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Early Start with Rahel Solomon

U.S. Stocks Tumble As Trump's Trade War Escalates; Schumer Says He Will Support Republican Spending Bill; Putin Reacts To U.S. Proposal For Ukraine Ceasefire; Fiery Scene At Airport. Aired 5-5:30a ET

Aired March 14, 2025 - 05:00   ET

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

[05:00:34]

RAHEL SOLOMON, CNN ANCHOR: Good morning. And welcome to our viewers joining us from the U.S. and all around the world. I'm Rahel Solomon. It is Friday, March 14th, 5:00 a.m. exactly here in New York.

And straight ahead on EARLY START.

(BEGIN VIDEO CLIP)

JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: The financial markets have been roiled once again.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: There'll be a little disruption, but it won't be very long.

KIM BRUNHUBER, CNN ANCHOR: Chuck Schumer is defending his decision to support a Republican spending bill.

SEN. CHUCK SCHUMER (D-NY): There are no winners in a government shutdown.

REP. ALEXANDRIA OCASIO-CORTEZ (D-NY): I believe that's a tremendous mistake.

BRUNHUBER: A shocking scene at the airport in Denver, Colorado.

UNIDENTIFIED FEMALE: Oh, what happened?

UNIDENTIFIED MALE: It's on fire.

(END VIDEO CLIP)

(MUSIC)

SOLOMON: We begin this morning with President Donald Trump's erratic trade war and the brutal week it's been causing on Wall Street. This morning, all eyes are on U.S. markets, which are poised to open at least at this point. We'll pull up futures for you here in just moment.

At least for now, they are green. But we know this week it hasn't always been the best indicator of how markets closed. Many Americans are focused on how stock fluctuations will impact their wallets, how it will impact their retirement portfolios.

As we said, futures are looking up, but markets plunged Thursday as Trump threatened to impose steep new tariffs on European allies. The Dow falling 537 points, the Nasdaq dropping around 2 percent, and the S&P 500, also dropping more than a percent and now falling into correction territory, or down 10 percent from its record high last month.

President Trump has threatened to slap a 200 percent tariff on wine, champagne and other alcohol products from Europe. That's unless the European Union removes a 50 percent tariff that it put on U.S. spirits. In a social media post, Trump called the E.U., quote, one of the most hostile and abusive, taxing and tariffing authorities in the world.

European Commissioner Michael McGrath told CNN that the escalating trade war will cost jobs and hurt businesses.

(BEGIN VIDEO CLIP)

MICHAEL MCGRATH, EUROPEAN UNION COMMISSIONER: We will respond in a firm but a proportionate way. But this is not where we want to be. Tariffs are ultimately a tax on consumers here in the United States and in Europe. And they will hurt businesses and they will cost jobs.

(END VIDEO CLIP)

SOLOMON: CNN's Jeff Zeleny is following the developments from the White House.

(BEGIN VIDEOTAPE)

ZELENY: As President Trump ends another week here at the White House, the financial markets have been roiled once again, reacting to the trade war and the tariff policies that have really driven down stocks and have raised questions about this administration's policies. But the president on Thursday saying he's taking the long view.

TRUMP: We're not going to bend. We've been ripped off as a country for many, many years. We don't need their cars. We don't need their energy. We don't need their lumber.

Now there'll be a little disruption, but it wont be very long. But they need us. We really don't need them.

ZELENY: The president saying it won't be very long. But that, of course, will be one of the metrics to which he is judged going forward. Will the markets still continue to have an adverse reaction to what these policies are doing?

Now, the White House says, look, the market goes up, the market goes down. But it is clear the uncertainty that the trade war has signaled is really sparking uncertainty in the markets. The president, though embracing this policy, is looking ahead to even more tariffs when the reciprocal ones go into effect in April.

The bottom line to all of this, the White House saying, look, judge the president by what he did in his first term. But the reality is he's now being judged by his policies of the second.

Jeff Zeleny, CNN, the White House.

(END VIDEOTAPE)

SOLOMON: And joining me now with more is Neil Shearing. He is group chief economist at Capital Economics. And he joins us this morning from London.

Neil, great to have you.

Let's just start with the markets. It's obviously been rocky for weeks. The S&P is now in correction territory a 10 percent fall from recent highs. Treasury Secretary Scott Bessent had this to say about the markets. Take a listen.

(BEGIN VIDEO CLIP)

SCOTT BESSENT, U.S. TREASURY SECRETARY: We're focused on the real economy. Can we create an environment where there are long term gains in the market and long term gains for the American people? I'm not concerned about the a little bit of volatility over three weeks.

(END VIDEO CLIP)

SOLOMON: Neil, from your perspective, how do you see these swings? Would you describe this as a little bit of volatility?

NEIL SHEARING, GROUP CHIEF ECONOMIST, CAPITAL ECONOMICS: Well, it's all very well dismissing it as a little bit of volatility. And, of course, you know any government should -- should not become too fixated by moves in stock markets on a day to day, week by week basis.

And but -- if the treasury secretary really is focused on what's happening in the real economy, part of the reaction in markets that we've seen over the past few weeks has been a response to what's happening in the real economy, which has not been great. There's increasing evidence that consumers are pulling in their horns, perhaps scared by forthcoming tariffs.

If we look at some of the incoming data, particularly what economists call GDP nowcast or a real time measure of what's happening to GDP growth, it looks like the U.S. economy is on course to contract in the first quarter of this year.

So the data flow from the real economy in the first quarter of this year is looking pretty grim. And that's what's producing this response in markets.

SOLOMON: Yeah. And I mean sticking to the real economy. And just some of these warnings we've heard from corporate America. It was Dollar General, I believe it was who just warned -- the CEO just warned that they're also seeing signs of a slowing consumer. You're seeing some of the airline CEOs start to talk about a pullback there in demand. I mean, if -- if that isn't discretionary in terms of travel, I don't know what is.

And so, Neil, when you hear these warnings, you couple it with the market for people who are at home trying to make sense of the mumbo jumbo, the financial jargon, and trying to get a sense of what's happening in the economy. What would you say? I mean, how would you describe what were seeing?

SHEARING: Well, I think it's extraordinary on one level, because when you look at consumer downturns. And let's -- let's not overreact to this at the moment, its kind of 1 or 2 data points. But if this is to be a significant downturn in the U.S. economy, normally when that happens, its because the government has to raise taxes or cut spending for budget reasons, or the Fed has to raise interest rates because of an inflation problem, or because there's a shock from left field like the COVID pandemic that that knocks the economy for six.

But that's not really happened this time. There's not been a -- there's not been a big increase in interest rates from the Fed. In fact, they've been cutting rates. And there's not been a big fiscal tightening shock from the U.S. government. And there's not been an external shock.

This is self-inflicted. This is to the extent that we're seeing weakness in the economic data, it's about the uncertainty generated by some of the administrations policies. I think. So to my mind, it's that -- it's the first kind of self-inflicted recession, if this is to be a recession or downturn that we've had now.

I don't think we're there. We don't think were there yet. Like I say, I wouldn't overreact to 1 or 2 months worth of data. But to the extent we have seen some weakness since the start of the year, I think it's almost been entirely self-inflicted.

SOLOMON: Yeah. Let's consider what we've heard from the administration. We just heard Scott Bessent there, the secretary of treasury, saying we're taking a long term view here. We've heard Trump say the same, that we focus on quarters, other places focus on decades.

Neil, is there any indication that these tariff policies could be good for the U.S. economy in the long term?

SHEARING: Well, I commend the idea of not focusing on data month to month, week to week. You know, the government the government is right. Any government is right to -- to have a long term view and a plan, though often a long term plan for the economy collides with short term political realities, electoral realities. There's going to be midterms in a couple of years time. And then, of course, a presidential, another presidential election in four years time.

So often, political realities collide with the -- the economic imperative to have a long term plan. Even if you were to put together a long term plan for the U.S. economy, though I struggle to think that there's a -- I would struggle to argue that tariffs, higher tariffs should be a significant part to that.

That's not to say that the trade, the global trade field is perfectly level. I think that some of the administrations complaints about Chinese trade policy, I think, are justified. I just don't think tariffs are the right way to deal with that.

SOLOMON: Yeah. And I think part of the frustration, at least among investors, is that you're seeing these policies toward foes and friends alike, which is also part of the confusion.

Neil Shearing, we'll leave it here. But appreciate you being with us this morning. Thank you.

And Washington, the clock is ticking for Congress to avert a government shutdown. Lawmakers have until midnight to pass a plan to fund the government for six months. If they don't, hundreds of thousands of workers could be furloughed without pay, and many government services would be halted.

The top Senate Democrat, Chuck Schumer, has said that he will support a Republican bill that keeps the government open. He argues that a shutdown would put every part of the government at Trump's disposal.

(BEGIN VIDEO CLIP)

SCHUMER: I have said many times there are no winners in a government shutdown, but there are certainly victims. I believe it is my job to make the best choice for the country, to minimize the harms to the American people.

(END VIDEO CLIP)

[05:10:03]

SOLOMON: Now, Democrat Alexandria Ocasio-Cortez opposed the bill, which did pass the House with just one Democrat joining Republicans in favor and one Republican voting against it.

She says that some members of her party feel betrayed by the Senate minority leaders decision to back the House plan.

(BEGIN VIDEO CLIP)

OCASIO-CORTEZ: I think it's almost unthinkable why Senate Democrats would vote to hand the few pieces of leverage that we have away for free when we've been sent here to protect Social Security, protect Medicaid, and protect Medicare.

(END VIDEO CLIP)

SOLOMON: It's back to work for thousands of federal employees recently fired by the Trump administration. A second federal judge ruled Thursday that probationary employees from 18 different agencies must be reinstated to their jobs. The order by an Obama appointed judge suspends their dismissals for just two weeks. That gives time for a challenge to the mass firings by Democratic attorneys general to move forward.

And a judge in a separate case last month ordered half a dozen agencies to reinstate staff who were let go as part of the administrations effort to shrink the federal workforce. The Trump administration says that it will appeal the ruling.

That was a shocking scene at Denver International Airport on Thursday. Dozens of American Airlines passengers were forced to evacuate a burning jet by climbing onto its wing. The Federal Aviation Administration says that the Boeing 737-800 was diverted to Denver while flying from Colorado Springs, which isn't too far after the crew reported engine vibrations. The engine caught fire after the plane landed.

Denver Airport says that all 178 people on board got off the jet. Twelve were taken to the hospital with minor injuries. Authorities are investigating.

And when we return, we are getting our first look at brand new CNN polling revealing how some Americans feel about President Trump's handling of the war in Ukraine.

Plus, Russia's president responds to the U.S. proposal for a ceasefire in Ukraine. Why his response is actually raising more questions than answers.

And later, as protesters and later protesters overwhelm the lobby of the Trump Tower, many of them arrested as they demand the release of a Palestinian activist.

We'll be right back.

(COMMERCIAL BREAK)

[05:16:47]

SOLOMON: Welcome back.

A new CNN poll reveals what Americans think about President Donald Trump's foreign policy less than two months into his second term. Fifty percent of those surveyed say that his approach to the war between Russia and Ukraine is bad for the U.S., 29 percent say that it's good for the country.

Meanwhile, most Americans were skeptical about whether the presidents handling of the conflict will bring about long term peace to the region. Almost 60 percent say that it's not too likely or not at all likely. Roughly 40 percent say that it is at least somewhat likely, and about 54 percent of those surveyed say that President Trump's foreign policy moves have hurt Americas standing in the world. 30 percent say that they have helped.

Kyiv is moving to capitalize on Russia's unenthusiastic reaction to the U.S. 30-day ceasefire proposal for Ukraine. Russian President Vladimir Putin expressed, quote, reservations about the proposal after Moscow received it on Thursday. He raised questions about how it would work and also made it clear that it doesn't go far enough.

Kyiv has already signed off on the ceasefire plan, and President Volodymyr Zelenskyy accused the Kremlin of dragging its feet without saying no.

(BEGIN VIDEO CLIP)

VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): Now we have all heard from Russia, very predictable, very manipulative words from Putin in response to the idea of the ceasefire on the front line. He is actually preparing a refusal, as of now. Putin, of course, is afraid to tell President Trump directly that he wants to continue this war.

(END VIDEO CLIP)

SOLOMON: President Trump reacted to the Kremlin's answer while meeting with NATO Secretary General Mark Rutte. Trump said that he still has leverage to turn up the pressure on Russia if needed, but he wouldn't say how. He did suggest that Putin's response was a good start.

(BEGIN VIDEO CLIP)

TRUMP: He put out a very promising statement, but it wasn't complete. And yeah, I'd love to meet with him or talk to him, but we have to get it over with fast.

Thousands of people a week are dying, so we really don't have very much time. We have to make this fast. It shouldn't be very complicated.

(END VIDEO CLIP)

SOLOMON: Okay, let's get to Fred Pleitgen, standing by in Moscow with more -- Fred.

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi, there, Rahel.

Yeah. Fast doesn't seem to be on the Kremlin's agenda as far as getting that ceasefire rolling. Certainly, if you listen to Vladimir Putin late last night, what he did say is that in general, he is in favor of a ceasefire agreement. But then he came out with a litany of things that he called reservations with.

The Russians say that they want sorted out first. For instance, where the actual line of contact is going to be, who's going to monitor the ceasefire, who's going to enforce the ceasefire? What are the Ukrainians going to do when the ceasefire happens? Are they going to regroup and rearm?

And of course, one of the things that the Russians have been saying for a very long time is that they don't want any NATO troops, and now they're even saying foreign troops on the ground in Ukraine as security guarantees. All of this as the Russians are moving forward on various front lines

in Ukraine, and Vladimir Putin himself in part, is directing combat operations. Here's what we're learning.

(BEGIN VIDEOTAPE)

PLEITGEN (voice over): Just hours after visiting his generals near the front lines in the Kursk Region, Russian leader Vladimir Putin back in Moscow, pouring cold water on President Trump's initiative for an immediate ceasefire with Ukraine.

VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): I would like to begin with words of gratitude to the U.S. President, Mr. Trump, for paying so much attention to the settlement in Ukraine.

[05:20:12]

We agree with the proposals to end hostilities, but we proceed from the fact that this end should be such that it would lead to a long- term peace and eliminate the root causes of this crisis.

PLEITGEN: In other words, the Russians want to hammer out a full peace deal before ending the fighting, even as the Trump administration says the shooting should stop immediately.

The U.S. President had hoped Putin would fully endorse his proposal.

TRUMP: Now, we're going to see whether or not Russia is there, and if they're not, it will be a very disappointing moment for the world.

PLEITGEN: This, as Russian forces say, they've been making major gains in the Kursk Region, Ukraine's last small foothold on Russian territory.

Putin's soldiers are now patrolling the streets in small towns leveled by the battles.

There was fierce fighting here, this soldier says, Ukrainian troops brought in heavy equipment and shot at the building point blank. But the buildings are strong, the walls are strong, so the defense held up."

Putin went on to say he has concerns that the Ukrainians will use a ceasefire to regroup and rearm if Moscow's troops take their foot off the gas now.

PUTIN (through translator): So, these 30 days will be used how? So, that forced mobilization continues in Ukraine? So that weapons are delivered there? So that units undergo training? Or if nothing of such sort will happen, then the question arises, how will the issue of control and verification be resolved? And how will we be guaranteed that nothing like this will happen?

PLEITGEN: While the Ukrainians have fully signed off on the ceasefire proposal and say they're willing to implement it immediately, the Russians say they see little benefit in freezing the fighting, although Putin says he, too, wants to see the war come to an end.

PUTIN (through translator): I think that we need to talk about this with our American colleagues, partners, maybe call President Trump and discuss it with him. But the idea itself, to end this conflict by peaceful means is supported by us.

(END VIDEOTAPE)

PLEITGEN (voice-over): And, of course, Rahel, that could possibly be the next step, some sort of phone call between President Trump and the Russian President Vladimir Putin. It's unclear when exactly that is going to take place. Certainly, some believed that it could have taken place yesterday, but then the Kremlin denied that it would.

Of course, we also had Steve Witkoff on the ground. The presidential negotiator here trying to brief Vladimir Putin on the cease fire and trying to find a way forward as well. One of the things that one senior Russian lawmaker, however, has said is that the Russians believe that the U.S. needs to understand that any sort of agreement will be on Moscow's terms and not on Washington's -- Rahel.

SOLOMON: Okay, we will wait to see and we know you'll be on top of it. Fred Pleitgen. Thank you, live for us there in Moscow.

The Trump administration sued over the mass layoffs at the Department of Education. Coming up, I will speak with a former department adviser about the impact of the cuts, when we come back.

(COMMERCIAL BREAK)

[05:27:36]

SOLOMON: Welcome back.

Twenty U.S. states are suing the Trump administration for its plan to cut the Department of Education's workforce nearly in half. The states claim that the administration is illegally sidestepping congressional mandates, which require the department to carry out certain functions. The department oversees about 100,000 public schools and some 34,000 private ones nationwide, although it only accounts for a small fraction of public school funding, it does provide federal grants for schools and programs in need, and it evaluates the quality of curricula at both public and private institutions.

Joining me now is Sarah Sattelmeyer. She was a senior advisor for the office of the undersecretary at the U.S. Department of Education during the Biden administration. She is currently project director for education, opportunity and mobility and the higher education initiative at the New America think tank.

Sarah, great to have you this morning. Thanks for waking up early to be with us.

Just taking a look at your background. You have worked at some of these agencies that are now facing these deep cuts from the Department of Veterans Affairs to Health and Human Services, and more recently, the Department of Education.

What have you been hearing from friends or former colleagues who are still with these departments right now?

SARAH SATTELMEYER, PROJECT DIRECTOR, NEW AMERICA'S HIGHER EDUCATION INITIATIVE: You know, I think the entire community is really devastated by these cuts. What the spotlight is really being shined more than it normally is on something that's a little bit less sexy than policy, but that's implementation. It's getting programs into the hands of Americans and their families and their communities.

And what happens when the federal workforce is slashed? Is that it's harder for families to access these resources. It may be slower and things may break, and that ultimately affects the very people that were trying to serve.

SOLOMON: Yeah. And when it comes to the cuts, specifically at the Department of Education, it would now be about half the size. It was just a few months ago before the president was inaugurated. That is hard to even sort of wrap your mind around.

Can you explain for us, having worked at the agency, what kind of an impact does that have for the day to day work for the people who are there?

SATTELMEYER: Yeah, I mean, I think we don't even need to talk about hypotheticals right now. We saw a day or so after the cuts that across the United States, students and parents couldn't access the FAFSA form. It was down for a couple of hours.

And staff at the department who focused on technology and some of the back end systems had been cut, were having trouble accessing various systems that they needed to do their work, and it took longer than it otherwise.