Return to Transcripts main page
Erin Burnett Outfront
Trump Says He Is "Okay" With A Short-Term U.S. Recession; Judge: Trump's Targeting Of Elite Law Firm In Unconstitutional; Musk's SpaceX Hub Could Become An Official Town Called "Starbase". Aired 7-8p ET
Aired May 02, 2025 - 19:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[19:00:23]
ERIN BURNETT, CNN HOST: OUTFRONT next:
Breaking news, Trump says it's okay for the country to have a short recession. A statement from the president of the United States moments ago, as an entire industry in the U.S. is sounding an alarm about an economic emergency this hour.
Plus, breaking news, a federal judge handing Trump a huge loss tonight. This is on the issue of targeting law firms. This ruling says is targeting of one of them is unconstitutional.
And the town of Elon Musk. The Tesla CEO could be hours away from taking over a small town in Texas.
Let's go OUTFRONT.
And good evening. I'm Erin Burnett on this Friday.
OUTFRONT tonight, the breaking news Trump just telling NBC News that it's okay if America enters a short recession thanks to his trade war.
(BEGIN VIDEO CLIP)
KRISTEN WELKER, NBC NEWS ANCHOR: Are you comfortable with the country potentially dipping into a recession for a period of time, if you are able to achieve your long term goals?
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Well, you know, you say some people on Wall Street say, well, I tell you something else. Some people on wall street say that were going to have the greatest economy in history. Why don't you talk about them? Because some people on Wall Street say, this is --
WELKER: Well, that's what I'm getting at. Thats what I'm getting at, though. It's the same question. Yeah.
TRUMP: There are many people on Wall Street say this is going to be the greatest windfall ever happened.
WELKER: And that's my question. Long term, is it okay in the short term to have a recession? TRUMP: Look, yeah, everything's okay. What we are -- I said this is a
transition period. I think we're going to do fantastically.
(END VIDEO CLIP)
BURNETT: Of course, Trump has promised an economic boom on day one. As for windfall from those tariffs, if that's what he's referring to. That's not something people on Wall Street have thought about, at least in terms of a windfall, his word.
It all comes as one of the nation's biggest industries tonight is sounding the alarm, warning that hundreds of businesses are shuttering and tens of thousands of jobs will be gone with empty store shelves because of Trump's trade war. That is not just a minor recession. It is the warning tonight from the footwear industry.
They have just written a letter to Trump in which they write, if the current situation continues, American footwear workers and consumers will suffer. This is an emergency that requires immediate action and attention. That's a dire warning. And yet, as of tonight, there is no word of any trade deals so far, despite the promises that we have heard repeatedly in recent days.
(BEGIN VIDEO CLIP)
TRUMP: I think well have a deal with India.
SCOTT BESSENT, TREASURY SECRETARY: I would guess that India would be one of the first trade deals we would sign. So, watch this space.
KEVIN HASSETT, WHITE HOUSE NATIONAL; ECONOMIC COUNCIL DIRECTOR: I think it's more than 20 now where we actually have hard offers on the table. I'm sure there will be news by the end of the day.
(END VIDEO CLIP)
BURNETT: Now that end of the day, as Hassett was referring to, that was yesterday. Bessent's watch this space was on Monday. Trump said there would be a deal with India on Tuesday. And then of course there was, the deal is done already as I speak. Done, done, done, done. That was Howard Lutnick. That was also earlier this week.
So far, you know, wherever the deal is, it hasn't happened yet. And if you listen to Trump, it does not seem that he's in a rush to make a deal. He tells "The Atlantic", quote, I have a lot of negotiations going on, but I don't have to. I do that because I want to see how they're feeling.
Of course, the reality is Trump needs these deals. He needs them desperately because Americas greatest companies are concerned, because Americas consumers are concerned.
And OUTFRONT financial analysts, you know him from Bespoke Investments, Paul Hickey. He went through the number of companies that so far and their earnings calls. Theres been a lot of them have mentioned the word "recession". And he said, well, he got to way more than 44, which was the number in "The Financial Times" earlier this week. These major concerns are coming as we're getting our first look at Trump's budget blueprint, which is a big headline today, a proposal that contains $163 billion in cuts.
Now of course, in theory, cuts may be a good thing for the United States, which is a country that lives well beyond its means. The U.S. national debt right now is $36.8 trillion. It is growing by the second. Anyone familiar with this topic knows the website that I just put up there.
We can all agree that this is a problem, or we should be all able to agree on that. But to be clear, Trump has been the biggest single driver of that particular problem in two terms. Obama ran up national debt by $9.3 trillion. Thats slightly more. Slightly more than what Trump did in four years. So, we did slightly more in eight of what Trump did in four. Trump's debt went up $7.8 trillion.
And on the show, if you've been a regular viewer, God knows there are a few of you, perhaps, who go back this long. You know that we have been focused, rather obsessed with Americas debt problem since the day we launched with, which was October 3rd, 2011. Actually, for years, every single day in the show, we asked a question.
(BEGIN VIDEO CLIP)
BURNETT: It has been 59 days since the U.S. lost its top credit rating.
[19:05:00]
What are we doing to get it back?
It has been 76 days since the U.S. lost its top credit rating.
It has been 137 days, 150 days, 209 days, 120, 137 days, 175, 567 days, 652 days, 697, 765 days since the U.S. lost its top credit rating.
(END VIDEO CLIP)
BURNETT: Well, it has now been 5,019 days since America lost its top credit rating, and things have gotten a hell of a lot worse.
Now, now, Trump is in this deficit, this debt. Sorry, a slip of the tongue there, increasing defense spending by 13 percent. So that's going up to more than $1 trillion, which is about the same amount that he's cutting from the difference there, the delta, is the same amount he's cutting from child support, education and housing assistance.
So overall, the debt situation is bad. It remains bad. And Trump's budget plans comes as he has slashed 280,000 jobs. And of course, is in the middle of a historically unprecedented trade war.
And those things are part of why consumer expectations of the future are currently at a 13-year low. But while regular American families are anxious about prices surging and jobs falling, there is at least one family that has no reason for such anxiety. That is Trump's.
This is the headline on the conservative website "Drudge," 100 days of presidential profit. In fact, Forbes estimated that Trump was worth an estimated $2.3 billion last year. Now they estimate he's worth $5 billion. I mean, that is really incredible. His wealth is more than doubled. His wealth is more than double. How many people can say such a thing?
Well, how is that happened? Is it because he's been president? Well, so far, you know, Trump has been selling MAGA merchandise. His family has. He's the chief crypto advocate for Trump backed crypto venture that's called World Liberty Financial. He's got his own meme coin.
There's a new club, by the way, in Washington, D.C., club that Don Jr. started called the executive branch. If you want to be in his -- his club, his group, you got to pay $500,000 for a membership fee. And there are corporate boards that Trump's kids have joined, all of which pay plenty of money to show up a couple times a year. They're extremely lucrative foreign deals.
Just days ago, remember eric Trump and the son of special envoy Steve Witkoff announced a $2 billion deal in Dubai, and Trump is making his first official state visit to Saudi Arabia, the same country that invested $2 billion into his son in law's equity firm, Jared Kushner.
Jeff Zeleny begins our coverage OUTFRONT live outside the White House.
And, Jeff, we just heard the president talking about the economy in this new interview with NBC, pushing back on fears of a recession. What -- what is the thinking in the White House right now on the economic scenario as we enter another weekend where they've said there would be multiple trade deals and we do not yet have one?
JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: Erin, one word I heard there from the president, it's something we've been hearing really all week, a transition were in a transition period. The economy is going to be in a transition period. That was not a word that was used when Donald Trump was running for office. There was no mention of a transition period through his tariff policies, essentially a hold on.
So, I thought that was interesting. It's something we have really heard him say repeatedly. But you're right, at the end of this day here at the end of this week here, we've heard much talk about how the president wants his advisers to reach some type of a trade deal. There has not been one announced.
Erin. It was very silent around here today at the White House. The president was spending the day at his Mar-a-Lago resort. He has a Republican fundraising dinner this weekend. He will be returning here on Sunday, but we will see if a trade deal comes next week.
But as of now, there have not been any. The question is, why are they not finished? Are the partners not negotiating?
But the bottom line of this, the president said he would lower prices. Now he is essentially, and he did again in the interview, urging people that the prices may go up a bit, even a recession potentially.
So, the White House is -- was thrilled to see the jobs numbers today hold steady. The president once again called for the federal reserve to lower interest rates. They meet next week. No signs that they will do that. But again, calling for a transition period, not something he did when he sought the office -- Erin.
BURNETT: No, no. And he said, of course it would begin the day, the day that he took office.
Thanks very much, Jeff Zeleny, at the White House.
Everyone is here with me now.
So, dan, you know, you hear Trump. He was saying that, obviously he's saying you would accept a small recession in the short term because it's worth it in the long term. But then he talked about all these people on Wall Street. He said who thinks that what he's doing is great and that its going to bring in a windfall.
DAN IVES, GLOBAL HEAD OF TECHNOLOGY RESEARCH, WEDBUSH SECURITIES: (INAUDIBLE), 25 years on -- on the street, there's no one out there that would view this policy as bullish. And the reality is, and talk more, talk about it is that the markets been up because Wall Street knows they're going to have to ultimately take steps back, get deals done. And no one wants a recession. And you look at --
BURNETT: And they assume he doesn't either except for he just said he's okay with a small one.
IVES: And again, him saying that, and the reality because the worst thing you ever want is stagflation. And that's why the market is telling Trump and telling all the advisers, whether its India, you got to get deals on the table now. Otherwise, markets are going to lose patience.
BURNETT: Windfall.
[19:10:01]
PETER TUCHMAN, TRADER AT THE NEW YORK STOCK EXCHANGE: You know, you know it's baffling. I'm sitting there trading the market every day. Weve had nine days of an incredibly bullish market, right? Advances versus declines have been up. And we are -- we've regained all -- not all, we've regained some numbers.
BURNETT: Yes.
TUCHMAN: Since. You know everybody keeps saying that we've regained all the numbers since liberation day. It's not true.
There are -- we -- so much of, first of all, confidence hasn't been eaten away. There are a lot of stocks that are not up the exact same amount as the -- as the indices are up. Right. Thats clear. Right. Some of the bigger names even in tech. Okay. My gut is and I'm trying to make sense of this on a day-to-day
basis when you've got strong market 90 handles on the S&P, 700, 800 points on the Dow. And you're seeing a broad-based rally. And it's baffling to me that we are here. But my only the only way I could interpret it is that the Wall Street is a leading indicator.
BURNETT: Well, because they think that he is going to back off and end this because it's not good for the economy.
TUCHMAN: But it's a game of poker.
BURNETT: Right, yeah.
TUCHMAN: Yeah, yeah. But I'm hoping, you know, you'll often see the market and the economy go in concert. Sometimes they diverge and sometimes Wall Street is what takes us out of this stuff. And my hope is that this rally we're seeing is what pulls us out.
RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: That works if it's the wealth effect, if you get more, if people's wealth, they see their stock market, they see their portfolio goes up.
Therefore, they feel wealthier. And as they feel wealthier, they go into a consumer spending. The problem in this case is that absent the market gains, there's nothing else there underpinning it. It's a hope and a prayer that's really --
(CROSSTALK)
TUCHMAN: The mainstream America is not making money in the market. And if you're not in the market that way.
QUEST: If you look at, let me just give the president the benefit of the doubt. If you talk about a transitional period, yes, Reagan had a had a recession in '81, '82. Thatcher had a recession in the first few years, but they had solid economic policies based on monetarism. Love it or hate it.
BURNETT: Right, right.
QUEST: That required that sort of -- that sort of medicine, this is just wantonness.
IVES: And, Richard, I also think it's medicine, but it takes 4 to 5 years to build a factory. The -- what's the reality of the situation even when you look at Apple.
BURNETT: Is it medicine or is it poison?
IVES: But that's -- and even when you look at Apple, it's really India. Thats how they're getting around a lot of the China.
BURNETT: And they're waiting for that.
All right. Tuchman, can I give you the whiteboard? You're going to love it. TUCHMAN: Sure.
IVES: Oh, this is --
(CROSSTALK)
BURNETT: He's going to love it.
So, the footwear industry, you know --
TUCHMAN: I love sneakers.
BURNETT: They told Matt Egan today from CNN no amount of tariffs are going to bring the jobs here. We pay the tariffs. The American consumers pay the tariffs. They are not external revenue sources. They couldn't be more clear.
So, here's the number. Here's the whiteboard. Are you ready? Ninety- ninety -- 99 percent. That is the amount of footwear made outside the United States that's bought in the United States. That's what he means.
No amount of tariffs is going to bring this back and we should not want it back, 99 percent. It doesn't get higher than that.
TUCHMAN: You know, look, we know what jobs are Americans going to start taking now to one point that you said yes, it's 4 or 5 years away. But when -- when I speak to people who are seeing things through Trump glasses, they're saying, yes, but who's going to be building those factories? Right? Were going to start that right out of the gate. And in that way then then Trump is -- is lived up to his promise that we are going to be putting.
BURNETT: But those are manufacturing factories. Those are not footwear factories.
IVES: And that's part and we've talked about look at as the boots start to you see the shortages come through. Look, if you like $400 Nikes, we should make them in New Jersey. If you like $100 ones, you make them in Vietnam and China.
TUCHMAN: Look what China did when they when -- when he -- when he did the pause and he got picked a fight with China and said, we're pausing with everybody but you. And they had everyone in China. They had people in the factories there who were making the really high-end luxury goods, actually making advertisements, that you can buy the stuff directly from us.
BURNETT: Right.
TUCHMAN: The stuff you're buying from Hermes is not Hermes goods. They're being made here in China.
QUEST: I've been waiting 15 years to use this quote.
TUCHMAN: Well, go for it. QUEST: Laura Tyson, the economic and former economic advisor,
principal of London business school, guru, Laura Tyson wrote in her book many years ago, who's bashing whom? That the America will have a shoe industry when Americans are prepared to pay more for shoes?
And if you take now, today --
BURNETT: I mean, the moment for the quote came.
QUEST: Exactly.
BURNETT: At the moment.
(CROSSTALK)
IVES: Tuchman got the whiteboard and he had that quote.
(CROSSTALK)
QUEST: But it's true. The moment -- I mean, I'm not going to show my famous shoes, you know, it's made in China. The moment they're made. If these were made in the U.S., they would cost more.
IVES: Yeah.
BURNETT: Yes.
QUEST: That's the ergo of it.
BURNETT: Right. Well, and, that's what -- when you came back to Scott Bessent, who, you know, said, well, the essence of the American dream is not cheap goods, of course. I mean, there is a philosophical argument we could have about the American dream, but to many people, in the way we live, the American dream, that is the American dream.
[19:15:02]
IVES: And it all goes back to in the U.S. you like goods, you don't want to produce them. And it comes down to, if you like, $3,500 iPhones, we should make them in the U.S. if you like $1,000 ones in China, or at least even in India.
QUEST: There's a sophisticated point that you make, though, a moment ago, which talked about debt and Americans living beyond their means, "The People's Daily" in China made exactly that point recently when it said, fine, America, you carry on. But the real problem is America is living beyond its means, and its productivity gains do not justify the standard of living.
BURNETT: So, Trump said something the other he's actually brought this up a couple of times, and I just wanted to not ask you to get in his head, but to try to understand what he's saying here.
This is - Scott Bessent said this and then Trump said it.
Here they are. (BEGIN VIDEO CLIP)
BESSENT: I am told that in parts of Florida, gasoline is $1. 93, and that's an automatic tax cut for the American people.
TRUMP: Gasoline prices just hit $1.88 a gallon in three states. Can you believe it?
(END VIDEO CLIP)
BURNETT: You look confused. We look confused. I checked AAA, which is an 87 for regular unleaded, is 87 octane, so it's the lowest octane. You get the gas station, they've got a national average of 3.18. The lowest of 2.66.
So, I don't know where he's getting the 1.88. As for Florida, that number doesn't match either. I don't know where these numbers are coming.
TUCHMAN: Florida --but that's just -- that's just one part of this. Those two guys, no disrespect, are living in a completely different world. You know, to Mr. Bessent, I mean, the way he addresses things, it's almost there's a disconnect, right? That he's not taking seriously, that there are people out here who are living paycheck to paycheck who are really suffering, right?
IVES: Yeah.
TUCHMAN: It may not affect us as much, but -- I mean, those are the people who voted for Mr. Trump. And he promised all these things that not really none of them are being delivered.
IVES: And the price increases we've talked about, 2 or 3 weeks, you get to Memorial Day. Let's see people's reaction when they're walking around.
TUCHMAN: And it's not a catastrophe. But the fact that he's been harping on this for the last week --
BURENTT: Well, you've been watching the cargo.
IVES: The cargo doesn't lie.
TUCHMAN: No, it doesn't. And we know that you're in touch with that. And that's -- that's a scary thought.
IVES: And again --
TUCHMAN: The boats are half full. The shelves may be empty, and the clock is ticking.
IVES: And maybe -- and maybe now Richard wants to get in. We're going to build a sneaker factory in New Jersey.
TUCHMAN: Today with T-shirts.
IVES: Maybe now Richards going to get in on it when we build that sneaker factory.
BURNETT: Start 3D printing sneakers like Adidas.
QUEST: And we haven't even seen the beginning of this. Wait until the boats. It's all to do with, you know, the tariffs come on when the boat sails. There are ships with tariffs free, some have tariffs. But I was talking to the port of Los Angeles and they just say we ain't seen the start of this yet.
BURNETT: No. And that's the thing -- everyone's afraid. But we haven't yet seen it.
TUCHMAN: Down with the -- with the -- with the -- with the toys, right?
BURNETT: With the stuffed animals.
TUCHMAN: Right. And how he's just representative of small business that is going gotcha.
IVES: Down 40 to 60 percent in terms of the ships.
TUCHMAN: It's going to be devastating. They're not going to have their products at Christmas.
BURNETT: No.
IVES: That's why you got the stuffed animals last week.
TUCHMAN: No, they just arrived today. Thank you.
BURNETT: All right. I'm sorry. I got to ask about that during commercial break. Thank you all very much.
And next, the breaking news. Trump suffering a major blow in court. This just happened here moments ago on a Friday night, a federal judge calling Trump's executive order that targeted a law firm unconstitutional. It's a hugely significant move. The first of these.
Plus, J.D. Vance defending a far right extreme political party in Germany as he accuses the government there of doing the equivalent of rebuilding the berlin wall.
And Elon Musk on the verge of taking over a Texas town. We'll explain.
(COMMERCIAL BREAK)
[19:22:59]
BURNETT: Breaking news, a major legal defeat for President Trump. A federal judge just ruling that his executive order targeting Democratic tied law firm Perkins Coie is illegal and unconstitutional. It marks the first time that a federal judge permanently blocked the president from enforcing an order to punish legal firms that he says he opposes politically. Judge Howell writes in part, quote, no American president has ever
before issued executive orders like the one at issue in this lawsuit targeting a prominent law firm with adverse actions. This action draws from a playbook as old as Shakespeare, who penned the phrase, the first thing we do, let's kill all the lawyers.
Evan Perez is OUTFRONT.
And, Evan, you know, look, law firm after law firm has buckled under pressure from the president to do various deals. So now you have this this ruling against the president in the case of Perkins Coie. How significant is it?
EVAN PEREZ, CNN SENIOR JUSTICE CORRESPONDENT: This is very significant because now you have a judge who is saying that the entire executive order is unconstitutional, Erin. And she goes on to say, beyond this, she says that there's a cruel twist to that Shakespearean quote. She says it's basically the let's kill all the lawyers I don't like.
And that's exactly what Donald Trump, what President Trump has done. Look, there is no doubt what the intent that the president has behind these executive orders, because he's made it very clear in the preamble to all of them. He goes into chapter and verse of all of the things that he believes these law firms have done against him, against his allies, and why he dislikes them and why he is taking these, these, these actions. And so, it's kind of really made it very clear for the judges to know what the intent of the president is, why he is taking action against these, these law firms.
And so, as you pointed out, now we have three firms that have actually challenged them. But by and large, the legal industry has kind of folded.
[19:25:00]
A lot of them big law firms have basically gone to the White House and made deals. What the White House says is that they've signed deals worth up to $1 billion of essentially pro bono work for -- for the president in exchange for getting rid of these orders. Right?
Big names like Paul Weiss have made deals with the president of the United States to try to avoid getting these, these, these executive orders. And so, what this judge is doing now, Erin, is significant because its also not only you know, denying, you know, the parts of the executive order that had to do with their ability to get into federal buildings, for instance. She's also saying that the president can't even suspend security clearances, which is a big, big part of this.
BURNETT: Yes. Yeah, absolutely. And those security clearances, which they had had representing both sides of the aisle, always. Right. That that had been the precedent and the way things were.
PEREZ: Exactly.
BURNETT: All right. Evan, thank you so much. And obviously important breaking news.
So, let's go now to the Democratic Congressman Adam Smith, the ranking member of the House Armed Services Committee.
Prior to joining the House, I know, Congressman, you were a lawyer in both private and public practice. You were also prosecutor for the city of Seattle.
So, when you hear this and you've watched law firm after law firm after law firm, make these deals with Trump, what is your reaction tonight as you look at this former prosecutor and a lawyer to this breaking news of a federal judge ruling that his executive order -- Trump's executive order targeting law firm Perkins Coie is illegal?
REP. ADAM SMITH (D-WA): Well, it's very encouraging. Look, the fact that so many law firms have bowed to Trump's pressure was incredibly troubling. Now, obviously, Perkins Coie has a very strong Seattle connection. They are one of many law firms that rejected me for a job when I graduated from law school years ago. It's a Seattle institution.
But it goes way beyond just this one law firm. Trump is trying to shake down law firms to make sure that they don't represent Democrats or anyone he disagrees with. That is the action of an authoritarian dictator, not of a democratically elected president.
And the fact that so many law firms just bowed to this only gives him more power. I really applaud the law firms like Perkins and others who have stood up to it. And this judge ruling helps stop what President Trump is doing. But the whole country should recognize just how bad this is for freedom and democracy, that a president could put this amount of pressure on a law firm.
BURNETT: Now, Congressman, as the ranking member of the House Armed services committee, I want to ask you about some developments also in the national security front tonight, breaking news about President Trump ousting Waltz as national security adviser and replacing him with Rubio. So, a person who spoke with Rubio tells CNN tonight that he plans to stay in this additional role of national security advisor for up to six months. So that would mean that he keeps his job as secretary of state. Two other positions as well, USAID as well as archivist.
But we looked back, and the only person who has held the job of national security advisor and secretary of state at the same time, Congressman, at the same time is Henry Kissinger.
SMITH: Yeah, yeah. Look, these are jobs that are vastly more complicated than back in the early '70s when that was true. And it really does jeopardize our ability to meet our national security needs, to not have people in all of these other positions. So it's part of consolidating power around the few. It ties in to some degree with the law firm conversation.
Trump wants all the power. He doesn't want people around him to have power. And that consolidation weakens the U.S. by taking away needed talent in different places to make sure we're covering all of the ground, we need to cover.
Secretary Rubio has more than enough to do as secretary of state. The national security adviser is supposed to be the day in and day advisor, tracking all that's going on in the world. Secretary of state needs to be out in the world doing diplomacy. This will limit the ability of the U.S. to meet the challenges we face.
BURNETT: So, the White House today just confirmed this. The story about the military parade. And this has been percolating for a while. Right. We heard from the mayor of Arlington that they had been looking into it. And now, the White House confirms that Trump will host a military parade on June 14th. That is his birthday. He turned 79 on that day. It is also the Army's 250th birthday.
Now, the "AP" reports that Army -- the Army plans dated this week. They came out this week call for more than just to go through these numbers. I'm sure you know them offhand at this point, but 6,600 soldiers, at least 150 vehicles, and they don't say what those vehicles are, is and how heavy they are to the roads. And 50 helicopters.
So, I mean, it's the Army's birthday, it's Flag Day. It's also Trump's birthday. Is this all -- is this a good use of time and money right now?
SMITH: Absolutely -- absolutely not. It's also the birthday of the original Adam Smith, the Scottish economist. But that's not relevant either.
Look, this is a horrible misuse of military funds.
[19:30:00]
We have a very tight budget, big needs. This is a waste of money, which is bad. Worse is the authoritarian dictator overtones of this decision, to have the military honoring an individual instead of the country. I've also heard that President Trump wants to change the name of Veterans Day to something about victory in World War One day, so that were not honoring all veterans the way that we used to.
This consolidation of power around Trump's ego at the expense of the American people, and in this case, our military, is deeply troubling and not what this country is supposed to be about. It's in Russia and North Korea that we forced the military to honor the dear leader. It is not supposed to be with the United States of America is about regardless of whether or not, you're a Republican or Democrat, conservative, liberal. You should be troubled by us looking like a dictatorship instead of a representative democracy.
BURNETT: Congressman Smith, I appreciate your time. It is always great to talk to you and thank you. And by the way, I will now forevermore remember that that other Adam Smith was born on June 14th. Thank you.
And next --
SMITH: My birthday is on June 15th. But that doesn't mean anything either.
BURNETT: Well, I might remember it. Now they're back to back.
All right. Thank you so much, sir. I appreciate it.
Sometimes good to get a laugh.
SMITH: Thanks, Erin.
BURNETT: All right. And next, the world turns on the U.S.
We're going to show you. I mean, these are stunning numbers that are coming out. The lengths that some European shoppers are going to right now to avoid buying American. This is the bigger question of what's at stake here. And Fareed Zakaria will be with us.
Plus, we're going to take you to one Texas town. That's about to be renamed and Elon Musk could have a lot of power over it.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Do you worry about what Elon Musk and SpaceX is up to by trying to create this city?
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[19:36:30]
BURNETT: Breaking news, the White House unleashing an all-out assault on Germany over a right wing political party. Secretary of State Rubio, Elon Musk and Vice President Vance, attacking America's longtime ally. Vance even accusing the Germans of rebuilding the Berlin Wall. This came after Germany's domestic intelligence agency classified the far right political party in Germany, the AFD, as extremist, which makes it easier for them to have surveillance on it.
AFD is an anti-immigration party with a co-leader who has been fined for using Nazi slogans. But the White House once again is coming to its defense as anti-American sentiment is growing overseas amid Trump's trade war.
And Melissa Bell has this special report tonight for us OUTFRONT.
(BEGIN VIDEOTAPE)
MICHEL CERDAN, #BOYCOTTTRUMP MEMBER: So --
MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT: So -- so before you would have come in and you would have taken these chips.
CERDAN: Yes, I used to take this one, but now, when I took this one.
BELL: Across Europe, a quiet protest is playing out in supermarket aisles. American products left untouched. The #BoycottTrump is gaining traction as Facebook groups rally Europeans to push back against U.S. policies with their wallets.
Michel joined a French group in March.
CERDAN: As long as we are aggressive, a policy of American administration, we want to make president to say, stop it.
BELL: His group even provides an app called DeTrumpify Yourself that lets consumers know if a company's funding traces back to the United States.
CERDAN: Further, I wonder if it is so we just use the app and it says, yes, it's --
BELL: It's American. So American.
CERDAN: Well, we'll try with that. We look like.
BELL: This is a very French brand.
CERDAN: Very French. But sometimes we have surprised. Yes.
BELL: So we can buy.
But sometimes you get surprises because you find that a company that you thought was French has in fact been bought by an American group. And that's the point of the app.
CERDAN: Exactly.
BELL: One recent survey in France found that six out of ten people support consumer boycotts of U.S. goods. The poll also showed that the hardest hit American brands included Tesla, McDonalds, Coca-Cola and Victoria's Secret.
But it's not just products. Travel to the U.S. from Europe is also down. In March, visits dropped 17 percent compared to the same time last year.
GHISLAINE, #BOYCOTTTRUMP MEMBER: It's changed the way we travel. It's changed the way we consume. There's hesitation and fear about going to the United States.
PROTESTERS: Stop Trump!
BELL: So Ghislaine, who asks us not to use her last name as she has family in the United States, joined a small group of American protesters on Thursday.
(CHANTING)
BELL: Just here in Paris, there have been three anti-Trump protests in as many weeks, including this one at the heart of what is the traditional day of demonstration here in Paris, the May Day protest with a decidedly American feel. Now, this group includes not just Americans who live here, but also some of their European allies and American tourists who've just taken a day off of their vacation to make their voice heard.
UNIDENTIFIED FEMALE: I'm here for my grandparents, who were immigrants from Italy.
[19:40:00]
And, they were -- there was prejudice against them, and they were very, very proud to be in America. And I'm not sure they would be today.
BELL: Melissa Bell, CNN, Paris.
(END VIDEOTAPE)
BURNETT: Fareed Zakaria is OUTFRONT now, host of "FAREED ZAKARIA GPS".
And, Fareed, you know, you see Melissa's report. It's amazing, that app is fascinating in and of itself. But the anti-American sentiment feeling boycotts, you know, we're seeing it. Tourism numbers are down -- I mean -- and sure, Tesla has a specific link to Musk, right? He's a lightning rod himself. But the numbers out of Sweden today were at an 80 percent drop in Tesla sales. France wasn't far behind.
I mean, these are real numbers. This is not just talk. This is action.
FAREED ZAKARIA, CNN HOST, FAREED ZAKARIA GPS: Erin, it's really remarkable because for the last 30 or 40 years, ever since the fall of the berlin wall, this wave of global integration has resulted in American brands becoming the leading global brands in the world. Everything from Coca-Cola to McDonald's, which were always big. But Tesla and of course, all the information technology companies, Google, Apple, you know, we've been riding this extraordinary wave of American brands being considered the leading brands in the world.
Take American universities, Harvard, Yale, Princeton, all of them. You know, this is the world that in a way, Donald Trump inherited and somehow systematically, he is tarnishing every one of these brands. He's attacking the American universities. He's doing things that are tarnishing these global brands because he's so alienating the rest of the world.
And I think it's important to remember, you know, it's not just people buying Coca-Cola. It's people are people going to want to come and study in the United States if they think, as Marco Rubio has kept, kept telling them, we can revoke your visa anytime we want, we can deport you anytime we want.
So you're going to see a kind of a slow stagnation of one of some of the crown jewels of America.
BURNETT: I remember the book cities on a hill, I think it was back in the '80s, but I still remember reading it and even getting to the point, you know what Los Angeles stands for? To the country and to the world. What America stands for.
You know, Harry Enten was looking at some numbers this week, Fareed, to this point of what America stands for and the belief that America has a positive impact in the world, right? The intangible city on a hill that that has fallen in 26 of 29 countries recently surveyed, 26 of 29.
You know, I know it's impossible to answer this question. You know, fully at this, at this moment, but -- but -- what's your feeling on this as to whether the United States can recover, even if the tariffs become a bad memory and Trump really does move on past it, no evidence he will, but even if that happens, is the damage permanent?
ZAKARIA: I don't know, permanent. Permanent is a big word, but it's long lasting because, you know, Trump has now been elected twice, and I was actually surprised by how high the numbers were in the sense there's still a reservoir of goodwill. There's still a sense that the United States stands for the right things, even though, you know, we're siding with Putin, we're trashing our European allies. We're talking down democracy.
So, you know, I think that once you -- once you break trust, it's very hard to rebuild. Trust takes a long time to build, and it's very easy to break.
BURNETT: So, I mentioned the issue going on with the AFD right now. Marco Rubio, Elon Musk, J.D. Vance have been attacking Germany and Europe overall, but Germany in particular, after the country's domestic intelligence agency classified the far right political party AFD as extremist.
Now, that makes it easier for them to surveil it. But they have now classified it as extremist. This is a party that the individuals I just mentioned, and certainly, Musk and Vance have defended again and again, right? It's an anti-immigration party. The co-leader has been fined for using Nazi slogans.
So, what do you make of now? You know, the party gets labeled extremist by domestic intelligence. And -- and still, there's this rise to its defense.
ZAKARIA: Well, what I'm most struck by, Erin, is that Donald Trump for much of his first term, in fact, I think it was in his maybe his first inaugural, the first speech he gave at Davos, Elon Musk recently at the world government forum in Dubai, they talk about how we are not going to tell the rest of the world how to run their affairs. We -- we've had enough of these liberal internationalists going around telling the world how to run their affairs.
Well, then it turns out here they are lecturing Germany on how it should handle very sensitive issues of free speech and such. Now I have my own issues with it, but I think it's very odd for the United States to get away in on a domestic issue in Germany.
[19:45:03]
Let's remember -- Europeans treat free speech differently. They don't have a First Amendment, and Germany has a very sensitive past with regard to far right, extreme nationalist parties. And surely anyone who understands history will have some ability to respect that.
BURNETT: Yeah, well, obviously we have seen a different take.
Fareed, thank you so much. I really appreciate you taking the time on a Friday night.
And next, everyone, we're going to take you to a small Texas town that Elon Musk is -- seems to be taking over.
(BEGIN VIDEO CLIP)
ED LAVANDERA, CNN SENIOR NATIONAL CORRESPONDENT: This is the entrance to what is poised to become the newest city in Texas, made in the image of Elon Musk, if you will. It is Starbase, Texas.
(END VIDEO CLIP)
BURNETT: Plus, Harvard hitting back tonight at what they are calling Trump's highly illegal threat.
(COMMERCIAL BREAK)
[19:50:34]
BURNETT: New tonight, Elon Musk could be hours away from getting his own company town in Texas, a whole town. The town is made up mostly of employees who work for Musk's SpaceX, and the town will be called Starbase. This comes amid I mean, look at the statue. The statue of Elon there.
It comes amid growing signs that Musk's brand has been losing its luster in the U.S. and overseas. The new numbers out of Europe show Tesla shares fell in country after country for the fourth month running, and that included that 81 percent plunge in the country of Sweden.
Ed Lavandera is OUTFRONT.
(BEGIN VIDEOTAPE)
ED LAVANDERA, CNN SENIOR NATIONAL CORRESPONDENT (voice-over): There's only one way on land anyways to reach SpaceX. For generations, highway four was the road less traveled.
RENE MEDRANO, LOCAL LANDOWNER: We bought out here. All of this dirt road.
LAVANDERA: And for Rene Medrano, traveling the path less taken to a hidden beach at the southernmost tip of Texas has made all the difference in his life.
But this retired high school coach fears Elon Musk and SpaceX are taking too much control over who can access this part of their world.
MEDRANO: People want to go to Mars, let them go to Mars. Theres people that want to go to the beach and enjoy Boca Chica Beach. Okay? Let's compromise.
LAVANDERA: The latest chapter in SpaceX development is an election tomorrow to make this high-tech outpost an official city. If approved, the city limits would stretch from the Texas coast inland along Highway 4. Residents here will also elect a mayor and two commissioners, all connected to SpaceX, and are running unopposed.
This is the entrance to what is poised to become the newest city in Texas, made in the image of Elon Musk, if you will. It is Starbase, Texas.
In recent years, a well-manicured neighborhood has sprouted in this marshy coastal plain. There are airstream trailers, single family homes, rows of freshly planted palm trees, SpaceX employs more than 3,000 people in this facility. This will be the proverbial company town.
Jared Hockema is a local Democratic Party official and city manager of nearby Port Isabel.
What is your concern with Starbase becoming a city?
JARED HOCKEMAN, PORT ISABEL CITY MANAGER: SpaceX is great. It's brought a lot of jobs. The question always comes back. Are you using public power to benefit a private interest?
LAVANDERA: Every time SpaceX launches or moves rocket parts, Highway 4 is closed down. The company needs to get permission from local county officials. But SpaceX and some Texas lawmakers want to give SpaceX more control of the road closures and access to the nearby beach.
As we drove the public streets of Starbase, a security guard started following us around. We wrapped up our work and moved along.
SpaceX and the candidates running for public office did not respond to CNN's requests for comment.
So, you're going to be one of the original settlers of Starbase, Texas?
I guess that's the way --
ANTHONY GOMEZ, MANAGING PARTNER, ROCKET RANCH: I hope so. Pioneers. Pioneers.
LAVANDERA: Do you -- do you -- do you feel that way, or is that being --
GOMEZ: It feels like manifest destiny sometimes.
LAVANDERA: Anthony Gomez runs a business called Rocket Ranch. Hundreds of people come to this observation point on rocket launch days.
GOMEZ: We do launch observations. It's the closest place to see it from in America.
LAVANDERA: Three-point-seven miles away. So when that rocket takes off the big one.
GOMEZ: You can feel it. Yeah, your entire -- I mean, every molecule in your body vibrates with joy. It's amazing.
LAVANDERA: Gomez says turning Starbase into a city will help Elon Musk and SpaceX make even greater progress in space travel.
GOMEZ: They're moving at an incredible pace. The most important thing about this mission is that its time sensitive, like humanity is finite, consciousness is finite. You have to move quickly.
LAVANDERA: As we reach the beach with Rene Medrano, he pointed out, SpaceX wants approval for up to 25 launches a year, and why he fears were this development is headed.
Do you worry about what Elon Musk and SpaceX is up to by trying to create this city?
MEDRANO: The number one thing that I think a lot of people are worried about is to get the SpaceX, have a gate and it says, closed forever. And then now we can never, ever enjoy the beach that we have now.
LAVANDERA: Ed Lavandera, CNN, Boca Chica, Texas.
(END VIDEOTAPE)
BURNETT: A fascinating story from Ed.
And next, Harvard's president tonight taking on Trump, calling Trump's latest threat highly illegal.
(COMMERCIAL BREAK)
[19:59:34]
BURNETT: Breaking news, fighting back. The president of Harvard standing up to Trump, calling the president's threat to strip the school of its tax exempt status, quote, highly illegal. Harvard President Alan Garber telling "The Wall Street Journal" that if Trump follows through on his threats, it would send a dire message to colleges and universities across the country.
Trump posted on "Truth Social" today, quote, it's what they deserve when issuing his threat. It's all part of an extraordinary war over free speech, political ideology and federal funding for the Ivy League School. Harvard insists it will not give in to Trump's demands.
Thanks so much for joining us.
"AC360" starts now.
