Return to Transcripts main page

Early Start with Rahel Solomon

Trump Imposes Sweeping New Tariffs On Trading Partners; China Promises To Take "Resolute And Effective Measures" As Trump's 104 Percent Tariffs Go Into Effect; European Markets Open Lower As "Reciprocal" Tariffs Kick In; South Korea Unveils $1.3B For Auto Industry Amid U.S. Tariffs. Aired 5-5:30a ET

Aired April 09, 2025 - 05:00   ET

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

[05:00:21]

ANNOUNCER: This is CNN breaking news.

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 Wednesday, April 9th, 5:00 a.m. here in New York, 10:00 a.m. in London and 5:00 p.m. in Beijing.

We are hours into President Trump waging the next phase of his global trade war, levying new double-digit tariffs on dozens of countries and an astonishing 104 percent tariff on China. All of this throwing the global markets into further turmoil.

Let's take a look. Asian markets closed, mixed. Actually, Nikkei closed off about 4 percent. Hang Seng index maybe, let's call it 7/10 of a percent. Shanghai composite, 1.3 percent.

European markets a different picture, where it looks solidly lower. Between the FTSE and let's call it the DAX, were looking at between 2.2 to 2.5. France off about 2.10 percent there.

And U.S. markets in premarket trading -- well, they've sort of been all over the place, experiencing a wild day of trading on Tuesday. They all closed sharply lower. But this morning, futures have been at points flat, at other points lower. And currently as we see, mixed.

Nasdaq S&P look at least in the green marginally, but a green -- green is green certainly in this market. And now, those tariffs that went into effect at midnight Eastern Time range from 11 percent to 50 percent. And that's on top of the sweeping 10 percent tariffs implemented Saturday.

The new tariffs hit some of America's closest trading partners, which the White House has called the worst offenders. That's not to mention the massive tariffs on China. This is what Trump said at different events on Tuesday.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We're making deals and people are paying tariffs. Countries are paying tariffs. Right now, China is paying a 104 percent tariff. Think of it, 104 percent.

Now, it sounds ridiculous, but they charged us for many items 100 percent, 125 percent. Many countries have. They've ripped us off left and right. But now, it's our turn to do the ripping.

We've had talks with many, many countries over 70. They all want to come in. Our problem is we can't see that many that fast. But we don't have to because as you know, the tariffs are on, and the money is pouring in at a level that we've never seen before.

(END VIDEO CLIP)

SOLOMON: But economists, market analysts and banks dispute Trump's logic, saying that these tariffs are likely to cause a massive global recession. Lawmakers, including some Republicans, are also criticizing the policies.

(BEGIN VIDEO CLIP)

SEN. THOM TILLIS (R-NC): I'm assuming this all got gamed out. Because -- because it's a novel approach, it needed to be thought out. Whose throat do I get to choke if this proves to be wrong?

(END VIDEO CLIP)

SOLOMON: Meanwhile, U.S. business owners say they are collateral damage in a war of attrition, including this longtime business owner who imports small appliances from China.

(BEGIN VIDEO CLIP)

BOBBY DJAVAHERI, PRESIDENT, YEDI HOUSEWARE APPLIANCES: We are the ones -- the importers are the ones that get the invoices from the customs -- from the Customs Department. We are the ones that have to pay the government all the tariffs, taxes, whatever you want to call them a tariff, a tax. It's a synonym to me. And that, that, that, that all gets billed to us, which we in have to bill the consumer at the end.

(END VIDEO CLIP)

SOLOMON: All right. This morning, we are watching the response all over the world.

CNN's Melissa Bell is live for us in Paris. But first, let's start with Marc Stewart in Beijing.

Marc -- Marc, talk to us about how China is reacting to this latest increase in tariffs.

MARC STEWART, CNN CORRESPONDENT: Well, Rahel, good morning.

You could argue were in a bit of a holding pattern in the sense it's not a question of if China will respond. It's about how and when that retaliation would take place. Now, if we look back to last week, last Friday when China last retaliated, its response came on a Friday afternoon, early evening here in Beijing, very early morning in New York. You could argue to perhaps send a message to the markets.

And it's that timing that is creating some conversation on Chinese social media. Will China do something late in the day here in Beijing to perhaps try to impact the market open in the United States?

As far as the messaging from Beijing today, very much the same tone of defiance. We have heard from government leaders, we have heard from state media, again, emphasizing that point that China will fight to the end and that China has the economic tools to endure this trade war.

Certainly, this is a China issue, but it's also an Asia wide issue. And that's been reflected very much in the markets. If we take a look at the market boards, we'll see that there were some declines today in both South Korea -- South Korea and in Japan.

[05:05:04]

Not so much a surprise in the sense that those are parts of the world that are very tied to the auto industry, to auto manufacturing.

Of course, we've got Honda, Toyota in Japan, Hyundai, Kia in South Korea. So, there were some losses there. Now, if you do notice, the Shanghai composite, which is one of the indices here in Asia, it actually saw a little bit of a boost up by a little bit more than one percentage point. It comes though, as we hear from a government official saying that Beijing has taken some proactive steps to withdraw this kind of fiscal storm.

So that is perhaps a glimmer of hope, at least for, for -- for Chinese traders, that the government is showing some kind of optimism.

As far as where we go from here, we heard President Trump on Truth Social again, open the door for negotiation, for conversation. But Beijing again remained, remaining very defiant in the sense that it said -- it does not feel that Washington, the White House is expressing a genuine willingness to have such serious conversations about trade.

Rahel, I go back to some of the remarks we heard from an analyst last week who posed this very question, who will fold first? Rahel?

SOLOMON: Yeah, yeah, I heard an interesting sort of commentary this morning that when we've seen reaction from China, its almost always comes shortly before the U.S. market opens. So, to your point, it's really not a question of if, it's when. So, watch this space.

Marc Stewart, good to see you. Thank you, Marc.

Let's turn now to CNN's Melissa Bell, who is with us from Paris.

Melissa, how does the E.U. plan to respond to these new tariffs?

MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Europeans are asking themselves the questions that are being asked around the world, whether these tariffs are an end in themselves or a negotiating tool. And for now, it appears Donald Trump, President Trump seems determined to make it look like, at least for the time being, they appear to be in themselves.

And of course, that has huge repercussions on the global economy. The Europeans are meeting today to try and figure out what their response should be. Some talk about a 25 percent tariff on all American imports to the E.U.

But even before that is decided and kicks in, there are already the impacts on American consumers themselves. Of this 20 percent across the board tariff that has come in on European imports to the United States.

So, take the Heineken beer, for instance. Already, this is a European beer that's been hit by aluminum tariffs. Now, imports of Heineken to the United States, 20 percent tariff slapped on them. That will necessarily make the price to the consumer all that greater.

There are specialties like camembert cheese. You simply can't make them in the United States. So, they will continue to be imported. They will just be more expensive for Americans to buy.

Perhaps most interesting is the luxury sector, for which the European union is so famous. Champagne exports to the United States. Champagne, by definition, can only be made here in France, at 27 million bottles were exported in 2023. Champagne is suddenly going to get a lot more expensive to American consumers.

And then there is the wine industry. A bottle of, for instance, Burgundy White, very popular in the United States. The total exports of European wines to the United States, worth 2.5 billion last year. Thats how much Americans like European wines.

Now, you could argue, and this is part of the argument, of those who are in favor of tariffs. Will people change to California? But the point is Californian wines rather -- the point is the way the global supply chains are organized. They too rely on things like French barrels, suddenly, that have a 20 percent tariff slapped on them.

So, it is the cost to American businesses. As of now, even before the retaliatory measures, Rahel, and the cost to American consumers, who are certainly going to find a lot of things, they're very used to buying and enjoying, either more expensive or simply entirely unavailable, because Europeans have decided it simply isn't worth exporting them, Rahel.

SOLOMON: Yeah, some have sort of suggested there will be very little places to hide in terms of where you can find yourself immune from some of these tariffs.

Melissa Bell live for us in Paris -- Melissa, thank you.

Now let's bring in Josh Lipsky, senior director of the GeoEconomics Center and an economic diplomacy fellow at Harvard University's Belfer Center. He joins us this hour from Washington. Great to have you this morning, Josh.

Look, it's been five hours. Midnight has come and gone. I think, you know, any last-minute hopes that a deal would be reached have clearly been dashed?

What are you watching now? What happens now?

JOSH LIPSKY, SR. DIRECTOR, GEOECONOMICS CENTER, ATLANTIC COUNCIL: Well, the trade war has officially begun, and the United States has the highest effective tariff rate it's had in a century. So, President Trump has done what he said he was going to do. And we are past the immediate negotiation phase and into what we call the Atlantic Council tariff as tariff. He is trying to use it as a macroeconomic tool to raise revenue.

[05:10:02]

And the question is, how will the rest of the world respond? We were just talking on this show about how China will respond, and we'll wait for the pre-market reaction. But just as important is Europe, is the rest of Asia, is everywhere else around the world.

And there's going to be different models of response. And then how the White House takes that. And can we avoid the tit for tat escalation, which is usually the trademark of a trade war? Thats the real risk right now. And that's why the markets are on edge.

SOLOMON: And, Josh, you've made the point that there are models to address crises like these. But you say they won't work this time. What do you mean by that?

LIPSKY: Well, I wrote yesterday at the Atlantic Council that if you compare what's happening right now to the other two major economic shocks of the century, the global financial crisis and the pandemic, this isn't the same kind of economic crisis. Back then, we rely on the federal reserve. We rely on the G20 to step in in a crisis.

But the G20 is not going to be a good coordinating mechanism right now, because the United States is waging a trade war against almost every member of the G20, and the Federal Reserve is worried about stagflation in the United States. So, they can't cut interest rates like they've done in past crises because they're worried about higher inflation.

So, both of those tools aren't at the disposal of the U.S., and the rest of the world knows it. No one is coming to save the global economy. It's made by a decision right now by the White House, and only a reversal of that decision is what could de-escalate things at the moment.

SOLOMON: So, if the models that weathered us through the storms of the past few decades won't work, the Fed's not coming to the rescue. How do you see this ending?

LIPSKY: The question is what the pain economically will be, both in the U.S. around the world. And does that recalibrate both how countries react and the White House approach? No one has tried what the White House is doing in 100 years right now. There are really no good economic models to understand all of the implications on inflation, on growth. We are going to live through this over the next weeks and months.

And the question will be, is there a recalibration coming out of that to say this is not working? It's not working for the U.S. It's not working for the world, and we need to figure out a better way forward here.

But I think we're going to live through this, at least in the short term. And it's going to be -- unlike something people have experienced in a very long time.

SOLOMON: Yeah. I'm curious just to sort of make the counterpoint. I've been reading some op-eds about examples in the past where the administration has been able to effectively restructure the global markets, whether we're thinking about Paul Volcker in the '70s and -- and maybe in that moment, it doesn't feel effective. But if you sort of look -- look more long term, it can be.

And I guess my question, josh, is how do you see that likelihood that maybe in the midst of this and obviously this is the White Houses point, which is were taking a long term view here, not short term, but -- but what about the likelihood that ultimately after this sort of short term period of pain, that this, that, this, this might work out for the U.S.?

LIPSKY: I think that the pain that we're going to go through economically here is not going to result in what the goals of the White House seem to be, which is reshoring domestic manufacturing. And it's also never been completely clear, is that the end goal or is it just to raise revenue? Because the White House is assuming that many countries will not retaliate.

But China has already shown that that's not the case. And so, that's why I think if the end goal is to rebuild domestic manufacturing in some way, we're unlikely to get there. And look, there's a way to do tariffs. Tariffs are not a tool that should never be used in my opinion.

But we just went from a 22.5 percent effective tariff rate in the United States to something like a 25 percent effective tariff rate in the United States. Thats a shock, not just to the U.S. system, to the and the global system right at the same moment. And so, I think it's those issues, the way it's done and the goals that are going to be very hard to achieve.

SOLOMON: Yeah. And certainly, you know, leading -- leading some certainly critics to say that the goalpost keeps moving for the White House. And so, there's the question of can -- can these policies effectively accomplish what the White House is trying to accomplish? But then the other part of it is, what exactly is the White House trying to accomplish? Because the goalpost feels like it keeps moving.

Josh Lipsky, we'll leave it here, but appreciate you being here this morning. Thank you.

All right. Dozens are dead, countless more injured after the roof of a nightclub collapsed in the Dominican Republic. Details on this straight ahead.

Plus, South Korea offering support to its auto industry amid new U.S. tariffs. Ahead, the economic fallout from the global trade war.

And Prince Harry making a rare visit to the U.K. We'll have the latest on his fight against the British government's decision to downgrade his taxpayer-funded security. We'll be right back.

(COMMERCIAL BREAK)

[05:19:15]

SOLOMON: Welcome back.

South Korea has announced more than $1 billion in emergency support measures for its auto industry as it seeks to mitigate the blow from new U.S. tariffs. Seoul, citing concerns over the, quote, serious threats that the new duties pose. This comes as higher tariffs from the Trump administration affect dozens of U.S. trading partners.

The Trump administration previously announced 25 percent tariffs on all imported cars and auto parts, including those from its allies, raising concerns for South Korean carmakers Hyundai and Kia.

Meanwhile, President Trump says that the U.S. and South Korea have the, quote, confines of a deal after speaking with South Korea's acting president.

CNN's Mike Valerio has an exclusive interview with South Korea's leader, who believes that he can get Donald Trump to do something no other leader has been able to do so far. Drop the tariffs.

(BEGIN VIDEOTAPE)

MIKE VALERIO, CNN CORRESPONDENT: Well, the headline here is that we now have a dramatic illustration of the differences between two approaches.

We have China leading the resistance, retaliating with tariffs of its own. And now in this new interview with South Korea's Acting President Han Duck-soo, we have an idea of South Korea's playbook, which is to come to the negotiating table. Cool. Collected, putting value in the strength of its long-term alliance with the United States, with the mentality that a deal can be made.

In this new interview with South Korea's head of state, we asked him, what is Seoul's strategy in Washington, D.C.? Listen to what he told us.

So, Acting President Han, what is your message to President Trump?

HAN DUCK-SOO, SOUTH KOREAN ACTING PRESIDENT: First of all, we will cooperate with the United States and President Trump to make sure that we can find some of the solutions to arrive at the win-win situations.

VALERIO: You do anticipate that this 25 percent tariff level will not stay. That's your anticipation?

HAN: Depending on the negotiations.

VALERIO: That's certainly your hope.

HAN: Yes.

VALERIO: Are you optimistic? How do you feel on a gut level these negotiations are going to go?

HAN: About 57 countries are actually are subject to that kind of tariff. So --

VALERIO: Twenty-five percent, though, that's pretty steep for friends for generations.

HAN: Well, it's a pity because we are evaluated in that way. But I think that that kind of different assessment can always happen in this kind of situations.

VALERIO: Should friends really be treating friends like this?

HAN: Well, friendship should be compensated by sometimes the mutual economic, financial and other dimensional aspects. You can never say that relations between the United States and Korea, because we are friends -- so, everything should be condoned and we don't care what happens.

VALERIO: Now, just a few hours after Acting President Han Duck-soo sat down with CNN, the acting president had his first phone call, his first communication ever with U.S. President Donald Trump and the president posted on Truth Social that things seem to be looking good for a deal, writing, quote, we have the confines and probability of a great deal. Things are looking good.

So, the real test here will be if a country like South Korea comes to the negotiating table, putting the full faith and the value of its long standing alliance with the U.S., how far can its tariff come down?

For what its worth, Han Duck-soo had served as ambassador to the United States from South Korea before the Trump years, and also before the Trump years. He was instrumental in getting the U.S./South Korea free trade deal over the finish line.

Mike Valerio, CNN, Seoul.

(END VIDEOTAPE)

SOLOMON: Well, as we've been discussing all morning, President Trump has been fighting a tariff war with China, but now his vice president is in the crosshairs after saying this.

(BEGIN VIDEO CLIP)

J.D. VANCE, VICE PRESIDENT OF THE UNITED STATES: To make it a little bit more crystal clear, we borrow money from Chinese peasants to buy the things those Chinese peasants manufacture.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

[05:27:47]

SOLOMON: Welcome back.

Rescue workers are searching the rubble for survivors after the roof of an iconic nightclub in Dominican Republic collapsed, killing at least 98 people. Thats according to the "Associated Press". Two former players with Major League Baseball and a politician are among the dead. More than 220 people were hurt, according to the country's national emergency system.

A popular merengue artist was performing when the ceiling gave way at the jet set nightclub in the early hours of Tuesday morning. Aerial footage showed the venue with a wide, gaping hole in the middle of the building where the audience would have been located during the performance.

President Trump's mass deportation push is getting help from the tax agency. The U.S. Internal Revenue Service has agreed to a deal to help immigration and customs enforcement, or ice, track down undocumented immigrants for possible deportations by providing sensitive taxpayer data. This comes after months of tension within the IRS over concerns about whether the deal is legal. It also caused a slew of resignations by key career officials.

A federal judge says that it's unconstitutional for the White House to punish the "Associated Press" just because President Donald Trump doesn't like its viewpoint. Earlier this year, Trump blocked the aps access to his events. The Oval Office and air force one, simply because the organization continued to use the name Gulf of Mexico after Trump renamed it Gulf of America.

The Trump appointed judge ordered the government to restore the "AP's" access, but he did delay his order for one week to allow the White House to appeal.

Now to a new battle in the strained relationship between the U.S. and China over the tariff war. A war of words is brewing over J.D. Vance's comments about, quote, Chinese peasants.

Will Ripley has the story.

(BEGIN VIDEOTAPE)

VANCE: Well, good morning, everybody.

WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The American hillbilly versus China's so-called peasants. It all started with this.

VANCE: And to make it a little bit more crystal clear, we borrow money from Chinese peasants to buy the things those Chinese peasants manufacture from Chinese peasants.

RIPLEY: Vance's Chinese peasants comment reaching Beijing within hours. The government's response, swift and scathing.

LI JIAN, CHINESE FOREIGN MINISTRY SPOKESPERSON (through translator): It's both astonishing and lamentable to hear this vice president make such ignorant and disrespectful remarks.

[05:30:00]