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Early Start with Rahel Solomon
Stocks Fall After Fed Chair Warns About Tariff Impacts; President Trump Touts "Progress" In Japan Trade Talks; Judge Threatens Trump Admin. With Contempt Charges; U.S. Senator Denied Visit With Deported Maryland Man; Tariffs Hitting Cheap Chinese Goods. Aired 5- 5:30a ET
Aired April 17, 2025 - 05:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[05:00:23]
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 17th, 5:00 a.m. here in New York.
And straight ahead on EARLY START:
(BEGIN VIDEO CLIP)
JEROME POWELL, FEDERAL RESERVE CHAIRMAN: The level of tariff increases announced so far is significantly larger than anticipated. Unemployment is likely to go up as the economy slows.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think there's a whole new spirit in our country, and I think there's a whole new respect for our country.
UNIDENTIFIED MALE: Every day, it's something different, you know? So, it's either on or it's off, or it's this, or it's that.
GOV. GAVIN NEWSOM (D), CALIFORNIA: The uncertainty is pronounced, and it is profound.
PAM BONDI, U.S. ATTORNEY GENERAL: He is not coming back to our country. There was no situation ever where he was going to stay in this country. None. None.
SEN. CHRIS VAN HOLLEN (D-MD): Open the door of CECOT and let this innocent man walk out.
(END VIDEO CLIP)
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SOLOMON: Let's begin with that grim warning from the head of the Federal Reserve. As the U.S. wages a global trade war, stocks closing lower Wednesday after Jerome Powell described the potential impacts of President Trump's tariffs. For weeks now, investors have been wrestling with the unpredictability of the trade war.
On Wednesday, Powell said that higher inflation and slower economic growth are likely to occur given the unprecedented nature of the tariffs.
(BEGIN VIDEO CLIP)
POWELL: The level of tariff increases announced so far is significantly larger than anticipated, and the same is likely to be true of the economic effects, which will include higher inflation and slower growth.
(END VIDEO CLIP)
SOLOMON: Powell also noting that Americans will likely bear the brunt of those tariffs with increased costs.
(BEGIN VIDEO CLIP)
POWELL: Unemployment is likely to go up as the economy slows in all likelihood, and inflation is likely to go up as tariffs find their way. In some part of those tariffs come to the -- come to be paid by the -- by the -- by the public.
(END VIDEO CLIP)
SOLOMON: U.S. markets, reflecting Powell's concerns about the economy with the Dow tumbling 700 points by the end of trading on Wednesday.
Now, the Trump administration has been meeting with countries seeking to make a deal before these tariffs go into effect. In the coming hours, President Trump is set to meet with Italian Prime Minister Giorgia Meloni to discuss a trade agreement, among other things.
Let's take a look and see how the markets are doing today. Asian markets closed solidly higher. Hang Seng up about 1.6, Nikkei 1.3. Let's call it -- Shanghai, the worst among them about one tenth of a percent.
European markets are all solidly lower, between a third of a percent for the German Dax to about three quarters of 1 percent for the FTSE.
And here's a quick check of the U.S. futures are trading right now in the premarket, a few hours before the opening bell on this last day of the trading week. Markets are closed tomorrow for the easter holiday. Nasdaq futures look set to open at this point, almost 1 percent. S&P just about the same. Dow futures up three quarters of 1 percent, let's call it.
All right. Let's turn to CNN's Mike Valerio who has the latest on the trade war from Seoul.
Mike, great to see you this morning.
There did seem to be a little bit of optimism about a potential deal with Japan. What's the latest this morning?
MIKE VALERIO, CNN CORRESPONDENT: So, Rahel, you're absolutely right. And while a big chunk of the world was asleep, you know, there really were two emerging story lines, competing story lines here in Asia. The first one is of optimism. Countries like here in South Korea and
Japan seemingly conveying that they think that they are on the right path to a trade deal with the United States. And then in the second story line, we have China leading the resistance to these U.S. tariffs and talks still going nowhere fast.
So, let's put up the graphic of the day. This is from Truth Social. The president of the United States posting this photo with Ryosei Akazawa. He is the trade minister from Japan, the minister of trade and economic revitalization from Japan, who is leading tariff talks. The president saying that things seem to be pointing in the right direction and Akazawa mirroring those comments.
Akazawa telling members of the press the following, Rahel. He said after this Resolute Desk photo session or this photo moment, quote: We are very grateful that President Trump met with us. The president never strongly stated this is what we're going to do, but rather said Japan is the top priority in the talks.
So, what is conveyed here? It seems to be that if American allies and, you know, so many countries around the world get to the negotiating table early, putting themselves on the fast track to the deal, to a trade deal, they are going to get this kind of treatment from the U.S. president -- rosy public statements.
[05:05:04]
But we will see what the contours of a future deal entail. South Korea is hoping to play this playbook. Rahel, when the finance minister here in Seoul takes a trip to D.C. next week.
So, the flip side of the coin, the second story line is definitely China leading the resistance. Today, we saw scenes of Chinese President Xi Jinping touring throughout Cambodia, regional ally trying to get not only Cambodia, but earlier in the week, Malaysia and Vietnam, rallying these regional neighbors to its cause, to try to get more neighbors in its corner as it leads the resistance against these U.S. tariffs.
But new reporting that we have from our team around the greater region, we have a source who is familiar with the government in Beijing's thinking when it comes to these trade talks, and they are still, Rahel, open to talks or open to the possibility of a summit, certainly newsworthy. And in fact, before the tariffs were announced on April 2nd on that big poster board in the Rose Garden, this source in Beijing is conveying to us that they, the government, had appointed a person, a point person, to be in charge in the negotiations between Beijing and D.C.
But what is getting in the way right now? A lack of, quote, respect, consistency and reciprocity. And if trade talks between Beijing and D.C. are going to move forward, the sources telling us here at CNN that Taiwan would come up that also trade and tech restrictions between the United States sending semiconductors to China would also come up as part of those negotiations. So, what we're looking for in the next couple days. What kind of moves
Malaysia, Cambodia, Vietnam make as they're walking this very tightrope between D.C. and Beijing? They don't want to upset D.C., and were going to see what kind of details emerge in this friendly talk, friendly photos between D.C., Tokyo, what happens here in Seoul, too, Rahel.
SOLOMON: Yeah, really interesting to see how some of these Southeast Asian countries are stuck between a rock and a hard place, China and the U.S. obviously.
Mike Valerio in Seoul, Mike, thank you.
Back here at home, the New York International Auto Show continues today. And yesterday, our Richard Quest spoke with experts about how the tariffs will affect customers and those in the auto industry at large.
(BEGIN VIDEOTAPE)
RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: There are hundreds of gleaming, expensive, beautiful new cars here at the auto show, but the topic of conversation of those people visiting from the industry is, of course, about the effect of the tariffs.
MARK SCHEINBERG, PRESIDENT, NEW YORK INTERNATIONAL AUTO SHOW: There may be a situation where a manufacturer has to raise the price of the car, and what they may do is tell the consumer this is not our profit line. This is a tariff that going on it. But I got to tell you, the dealers are first of all a very optimistic group. If they're not, they're going to be on Prozac for the rest of their lives on it.
But I do think that they have seen lots of different instances, whether it's COVID, whether it's computer chip shortages, and somehow the industry has adjusted.
QUEST: And all of this, the big question is likely to be, how many cars will be sold if the U.S. economy is slowing down towards a recession?
Certainly, Jerome Powell, the chair of the Fed, made clear today he is seeing higher inflation, possibly persistent resistant inflation that will make the feds job that much more challenging.
Inflation is on its way. Car sales will suffer. Not surprisingly, everybody at the auto show has much to worry about.
Richard Quest, CNN at the New York Auto Show.
(END VIDEOTAPE)
SOLOMON: Thank you, Richard.
And taking a live look now at the Vatican. That's where Holy Thursday observances are underway. Now, Pope Francis is still recovering from his recent battle with pneumonia. So, the mass in saint peters basilica is being led by a cardinal that was delegated by the pontiff.
According to the bible, the last supper took place on Holy Thursday.
All right. Still ahead for us, the U.S. senator travels to El Salvador to visit a Maryland man thought to be wrongly deported. But the senator hit a big roadblock. The latest update on the fate of Kilmar Abrego Garcia, coming up next.
And it was one of the most notorious crimes of the 1990s, the Menendez brothers. But could the brothers soon get out of prison? Details on their resentencing.
Later, potential breakthrough in the search for life beyond earth, scientists finds what could be key evidence just 124 light years away.
We'll be right back.
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SOLOMON: Welcome back.
The fight between the Trump administration and the judiciary is escalating, with some U.S. officials now facing a rare threat of contempt of court charges. District Judge James Boasberg has ruled that the administration violated his order to stop last month's deportation flights of alleged Venezuelan gang members to El Salvador.
Boasberg writes: The government's actions on that day demonstrate a willful disregard for its order, sufficient for the court to conclude that probable cause exists to find the government in criminal contempt.
The Trump Justice Department is appealing the ruling. It says that the alleged gang members were deported under the Alien Enemies Act of 1798, claiming that they were part of an invasion of the U.S. They are now being held at a notorious prison in El Salvador.
And more now from CNN's Paula Reid.
(BEGIN VIDEOTAPE)
PAULA REID, CNN CHIEF LEGAL AFFAIRS CORRESPONDENT: This case has become a flashpoint in the tension between the White House and the federal courts.
[05:15:00]
And here, Judge James Boasberg, who has repeatedly been attacked by President Trump, has found that the government's actions last month, when it came to deportations under the Alien Enemies Act. Specifically, the fact that they did not turn around planes full of migrants who were being deported to El Salvador after the judge ordered them to be sent back, constitute a willful disregard of his order. Now, the Justice Department has argued he had overstepped his bounds.
He was trying to interfere in questions of foreign policy, but now, he says he will begin contempt proceedings unless these migrants are given an opportunity to have their cases heard. Now, the Supreme Court weighed in on this larger issue. The use of the sweeping wartime authority, the alien enemies act to facilitate deportations.
And it found that the administration can use this act as long as the individuals who are deported have a court hearing. So, it does appear that Boasberg is just sort of endorsing what the Supreme Court said. It is also a little bit surprising that he is pursuing contempt because, again, the administration won on the larger issue for now at the Supreme Court. But it is clear the administration says it will fight this.
Paula Reid, CNN, Washington.
(END VIDEOTAPE)
SOLOMON: The U.S. senator traveled to El Salvador to visit a Maryland man thought to be wrongly deported, who is now being held in that same notorious prison, but says that he was not allowed to see him.
Maryland Democrat Chris Van Hollen said that he asked the Salvadoran vice president if he could at least speak over the phone with Kilmar Armando Abrego Garcia, but says that his request was denied. Van Hollen is vowing to keep pressing for answers about Abrego Garcia release, and warned that more members of Congress will be coming to El Salvador on his behalf.
(BEGIN VIDEO CLIP)
SEN. CHRIS VAN HOLLEN (D-MD): I'm asking President Bukele under his authority as president of El Salvador, to do the right thing and allow Mr. Abrego Garcia to walk out of a prison. A man who's charged with no crime, convicted of no crime, and who was illegally abducted from the United States.
(END VIDEO CLIP)
SOLOMON: Now, during a visit to the White House earlier this week, the Salvadoran president said that he has the power to release Abrego Garcia, but will not.
U.S. attorney general says that Abrego Garcia will not be returning to the U.S.
(BEGIN VIDEO CLIP)
PAM BONDI, U.S. ATTORNEY GENERAL: He is not coming back to our country. There was no situation ever where he was going to stay in this country. None. None. He's from El Salvador. He's in El Salvador. And that's where the president plans on keeping him.
(END VIDEO CLIP) SOLOMON: Now. Abrego Garcia lawyers say that he has not been charged with any crimes in the U.S., nor is he a gang member. The Trump administration had admitted in court that he was mistakenly deported due to a clerical error, but now deny that.
Meanwhile, the administration, making a renewed push to portray Abrego Garcia as a dangerous criminal and a member of the MS-13 gang, an allegation that his wife and his lawyers deny.
On Wednesday, the Department of Homeland Security posted portions of a protective order against him that had been filed by his wife four years ago.
(BEGIN VIDEO CLIP)
KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: Once, in May of 2021, assault in any degree and on May 4th of 2021, he punched and scratched his wife, ripped off her shirt and grabbed and bruised her. This is from a court in Maryland.
(END VIDEO CLIP)
SOLOMON: In a statement to CNN, Jennifer Vasquez Sura said that she was a survivor of domestic violence and had sought the protective order after the couple had a disagreement. She says that they were able to work through the situation privately, through counseling, and their marriage only grew stronger.
Still to come for us, Americans hooked on cheap Chinese products may face some sticker shock, with wholesalers warning that Trump's trade war is already forcing them to raise their prices.
And later, search warrants reveal a possible motive for the man accused of setting fire to the home of the Pennsylvania governor. We will have the latest on the investigation here.
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[05:23:34]
SOLOMON: Welcome back.
The World Trade Organization is warning that President Trump's trade war will have a global impact. A new report says that trading prospects have, quote, deteriorated sharply since the announcement of President Trump's reciprocal tariffs. The global -- the group expects global trade to shrink by 0.2 percent compared to a 2.7 percent growth forecast before the trade war. The WTO predicts that North America will be hit the hardest and see a greater economic slowdown.
And President Trump's tariffs are already affecting cheaper items made in China. everything from Christmas decorations to hats. Even a few MAGA hats are suddenly getting a lot pricier, and wholesalers say that business is starting to suffer.
CNN's Marc Stewart reports. (BEGIN VIDEOTAPE)
MARC STEWART, CNN INTERNATIONAL CORRESPONDENT (voice-over): It's Christmas every day at this factory in eastern China, but the holiday cheer has soured since the start of President Trump's trade war.
And this is all going to the U.S.
From Christmas signs to Santas, holiday decorations made here sell for just a few dollars in the U.S. But with tariffs, the prices are so steep, it won't be worth it for American retailers to buy them.
STEWART: How much money have you lost because of canceled business?
RON HONGYAN, BUSINESS OWNER (through translator): About more than 1 million yuan.
STEWART: That's about $135,000. From the factory floor to her showroom, Ron Hongyan says she has lost revenue and relationships.
STEWART: How does that make you feel?
HONGYAN (through translator): It makes me feel sad because we have been working together for a long time, but our deals have stopped due to the tariffs.
[05:25:02]
STEWART: At first, she offered to slash prices for her long-time American customers, hoping to absorb some of the costs. Now, the tariffs are so high, most of her customers in the U.S. canceled orders completely.
STEWART: It's stories like this we're hearing from exporters here in Yiwu, one of the largest wholesale markets in the world. It's really ground zero in this trade war that's tearing apart the world's two largest economies.
So, how long has your family had this business?
LI XINYAO, BUSINESS OWNER: It's about 30 -- more than 30 years. America has always impacted the world. Yeah. When they start the trade war, all the people will worry about that.
STEWART: Do you think America is acting badly?
XINYAO: Of course, I think so.
STEWART: Last year, vendors here sold around $11 billion worth of products to the United States. But even before Trump 2.0, China saw this trade war coming. To get ahead of it, exporters are already diversifying.
Right now, half of Nie Ziqin's business is with the U.S. She tells me she's not worried. NIE ZIQIN, WHOLESALE VENDOR (through translator): My next step is to transfer my U.S. sales routes to the E.U. Last year, we also began designing products we can sell to the Chinese domestic market.
STEWART: But it's a two-way street. American consumers rely on places like this for the things they want at the price they want to pay, including something that has become an unmistakable symbol.
Look what we found in the middle of this market, Donald Trump's trademark hat made in China.
American consumers have long been hooked on cheap Chinese products. Giving them up might not be easy.
Marc Stewart, CNN, Yiwu, Eastern China.
(END VIDEOTAPE)
SOLOMON: All right. Still ahead for us, fire and panic in Gaza as Israeli strikes tear through an encampment for displaced Palestinians. Still ahead, the death toll it left behind.
Plus, the White House tries to get around a judge's order to restore the associated press to the briefing room. Find out how they're going about it, straight ahead.
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