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Early Start with John Berman and Zoraida Sambolin

Larry Kudlow Contradicts Trump on U.S.-China Trade War; White House Accused Democrats of Not Following Rules and Norms; House Republicans Criticizes Rep. Rashida Tlaib Over Remarks On Holocaust; Department of Homeland Security Asked Military for Help in Dealing with Influx of Migrants; Hollywood Producers to Stop Filming in Georgia After Abortion Bill Passage; Actress Felicity Huffman to Plead Guilty to U.S. College Admission Scam; Mike Pompeo heads to Brussels to Discuss Iran. Barge and Tanker Collide in Houston Channel; Sweden Reopens Rape Charges Against Julian Assange; Uber debuts on Wall Street. Aired 4:30-5a ET

Aired May 13, 2019 - 04:30   ET

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

[04:30:00] (COMMERCIAL BREAK)

CHRISTINE ROMANS, CNN HOST: Wall Street braces for China to retaliate as the Trump administration admits tariffs hurt American companies too.

DAVE BRIGGS, CNN HOST: Secretary of state Mike Pompeo right now en route to talks on Iran as the U.S. deploys more missiles to the Middle East.

(BEGIN VIDEO CLIP)

REP. ADAM SCHIFF (D-CA): I think if you fine someone $25,000 a day to their person until they comply, it gets their attention.

(END VIDEO CLIP)

ROMANS: Frustrated Democrats consider hefty fines for Trump officials who blow off congressional subpoenas.

BRIGGS: Russian President Vladimir Putin's victory lap and a hockey rig did not quite go as planned, quite a spill.

ROMANS: That's how I skate.

BRIGGS: You don't want to be the guy that lay that carpet though. That's how you skate, ha? You take the spill without the carpet. Welcome back to "Early Start." I'm Dave Briggs.

ROMANS: And I'm Christine Romans. It is 32 minutes past the hour. But let's begin with the trade war.

Bracing for a sell off around the world right now. Global markets are falling. That Hong Kong market is closed for a public holiday. Everything else is in selloff mode. Out in Wall Street, futures are decidedly lower here, more than 1 percent losses forecast by the Dow futures, NASDAQ, and the S&P 500.

The U.S. and China trade war will raise costs for Americans and create uncertainty for investors. Tariffs on thousands of items including dish washers, frozen fish, handbags and clothes, all jumped to 25 percent Friday.

Right now, tariffs hit roughly half of the products that China sells to the U.S. And the president falsely states that China pays those tariffs. His economic adviser, Larry Kudlow, reluctantly admitted on Fox Sunday what everyone else already knows, U.S. companies pay tariffs, not China.

(BEGIN VIDEO CLIP)

CHRIS WALLACE, FOX NEWS SUNDAY HOST: It's not China that pays tariffs. It's the American importers, the American companies, that pay what in effect is a tax increase and often times passes it to U.S. consumers?

LARRY KUDLOW, DIRECTOR, NATIONAL ECONOMIC COUNCIL: Fair enough. In fact, both sides will pay. Both sides will pay in these things.

WALLACE: But the tariff on goods coming into the country, the Chinese aren't paying?

KUDLOW: No, but the Chinese will suffer GDP losses and so forth with respect to a diminishing export market and goods that they may need for their own.

WALLACE: It's U.S. businesses and U.S. consumers who pay, correct?

KUDLOW: Yes, to some extent. Yes, I don't disagree with that. Again, both sides -- both sides will suffer on this.

(END VIDEO CLIP)

ROMANS: Breaking from his boss who falsely claimed the U.S. will be taking in tens of billions of dollars of tariffs from China. All right. This trade war is not over. The administration says it has begun the process of raising tariffs on all remaining imports from China worth $300 billion.

For now iPhones, toys and tennis shoes have avoided taxes. But in a new round of tariffs, those would be included. This is what a trade war looks like. They're not easy to win, and China's retaliation is really hurting U.S. farmers at the worst possible time.

[04:35:01] Farmers can't get into the fields because of flooding. And last year's soybean crop is rotting in storage. Until last year, one in three rows of soybeans grown in the U.S. was shipped to China. The trade war ended that.

Agricultural secretary, Sonny Perdue, said Friday the president has asked the USDA for a plan to help farmers affected by tariffs, adding POTUS loves his farmers and will not let them down.

Kudlow said Sunday there is a strong possibility Trump will meet Chinese President Xi Jinping at the G20 Summit next month.

BRIGGS: China has threatened to take unnecessary -- necessary countermeasures in response to the U.S. escalation of this trade war. Matt Rivers is live in Beijing. Matt, any specifics about exactly what retaliation would look like?

MATT RIVERS, CNN CORRESPONDENT: At the moment, no, nothing specific yet, Dave, from China's government, and I think that shows you that they're really trying to figure out a different sort of retaliatory response because they can't match the United States dollar for dollar on tariffs.

That's because the United States sends far fewer goods here to China than the other way around. And so, China can't just put tariffs on another $200 billion worth of American imports here because $200 billion worth of imports doesn't exist. They have already put tariffs on the vast -- the large majority of American imports here.

So, what else do they do? They could hike existing tariff rates. That's certainly something. They could make life harder for farmers than it already is in the U.S. by putting more restrictions in place on U.S. exports here.

There's a number of things that they could do and we're really waiting to see specifically what they end up doing. And it will have an impact on American companies who are based in the United States, sending things here. But also you could see market access restrictions for companies in the U.S. that are already operating here, companies like Apple and Starbucks and the like.

But I think one interesting note here is that Chinese state media is already picking up on Larry Kudlow's comments in the U.S. on Sunday saying basically, look, this is going to hurt the U.S. economy. It is Chinese-U.S. consumers. They don't talk about the fact that Chinese consumers will be hurt, and that is certainly the case.

But China is using the White House's aide's words against them in the sense that China is saying, look, U.S. consumer, you don't want to feel the pain, then maybe you should pressure your government to stop going forward with this trade war. Whether that's fair or not, I don't -- I won't offer an opinion on that, but it's certainly the argument they're making.

ROMANS: I mean, one way, they're going to get hurt is that, you know, already we're hearing from people who were moving their factories or moving their supply chains from China to Vietnam or Cambodia or even Mexico, which is closer to the United States and has much more -- much lower labor rates, not necessarily bringing that production back to the U.S., which is what the president wants but just leaving China.

BRIGGS: Just hard to believe, Matt, that stating the obvious about tariffs is international breaking news. We'll check back with you next half hour. Thank you, Matt.

ROMANS: All right. The White House taking a new tact as it pushes back against congressional investigations. It's accusing House Democrats of violating rules and norms of congressional oversight.

White House statement says Democrats are demanding documents they know they have no legal right to see, including confidential communications between the president and foreign leaders, and grand jury information that cannot be disclosed under the law. The White House will not and cannot comply with unlawful demands made by increasingly unhinged and politically motivated Democrats.

BRIGGS: President Trump mocking the Democrats claim the country is heading into a constitutional crisis with this tweet, the Democrats new and pathetically untrue sound bite is that we are in a constitutional crisis, calling the whole thing a sad joke. Democrats, meanwhile, angry at what they see as an unprecedented across the board stone walling effort by the administration.

ROMANS: Last week, the president invoked blanket executive privilege to block Democrat's access to the full unredacted intelligence report. Here's House Intelligence chairman, Adam Schiff, on Sunday.

(BEGIN VIDEO CLIP)

REP. ADAM SCHIFF (D-CA): Here, the Trump administration has decided to say a blanket no, no to any kind of oversight, whatsoever, no witnesses, no documents, no nothing, claiming executive privilege over things that it knows there is no basis for. There's no executive privilege over the hundreds of thousands of documents regarding events that took place before Donald Trump was president. You can't have a privilege -- an executive privilege when you're not the executive. So, they know that vast categories are in applicable to the privilege here. So they're just stone walling.

(END VIDEO CLIP)

ROMANS: Schiff telling ABC News that Congress has other tools to break through the stone walling.

(BEGIN VIDEO CLIP)

SCHIFF: Look, we are going to have to consider other remedies like inherent contempt where if the courts take too long, we use our own judicial process within the Congress.

Look, I think, if you fine someone $25,000 a day to their person until they comply, it gets their attention.

(END VIDEO CLIP)

ROMANS: Among the oversight action coming this week, a federal judge is set to rule Tuesday on a House subpoena of the president's financial records. And Friday is the deadline for the IRS to respond to another subpoena, this one for Trump's tax records.

BRIGGS: House Republicans denouncing Congresswoman Rashida Tlaib for comments the Michigan Democrat made about the holocaust on a Yahoo News podcast. Listen. (BEGIN VIDEO CLIP)

[04:40:03] RASHIDA TLAIB, (D-MI): It's kind of a calming feeling I always tell folks when I think of the holocaust and the tragedy of the holocaust and the fact that it was my ancestors, Palestinians, who lost their lands and some lost their lives, in the name of trying to create a safe haven for Jews post the holocaust, post the tragedy. And I love the fact that it was my ancestors that provided that, right, in many ways. But they did it in a way that took their human dignity away.

(END VIDEO CLIP)

BRIGGS: But two top House Republicans, they're falsely accusing Tlaib of using the term calming feeling to describe her view of the holocaust itself. An already whipped (ph) Steve Scalise said there's nothing calming about 6 million Jews being murdered and Liz Cheney of Wyoming calling on Speaker Pelosi to take action against Tlaib for her, quote, "vile anti-semitism."

ROMANS: All right. The Department of Homeland Security asking the military for more help to deal with the influx of migrants coming to the U.S. Administration officials tell CNN the request includes single occupancy tents for large numbers of migrants.

Customs and Border Protection predict it will surpass half a million migrants crossing into the U.S. so far this year -- half a million. The Pentagon says acting defense secretary, Patrick Shanahan, is considering the request. He discussed additional ways to support the border mission with Acting Homeland Security Secretary Kevin McAleenan over the weekend as they flew to Texas to inspect the border area.

BRIGGS: Some Hollywood producers vowing to stop filming in Georgia after Governor Brian Kemp signs a controversial new fetal heartbeat abortion bill into law. David Simon, the producer of The Wire and the The Deuce tweeting, "We will pull Georgia off the list until we can be assured the health options and civil liberties of our female colleagues are unimpaired."

And Christine Vachon of Killer Films says they will no longer consider Georgia as a viable shooting location until this ridiculous law is overturned. The MPAA, who represents the five major film studios, says it's monitoring legal efforts to reverse the new anti-abortion law.

ROMANS: All right. Actress Felicity Huffman is due to appear in federal court in Boston later today to formally enter her guilty plea in the college admission scam. Huffman is charged with conspiracy to commit fraud. She admitted paying $15,000 to a fake charity to facilitate cheating for her daughter on the SATs.

Huffman is one of more than a dozen parents who agreed to plead guilty in connection with the scam dubbed Operation Varsity Blues. Federal prosecutors planned to ask for a sentence of up to 10 months jail for Huffman.

BRIGGS: Wow. Ahead, the secretary of state cancelling a planned trip to Moscow today, more on where he is headed and why, next.

ROMANS: And a passenger jet lands without its front wheel.

[04:45:00] (COMMERCIAL BREAK)

BRIGGS: Secretary of State Mike Pompeo cancelling a planned trip to Moscow and instead making a last minute detour this morning to Brussels. At the top of the agenda, Iran. Pompeo will talk with Britain, Germany, and France about what the U.S. views as an increasing threat from Iran to American forces in interest.

In the meantime, the Pentagon announcing more patriot missiles will be deployed to the Middle East in response to the increased tensions with Iran. Senior international correspondent, Fred Pleitgen, standing by live for us this morning in Teheran. Fred, good morning to you. What is the response?

FRED PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: It is a pretty angry response, Dave, so far form the Iranians. On the one hand, they're accusing the United States of psychological warfare. They're accusing the United States of economic warfare, essentially saying that the U.S. administration is trying to bring Iran to its knee.

Now, it's quite interesting because they always make a difference. And for instance, the foreign minister, Javad Zarif, he says he doesn't believe that President Trump wants war in Iran, but he does, for instance, believe that Secretary of State Pompeo, and actually National Security Adviser Bolton, that they are more inclined to actually have a war with Iran.

Now, the Iranians obviously say that's not something that they want. But on the other hand, they also say they are ready. There has been tough talk from senior commanders of the Elite Revolutionary Guard Corps. They are saying or some of them are saying that they believe that America's presence and increased presence in this region is an opportunity because they say with the missile systems that they have now, for instance, aircraft carriers, could essentially be sitting targets in places like the Persian Gulf.

And speaking of the Persian Gulf, obviously, increasingly tense situation there. On Sunday, what happened is that several oil tankers seemed to have been sabotaged, some of them under Saudi Arabian flags, some of them also under the flag of the UAE.

Now, none of these countries are blaming Iran for that and Iran has also condemned it as well. But of course, right now, with the situation as tense as it is, there is always the possibility form some sort of miscalculation. Of course, at this point in time, you also have the Abraham Lincoln carrier strike group that is also in that region, and of course, also a lot of Iranian naval forces that are in that region as well, Dave.

BRIGGS: Uncomfortable times there. Fred Pleitgen live for us in Tehran this morning. Thank you.

ROMANS: Ship and barge traffic resuming this morning in the Houston ship channel. Crews still working to clean up a spill that spilled thousands of barrels of gasoline product into the channel on Friday. That spill followed a collision in the channel between an oil tanker and a tug pushing two barges.

Coast guard officials say the impact capsized one barge, damaged the other, and triggered the leak of some 9,000 barrels of gas blending stock that the barges were carrying. No injuries were reported in the collision.

BRIGGS: A miraculous landing in Myanmar.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: (Inaudible).

(END VIDEO CLIP)

BRIGGS: Passengers escaping from a jet after a captain brought it down on its rear wheels after the front landing gear failed. The plane skidded on its nose for about 25 seconds.

[04:50:01] None of the 89 passengers on board were hurt. Myanmar Airlines Flight 103 was headed from Yangon to Mandalay when the pilot realized there was a problem and circled the airport twice before landing the plane. Close call.

ROMANS: A prosecutor in Sweden set to make a major revelation about Julian Assange just minutes from now. We're going to have a live report next.

(COMMERCIAL BREAK)

BRIGGS: In just a matter of moments, Swedish prosecutor will reveal if she will open a preliminary investigation in the rape charges against WikiLeaks' founder Julian Assange. That sexual assault investigation is what prompted Assange to seek asylum at the embassy of Ecuador back in 2012. He was evicted last month.

[04:55:09] CNN's Anna Stewart live for us in London with the latest. Anna, good morning?

ANNA STEWART, CNN REPORTER: Good morning. Yes, we're waiting for the Swedish prosecutor to come up and speak in a press conference and tell us whether or not they will be reopening the investigation into the rape allegation.

Now, there were several other sexual assault allegations against Julian Assange, all of them dating back to 2010, and he denies all of them. But most of them have actually expired under the statute of limitations. The rape allegation, however, won't expire until August next year.

The big question is do they reopen the case. The reason they dropped it in 2017 was simply as they couldn't progress it while he was in the embassy. If they do decide to reopen this case, they will then need to issue a fresh European arrest warrant and then want to extradite him to Sweden. Bu of course, the U.S. also wants him extradited there.

BRIGGS: OK. Anna Stewart live for us in London this morning. Thank you. Staying abroad. Think fall of the Russian empire only much more amusing. Russian president Vladimir Putin taking a victory lap until that after a hockey exhibition match. Down he went. Putin failed to notice the red carpet that was laid on the ice. Certainly, he had something to celebrate. The Russian leader scored eight goals in the game as he usually does in these sorts of displays.

ROMANS: Funny how he always has a high score every time he plays. Let's get a check on CNN business this morning. Global stock markets are down sharply around the world, bracing for China to retaliate on Trump's tariff hike. Hong Kong is up but that's only because it's closed for a holiday. Everything else is down. And markets here in the U.S. futures are down as well. It looks like you're headed for more than 1 percent losses in the opening bell.

The Dow finished up 114 points, so pretty resilient in the face of tariffs. But for the week, it was still down more than 2 percent, the worst week for the Dow since March. The S&P 500 and the NASDAQ both snapped four-day losing streaks but, again, had their worst week since December.

Some perspective here on the resilience of the stock market. Stocks are dramatically higher for the year. Two things, markets may be underestimating the pain of the protracted trade war or investors may think that the U.S. and China will eventually get a deal sometime this summer, but still, a lot of risk here for stock investors and it looks like this morning is going to be pretty ugly.

Also ugly, the Wall Street debut for Uber. Stocks of the share closed down 7.6 percent Friday. It came at the end of a turbulent week filled with headlines about striking workers, steep losses in the ride hailing industry, broader market jitters over an escalating trade war. I heard one called it the week from hell, a terrible week to be trying to go public. Uber did succeed in raising $8.1 billion in one of the largest public offerings ever. Competitor, Lyft, closed down 7.4 percent.

"Early Start" continues right now.

Wall Street braces for china to retaliate as the Trump administration admits tariffs hurt American companies too.

BRIGGS: Secretary of State Mike Pompeo right now en route to talks on Iran as the U.S. deploys more missiles to the Middle East.

(BEGIN VIDEO CLIP)

REP. ADAM SCHIFF (D-CA): I think if you fine someone $25,000 a day to their person until they comply, it gets their attention.

(END VIDEO CLIP)

ROMANS: Frustrated Democrats consider hefty fines for Trump officials who blow off congressional subpoenas. (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Defended by Simmons. Is this the dagger?

(END VIDEO CLIP)

BRIGGS: This incredible bouncing buzzer beater by Kawhi Leonard leaves us with just four teams left and an incredible NBA finals. It has just been spectacular. Toronto moving on. Folks in Philly (inaudible) this morning.

Good morning, everyone, and welcome to "Early Start." I'm Dave Briggs.

ROMANS: And I'm Christine Romans. It is 4:59 exactly in the East. Get up, get your week started.

BRIGGS: A little bit early.

ROMANS: It is Monday, everybody. Let's take a look at the top story this morning and that is the China trade war. The president's trade war with China is gathering headlines across the globe.

You can see Tokyo and Shanghai stocks are down. Hong Kong is up a little bit here. London, Paris, Frankfurt, all lower, but they've been open for just less than an hour, frankly. And U.S. futures look like they're going to have a tough day, down maybe here we're talking about 300 points at the opening bell.

Look, there are thousands of items that are going to have tariffs, dish washers, frozen fish, handbags and clothes, all of those tariffs jumped to 25 percent on Friday.

[04:59:58] Right now, tariffs cover about half of the products that China sells to the U.S. Now, the president falsely states that China pays those tariffs. His economic adviser, Larry Kudlow, reluctantly admitting on Fox Sunday.

END