone. That doesn't mean that they cannot weigh
in on this case, but as things are this morning, the government is in a position where they would have to return him by the end of the day.
We'll be monitoring this closely, but certainly a case that his family is desperate to get additional answers to.
MACFARLANE: All right, still to come, global markets react in panic to Donald Trump's trade wars. We'll take a look at the worst hit stocks.
(COMMERCIAL BREAK)
[09:50:00]
MACFARLANE: After closing last night with two straight massive sell offs, U.S. stocks are still down sharply. Just have a look at those numbers. The
down the NASDAQ, 500 all down by under 3 percent billionaire Hedge Fund Manager and Trump Supporter Bill Ackman, is now leading Wall Street's
backlash to the tariffs, saying, quote, this is not what we voted for, and calling Donald Trump's tariff plan a self-induced economic nuclear winter.
Well joining me now is Chief Data Analyst Harry Enten. And Harry, we are seeing in the polling now that resistance President Trump is starting to
look like what we saw in term one, I guess.
HARRY ENTEN, CNN CHIEF DATA ANALYST: Yeah, I just have to ask Bill Ackman like, have you ever followed Donald Trump ever? He has been for tariffs for
longer than I've been alive. I don't really understand this wasn't what we voted for. If you listen to Donald Trump, I think that you would have the
opposite opinion.
But look, I think there is no doubt about it that there's definitely been a backlash to Donald Trump, certainly on the economy. You know, we can see it
pretty well here. You know, you mentioned term one. And if you're looking at the economic metrics and how people are feeling about Donald Trump, it's
actually far worse than it was in term one at this point.
So, this is Trump's net approval rating on the economy. You know, in April of 2017, he was at +5 points. He was above water. Look at where he is now.
In April of 2025, way underwater. He is swimming with the fishes. He is at -12 points. My goodness, gracious. You go back through history.
That is the worst for a president at this point in their term, in their presidency, on record at -12 points, and it just took them. What is it,
less than -- a little less than three months to get there. And of course, a big reason why we're seeing this distrust of Donald Trump on the economy
has to do with the markets.
And you know, you talk with Matt Egan, earlier about this, I just think it's worth reemphasizing just how unique this current situation is. So, S&P
500 I've been looking at all the presidents seeing if there was a drop of at least 15 percent to this point in their presidency.
And guess what, if we look at the S&P 500 since 1957, Donald Trump is the only one to see a drop of at least 15 points after inheriting a bull
market. Remember, the market was gaining under Joe Biden, there was a gain of over 20 percent in 2024, but Donald Trump already is seeing, you know,
we're watching the market right now is 15 percent drop when the markets open at 09:30.
I think it's closer to about, let's just say an 18 percent drop on total right now. And of course, George W. Bush had a similar drop at this point,
his presidency in 2001, but Bush, of course, inherited what was a market in decline. This was a market going up, and yet Donald Trump completely turned
around.
Of course, the big question -- the big question is, will this hit the larger economy, right? This is the market is what happens on Wall Street,
affect Main Street. I would argue, yes, regardless, because 62 percent of Americans own stock. But more than that, look at the chance of a recession.
Look at these forecasts from JP Morgan and Goldman Sachs. In early March, it was 40 percent according to JP Morgan, 20 percent according to Goldman
Sachs. Look at where we are now, 60 percent according to JP Morgan, and get this 45 percent according to Goldman Sachs.
That figure is up even within the last 24 hours, it jumped from 35 percent to 45 percent. And this, I think, is the big worrisome thing, because it's
one thing for something to happen down in the lower part of Manhattan. It's another thing when it hits the broader part of the economy.
And this is, I think a lot of folks are worried about, in this particular point, the chance of a recession here in the United States. It's looking at
best, like 50, 50, uh oh, we better buckle down the hatches, because at this particular point it's not looking so hot.
MACFARLANE: Yeah, those are definitely not good odds.
ENTEN: Yeah.
[09:55:00]
MACFARLANE: And we'll wait to see when this all bites the consumer's pockets, what it looks like for Donald Trump as well.
ENTEN: Yes.
MACFARLANE: Harry for now. Appreciate it. Thank you.
ENTEN: Thank you.
MACFARLANE: Well U.S. coffee shops are bracing for impact as foreign coffee producers grapple with these tariffs, and it's also going to affect lots of
Americans. The average person drinks 3 cups a day, or me 5 cups a day. That's 400 million cups a day nationwide, and 73 percent of Americans drink
coffee every day.
So just to underscore the point, here's how Starbucks is trading this hour, almost down by 5 percent they're worth noting that this might not be all
the fault of tariffs. Starbucks have been struggling bringing back handwritten names on cups to reconnect with customers and laying off 1000
corporate employees back in February.
Still more expensive coffee beans, isn't going to help, is it? We'll have a lot more on market reaction to bring you in the next hour of "Connect the
World". Stay with us. We'll be back after a quick break.
(COMMERCIAL BREAK)
END
