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Early Start with Rahel Solomon
Trump Acknowledges "Tough" Economic Transition; U.S. Economy Shrinks For The First Time Since 2022; Trump Blames Biden For Shrinking Economy; China Standing Firm In The Face Of Trump's Tariffs; U.S. And Ukraine Sign Minerals Deal; Harris Slams Trump In First Big Speech Since Leaving Office; Gaza Nears Famine Two Months After Israel's Total Blockade. Aired 5-5:30a ET
Aired May 01, 2025 - 05:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[05:00:24]
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, May 1st, 5:00 a.m. here in New York.
And straight ahead on EARLY START.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This is Biden. And you could even say the next quarter is sort of Biden.
KAMALA HARRIS, FORMER U.S. VICE PRESIDENT: We are witnessing the wholesale abandonment of those ideals.
UNIDENTIFIED MALE: This partnership allows the United States to invest alongside Ukraine.
JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: Certainly a major diplomatic breakthrough. Now, of course, the hard work continues for reaching a ceasefire between Russia and Ukraine.
JOHN VAUSE, CNN ANCHOR: Libya and Rwanda may soon join El Salvador as a destination for forced deportations from the U.S.
MARCO RUBIO, U.S. SECRETARY OF STATE: The further away from America, the better.
(END VIDEO CLIP)
(MUSIC)
SOLOMON: All right. We begin this hour with the first apparent admission from Donald Trump of risk and uncertainty for Americans around his tariff strategy.
The president conceding in a NewsNation town hall that his tariff plans face a perception problem. He also refused to say when things might transition from long term pain to, or short-term pain to long term gain.
At a cabinet meeting on Wednesday, Trump said that Americans may need to adjust their spending and consumption habits, and he acknowledged possible shortages of products from China, as well as higher prices.
Meantime, the latest Commerce Department report shows that the economy fell at an annualized rate of 0.3 percent in the first quarter, its worst performance since 2022. Economists had predicted growth of 8/10 of a percent. President Trump says that his predecessor is to blame.
(BEGIN VIDEO CLIP)
TRUMP: When you look at the stock market in this case, is it says how bad a situation we inherited I took place. This is a quarter that we looked at today and I took we took all of us together. We came in on January 20th. So, this is Biden. And you could even say the next quarter is sort of Biden because it doesn't just happen on a daily or an hourly basis.
(END VIDEO CLIP)
SOLOMON: All right. Let's take a look at U.S. futures, which are solidly higher. The Dow, S&P and Nasdaq all up between 7/10 of a percent to 1.6 percent for the Nasdaq. The Nasdaq, the strongest among them continuing a bit of a theme there.
Blockbuster earnings reports from Microsoft and Meta obviously helping to boost U.S. futures, boost investor sentiment. By the way, speaking of tech, Amazon and Apple, they're set to report their earnings after the bell today. So, look to see if that trend continues.
And there are growing signs that the Trump tariffs are already starting to take their toll in the U.S. and China. So, which of the world's two largest economies is better prepared to deal with the trade war?
Let's go live now to CNN's Kristie Lu Stout in Hong Kong for some answers.
Kristie, great to have you. This really has been the central question, right. Which of these major economic superpowers will blink first? What did you find?
KRISTIE LU STOUT, CNN CORRESPONDENT: Absolutely. It's been really interesting, Rahel, to dig into this because, you know, with the United States and China locking horns over tariffs, we have this new economic pain war underway. And experts say that China has the capacity to endure this.
Take a look at this.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: This will be a fast war.
STOUT (voice-over): "The Battle at Lake Changjin" is one of China's biggest ever blockbusters. Commissioned by the Chinese government, it glorifies the Chinese soldiers who fought American troops in the Korean War.
Fast forward to today, and China and the U.S. are locking horns in another epic battle.
KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: China needs to make a deal with us. We don't have to make a deal with them.
LIN JIAN, CHINESE FOREIGN MINISTRY SPOKESPERSON (through translator): Be it a tariff war, a trade war, or any other type of war, we're ready to fight till the end.
STOUT: Trump started this war with China, aiming in part to bring manufacturing back to the U.S.
Chinese netizens mocked the idea with A.I.-generated videos showing a post-tariffs world of dingy American factories with downcast workers.
Decades of trade have brought bumper profits to both countries. And as U.S.-China trade withers, fortunes are turning.
In the U.S., the price of goods could shoot up, fueling inflation, and putting the U.S. at real risk of recession. And in China, a prolonged trade war could put countless factories out of business.
STOUT: The question is, how much pain can the people of China handle in the event of a long trade war with the U.S.?
EDWIN LAI, HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY: I think the pain threshold is probably higher for Chinese society. The Chinese government, being an authoritarian government, may have its own advantage, because it can more easily reallocate resources.
[05:05:07]
STOUT: The Chinese have endured famine, the Cultural Revolution, and more recently, three years of strict COVID-19 lockdowns before protesters bravely took to the streets.
And in this trade war, pain is already being felt. On social media, Chinese factory owners post images of their products piling up in warehouses, while workers show how machines and production lines have shut down.
Despite a dire economic forecast, many patriotic entrepreneurs are standing firm.
UNIDENTIFIED MALE: Even if the tariffs increase to 500 percent, I'm not afraid. Please rest assured: we can hold on.
UNIDENTIFIED MALE: Stop all the orders. Stop all the export orders. I will not chicken out.
UNIDENTIFIED MALE: We can give up the U.S. market. I can let this batch of orders rot in the warehouse. You must give up illusions and prepare for struggle, for China.
STOUT: In "The Battle at Lake Changjin," U.S. soldiers are seen gorging on Thanksgiving turkey while Chinese troops chew frozen potatoes in the trenches. Yet, they still beat the Americans later.
Trump's trade war pits the U.S. and China in a new challenge of resilience that's not about business or money. It's about honor and national pride.
(END VIDEOTAPE)
STOUT (on camera): Now, I want to be clear here China is feeling the pain from Trump's tariffs and new economic data out this week, released on Wednesday, it said that for the month of April, factory activity in China fell faster than expected. We know that international banks have slashed their growth forecast for China for the year, and China has been hit with a number of domestic economic challenges at home, including an ongoing property slump.
Still, China is putting this brave, patriotic face forward. There was this new propaganda push out this week with China saying they, quote, won't kneel to U.S. tariffs, but it looks like China is digging in for a long and painful tariff battle ahead.
Back to you.
SOLOMON: Yeah, really fascinating to see the connection to patriotism there.
Kristie Lu Stout in Hong Kong -- Kristie, thank you so much.
Tesla is denying a "Wall Street Journal" report that its board of directors has begun the process of replacing Elon Musk as CEO. Electric car company's chairman or chairwoman, rather, said on social media that the article was, quote, absolutely false, adding that this was communicated to the media before publication. "The Wall Street Journal's" report cited anonymous sources. Last week, Tesla said that both sales and profits plummeted in the first quarter.
Musk announced the same day that he was stepping back from his government work to focus on the company. He also received a friendly farewell at a cabinet meeting on Wednesday.
(BEGIN VIDEO CLIP)
ELON MUSK, TECH BILLIONAIRE: A tremendous amount has been accomplished in the first hundred days. As everyone has said, it's more than has been accomplished in any administration before. Ever. Period.
TRUMP: You know, you're invited to stay as long as you want at some point. He wants to get back home to his cars and his --
(END VIDEO CLIP)
SOLOMON: Now, Musk claims that his DOGE team has cut about $160 billion in government spending. That figure has been disputed, and it's far short of his initial goal to cut $2 trillion.
After months of negotiations that were at times heated, the U.S. and Ukraine have signed an economic deal that will give Washington access to Kyiv's rare earth minerals. In exchange, the two countries will establish a joint investment fund, which will help pay for Ukraine's post-war reconstruction.
Here's the treasury secretary on Wednesday.
(BEGIN VIDEO CLIP)
SCOTT BESSENT, TREASURY SECRETARY: This partnership allows the United States to invest alongside Ukraine to unlock Ukraine's growth assets, mobilize American talent, capital and governance standards that will improve Ukraine's investment climate and accelerate Ukraine's economic recovery.
(END VIDEO CLIP)
SOLOMON: Now, as part of the terms, Ukraine says that it will retain full ownership and control of its resources, with Kyiv determining which minerals to extract and from where. Going forward, new U.S. military aid to Ukraine can count as a contribution to the investment fund.
More now from our Jeff Zeleny at the White House.
(BEGIN VIDEOTAPE)
JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: A diplomatic breakthrough of sorts between the United States and Ukraine, with both countries coming together on Wednesday to sign that long awaited deal. A reconstruction and investment fund between the two countries all over the rare earth minerals, of course.
Think back to a little more than two months ago, when Ukrainian President Volodymyr Zelenskyy traveled to the White House for that meeting in the Oval Office with the U.S. President Donald Trump. That was the day that this deal was originally intended to be signed.
Of course, that meeting ended in a spectacular fashion with a dramatic diplomatic breakdown and then a bit of a stalemate between the two countries. But we are told it was that meeting in the Vatican at St. Peter's Basilica, right before Pope Francis's funeral.
[05:10:00]
Such powerful images as we all remember of the two presidents sitting there together, one on one.
That got this deal back on track and nearly over the finish line, some last-minute hurdles as well. But they also were resolved. We're told one of those is the U.S. will not be able to essentially profit, get money back from some of those rare earths if they are able to be mined or the like, for the money that the United States gave to Ukraine. Of course, that money was never intended to be alone. It was intended to stop the incursion of Russia after illegally invading Ukraine.
But the U.S. treasury secretary, Scott Bessent, he hailed it like this. He said this agreement signals clearly to Russia and the Trump administration that they're committed to a peace process that centered on a free, sovereign and prosperous Ukraine over the long term.
The prime minister, deputy prime minister of Ukraine, also signing the deal here in Washington. She's writing together with the U.S. we are creating the fund that will attract global investment in our country.
So, certainly, a major diplomatic breakthrough. Now, of course, the hard work continues for reaching a ceasefire between Russia and Ukraine.
Jeff Zeleny, CNN, the White House.
(END VIDEOTAPE)
SOLOMON: Canadian Prime Minister Mark Carney is reaching out to his counterparts around the world, days after leading his liberal party to victory in federal elections, he spoke to President Volodymyr Zelenskyy to reiterate Canadian support for Ukraine in its war with Russia. The two leaders agreed that Ukraine must be at the negotiating table if a lasting peace with Russia is to be reached. They plan to meet on the sidelines of the G7 Summit next month in Canada.
Mr. Carney also spoke to U.S. President Donald Trump. The PM's office says that the two agreed to meet in person in the near future. President Trump says that the meeting could happen at the White House within a week.
Former U.S. Vice President Kamala Harris castigated President Trump in her first major speech since leaving office and losing the 2024 election. Harris spoke Wednesday at a gala in San Francisco, which benefited women who were interested in entering politics. She attacked Trump for creating what she called, quote, the greatest manmade economic crisis in modern history. Harris said that his tariffs are inviting a recession, which will backfire on American businesses and families.
And she accused the president of giving up on what the U.S. stands for.
(BEGIN VIDEO CLIP)
KAMALA HARRIS, FORMER U.S. VICE PRESIDENT: Instead of an administration working to advance America's highest ideals, we are witnessing the wholesale abandonment of those ideals. And what we are also seeing in these last 14 weeks is Americans using their voice and showing their courage.
(END VIDEO CLIP)
SOLOMON: Harris also said that there is a method to Trump's chaos, claiming that he is a vessel for conservative policies that have been decades in the making. Still ahead for us, wildfires burning out of control near Jerusalem,
forcing evacuations and road closures in several communities. Empty warehouses and empty stomachs, Gaza is running out of food and the most vulnerable are suffering the most. We'll have a closer look at the humanitarian crisis.
And later this hour, the popular tour that President Trump says could get more expensive and harder to find in the months ahead.
We'll be right back.
(COMMERCIAL BREAK)
[05:18:08]
SOLOMON: Welcome back.
Israel is facing a national emergency and seeking international help to battle wildfires burning out of control near Jerusalem. More than a dozen people have been taken to hospitals because of the fires like you see on your screen here. They've been fueled by dry conditions and strong, gusty winds.
At least ten communities have been evacuated, and authorities had to close the main highway connecting Tel Aviv and Jerusalem. No word yet on what caused the fires. They are burning very close to where another wildfire broke out last week.
Thousands of desperate people in Gaza city have stormed U.N. aid facilities in search of food and supplies. According to a journalist on the ground, children and women and children and adults and men all pushing their way into warehouses looking for any remnants of food. Gaza is on the cusp of an all-out and entirely preventable famine.
For nearly two months, Israel has not let in any humanitarian aid to pressure Hamas to release the remaining hostages. But rights groups say that starvation is being used as a weapon of war.
CNN's Jeremy Diamond has our report and our warning that it does contain images that are difficult to watch.
(BEGIN VIDEOTAPE)
JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT (voice-over): Inside her fly- infested tent, Yiman Rajab (ph) is doing her best to keep her six children alive.
Today's survival looks like this, sifting the half bag of flour she found on a garbage dumpster in Gaza City, after all of its bakeries shut down. It is rancid, crawling with pests and clear signs of contamination.
But Rajab hopes she can salvage enough to make bread for her children.
My kids are vomiting after they eat it. It smells horrible, she says. I keep cleaning it and it won't get clean. But what else can I do? She asks. What will I feed my children, if not this?
Rajab is one of hundreds of thousands of parents in Gaza struggling to feed their children, an entirely man-made crisis that is rapidly spiraling.
[05:20:08]
For nearly two months now, Israel has carried out a total siege of Gaza, refusing to allow a single truck of humanitarian aid or commercial goods into the strip.
Israel says, it is trying to pressure Hamas into releasing the hostages, but it is civilians in Gaza who are paying the heaviest price.
There is no food, no nothing. Death is easier than this life, this elderly woman says.
This soup kitchen in central Gaza can now only provide one meal a day to those who are growing increasingly desperate.
This man says he has been standing in line for hours, hoping to feed his family.
These scenes an echo of last summer when hunger swept across Gaza, killing 52 Palestinians according to the Ministry of Health. The Biden administration pushed Israel then to let in aid. There is no such public pressure from the White House now, which says it backs Israel's tactics.
Food warehouses are now barren.
YASMIN MAYDHANE, EMERGENCY COORDINATOR, WORLD FOOD PROGRAMME: We are in a position now where over 400,000 people that were receiving assistance from our hot meal kitchens, which is the last lifeline for the population, is in itself grinding to a halt.
DIAMOND: Cases of acute malnutrition are now spiking. United Nations said nearly 3,700 children were diagnosed in March, 85 percent more than the previous month.
Five-year-old Osama Al-Arakab (ph) is among those most severely affected by Israel's blockade, which has exacerbated his pre-existing medical conditions. He has lost eight pounds in the last month and now weighs just 20 pounds. His skin sticking to his bones, every movement is painful.
Because of this war, my son has reached this state, she explains. Now he can barely walk. I have to carry him everywhere.
Every day, his condition worsens. Every day, Israel prevents food from getting into Gaza, Osama's life becomes more at risk.
Jeremy Diamond, CNN, Jerusalem.
(END VIDEOTAPE) SOLOMON: All right. Up next for us, a new survey gives insights into Americans' borrowing habits and what they're purchasing with those buy now, pay later loans. And later, the U.S. government is looking for countries that will take deported migrants. We'll tell you who they're reportedly in talks with after this break.
(COMMERCIAL BREAK)
[05:27:07]
SOLOMON: Welcome back.
Just hours after Donald Trump hailed the dawn of America's supposed golden age, he casually admitted during a cabinet meeting that his China trade war will mean fewer goods in stores at higher prices, and that kids might not get as many toys.
(BEGIN VIDEO CLIP)
TRUMP: Somebody said, oh, the shelves are going to be open. Well, maybe the children will have two dolls instead of 30 dolls, you know, and maybe the two dolls will cost a couple of bucks more than they would normally.
(END VIDEO CLIP)
SOLOMON: Now, the U.S. president argued that America doesn't need most of China's cheap goods, even though they are widely consumed in the U.S.
Meantime, his treasury secretary claimed that American families are finding their financial footing again, but evidence points to the contrary. Consumer confidence, for example, sank in April to its lowest level since 2020. The same survey also pointed to low expectations for jobs and income.
Meanwhile, the online loan marketplace LendingTree is up with a new survey on "buy now, pay later" loans, and it found that more than 40 percent of "buy now, pay later" users are late with their repayments. Nearly a quarter of them have three or more loans at the same time, and 25 percent of borrowers are using "buy now, pay later" to buy groceries, essentials.
I want to bring in now Matt Schulz from Austin, Texas. He is the chief consumer finance analyst with LendingTree, and also the author of "Ask Questions, Save Money, Make More: How to Take Control of Your Financial Life".
Great to have you this morning, Matt.
Let me just start with just some of the other results from this survey, because you say that there were several troubling findings. Walk us through them.
MATT SCHULZ, CHIEF CONSUMER FINANCE ANALYST, LENDINGTREE: Yeah. Really, the most troubling one of all is probably the fact that 1 in 4 "buy now, pay later" users say that they have been using those loans to buy groceries. And we all know that that prices have been rising at the grocery store. And were all kind of tired of it.
But I think that the widespread use of these "buy now, pay later" loans, which have traditionally been more for bigger ticket items and more want kind of things than need the fact that "buy now, pay later" is being used so often for groceries speaks to just how much a lot of people are struggling.
SOLOMON: Yeah, and I did wonder about that because I guess the counterpoint is, I mean, how much of that could be because of the popularity of these "buy now, pay later" loans? I mean, I feel like I see the option everywhere versus signaling real trouble.
What would you make there?
SCHULZ: Well, there's never just one reason. And it's certainly -- it's certainly could be that these -- that these loans have become more popular and just kind of continue to hit critical mass because there's no question that the main "buy now, pay later" lenders have done a really good job of making it a lot easier to use their loans, most anywhere you want to use.
