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Early Start with Rahel Solomon

Trump Imposes Sweeping New Tariffs on Trading Partners; European Markets Open Lower as Reciprocal Tariffs Kick In; South Korea Seeks Cooperation, Not Confrontation, with U.S. Aired 4-4:30a ET

Aired April 09, 2025 - 04:00   ET

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

[04:00:10]

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, 4 a.m. here in New York, 9 a.m. in London, and 4 p.m. in Beijing as markets around the world react to the latest Trump tariffs.

We're now hours into President Trump waging the next phase of his global trade war, having new double-digit tariffs on dozens of countries and a whopping 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. The Nikkei closed off about 4 percent, the Hang Seng, interestingly, up about 1 percent, Shanghai Composite up about 1.3 percent.

Taking a look at European markets, which opened last hour and are solidly lower across the board here from the DAX, which is off about 1.9 percent, FTSE off about 1.9 percent as well, similar picture in France.

Taking a look at U.S. markets now, which experienced a wild day of trading on Tuesday, all closing sharply lower after briefly being higher in the day, actually. Now futures this morning, well, they've been all over the place. At one point, they were flat. Right now, they are currently higher across the board as well.

Now, the tariffs went into effect at midnight Eastern time, and they range from 11 to 50 percent. That is on top of the sweeping 10 percent tariffs implemented Saturday. New tariffs hit some of America's closest trading partners, which the White House has called the, quote, worst offenders, and that's not to mention the massive tariffs on China.

This is what Trump said at a different event on Tuesday. Take a listen.

(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 there, saying that these tariffs are likely to cause a massive global recession. Lawmakers, including Republicans, are also criticizing the policies.

(BEGIN VIDEO CLIP)

SEN. THOM TILLIS (R-NC): I'm assuming this all got gamed out 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: You know, U.S. business owners say that 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 HOUSEWARES APPLIANCES: We are the ones, the importers are the ones, that get the invoices 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 all gets billed to us, which we have to bill the consumer at the end.

(END VIDEO CLIP)

SOLOMON: We are watching the response all over the world this morning. CNN's Melissa Bell joining us live from Paris. Let's actually begin with our Kristie Lu Stout in Hong Kong for us.

Kristie, Trump has forged ahead with this massive levy on China. How's the country reacting this morning?

KRISTIE LU STOUT, CNN CORRESPONDENT: Yes, well, Rahel, in China, but also all across the region, many people, whether they're economists, investors, small business owners, are reacting with a sense of dismay and deep concern.

Within the last hour, we spoke to a small business owner, an Amazon merchant who is based in Shantou, China. She sells toys to the U.S. market. She usually ships about 10,000 units a month. She is currently suspending her shipments and is considering exiting the U.S. market entirely. This as the U.S. president, Donald Trump, forges ahead with his

reciprocal tariffs on dozens of countries around the world and that punishing, eye-watering total tariff rate of at least 104 percent on China, on the back of China not respecting Trump's deadline, not respecting his deadline or his request to remove its own retaliatory tariffs.

[04:05:00]

We've been watching the markets this day, down arrows across the board in major markets like South Korea, Japan, in Hong Kong as well. Investors here in the region rejecting Trump as he unleashes this new wave of tariffs.

Now, we heard from U.S. officials. They say they're ready to talk and that they have been approached by at least 70 governments and that they're prepared to talk and talks will soon begin with Japan and South Korea, among other countries. In fact, Donald Trump said that he had, quote, a good call with the acting South Korean president on Tuesday.

But he had a different set of words to describe China. I want to bring up a truth social post by the U.S. president. He says this. Let's bring it up for you.

Quote, China also wants to make a deal badly, but they don't know how to get it started. We are waiting for their call. It will happen.

Now, Chinese officials, they're not taking it. In fact, they are reiterating their line that they will fight this trade war until the end.

Listen to this.

(BEGIN VIDEO CLIP)

LIN JIAN, CHINESE FOREIGN MINISTRY SPOKESPERSON (through translator): I believe the actions of the U.S. do not reflect a genuine willingness for serious dialogue. If the U.S. disregards the interests of both countries and the international community and insists on waging a tariff war or trade war, China will fight to the end.

(END VIDEO CLIP)

STOUT: China is rejecting Trump's tariffs. Investors in the region and elsewhere as well, and small business owners across China and the region being forced to stop and figure out what's next. Rahel, back to you.

SOLOMON: That certainly is the question, both in that part of the world and around the world in general. Kristie Lu Stout, thank you.

Melissa, let me now go to you in Paris. What are you hearing? What are you learning about how the EU plans to respond to these new tariffs?

MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, they're meeting this afternoon to figure out just that, Rahel, whether they're going to impose in their turn now a 25 percent tariff, for instance, on all American imports to the European Union.

In fact, just now, Ursula von der Leyen, the President of the European Commission, has been meeting with pharmaceutical leaders who are warning that there may be shortages, difficulties in sourcing and getting medicines in the United States as a result of the shocks to all the supply lines that this is causing.

Then, of course, we've been talking a great deal about what this means for business leaders, small and larger.

But there is the question of how this overnight tariff will impact American consumers. Rahel, we're talking about things like Camembert cheese, which suddenly now is subject to a 20 percent import tax. Heineken beer, already impacted by aluminum tariffs, which is going to be that bit more expensive to American consumers.

And then there's the wine industry. $2.5 billion worth of European wine was imported to the United States last year. They're now the subject of this 20 percent tariff.

Now, there is a lot of uncertainty about who's going to take the hit. On the whole, it is expected that it will be importers who will pass it on to suppliers, who will pass it on to consumers. Now, if you take the case of wine, for instance, the logic behind Donald Trump's tariffs is that, well, OK, American consumers will turn to, say, Californian Chardonnay, rather than this burgundy white.

The point is, though, that even Californian Chardonnay is dependent on international supply lines, French oak barrels that are imported to the United States, now themselves the subject of a 20 percent tariff.

There is no scenario in which prices for ordinary Americans of all of the goods that they're used to buying, whether they are European or American, do not rise. And that, I think, is going to be a source of great interest over the course of the coming weeks, how quickly that impacts Americans and how definitively, even before countries like China or trading blocs like the European Union work out their responses and retaliatory measures -- Rahel.

SOLOMON: Yes, it's such an interesting point, Melissa. I mean, it's hard to imagine how any American in any part of the country doesn't feel this in one way or the other, depending on the products that they are exposed to every day.

Melissa Bell and Paris Forest. Melissa, thank you.

South Korea has announced more than a billion dollars in emergency support measures for its auto industry as it seeks to mitigate the blow from new U.S. tariffs. Seoul cited the concerns over the, quote, serious threat that the new duties pose.

This comes as higher tariffs from the Trump administration affect dozens of U.S. trading partners. 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 do something with Donald Trump that no other leader has been able to do so far, drop the tariffs.

(BEGIN VIDEOTAPE)

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MIKE VALERIO, CNN INTERNATIONAL CORRESPONDENT (voice-over): As China's Xi Jinping strikes back against steep U.S. tariffs, vowing to fight them eye for an eye --

VALERIO: How are you? It's so good to meet you.

VALERIO (voice-over): -- South Korea's leader says in an exclusive interview with CNN. He is looking for a deal.

VALERIO: 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, you know, to arrive at the win-win situations.

VALERIO (voice-over): Han Duck-soo, South Korea's head of state, says cooperation and negotiation, not confrontation, will be South Korea's playbook. A strategy, he says, driven by deep ties to the U.S. forged during the Korean War. Today, nearly 30,000 U.S. troops are still stationed in South Korea. And he's betting friends with this much history can talk this through.

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

HAN: Depending on the negotiations.

VALERIO: 25 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 situation.

VALERIO (voice-over): South Korea's auto industry is a success story in part because of tariffs. Seoul National University economics professor Lee Keun, writing, South Korea's high tariffs on imported cars protected Hyundai, helping it to grow into a global powerhouse exporter. In this tariff trade war, economists fear parts and products from South Korea could skyrocket in price, harming jobs and assembly lines on both sides of the Pacific.

Han remains optimistic, speaking with U.S. President Donald Trump for the first time in a phone call Tuesday morning. President Trump echoing the enthusiasm for now, posting on Truth Social, the two leaders had a quote, "great call" and quote, We have the confines and probability of a great deal for both countries, Trump wrote.

HAN: I think if we really try to work very hard, and you know, exchange our information on interpreting and assessing in the right way, in this case with the United States, I think the situations can be improved.

VALERIO (voice-over): Mike Valerio, CNN, Seoul.

(END VIDEOTAPE)

SOLOMON: All right let's go live to London and Neil Shearing, the group chief economist at Capital Economics. Neil, great to see you this morning. Midnight has come and gone. What do you expect to happen now? What comes next?

NEIL SHEARING, GROUP CHIEF ECONOMIST, CAPITAL ECONOMICS: Well, all eyes now are on whether there can be any rollback of these tariffs. And I think partly that's about the tariffs on China, which are extremely high levels now, well over 100 percent. But also the U.S.'s other trading partners. We've just heard from your report, potentially a deal in the offing with Korea, Japan too, maybe.

And the backdrop to this is that markets are selling off. So the equity market's down, the bond market's selling off. So markets and investors are looking for some signs, I think, that some deals are possible, even if we don't get a full rollback of the tariffs.

SOLOMON: So to that end, in terms of some deals are possible, who do you see at this point as the biggest winners and losers of these policies?

SHEARING: Well, let's be clear, there's no winners from a tariff war in aggregate. Everyone's worse off if we start taxing consumption. Prices go up and everyone's worse off.

At the moment, the biggest losers, it looks like to me, are going to be potentially U.S. consumers that are going to have to pay higher prices and Chinese producers, because it looks like tariffs on China are going to settle at a higher rate than those on other countries.

Now, that potentially creates some opportunities for other countries, for example, to capitalize on the fact that Chinese producers are being hit by higher tariffs from the U.S. We've seen, for example, Apple suggesting that it might start to source more products from India to supply the U.S. market. So there's potential potentially one, if not winner, then potentially they lose by less. They might gain a little for movements of production from China. SOLOMON: Yes, that's an interesting point. Neil, you study and follow the markets and the economy closer than most. When people come to you and say, what do I do?

I mean, there seems to be nowhere to hide in these markets. What do you say?

SHEARING: Well, I'm not an investment advisor, as it were. So I have nothing to offer in terms of where you invest your money. But I think that the critical thing from a macroeconomic perspective and economic perspective is the interactions between financial markets and the real economy.

[04:15:00]

So at the moment, we're all focused on the impact that tariffs are going to have on inflation in the U.S. and on demand for imported goods to the U.S. and therefore exported goods from the rest of the world. But if global bond markets sell off and equity markets fall, then that tightens what are called financial conditions.

That means interest rates in the real economy go up. The amount people have to pay on their mortgages, the interest rate on their mortgages goes up, too. The wealth effects through falling equity prices, wealth is destroyed.

And that has an effect on the real economy, too, because it affects households and consumers and makes businesses think twice about investments as well. So it's the second round effects through the financial markets to the real economy that may be the shoe that's yet to drop.

SOLOMON: Yes, on the interest rates that you just sort of touched on there, I mean, that sort of brings up a critical component of this, which is what does the Fed do here? I mean, President Trump has made it very clear and he has been for quite some time, but especially more recently, that this would be a good time, according to the president, to cut rates. It's hard to see how they would do that if there's so much concern about these policies causing higher prices.

So what do they do with this? I mean, can they come to the rescue here?

SHEARING: The short answer is they can't. And I think they're stuck between a rock and a hard place. The rock being President Trump and the hard place being rising inflation.

Now, it would indeed be a good time to cut interest rates if you hadn't just imposed a substantial increase, the biggest increase in tariffs this side of the Great Depression, and perhaps even before the Great Depression, which is going to push up inflation in the U.S.

So on our measures, it looks like inflation is heading at least to four and a half percent in the U.S., potentially even higher if these tariffs stick. And that means that unless the U.S. economy experiences a really substantial downturn and recession, the Fed's going to be really loathe to cut interest rates because it's worried about the second round effects of inflation through wages, the labor market, and then pushing up other prices in the economy that might have.

So the Fed's between a rock and a hard place. And unless the real economy really, really deteriorates, we've got a really substantial downturn in economic activity. I don't think interest rates can be cut at least to the same extent as some of the markets now hope.

SOLOMON: Yes. And who wants to hope for that? I mean, a lot of people want lower rates, but certainly not at the cost of the U.S. economy or the global economy. That's a pretty steep price to pay for lower rates. Neal Shearing, we appreciate you being here today. Thank you.

All right, dozens are dead and countless more injured after the roof of a nightclub collapsed in the Dominican Republic. The latest details on this tragedy coming up.

Plus, Ukraine claims that Russia staged massive drone attacks overnight, injuring more than a dozen people. We'll have the latest on the conflict here.

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

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SOLOMON: Welcome back and now to the Dominican Republic, where rescue workers are searching the rubble for survivors. This is after the roof of an iconic nightclub collapsed, killing at least 98 people. According to the Associated Press, two former players with Major League Baseball and a politician are among the dead.

The country's national emergency system reports that more than 220 people were hurt. Authorities say that 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. That's where the audience would have been located during that 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's also caused a slew of resignations of key career officials.

Democrats in the Senate are pushing a resolution to end the Trump administration's global tariffs. They want to pressure Republicans to choose between backing the president or preventing price hikes for their constituents. CNN's Manu Raju has more on the concerns of some lawmakers.

(BEGIN VIDEOTAPE)

MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Donald Trump's Trump trade official, Jameson Greer, was answering questions from Republicans and Democrats on the Senate Finance Committee about Trump's tariff policies. He urged patience. He said that these issues, these trade deals, would not be resolved overnight.

He contended that a number of these countries, roughly 50 or so, have come to the negotiating table seeking to lower their tariffs. But the question is how much patience will Republicans in particular give, given that they control both the House and the Senate. Some of them expressed some skepticism over the Trump policies, and others were flatly worried that if the tariff policies go into effect, particularly in the long term, that some industries and companies could go bankrupt.

RAJU: You seem to have concerns about some of these companies could go into bankruptcy because of this policy. Explain your concern.

SEN. RON JOHNSON (R-WI): I have those concerns. I've been expressing them for quite some time.

RAJU: You think that this could lead to bankruptcy?

JOHNSON: In certain businesses, it's a real possibility.

SEN. THOM TILLIS (R-NC): Of course it concerns me. I mean, my God, it's a stability issue.

[04:25:00]

You know, businesses hate uncertainty. We've got a lot of uncertainty. In business, you always come up with decisions. You create one throat to choke.

I'm just trying to figure out who I should compliment or who I should hold accountable.

SEN. TODD YOUNG (R-IN): Congress should play a meaningful role when it comes to developing revenue measures, whether it's taxes or tariffs.

I think the president needs broad discretion to be able to enforce whatever Congress develops and implements. And so I actually have been working with the administration to give them more tools to implement existing tariff laws.

RAJU: But there is a bipartisan effort in the Senate to give Congress a check on the president's tariff powers. However, that is not coming for a vote because it's opposed by the Speaker of the House, Mike Johnson, who wants to give Trump latitude to enact these tariff policies.

And also John Thune, the Senate Majority Leader, someone who is actually skeptical of tariffs himself, a longtime supporter of free trade agreements, but he does not want to be on the opposite side of Trump on this issue, says he wants to give Trump space. And also is contending that if they were to move forward, he doesn't see a path for it to become law, especially given the fact that Trump has threatened to veto that legislation.

But if lawmakers begin to raise more concerns, particularly Republicans, and they hear from voters who are paying more for a wide range of items, perhaps the calculus could change.

But at the moment, Trump's policy is moving ahead. Republicans are watching nervously as Democrats are outrightly opposed.

Manu Raju, CNN, Capitol Hill.

(END VIDEOTAPE)

SOLOMON: All right, still ahead, President Trump has been fighting a tariff war with China. Now his vice president is in the crosshairs after saying this.

(BEGIN VIDEO CLIP)

J.D. VANCE, U.S. VICE PRESIDENT: 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)

SOLOMON: Plus, boys will be boys. That's how the White House is describing the spat between two of President Trump's top advisers. How that angry back and forth is unfolding -- coming up next.

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