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Early Start with Rahel Solomon

Trump Announces Sweeping New Tariffs; New Trump Tariffs Threaten to Escalate Global Trade War; Price Spikes Expected with New 25 Percent Tariff on Imported Cars; Severe Weather Hammers Parts of U.S.. Aired 4-4:30a ET

Aired April 03, 2025 - 04:00   ET

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

[04:00:00]

ABBY PHILLIP, CNN ANCHOR: Called tress management teams to meet with air traffic controllers and they're increasing the number of controller supervisors. A controller was arrested and charged with assault after a fight broke out there. Over what? Well, that is not clear.

But the controllers have been dealing with increased stress after a mid-air collision over the Potomac and close calls as recently as last week.

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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 Thursday, April 2nd, 4 a.m. here in New York and straight ahead on EARLY START.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This is one of the most important days, in my opinion, in American history. It's our declaration of economic independence and the day that we began to make America wealthy again.

UNIDENTIFIED MALE: Everybody sit back, take a deep breath, don't immediately retaliate. That's how we get escalation.

RICHARD QUEST, CNN ANCHOR AND CORRESPONDENT: There's going to be escalation. It's the nature of the beast. This is why it's never been done.

URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: We are already finalizing the first package of countermeasures and we will always stand up for Europe. If you take on one of us, you take on all of us.

UNIDENTIFIED FEMALE: The scope of this system, when you look at how many areas are impacted, this is a very widespread system. UNIDENTIFIED FEMALE: I just knew that it was going to get bad, so I took me and my family to the near shelter and we watched it come through, but we was hoping it missed our house, but as soon as we drove up, we realized we have nothing left.

(END VIDEO CLIP)

SOLOMON: All right, we begin this hour with that major economic news. President Trump overhauling a century of global American trade policy as he announces sweeping new tariffs on all imports to the U.S. It's a move which threatens to escalate his trade war with countries around the world. On Wednesday, the president used national emergency powers to impose tariffs of at least 10 percent on most countries.

There are even higher rates for dozens of nations that he called the, quote, worst offenders. It's a historic move that economists say will likely cause consumer prices to skyrocket and hurt economic growth. J.P. Morgan warning that the tariffs will probably plunge both the U.S. and global economies into a recession this year.

Now, the reciprocal tariffs are aimed at some of America's top trade partners. It includes 34 percent additional levies on imports from China. That's on top of existing tariffs and 20 percent tariffs for the EU.

Now, the baseline 10 percent raise rate that will take effect on Saturday with a more customized higher rate starting a week from now. President Trump claiming that his economic strategy will bring jobs and factories roaring back to the U.S.

(BEGIN VIDEO CLIP)

TRUMP: This is one of the most important days, in my opinion, in American history. It's our declaration of economic independence. For years, hardworking American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense. But now it's our turn to prosper.

(END VIDEO CLIP)

SOLOMON: All right let's take a look at the market reaction at a 4 a.m. on a Thursday morning after this historic announcement. You can see that futures are all solidly lower, steeply lower between 2.4 percent and 3.3 percent. The Nasdaq sort of continuing that trend there being the worst among them, shaping up to perhaps be another rough day on Wall Street after the markets actually closed higher yesterday.

Taking a look at European markets, you can see a similar reaction, although not as steep, FTSE off about 1 percent, the German DAX off about 1.7 percent and the CAC 40 about 1.8 percent, let's call it.

And governments around the world also deciding how to respond as the new Trump tariffs have triggered global shockwaves. Japan's chief cabinet secretary calls them extremely regrettable and is asking for a review. Canadian Prime Minister Mark Carney says that the Trump tariffs will fundamentally change the international trading system, and he is promising to respond with countermeasures.

(BEGIN VIDEO CLIP)

MARK CARNEY, CANADIAN PRIME MINISTER: We are going to fight these tariffs with countermeasures. We are going to protect our workers and we are going to build the strongest economy in the G7.

(END VIDEO CLIP)

SOLOMON: Australian Prime Minister Anthony Albanese is ruling out retaliatory tariffs on U.S. goods. He says that the existing trade agreement with the U.S., well, he says that it contains mechanisms to resolve any disputes.

(BEGIN VIDEO CLIP)

[04:05:00]

ANTHONY ALBANESE, AUSTRALIAN PRIME MINISTER: The administration's tariffs have no basis in logic and they go against the basis of our two nations partnership. This is not the act of a friend.

(END VIDEO CLIP)

SOLOMON: All right let's get a feel for how Europe is reacting. CNN's Melissa Bell joining us live this morning from Paris. Melissa, we just saw sort of how European investors are responding, how the markets are responding but how are European leaders responding this morning? What are you hearing?

MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Rahel, European leaders have been preparing this for some time, looking at a number of scenarios, waiting to see the detail of what was going to be announced from the Rose Garden. We've heard already from Ursula von der Leyen, speaking from Samarkand. And I think the tone speaks to a great deal of the sense of betrayal that's felt by many of the United States' allies or former allies at least.

But just a word before have a listen to her, Rahel, about some of the measures that the Europeans have been looking at. Essentially what the Europeans are saying is that, and we're hearing this from some of the officials who have been involved in the preparation of some of these scenarios, that it is not only the United States' biggest trading partner as a bloc, but that this huge single market, they believe, can be used as the primary weapon of the European Union in its response.

So making it very painful for American companies, not just because of the size of the market itself, but also because there are a number of tools at the disposal of Europeans, things like the Digital Services Act. There's also an anti-coercion measure, says the official, that until now has been used to target companies that misused funds, but may now be used, for instance, to target American banks and make it much more expensive for them to do business that comes through the European Union.

So they're looking at these very wide and fairly aggressive responses, even as they hope to negotiate, and they say they want to avoid escalation. But their primary objective, they say, will be to protect Europeans. Have a listen to what Ursula von der Leyen had to say after the announcement from Donald Trump.

(BEGIN VIDEO CLIP)

URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: I know that many of you feel let down by our oldest ally. Yes, we must brace for the impact that this will inevitably have. Europe has everything it needs to make it through the storm. We are in this together. If you take on one of us, you take on all of us.

(END VIDEO CLIP)

BELL: We've also been hearing reaction from a French government spokesman, and I think the words are interesting. He, the President Trump, that is, has no limits. He takes himself for the master of the world.

There is a great deal of anger amongst American allies. And here in Europe, that sense of betrayal, that anger, that frustration has been expressed by a number of leaders as well this morning, and no doubt we'll continue to hear more of that.

But again, what is actually happening in terms of concrete measures that EU ambassadors are meeting even now over the course of the day to figure out the response, we expect to hear more about the precise nature of the responses that will be rolled out over the next few days and up until the 12th of April, which is already being billed as European Liberation Day by some European officials.

But of course, even so, they're going to seek to try to continue to negotiate, because as they keep saying here in Europe, we did not start this war. We're prepared for it, but we'd much rather avoid it altogether -- Rahel.

SOLOMON: Yes, Melissa, it was interesting to hear President Trump yesterday say in the Rose Garden that other countries have to do what's right for them, as he says we do, we're doing what's right for us. Interesting to see what decision other countries ultimately come to as they decide what is right for them. Melissa Bell in Paris. Thank you.

OK, let's bring in Rhett Buttle now, founder and CEO of Public Private Strategies and also the co-executive director of the Small Business Roundtable, which works to bring together the public and private sectors. He joins us now live this hour from Oxford, England.

Rhett, great to have you this morning. We've had about 12 hours at this point to process this announcement. Your reaction on the impact that these tariffs will have?

RHETT BUTTLE, FOUNDER AND CEO, PUBLIC PRIVATE STRATEGIES: Well, good morning, Rahel. Obviously, this is unwelcome news for many people in the business community. And as we can already see, it's having a massive effect on the market in a way that we've potentially never seen before.

But I think the real impact is yet to be felt. Pretty soon here, you know, small businesses and working families are really going to start to feel the effect of these tariffs. Tariffs really are attacks on working class families. And really, a lot of these costs are going to be passed on to consumers.

And so right now, it's a lot of language and we're watching the terrible impacts on the stock market. What's yet to come in the next few days and weeks for consumers and small businesses is really where this impact will be felt.

SOLOMON: Yes, and make that more clear for me, the impact on small businesses, because at least here in the U.S., small and medium sized businesses are a huge driver of economic growth. They're a huge driver of labor, of jobs. I mean, give me a sense of, and plain speak, what this means for small businesses.

BUTTLE: Yes, look, small businesses employ half of all Americans. They create out two out of every three new jobs in our country.

[04:10:00]

And while we've already heard for a number of large corporations that this is going to impact them, small businesses don't have the same ability as large corporations to be able to absorb these sort of long term impacts that we'll see for tariffs.

And so for them, it makes the planning more difficult. And so they have to more immediately pass on a lot of these costs to their consumers. And so consumers who do day to day goods with Main Street businesses or small businesses, they will obviously feel it when they impact their products.

But because of who small businesses employ and how they do their planning, there's a potential that it could also affect unemployment. It would allow businesses to not be able to project out as long or maybe hire as much as they should. So we're going to see some of the immediate effects of the stock market and the price on consumers.

I also affect this -- I also am worried this is going to affect the U.S.'s long term growth in terms of how small businesses hire. We're already seeing small businesses confidence dip there.

You know, for the last few years, we've seen a lot of small businesses grow and get started. This is not the sort of signal we want to send to the small business sector, which is really the job engine of America's job creation.

SOLOMON: And what areas would you expect to see this show up first in the form of higher prices? What sectors, what areas and how soon?

BUTTLE: Yes, I think most immediately, you know, we'll see it in the manufacturing sector. We've already seen some of it in autos, for example. You know, there was a 20 percent tariff placed on imported autos. Some of that impact consumers will start to see.

But we're going to see it on a lot of basic goods that that folks buy everything from consumer electronics, some some sorts of alcohol, for example. So a lot of that will be passed on, you know, in small businesses, but also directly to consumers who are on the shore shopping.

So this pretty soon here in the next few weeks, we'll start to see prices rise for consumers. And like I said, this is really more like a tax on consumers really than than a tool. And, you know, as we move on and on and we start to see other countries retaliate to this tariff war, we could see other potential effects over the next few weeks and months.

SOLOMON: Yes, right. I mean, just just just playing devil's advocate here, sort of humor me. Every industry sort of has a different profit margin on average.

Some some like groceries have thinner margins. Others have larger margins. I mean, there are areas, right, where companies can theoretically absorb some of these higher costs. They don't have to pass them on to consumers.

Do you expect that to happen? And what industries would you be watching perhaps for that to happen?

BUTTLE: Yes, look, not all industries, you know, will necessarily have to pass this on as a tax to consumers. You know, some have long term planning in place. And for the most part, we'll see larger businesses be able to mitigate some of that risk because some of this is projected. Some of them have already done the planning.

And for a number of businesses, you know, who have, you know, different supply chains, supply chains that are more oriented towards home, they may be able to ward off some of this. But eventually, the long term impacts on the market are really going to affect all businesses.

And I think particularly, you know, we worry about the small businesses just because of the position they're in and the fact that they don't have the same amount of planning ability or the cash flow. And so we really want to be able to support them in different ways. And so it really just matters how long sort of this trade escalation continues to lean on.

But eventually, I think we will see broad impact across a number of industries.

SOLOMON: Yes, and just for our viewers, stick with us in the next hour. We're going to be speaking to a small business owner about how this impacts her and her business and her supply chains.

Rhett Buttle, we appreciate you being with us this morning. Thank you.

BUTTLE: Always great to see you. Thanks for having me.

SOLOMON: All right and still ahead for us, need a new car or need to get one repaired. Americans may have to, as we just were talking about, pay more for both because of the new tariffs. We'll have those details straight ahead.

And later, millions are impacted as tornadoes, thunderstorms and hail pummel the Midwest U.S. We'll be right back.

[04:15:00]

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN CHUCK SCHUMER (D-NY), U.S. SENATE MINORITY LEADER: Donald Trump said he reduced prices on day one when he got elected. He's doing just the opposite with these tariffs. He's raising prices through the roof and strangling American families.

SEN. RAND PAUL (R-KY): This is a tax, plain and simple, on the American people.

(END VIDEO CLIP)

SOLOMON: Senator Republican Rand Paul and Democrat Chuck Schumer sharing passionate reactions over President Trump's new tariff policy. Four Republican lawmakers helped pass a bipartisan resolution in the Senate rebuking the White House's trade policy.

Now, that includes Mitch McConnell, who said in part, quote, Tariffs are a bad policy, and trade wars with our partners hurt working people most. Tariffs drive up the cost of goods and services. They are a tax on everyday working Americans. Preserving the long-term prosperity of the American industry and workers requires working with our allies, not against them.

And President Trump's new tariffs are making some Americans think about purchasing large purchases sooner rather than later. That 25 percent tariff now affects all imported vehicles, which could mean the difference between someone owning a car or leasing a car.

CNN's Danny Freeman spoke with customers and the president of a dealership in Pennsylvania about how the tariffs impact them.

(BEGIN VIDEOTAPE)

ROSA SCOTT, SHOPPING FOR NEW CAR: I need to buy a new vehicle before the prices start going up too high.

DANNY FREEMAN, CNN CORRESPONDENT (voice-over): Rosa Scott has been eyeing this new Jeep Wrangler for a while. But when she saw the dealership packed over the weekend, she knew she had to act.

SCOTT: I really wanted to wait a couple of months, but it might be too much then. [04:20:00]

FREEMAN: So, you were hoping to wait a couple of months to buy this car, but you were worried about tariffs in particular?

SCOTT: Yes, I was worried about the prices going up.

FREEMAN (voice-over): David Kelleher is the owner of David Auto outside of Philadelphia, which sells mostly Stellantis vehicles like Dodge, Jeep and Ram. But he says new tariffs on imported vehicles will be felt across the industry.

DAVID KELLEHER, PRESIDENT, DAVID AUTO GROUP: When you're talking about GM, Stellantis, Ford, these gigantic companies, we're going to be impacted. Make no mistake about it, even though we're American companies, we're going to be impacted.

FREEMAN (voice-over): For some, the feared impact means a race against the clock.

KELLEHER: I have a customer that ordered an $86,000 2500 Ram. If that can get on a train today, it will be without tariff. If it gets on the train tomorrow, it's going to have a 25 percent tariff. That $86,000 car becomes a $103,000 car overnight. And that customer, he's going to turn to me. I'm most likely going to eat that. That's a $20,000 hit.

FREEMAN (voice-over): For others, smaller changes add up fast. Take this new Jeep Compass, American car, assembled in Mexico. It costs around $30,000 today, but with a 25 percent tariff, Dave explained, these cars could suddenly cost as much as $37,500.

KELLEHER: That kind of change in a price moves that payment $175 a month. And our customers they're middle-class people. They just can't afford that kind of bump.

FREEMAN: What would you advise someone who's looking to buy a car? Should they go out and buy it today?

AARON BRAGMAN, DETROIT BUREAU CHIEF, CARS.COM: That has been our advice: is to go out and get a vehicle, frankly, as soon as you possibly can.

FREEMAN (voice-over): Aaron Bragman with Cars.com says it's crucial to remember American-made cars will also be impacted, as most cars assembled stateside use parts from overseas, which are expected to be tariffed, as well.

BRAGMAN: It's not going to just impact new car prices. This is going to impact repair costs, as well. So, it's a knock-on effect these tariffs are going to have, not just in buying a new car. It's in maintenance. It's in ownership costs. It's a number of different areas that are going to, quite frankly, cost American consumers.

FREEMAN (voice-over): Across the country, customers said they were buying cars early due to the tariffs. UNIDENTIFIED MALE: Just knowing that tariffs went into effect, and

it's real, now, I know that it's something I don't have to think about anymore.

FREEMAN (voice-over): But Kelleher is now worried for American workers who rely on imported cars for jobs.

KELLEHER: I think what the president is trying to do is admirable. Bring in more jobs to the United States, you know, bolstering the industries in the United States. This is great, great, great stuff.

But I'm telling you right now, the impacts of these tariffs are going to make Americans lose jobs. There's no doubt about it.

FREEMAN: Now, one important thing to note, from experts and this dealer that I spoke with, is the cars that are on this lot and lots all over the country right now, they're here right now. They got into the States prior to these tariffs going into place.

So, in theory, you should be able to get some cars that are on lots for pre-tariff prices. So, if you're concerned at all that you might have missed the boat when it came to some of these price increases, don't worry. There still may be a little bit of time to get a deal in.

Danny Freeman CNN, Glen Mills, Pennsylvania.

(END VIDEOTAPE)

SOLOMON: The judge overseeing the corruption case against the mayor of New York has dismissed the charges against him. Judge Dale Ho also ordered that the Justice Department cannot bring the charges against Eric Adams back again. The judge criticizing the DOJ's efforts to drop the case while trying to retain the ability to restore the charges if the mayor did not carry out the Trump administration's immigration agenda in New York.

The DOJ efforts sparking a mass resignation of several Justice Department attorneys amid accusations of quid pro quo. Mayor Adams is up for re-election this fall. He had pleaded not guilty to bribery, wire fraud, and charges of conspiracy.

Turning to severe weather now. Five million Americans are still under tornado watches this hour after storms pummeled the U.S. Midwest on Wednesday. CNN affiliate WISH reporting a tornado knocked over a large radio tower and ripped off the front of a building in Indiana.

That twister was just one of 19 reports of tornadoes scattered across states like Arkansas, Illinois, Kentucky, and Missouri. In one city in Arkansas, at least five homes were destroyed and power lines were brought down. You see some of that destruction in this drone video here.

Officials in Kentucky, meantime, say that four people were injured after they tried to take shelter in a vehicle near a church that was destroyed by a tornado. A line of severe thunderstorms was also seen tracking through parts of the Midwest. Officials in Missouri say that one person is confirmed dead following the storms, although at this point the circumstances are still unclear.

Across Indiana, Michigan, Ohio, Kentucky, and Arkansas, more than 400,000 energy customers have been left without electricity following the severe weather.

[04:25:00]

And still ahead for us, new warning signs for Tesla, the electric vehicle maker posting its largest drop in sales amid a growing backlash to CEO Elon Musk.

Plus, President Trump upending nearly 100 years of U.S. trade policy. Friend and foe alike will be impacted by sweeping new tariffs, including the markets in Asia. We'll have a live report from the region when we come back.

(COMMERCIAL BREAK)

SOLOMON: Welcome back. It's about 4.30 here in New York. I'm Rahel Solomon, and here's some of the stories we are watching for you today.

TikTok is running down the clock with no apparent solution to avoid a ban in the U.S. Their parent company has until this Saturday to sell the app over national security concerns regarding its Chinese ownership. Now, President Trump has previously extended the January deadline and has said that ...