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Early Start with Rahel Solomon

U.S. Stock Markets Sink As Asia, Europe Shares Tumble; Heavy Rains Flood Kentucky Town As Deadly Storms Slash U.S. South and Midwest; Florida and Houston Set for Men's National Championship Showdown After Final Four Wins. Aired 5-5:30a ET

Aired April 07, 2025 - 05:00   ET

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

[05:00:00]

POLO SANDOVAL, CNN ANCHOR: And good morning, and welcome to all of our viewers joining us in the United States and around the world, I'm Polo Sandoval in today for Rahel Solomon. It is Monday, April 7th, 5:00 a.m. here in New York City. And straight ahead here on EARLY START.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: What's going to happen with the market, I can tell you, I don't want anything to go down, but sometimes you have to take medicine to fix something. I was elected on this. Our country has gotten a lot stronger.

UNIDENTIFIED MALE: Ground is saturated, trees are going to fall. So, you've got to be very careful.

UNIDENTIFIED FEMALE: We're concerned about flooding at this point.

UNIDENTIFIED MALE: And we're just getting a lot of water right now. All that water has got to go somewhere.

(MUSIC)

UNIDENTIFIED MALE: Pump up the jam, pump it up.

UNIDENTIFIED MALE: Part of why we're good is because of that, because of our good-natured fun that we have, our ability to be in the final four for the first time and be in light.

UNIDENTIFIED MALE: You always have a chip on your shoulder. And for me, that chip has never left my shoulder.

(END VIDEO CLIP)

SANDOVAL: U.S. President Donald Trump's tariff-induced market mayhem appears to just be getting started. Trading in European markets now underway, and these right here are the numbers, they speak for themselves. They are following Asia's lead with serious losses. Asian markets have also been plunging. Just look at these numbers here as well. Major hits across the board, Hong Kong's Hang Seng hit the hardest of

all. U.S. stock futures, they are not fearing, at least, they are not faring any better. The Dow, Nasdaq and also the S&P 500 futures, they are all down ahead of the new trading week. Despite the turmoil, Mr. Trump defended his tariffs to reporters aboard Air Force One on Sunday.

(BEGIN VIDEO CLIP)

TRUMP: We will be taking in over $1 trillion over the next short period of time with the tariffs that I've already instituted. They're already in place now. What's going to happen with the market, I can't tell you, but I can tell you our country has gotten a lot stronger. And eventually, it will be a country like no other. It will be the most dominant country economically in the world.

I've spoken to many countries, they all want to do -- just so you understand the power of what I'm doing. Every country is calling on me, very solicitous of us, very nice, they've been very nice.

(END VIDEO CLIP)

SANDOVAL: Well, the Trump administration is downplaying this market volatility, there may be more uncertainty ahead. Larger U.S. Tariffs, they are scheduled to go into effect on Wednesday, and that's when the U.S. will place a 54 percent tariff on all goods imported from China. Now, in the meantime, the President says that he is willing to negotiate with Beijing.

(BEGIN VIDEO CLIP)

TRUMP: We have a trillion dollar trade deficit with China, hundreds of billions of dollars a year we lose with China. And unless we solve that problem, I'm not going to make a deal. Now, I'm willing to deal with China, but they have to solve their surplus.

(END VIDEO CLIP)

SANDOVAL: We are covering market activity in Asia and in Europe at this hour. Melissa Bell is watching the action from Paris, and our Kristie Lu Stout, she's been following Asian trading from Hong Kong. Let's begin there, Kristie.

KRISTIE LU STOUT, CNN CORRESPONDENT: Oh, Polo, markets here in the Asia Pacific region ended this day deep in the red as investors across the region continue to reject U.S. President Donald Trump's sweeping tariff policy. Let's take a look at how the Asian trading day ended. And you can see there, red across the board, deep losses here in Hong Kong with the Hang Seng losing over 13 percent this day.

Also losses in Japan, the Nikkei losing close to 8 percent, Seoul Kospi, the S&P, ASX in Australia, as well as losses in Shanghai as well. All this on the back of what was announced last week by U.S. President Donald Trump when he made that announcement, saying that there will be at least 10 percent tariffs on all U.S. imports, effectively upending global trade norms. And ever since that moment, leaders across the Asia-Pacific region

have been scrambling to formulate a response. Earlier today, we heard from the Japanese Prime Minister, who said that his government does want to talk and continue to talk with the Trump administration to find out ways to lower the tariffs being applied against his country.

[05:05:00]

The South Korean acting President also advocating for talks. But China advocating a very different, more robust approach. China late on Friday announcing that 34 percent retaliatory tariff that is going to kick into gear later this week on April the 10th. And China also over the weekend through state-run media, striking a very defiant tone.

And a number of online commentaries, including a commentary that was later published in today's front cover of the "People's Daily", in which it said, look, the tariffs from Donald Trump, they're going to hurt, but as it said, the quote, "sky won't fall". In addition to that, saying this, "as a responsible global power, we should turn pressure into motivation and see the U.S. impact as a strategic opportunity."

Now, the "People's Daily" also added that China has not closed the door on potential talks with Donald Trump. Back to you, Polo.

SANDOVAL: All right, Kristie Lu Stout, thank you so much there for the markets in Asia. Let's go now to Europe. Melissa Bell in Paris with the situation there in the markets. Hey, Melissa.

MELISSA BELL, CNN INTERNATIONAL CORRESPONDENT: Markets opening way down again this morning, Polo, even as European trade ministers are meeting over in Luxembourg. Now, this is an extraordinary meeting that's been called for by the Polish presidency of the EU Council.

And they're urgently looking at how to respond to the tariffs, even as they suggest that they intend to take their time simply because that the mark -- they believe that the pressure on the American administration is going to come first and foremost from the markets themselves. We've been hearing from the Polish trade minister, even as he went into that meeting, saying -- speaking to the $5 trillion U.S. that were lost on the U.S. stock market on Thursday and Friday.

Speaking also to this, these fools overnight in Asia, and this difficult opening here in Europe, he believes that all of that pressure will have to be listened to by Washington. And it isn't just coming from Europeans, that message we've been hearing from Elon Musk over the course of the weekend, speaking to a meeting of the Italian far-right. This is what he had to say about tariffs.

(BEGIN VIDEO CLIP)

ELON MUSK, FOUNDER & CEO, TESLA & SPACEX: I hope it is agreed that both Europe and the United States should move ideally, in my view, to a zero-tariff situation, effectively creating a free trade zone between Europe and North America, and also more freedom of people to move between Europe and North America if they wish -- if they wish to work in Europe or wish to work in America, they should be allowed to do so in my view. So, that has certainly been my advice to the President.

(END VIDEO CLIP)

BELL: Elon Musk there suggesting that he too is feeling the pain of all this. Europeans, even as they're meeting in Luxembourg, saying that they're going to look at how to strike back, but that also they're leaving the door open to negotiations. They believe that some room for compromise can be found.

And bear in mind, Polo, that the European Union as a bloc, the United States' largest trading partner. They believe that with the actions, the instruments they have up their sleeve, they can now make themselves heard. Heard even as they seek a better deal with the U.S. administration. Polo.

(END VIDEO CLIP)

SANDOVAL: Melissa Bell in Paris with a look at the European markets. Thank you, Melissa. You know, meanwhile, the White House is conducting a media blitz to downplay that --

(CLEARS THROAT)

SANDOVAL: Excuse me, that market chaos. On Sunday, administration officials claim that Trump's tariffs are, a, quote, "reset of the U.S. economy and global trade." They're also denying the risk of any recession.

(BEGIN VIDEO CLIP)

PETER NAVARRO, COUNSELOR TO PRESIDENT DONALD TRUMP: We are going to have the biggest boom in the stock market we've ever seen under the Trump policies.

SCOTT BESSENT, SECRETARY OF TREASURY, UNITED STATES: I reject that the assumption -- there doesn't have to be a recession. The -- you know, who knows how the market is going to react in a day, in a week.

HOWARD LUTNICK, SECRETARY OF COMMERCE, UNITED STATES: You need to reset the power of the United States of America, and reset it against all our allies and our enemies alike.

(END VIDEO CLIP)

SANDOVAL: A lot of optimism from the administration. As for lawmakers, they are fighting to rein in the tariffs. One Democratic senator says a bill requiring congressional approval for new tariffs is gaining some bipartisan support. And a Republican House of Representatives plans to introduce a Companion Bill later today.

As lawmakers push back, one Democrat says Trump, who spent the weekend golfing is securing his legacy and the image is not flattering.

(BEGIN VIDEO CLIP) SEN. ADAM SCHIFF (D-CA): He's wrecking our economy. And I think people have seen their retirement savings on fire, and there he is out on the golf course. That may end up being the most enduring image of the Trump presidency. That is the President out on a golf cart while people's retirement is in flames.

(END VIDEO CLIP)

SANDOVAL: A billionaire fund manager who endorsed Trump's presidential campaign is now calling on the President to pause this trade war. Bill Ackman says that launching, quote, "economic nuclear war on every country of the world will seriously damage the U.S. economy and reputation for decades to come." Those were his words.

[05:10:00]

Let's go now live to Frankfurt, where I'm joined by Carsten Berset(ph) -- forgive me, Brzeski; chief economist at ING Germany and also head of Global Macro. Thank you so much for joining us. It's going to be a very busy day here, you saw the numbers. You've heard about the numbers certainly in Asian and European markets. We also heard from the Trump administration this weekend.

They basically emphasized that tariffs are happening and they're going to remain in place. So, I'm curious, from your perspective, how can markets adjust and how likely is a recession?

CARSTEN BRZESKI, CHIEF ECONOMIST, ING GERMANY: Well, I think these comments over the weekend were clearly pouring oil into the fire, and kind of will have accelerated the market selloff, because markets are now realizing that these tariff threats are not only short-lived, but they are here for good. They are for real.

Plus, we got -- already heard about retaliation from Canada, from China, from the EU. So, for market participants, we're really clearly back in the early 1930s when U.S. protectionism, U.S. tariffs started or accelerated a global economic crisis.

SANDOVAL: So, in your opinion, what do you think are those counter- measures that will be likely from the EU? Specifically, what kind of products for consumers? What sectors could we see impacted?

BRZESKI: I think the EU will start a two-phase strategy. Strategy one is reacting to the former tariffs on steel and aluminum. So, there, the EU will probably also react with tariffs on U.S. steel and aluminum, plus a couple of very specific U.S. products like peanut butter motorcycles and Whiskey. But then we will get the stage two which will be one which is harsher, which will be clearly aimed at all kind of U.S. products that can be easily substituted by European products.

So, think of cars, but think of other machinery. But I think, you know, the other option could still be that there are negotiations that you go in completely the opposite direction, and that you really start to talk about reducing trade barriers. SANDOVAL: And also Carsten, what is your long-term outlook here? I

read some of your work here, and you wrote that the Trans-Atlantic relationship has changed for good. Tell our viewers in what way?

BRZESKI: Well, it's hard to, of course, currently come up with outlooks because the -- you know, the situation can change by the hour. So, for the short-term, we do see a recession coming in the U.S., we clearly see a slowing of the global economy longer-term, and I think this is -- everything that's happening, even if in the end, tariffs will be withdrawn, if the end -- in the end, we get a deal, I think the Trans-Atlantic relationship has been damaged and has been hurt for good right now, because the U.S. is no longer this trustworthy, reliable partner.

So, which also means, this idea that the Trump administration has, that they will get more foreign investments into the U.S. economy is something that, at least, with this erratic economic policies, with this very harsh and aggressive tone, is unlikely to happen.

SANDOVAL: Yes, and he hopes the foreign investments may be gone in many parts of the world now? Carsten Brzeski, thank you so much for taking the time and for offering your expertise. Really do appreciate you. All right, still to come here on EARLY START, deadly storms across the U.S., they are bringing powerful rains and flooding.

We're going to be showing you how rescue efforts have been impacted there by severe weather as those rivers are rising. Also later, Donald Trump imposing tariffs on uninhabited islands near Antarctica that are home to just penguins, not people. What one administration official says is behind that move. Also, as March Madness drawing to a close, two top-ranked teams gearing up for the NCAA Men's National Championship. Still ahead, their coaches sharing their journey that led them all the way to the finals. Stick around.

(COMMERCIAL BREAK)

[05:15:00]

SANDOVAL: Violent storms ripped through the state of Kentucky on Sunday. That's the latest in a day's long line of deadly weather that's been moving across the U.S. Some cities issued curfews until later today, while others have urged residents to evacuate before that flooding becomes worse. Several state and local government offices, along with universities, have announced closures for today.

Millions of Americans, they are still under a flood watch at this hour. And at least, 19 people have been killed across the country, and very similar storms. And that number could rise in the coming days, as the true extent of the damage is seen across the south. In Arkansas, CNN's Ryan Young spoke with firefighters who lost a vital piece of equipment due to the powerful flooding.

(BEGIN VIDEOTAPE)

RYAN YOUNG, CNN SENIOR U.S. NATIONAL CORRESPONDENT (on camera): Now, this is Hardy, Arkansas. Where we're standing right now, crews gave the neighbors here a chance to get away, but at some point, they needed this rescue vehicle to try to save someone who was getting close to a diabetic coma.

You walk back this direction, you can see the utter devastation that's been left behind. As we walk carefully here, we look out this way. You can see all the destruction that's been left behind. Cell service here is still very spotty. Many of the gas stations and local businesses here have been closed. But as we turn this direction, you realize the massive loss that this area has taken.

[05:20:00]

The river here is just over the banks over there. It all exploded over here. At one point, it was 27 feet per hour. You can understand the raging water, it crushed this fire truck. The crew that was on here was able to save the patient, but the firefighters had to be rescued by boat. You can see how this cab has been crushed. And I was talking to the fire chief who said they've never seen water come in this fast. Take a listen to how dangerous this was from the fire chief.

JOSH MOORE, HARDY VOLUNTEER FIRE DEPARTMENT: The water was up over the hood. The second trip back with the boat, the river caught him and it capsized the boat. We almost lost the guy, thankfully, we got everybody out of the water. I did send him to the E.R. to get checked out. And now we're here.

YOUNG: And we were standing here as the fire chief was assessing the damage to this critical piece of equipment that helps this entire area. They need to get another pumping truck, but it's the utter devastation for all these folks who live out here. This will be something they'll be cleaning up for quite some time.

They're asking major questions because the rain has been so consistent, most of this damage was done by water alone, not by the tornadoes. But still, they have to follow up, and there's a long cleaning process throughout this area. Ryan Young, CNN, Hardy, Arkansas.

(END VIDEOTAPE)

SANDOVAL: Absolutely heartbreaking images there. And you know, that same storm system has actually forced Augusta National Golf Club to cancel this morning's practice round of the Masters until further notice. Look at this social media post that they've published. It cites "expected inclement weather and concerns for patron safety."

Well, it also says no one should approach the club until further details are released. Organizers say that they'll be putting out an update in the coming hours. The 2025 Masters tournament is set to begin on Thursday and runs through Sunday. Well, in Texas, a second unvaccinated child is dead in connection with the state's ongoing measles outbreak.

As of Friday, there have been nearly 600 reported cases across nearly four states. In Texas, where a majority of the cases have been reported, nearly all were unvaccinated people. Well, Health and Human Services Secretary Robert F. Kennedy Jr., who has been criticized for his handling of the outbreak, announced that HHS is partnering with local officials to try to better combat the situation.

And he also conceded that the vaccine is the most effective way to prevent the spread of this disease. A U.S. federal judge on Sunday denying the Trump administration's motion to pause in order to return a Maryland man who was deported erroneously to El Salvador. The government is asking to block the action, despite having admitted that Kilmar Abrego Garcia was sent there by mistake.

The judge says that her order to return that man by the end of the day remains in full force and effect. The administration is now trying to block the order in the court of appeals. And the Attorney General has put the lawyer representing the government on administrative leave for allegedly not pursuing the case vigorously enough.

Well, talks are set to kick off in Washington in just a matter of hours as Israel's Prime Minister meets with Donald Trump at the White House. Ahead, we'll take a closer look at what's on the table for discussion between the two leaders.

(COMMERCIAL BREAK)

[05:25:00]

SANDOVAL: Israeli Prime Minister Benjamin Netanyahu, he's waking up in Washington this morning. That's ahead of his meeting with President Trump at the White House. Today's visit coming as the Trump administration slaps a 17 percent tariff on Israel. That topic, along with Gaza and efforts to return the hostages will be on the agenda when the two leaders sit down for their discussions.

(BEGIN VIDEO CLIP)

(EXPLOSION)

(END VIDEO CLIP)

SANDOVAL: And at least, one rocket hit the southern Israeli city of Ashkelon on Sunday after Hamas launched its largest barrage of rockets since Israel renewed its offensive in Gaza last month when the ceasefire was shattered. The Israeli military says five of ten rockets were intercepted. CNN's Nada Bashir joins me live now. Nada, can we -- tell us a little bit more about what we expect to come from this meeting.

NADA BASHIR, CNN REPORTER: Well, look, Polo, this is the second time that we are seeing the Israeli Prime Minister traveling to Washington to meet with the U.S. President since Trump took office. But this visit comes at a very different time. The ceasefire in Gaza has since been shattered. We are seeing the war in Gaza only escalating.

But of course, as you mentioned, this also comes after Trump imposed sweeping new tariffs. And we've heard from Trump indicating that tariffs will likely be a key focus of these discussions between the two leaders. Indications, it's understood that the Israeli Prime Minister will be seeking a better deal from the United States after the Trump administration imposed new 17 percent tariffs on Israeli goods.

This decision being enforced despite a pre-emptive move by the Israeli government to drop tariffs on U.S. goods. The U.S. is, of course, not only Israel's closest ally, but one of its most important and largest trading partners as well. But as you mentioned, there are a series of other topics that are set to be high on the agenda for both leaders.

Among them, of course, Iran. There are indications that U.S. President Donald Trump may be moving towards restarting negotiations with Tehran. This is, of course, something that the Israeli Prime Minister will not want to see. Take a listen to what Trump told reporters just yesterday.

(BEGIN VIDEO CLIP)

TRUMP: There's a lot of things going on with the Middle East right now that have to be silenced. You know, we had no problem with the Middle East. Everything was done -- we had no problem with Iran. We had no problem with anybody.

[05:30:00]