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Early Start with Rahel Solomon

Germany's Merz Fails To Win Chancellorship In First Vote; President Trump Says Trade Deals Are Coming; Air Traffic Controllers Lost Contract With Newark Planes; Tensions High Between Pakistan & India 2 Weeks After Killings. Aired 5-5:30a ET

Aired May 06, 2025 - 05:00   ET

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

[05:00:25]

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 Tuesday, May 6th, 5:00 a.m. here in New York.

And straight ahead on EARLY START.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Hollywood doesn't do very much of that business. They have the nice sign and everything's good, but they don't do very much. I'm not looking to hurt the industry.

UNIDENTIFIED MALE: Controllers there lost both radio and radar systems. Controllers were essentially doing their jobs blind.

UNIDENTIFIED MALE: We lost our radar and it's not working correctly. We don't have a radar, so I don't know where you are.

UNIDENTIFIED FEMALE: It's really amazing. We're very fortunate to be in Rome at this time.

UNIDENTIFIED FEMALE: Pope Francis gave us an incredible legacy to follow, and I know that the Holy Spirit will be guiding the cardinals.

REPORTER: Will it be positive? Will it be quick?

UNIDENTIFIED MALE: You won't know. We need to listen to the Holy Spirit.

(END VIDEO CLIP)

(MUSIC)

SOLOMON: All right. We'll get to those stories ahead this hour.

But right now, we want to begin with breaking news out of Germany. German conservative party leader Friedrich Merz has failed to win enough votes in parliament to become the next chancellor. Now, this is only the first round of voting, but it is an unexpected setback for the head of the Christian Democratic Union. His party secured a coalition deal with the center left social Democrats after February's national election. The legislature still has 14 days to elect mayors or another candidate with an outright majority.

Let's get straight to CNNs senior international correspondent, Fred Pleitgen, who is on the phone line for us now.

Fred, this, as I said, was unexpected. He was expected to be sworn in later today. So, walk us through the process. What happens now?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (via telephone): Yeah. He was indeed expected to get sworn in later today. And first of all, this is a huge slap in the face for Friedrich Merz and certainly for the coalition that he wants to form, which is the conservative party and the social Democrats. He needed 316 votes in German parliament to get across the finish line and become chancellor, and he only got 310.

So those six missing votes, that is actually quite a lot when you look at German parliamentary democracy and also something like this, a candidate not making it in the election for chancellor in the bundestag in the parliament is something that simply has never happened before.

Now, the latest that I'm hearing, and this is from a couple of minutes ago, is that there is not going to be another round of voting today. The parliament is not going to elect Friedrich Merz chancellor today. That is not going to happen.

The earliest could possibly be tomorrow. And that, of course, sets in motion all sorts of new timelines because Friedrich Merz was actually going to go on his first foreign trip tomorrow, going first to Paris and then to Warsaw to show that he stands by Germanys allies, especially, of course, in these very difficult times. But now all of that has basically been thrown out the window, as its unclear when Germany is going to have a new chancellor.

As you can imagine, Rahel on the ground right now, inside the German parliament, inside the German political system, there's a lot of finger pointing that's already going on, the conservatives pointing the finger at the Social Democrats, the Social Democrats pointing their finger back at the other side. But the bottom line is that for now, Olaf Scholz has left office, and currently Germany does not have another chancellor.

Now there are going to be two more rounds of voting where Friedrich Merz could become chancellor or a new candidate, or someone else could then be put up for vote in about 14 days from now. But definitely right now, Germany, in complete political disarray. And you're already seeing that, for instance, also on the German stock exchange, which has been tanking over the past couple of minutes -- Rahel.

SOLOMON: Yeah, I was just taking a look at that. Okay, so apparently no vote expected later today. Things will pick up tomorrow, presumably. Frederik Pleitgen reporting live for us there -- Fred, appreciate you

jumping on so quickly. Thank you.

All right. Let's now turn to President Trump's latest economic plans. Hollywood was rocked when he announced his intention to impose a 100 percent tariff on movies made outside the U.S., a lack of clarity over how exactly that would work and what it would cost quickly led to concern across the industry.

On Monday, the president said that no final decisions have been made and that he would go back and consult with the industry.

(BEGIN VIDEO CLIP)

TRUMP: Hollywood doesn't do very much of that business. They have the nice sign and everything's good, but they don't do very much. A lot of it's been taken to other countries and big proportion, and I'm actually going to meet with some because, you know, there's some advantages, I guess, and I'm not looking to hurt the industry. I want to help the industry.

(END VIDEO CLIP)

[05:05:03]

SOLOMON: Now. The uncertainty sent shares of major entertainment companies tumbling on Monday, including Warner Bros. Discovery, CNN's parent company, and tariff concerns are also hitting other industries as well.

Mattel, which makes Barbie dolls, told "The Wall Street Journal" that it plans to raise U.S. toy prices. Although the president says he's not worried about that.

(BEGIN VIDEO CLIP)

TRUMP: I don't think a beautiful baby girl needs 11 years old, needs to have 30 dolls. I think they can have three dolls or four dolls, because what we were doing with China was just unbelievable.

(END VIDEO CLIP)

SOLOMON: Still, the Trump administration continues to insist that better trade deals are coming soon. Here's Treasury Secretary Scott Bessent.

(BEGIN VIDEO CLIP)

SCOTT BESSENT, TREASURY SECRETARY: I think we're very close to some deals. I can say that I am highly confident that we have 18 important trading partners. We'll put China to the side.

(END VIDEO CLIP)

SOLOMON: And CNN's Kristen Holmes has more on those potential trade deals from the White House. (BEGIN VIDEOTAPE)

KRISTEN HOLMES, CNN SENIOR WHITE HOUSE CORRESPONDENT: There are still a lot of questions as to when exactly any of these trade deals are going to be made. We have heard from a number of administration sources for the past three weeks saying that they are on the precipice of making one of these trade deals, yet we still have yet to see any insight into how they are going, what they look like, and actually any tangible results from these ongoing negotiations.

Here's what Donald Trump said when it comes to these deals. When he was talking to reporters on Air Force One.

TRUMP: We're negotiating with many countries. But at the end of this, I will set my own deals because I set the deal. They don't set the deal. They set the deal. They've been ripping us off for years. I set the deal.

So, every country, almost without fail, friend and foe, has been ripping us off for years now.

HOLMES: I've spoken to a number of supporters of administration, officials, of allies of President Donald Trump, who all say that they are also very eager to see a deal being made. They understand that this is crucial for the economy, even if it's just symbolic in the sense that it shows that they are moving the needle forward in these conversations. Yet again. It has been three weeks. It is unclear when there's going to be one of these trade deals made.

And one thing to note here, as we talk about Donald Trump and these negotiations ongoing with various trade partners, it has been made clear, at least alluded to by the administration, that they are not going to move forward with China until they start to get some of these other trade deals in place. That's going to cause a lot of stress for Americans, particularly talking to those small business owners who feel like they are currently looking down the barrel of the gun, hoping for some movement, particularly when it comes to China to keep their businesses afloat.

Kristen Holmes, CNN, the White House.

(END VIDEOTAPE)

SOLOMON: One of the busiest airports in the U.S., Newark Liberty, continues to be plagued by widespread delays. More than a week after a communication outage led to staffing shortages, air traffic control audio recorded by the website liveatc.net and obtained by CNN, reveals the tense moments that authorities say prompted some controllers to take trauma leave.

(BEGIN AUDIO CLIP)

APPROACH AIR TRAFFIC CONTROLLER: No, you do not have a bravo clearance. We lost our radar and its not working correctly. Radar service terminates. Squawk VFR. Change approved.

If you want a bravo clearance, you can just call the towers when you get closer.

PILOT: Okay, I'll wait for that frequency from you. Okay?

APPROACH AIR TRAFFIC CONTROLLER: Okay. No, just squawk VFR. Look up the tower frequencies. We don't have a radar, so I don't know where you are.

(END AUDIO CLIP)

SOLOMON: Now. The Federal Aviation Administration did acknowledge Monday that the agency's antiquated air traffic control system is affecting its workforce. And now lawmakers are demanding an investigation.

CNN aviation correspondent Pete Muntean reports now.

(BEGIN VIDEOTAPE)

PETE MUNTEAN, CNN AVIATION CORRESPONDENT: The FAA is now essentially confirming our new reporting on this saga. This paints the best picture yet of why delays at Newark have been going on for days. It all goes back to an incident last Monday at the key radar facility responsible for Newark flights, and a source familiar with the incident tells me controllers there lost both radio and radar systems for an undisclosed amount of time.

That meant controllers were essentially doing their jobs blind, which led to at least five controllers taking what's called trauma leave, something they are legally allowed to do. They're now off for the next 45 days. This is a huge development, and the FAA has been investigating the cause of the equipment outage that triggered these staffing shortages.

But now, Senate Democrat Chuck Schumer is calling for the Department of Transportation inspector general to launch a probe immediately. This is what he said about the cause of the outage at the Newark radar facility. Listen.

SEN. CHUCK SCHUMER (D-NY): The technology is old and must be updated. It was one of the things that one of the things that happened at Newark is a copper wire burnt. Why are we using copper wire in 2025? Have they heard of fiber?

MUNTEAN: Schumer also called out last year's move of the Newark radar facility from Long Island, New York, to Philadelphia. The goal there was to shore up staffing issues, but Schumer says it actually made problems worse.

[05:10:04]

The FAA is not detailing a fix in the near term. Controllers do jobs that are location specific, meaning they could not be pulled from one area and dropped into another.

Pete Muntean CNN, Washington.

(END VIDEOTAPE)

SOLOMON: On Monday, Transportation Secretary Sean Duffy explained to Fox News what went wrong in that initial incident at Newark Liberty and addressed the future of the air traffic control system.

(BEGIN VIDEO CLIP)

SEAN DUFFY, TRANSPORTATION SECRETARY: The primary communication line went down. The backup line didn't fire. And so for 30s, we lost contact with air traffic -- with air traffic control --

LAURA INGRAHAM, FOX NEWS HOST: That's a big problem, right?

DUFFY: It is. Now, were planes going to crash? No, they have -- they have communication devices. They can see other air traffic like GPS in the airplanes.

But it's a sign that we have a frail system in place and it has to be fixed. We're going to build a brand new air traffic control system from new telecom, to new radars, to new infrastructure. We're bringing on new air traffic controllers.

(END VIDEO CLIP)

SOLOMON: Details of the plan are set to be revealed on Thursday. And according to Duffy, President Trump has bought into it.

All right. Still ahead for us, the Ford Motor Company revealing how President Trump's tariffs will affect car prices and how much they could cost the automaker.

Plus, cardinals have arrived in Rome to elect a new pope. How the Vatican is preparing for the start of the conclave on Wednesday.

And the biggest stars. We're looking fine and dandy. If you have opened your phone today, you have probably already seen the photos at fashion's most talked about event last night. Later this hour, I will be speaking with one historian on the inspiration behind this year's Met Gala.

We'll be right back.

(COMMERCIAL BREAK)

[05:16:09]

SOLOMON: Welcome back.

And a quick look now at U.S. futures this Tuesday, May 6th, at 5:15 on a Tuesday morning.

Still solidly in negative territory between 6/10 of a percent for the Dow, to the Nasdaq, which is off about 1 percent in early morning trading. Coming off of the losses on Monday, the Dow and S&P both snapping nine-day winning streaks as investors continue to worry about the trade war and rising inflation. Also watching the Federal Reserve's two-day policy meeting for May

which begins today. Expect that announcement tomorrow, although the consensus is at least right now, is that they are not expected to change rates, expected to hold rates steady. So stay tuned for that.

Ford, meantime, says that Trump's tariffs are going to cost the company around $1.5 billion this year. But it also doesn't think that U.S. consumers will see any big price hikes, at least not yet. Ford expects U.S. car prices to edge up by 1 to 1.5 percent in the second half of 2025. That's despite the 25 percent tariffs on imported vehicles and parts.

The company also announcing that it is suspending its financial guidance for the year as it waits to see how things play out. Revenue fell 5 percent in the first quarter, although that still beat expectations of a bigger drop. Ford is expecting a sharp decline in sales across the industry later this year after Americans rushed to buy vehicles before tariffs went into effect.

Let's now welcome in senior editor at "Autotrader" and "Kelley Blue Book", Brian Moody, who joins us live from Atlanta to discuss.

Brian, great to have you this morning. Thanks for being here.

On Ford's earnings just happened to fall just a few days after these new tariffs on auto parts went into effect. And you have said that these tariffs over the weekend could upend the industry even more than the previous levies on auto imports.

How so?

BRIAN MOODY, SENIOR EDITOR, AUTOTRADER AND KELLEY BLUE BOOK: Well, it depends on the automaker. Ford specifically seems well-positioned to weather this part of it because they already build a good part of their vehicles in the U.S.

So, it's really going to depend on how much of a car an automaker assembles in the U.S. and where those parts come from, and the parts seem to be one part that we haven't really discussed too much. We've always been talking about it from the automaker perspective. What about from the parts retailer's perspective?

SOLOMON: Yeah, and talk to me a little bit about that, because I read a stat that the U.S. produces about 10 million cars in U.S. plants, but that pretty much all of those cars, all 10 million of those cars have at least some imported part.

I mean, will these tariffs touch practically every car being made in the U.S. in one way or another?

MOODY: Yes, because there's no such thing as a 100 percent built in the U.S. car, including all parts. So some manufacturers, Tesla and Ford are good examples. Nissan makes some cars in the U.S. Mercedes- Benz makes a lot of cars in the U.S., but they all get parts from elsewhere. And most people don't realize this today, but a lot of parts of a new car don't come from the automaker itself. Things like radios, seats, brakes, lights, those things all come from a supplier. And to save money based on economies of scale or based on where else the car is popular, those things come from a supplier and they may come from outside the U.S.

SOLOMON: So, Brian, what are you telling people to do? I mean, I don't know if your neighbor comes up to you and says, I need to buy a car or I need to get my car serviced. What's your advice to people?

MOODY: Well, if you were already going to get a car this year, say your lease expires or you had an accident or your car just -- just died, if you're already going to get a car this year, then go ahead and do that. But just speed up your process a little bit. Know that the price of used cars was already going to go up, even if none of this happens. So speed up your shopping a little bit.

And when it comes to maintenance, if you suspect that you might need a repair or maintenance, make the appointment now.

[05:20:03]

SOLOMON: Yeah, I will say that my lease is coming up. And on a personal note, our family is downsizing to one car just because it makes more sense.

But, Brian, the car dealer -- dealer calls me every week asking if I want to bring it back sooner. And I keep saying I don't, but clearly, they want these old cars back on the lot.

MOODY: They do.

SOLOMON: Before I let you go, who do you think stands to be the biggest winners and the losers from these new tariffs? It's interesting that you pointed out Tesla and Ford. Do they stand to be relatively speaking, better to -- better equipped to withstand this than maybe some of their competitors?

MOODY: Yes. And there's lots of companies like that. For example, if you look at Nissan, Hyundai and Mercedes-Benz.

Mercedes-Benz has a new plant, a relatively new plant in Alabama where they make electric vehicles, but they also make the batteries that go into it. It's a state of the art facility. It's a gigantic place, but what they can do is they can ramp up production or they can decrease production.

Those types of things where they can bring some production into the U.S. are going to really help that automaker. Kia, another example.

SOLOMON: Okay. Brian Moody, we appreciate you being here and waking up early to be with us. Thank you.

MOODY: Yes, thanks.

SOLOMON: Well, coming up, a disputed line of control separates two nuclear powers as tensions spill over into local communities.

Coming up, CNN goes inside Pakistan controlled Kashmir, coming up next.

(COMMERCIAL BREAK)

[05:25:54]

SOLOMON: Welcome back.

Two weeks after the deadly massacre in Indian administered Kashmir, tensions between India and Pakistan are dangerously high. Pakistan reportedly carried out a second missile test on Monday. India ordered new security drills, and multiple major airlines have stopped flying over Pakistan.

Secretary general urging both sides to show restraint. Warning, quote, a military solution is no solution.

Let's get to CNN's Nic Robertson, who made a rare trip to the line of control separating the two nuclear powers. And he joins us now live in the Pakistani capital of Islamabad.

Nic, great to have you.

You were able, in your piece to talk to the people who live in this area, the people likely to be the most impacted by whatever comes next. What do they tell you?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yeah, some harrowing stories. And I think its worth noting here that we are the first international journalists to be able to get there at this time of heightened tensions and hostilities. And it's not even an easy thing for local journalists and reporters to do.

This is the Pakistani administered area of Kashmir, and it's very heavily controlled. So this access to hear these stories, I think, really tells a tale in -- of itself.

(BEGIN VIDEOTAPE)

ROBERTSON (voice-over): High in the Himalayas, Pakistan's army is taking us deep into disputed Kashmir, toward the line of control, the de facto border with India and one of the most militarized conflicts in the world. Tensions between the two nuclear armed neighbors rising since a terror attack killed 26 civilians, mostly Indian, almost two weeks ago.

Militaries on both sides readying for possible escalation, as India blamed Pakistan and Pakistan denied responsibility.

It's a war of words. Civilians on both sides of these rugged mountains fear, not for the first time, will be victims of events way beyond their sway. Control of the towering peaks unresolved for 75 years.

Just driving through the mountains here, it's easy to understand why Kashmir is still a disputed area, so hard to find a decisive war in this rugged terrain.

The other thing you see here is poverty. Meager villages clinging to the hillside. People here say the spiking tensions making it harder to eke a living, as we're about to find out.

On foot now, the village we're heading to a few hundred feet from the line of control.

And just look over there, you can see how close the front lines are. That's the last Pakistani position there, the Indian army position a few hundred meters away. And those trees, that's the line of control.

When we arrive, most villagers clustered around one house, some hiding in the dark. Inside, children peeking from unglazed windows.

This villager telling us they live in fear now. Elderly children and women are incredibly scared, he says. We want to take our livestock out to pasture, but the Indians are right there in front of us and we're very concerned.

Their fears may be well-founded.

This 17-year-old says Indian troops killed his father, Malik Farooq. He had gone to the line of control to chase our cattle, he says. The Indians shot him and accused him of being a terrorist. He is not. He is a good man.

The day after the massacre in Indian administered Kashmir, the Indian government announced it had foiled a terror plot, killing two Pakistanis. Malik's brother denies the allegations, too, says he was just a herder like me, believes India wants their land before breaking down in tears.

It's okay. It's okay.