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Early Start with Rahel Solomon

Trump Says He's Firing Federal Reserve Governor; Trump Doubles Tariffs On Indian Imports To 50 Percent; Israel Faces Global Outrage Following Gaza Hospital Attack. Aired 5-5:30a ET

Aired August 27, 2025 - 05:00   ET

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

[05:00:27]

MIN JUNG LEE, CNN ANCHOR: Good morning and welcome to our viewers, joining us from the United States and all around the world. Thanks so much for being with us. I'm MJ Lee. Rahel Solomon is off.

It's Wednesday, August 27th, 5:00 a.m. here in Washington, D.C.

And straight ahead on EARLY START.

(BEGIN VIDEO CLIP)

TOM FOREMAN, CNN CORRESPONDENT: President Trump says the deed is done. He has fired Federal Reserve board member Lisa Cook.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We need people that are 100 percent above board, and it doesn't seem like she was.

ROSEMARY CHURCH, CNN ANCHOR: President Donald Trump is expected to hold a large meeting at the White House to discuss the war in Gaza.

UNIDENTIFIED FEMALE: We do need to end this war because we need to bring the hostages back.

UNIDENTIFIED FEMALE: Two years in the making, Taylor Swift and Travis Kelce are getting married.

UNIDENTIFIED MALE: Travis had set up this beautiful garden arrangement. He said, hey, before we go to dinner, we should have a little glass of wine. And that's when he got down and he popped the question.

(END VIDEO CLIP)

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LEE: President Trump is doubling down on his feud with the Fed. The president says he is firing Federal Reserve Governor Lisa Cook and claims that he has cause to do so.

(BEGIN VIDEO CLIP)

TRUMP: She seems to have had an infraction, and she can't have an infraction, especially that infraction, because she's in charge of if you think about it, mortgages.

(END VIDEO CLIP)

LEE: Cook is fighting back. Her attorney said she will file a lawsuit challenging the president. And in a statement, the Federal Reserve said it plans to abide by the court's decision. It noted that the president can remove governors, but only for cause, and it's not clear whether the alleged infraction that the president spoke of meets that standard.

The president has been open about his irritation with the Fed, an institution that is supposed to act independently to set monetary policy for the United States.

President Trump is upset that Fed Chair Jerome Powell has not cut interest rates, but he did suggest that with Cook gone, the Fed might give him what he wants.

(BEGIN VIDEO CLIP)

TRUMP: We'll have a majority very shortly, so that will be great. Once we have a majority and housing is going to swing and it's going to be great.

(END VIDEO CLIP)

LEE: CNN's Tom Foreman has more on the president's messy fight with the Federal Reserve.

(BEGIN VIDEOTAPE)

TRUMP: We need people that are 100 percent above board, and it doesn't seem like she was.

FOREMAN (voice-over): President Trump says the deed is done. He has fired Federal Reserve board member Lisa Cook. But Cook and her lawyer say he cant do that because the president has not built the case to give her the boot.

TOM DUPREE, FORMER U.S. DEPUTY ASSISTANT ATTORNEY GENERAL: Under the law, the president clearly does have the legal authority to fire a member of the Federal Reserve for cause. I think what's a closer question, though, is whether what the president has at this point amounts to cause.

FOREMAN: At issue in 2021, Cook purchased a home in Michigan, then another home in Georgia, declaring both to be her primary residence based on a CNN review of mortgage documents, potentially double dipping on financial incentives for homebuyers. But analysts note she has denied wrongdoing. She was never charged. That might not be a valid cause to fire her anyway, and she may have an explanation.

DUPREE: She could just say she made a mistake.

FOREMAN: However, Trump has been fuming at the fed for months for refusing to drop interest rates to head off rising inflation, which many economists expect to get worse as Trump's tariffs settle in.

TRUMP: The job he's done is just terrible.

FOREMAN: So, he's tried and failed to shove aside Fed Chairman Jerome Powell. He's trying to push Cook out so he can name her replacement. And most of all, he's trying to make the seven-member independent board bend to his will, which some economists say is an awful idea.

JUSTIN WOLFERS, PROFESSOR OF ECONOMICS AND PUBLIC POLICY, UNIVERSITY OF MICHIGAN: We want the Fed to make decisions in the best interest of the American people, rather than the political interests of the president. If he proceeds down this path, then we get a step closer to a banana republic.

FOREMAN: Still, team Trump has flung mortgage fraud accusations at New York Democratic Attorney General Letitia James, who got a civil judgment against Trump for falsifying business records and Democratic Senator Adam Schiff from California.

TRUMP: I think Adam Schiff is one of the lowest of the low. I would love to see him brought to justice.

FOREMAN: They both deny any violations, but Trump didn't even accuse Tulsi Gabbard of wrongdoing when she simultaneously claimed homes in Texas and Hawaii.

[05:05:01]

Trump made her his director of national intelligence.

(END VIDEOTAPE0

FOREMAN (on camera): It really comes down to that question of cause. Even if Cook did what she's accused of, is that big enough to trigger such a massive move involving the Fed? Or is this just "because", because she was selected by President Joe Biden and President Donald Trump doesn't want her there?

Tom Foreman, CNN, Washington.

LEE: Let's discuss now with Jeanna Smialek. She is the Brussels bureau chief for "The New York Times", and she joins me live from the Belgian capital.

Thank you so much for joining us this morning.

Jeanna, this is all obviously unprecedented. Never in the Central Bank's history has a president fired a Fed governor. How much is the president's displeasure with the Fed for not lowering interest rates a factor here?

JEANNA SMIALEK, BRUSSELS BUREAU CHIEF, NEW YORK TIMES: You know, I think we can pretty clearly deduce that it is the main driver here not least of all because President Trump essentially said that last night during his cabinet meeting. You know, he was -- he was very clear, very blunt that with this move, the White House will soon have a majority on the Fed board of governors, which is that seven-member board that sort of sits over the top of the Fed, and that will give them a lot of power. It won't -- it won't absolutely allow them to control everything, but it will give them sort of the main voice when it comes to setting interest rates and really pave the way for much lower interest rates, which is what President Trump has been agitating for a long time here.

LEE: And from where you are in Brussels, can you give us a sense of how world leaders, not to mention global markets and investors, are reacting to what is widely seen as this attempt to erode the independence of monetary policy making in the U.S. Is there a lot of unease that you are picking up on?

SMIALEK: There is absolutely a lot of unease and a lot of attention. I think this really adds to what is a sort of ongoing level of tension here in Europe surrounding the United States. You know, people have been really kind of keeping an eye on what President Trump is doing with a lot of apprehension over recent months, partially because a lot of it has had to bear economically on Europe, but also because it has to bear with financial markets.

And I think, you know, I live in Brussels, so we get all of the French newspapers and almost all of them have stories about Lisa Cook. This morning, I was listening to French broadcast on my way into work, and it had a story about Lisa Cook this morning. You know, I'm not sure that Lisa Cook has made Le Monde before. But it's definitely the case that this is getting a lot of attention in the international media.

LEE: Yeah, certainly her moment in the spotlight. You covered the U.S. central bank for years, including its current chairman, Jerome Powell. He has been under tremendous pressure from President Trump to lower rates, and is constantly being singled out by the president.

Do you have a sense of how Powell himself has been handling this kind of political heat?

SMIALEK: You know what we really saw in the first Trump administration is Powell stuck to his knitting. He repeated that phrase all the time. He tried really hard to just ignore what was coming out of the White House, to really sort of look past it and stick to his job.

I think that I'm not there covering this right now, but I imagine that it's much more difficult this time around, partially because the Trump administration has really sort of learned the way the government works, and they have been much, much more overt in trying to seize control of the Fed than they were during the first Trump term.

And so, I think, you know, the Fed's long held policy of trying to keep your head down, just ignore the noise, push through it, and trust that the Federal Reserve Act is built in a way that will insulate the Fed from political sort of manipulation or political influence. It's probably no longer a strategy that works as well.

LEE: So, after Lisa Cook's attorney said that she plans to sue, the Central Bank said in a statement that it is going to abide by whatever the courts decision is going to be. Do you think that there's a good amount of concern where you are that we might be seeing the beginning of the reshaping of the U.S. Central Bank, or is there sort of a sense that the fed will ultimately be able to withstand these kinds of political pressures?

SMIALEK: I think we've got a lot of really huge open questions here around whether the Fed is going to be able to stand up to this, around what its going to mean for financial markets. If the Fed is not capable of standing up for this you know, I think I was talking to some economists friends last night, and I think there's a quite a lot of surprise at this stage that there hasn't been more of a reaction in financial markets to what has been, a pretty dramatic shift in policy here.

And so, I think there's a big question, you know, will financial markets freak out? At what stage will they freak out? And what does that mean for the rest of the world? And I think we don't know the answer to those questions yet.

LEE: A lot of unanswered questions.

Jeanna Smialek, thank you so much for joining us this morning.

[05:10:03]

SMIALEK: Thank you for having me.

LEE: U.S. Treasury Secretary Scott Bessent was quick to express his confidence in President Trump amid the situation with the Fed. On Tuesday, he suggested that the Federal Reserve's independence wasn't guaranteed, but rather based on public sentiment. Take a listen.

(BEGIN VIDEO CLIP)

SCOTT BESSENT, TREASURY SECRETARY: The Federal Reserve's independence comes from a political arrangement between itself and the American public, having the public's trust is the only thing that gives it credibility. And you, sir, are restoring trust to government.

(END VIDEO CLIP)

LEE: That remains to be proven. Lisa Cook's potential removal would move the president one step closer to having bigger involvement in U.S. monetary policy.

The news wasn't good for the U.S. dollar, which fell against major currencies on Tuesday. It's also leading central bankers worldwide to worry about their independence. But looking forward to the coming hours, let's take a look at where the U.S. futures sit as we wait for Wall Street to open.

As you can see there, we are seeing green across the board. The Dow, the S&P and Nasdaq futures are all trending up.

And more economic news. President Trump is dealing a punishing blow to India with new tariffs on most imports now at 50 percent. That's double the amount that was set just weeks ago by the president, one of the highest rates that the U.S. is charging any country. It's a movement to penalize India for importing Russian oil, which helps Moscow fund its war with Ukraine.

Indian officials have been quick to note not every country getting oil from Russia is being treated the same way, including China, which faces a 30 percent tariff. Trade negotiations between China and the U.S., of course, are ongoing, with Beijing's top negotiator expected to meet with the Trump administration in an informal setting later this week.

Meantime, Japan, Australia and Taiwan are the latest trading partners to suspend parcel deliveries to the U.S. as an exemption, allowing some items to be shipped to duty free expires on Friday. Regardless, the U.S. is profiting from the global trade tensions. New data shows President Trump's tariffs collected $22 billion in revenue on Friday alone. Economists predict that August total revenue could reach $32 billion.

CNN's Anna Cooban breaks down the numbers on how the new tariffs will affect India.

(BEGIN VIDEOTAPE)

ANNA COOBAN, CNN BUSINESS & ECONOMICS REPORTER: It had already been hit by 25 percent tariffs. Now an additional 25 percent is being added. India is about to face one of the highest effective U.S. tariff rates in the world. That's the rate that once you calculate various exemptions.

That's because after Russia invaded Ukraine in 2022 and Europe started sanctioning Russian oil. Russia focused on selling its barrels to Asia, and India became a big customer. By June this year, nearly 47 percent of Russian crude oil had been sent to China, and around 38 percent had been sent to India.

Now, last month, Trump announced secondary sanctions on countries purchasing this oil. After that, a crude oil analyst at Kepler noted a slowdown in purchases from India and that those barrels were being snapped up by China. They noted around 15 cargoes had been sent to China, but that hasn't been enough to stop these sanctions from coming into effect today.

That could make certain items that the U.S. gets from India a lot more expensive, from jewelry to jeans. And if that demand is cut down, it could have an impact on jobs in India. But the actual impact on Indian GDP is not predicted to be that significant. You can see here it's just a knock of around 0.8 percent based on these tariffs. Now engineering goods and electricals are a significant portion of the products that India will ship to the U.S. earlier this year, India overtook China to become the biggest exporter of smartphones to the United States, according to research firm Canalys. But smartphones are exempt from these sanctions, which could provide some relief. Other goods will continue to be sold to the rest of the world without facing a tariff increase.

Anna Cooban, CNN, London.

(END VIDEOTAPE)

LEE: FEMA has placed several workers on leave effective immediately. This comes one day after more than 180 employees signed an open letter to Congress warning that the Trump administrations massive overhaul of the Federal Emergency Management Agency could lead to catastrophic failures in disaster response. It was named the Katrina declaration, and says that critical reforms that were put in place after Hurricane Katrina in 2005 are being unraveled. Most employees signed the letter anonymously, but 36 did so publicly.

Coming up, Donald Trump says he's ready to send National Guard troops into more U.S. cities as part of his so-called crackdown on crime. Now, some local officials are getting ready to fight back against what the president seems to see as his absolute power. That's ahead.

Plus, Israel says it will examine several gaps in its understanding of the attack on a Gaza hospital that has sparked global outrage. We'll have the latest reactions and how the White House is responding.

And Kilmar Abrego Garcia gets ready for a hearing as he fights to keep the Trump administration from deporting him yet again. What to expect at the hearing today, that's ahead.

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LEE: President Donald Trump is making clear that he intends to expand the National Guard's role in law enforcement activities across the U.S.

[05:20:01]

He's made exaggerated claims about crime in U.S. cities to justify troop deployments, even though violent crime fell across the country last year. Trump says he might send troops into Chicago next, calling the city a killing field. Chicago's mayor and the Illinois governor are pushing back against those plans, saying that what the president is planning to do is unconstitutional and a threat to democracy.

(BEGIN VIDEO CLIP)

GOV. J.B. PRITZKER (D), ILLINOIS: What we are doing in the state right now is making sure that the president and those folks in Washington who are thinking about sending troops to the -- on the ground in a major American city, are is that they understand that no one wants them to come, that crime is down. Also, if they decide to do it, you know, were going to make sure and go to court about it because frankly, you're not allowed, according to posse comitatus act, to send armed troops into an American city to fight crime.

(END VIDEO CLIP)

LEE: But Trump claims that his presidential powers do give him the authority to send the troops in.

(BEGIN VIDEO CLIP)

TRUMP: I would have much more respect for Pritzker if he'd call me up and say, I have a problem. Can you help me fix it? I would be so happy to do it. I don't love not that I don't have the right to do anything I want to do. I'm the president of the United States. If I think our country is in danger and it is in danger in these cities, I can do it.

(END VIDEO CLIP)

LEE: And shifting now to the Middle East, President Donald Trump is expected to hold a large meeting at the White House in the coming hours to discuss the war in Gaza. That's according to special envoy Steve Witkoff.

The meeting comes just one day after a massive number of protesters attended a rally in Tel Aviv for what they're calling a nationwide day of struggle.

Meantime, the Israel Defense Forces says the double tap strike on Nasser Hospital, which killed at least 20 people, was aimed at what it believed was a camera positioned by Hamas. The IDF says it would, quote, examine several gaps in its understanding of the attack, but also claims six of the individuals that were killed in the strikes were terrorists.

CNN's Paula Hancocks joins us now with the latest.

Paula, a lot of outrage being directed at Israel right now as the White House is getting ready to convene this meeting about the war.

PAULA HANCOCKS, CNN CORRESPONDENT: Yes, MJ, there is increasingly strong condemnation about what happened on Monday at the Nasser Hospital in the southern Gaza city of Khan Younis. Many questions are being asked even after an updated statement from the Israeli military.

Now, there were contradictory statements to start with. The prime minister's office calling it a, quote, "tragic mishap". The IDF then on Tuesday saying that in fact, they had meant to target that area and they said it was Hamas camera.

They gave no evidence for this statement, though. And what we have heard from eyewitnesses, what we have seen, in fact, on live feeds of what was happening in real time was, in fact, that there was a camera targeted. We know it was a "Reuters" camera and that a "Reuters" cameraman among four other journalists in those double strikes was killed.

Now, as of now, it's not clear. The Israeli military, not giving details as to where they believe there was Hamas camera, but they say the reason they wanted to take it out is because they thought it was monitoring Israeli troop action. But the condemnation has been very widespread from countries around the world, from journalists groups, from the United Nations.

In fact, there was a statement from the United Nations human rights spokesperson. Let's listen to that. (BEGIN VIDEO CLIP)

THAMEEN AL-KHEETAN, U.N. HUMAN RIGHTS SPOKESPERSON: The killing of journalists in Gaza should shock the world, not into stunned silence, but into action, demanding accountability and justice. This incident and the killing of all civilians, including journalists, must be, thoroughly and independently investigated, and justice must follow.

(END VIDEO CLIP)

HANCOCKS: The Israeli military has said that there will be a thorough investigation. We did see, though, a letter from "AP" and "Reuters" to international media outlets that had contractors working for them that were killed in this attack, that have said they don't have full confidence that an internal investigation would actually lead to any transparent results, saying that they are looking at precedents of when journalists have been killed and Israel has investigated itself. So, there are growing calls for an independent investigation and for accountability to be carried out.

And it also comes as we are hearing that later today, this Wednesday, there will be a, quote, large meeting at the White House on Gaza itself.

[05:25:07]

We heard this from the U.S. Mideast envoy, Steve Witkoff, and he said it effectively will look at a very comprehensive plan were putting together for the next day, saying it will focus on what he calls Trump's humanitarian plans.

We did hear from the U.S. president, though, really casting doubt on what he had said on Monday, which was there could be a conclusive end to the war in two to three weeks. On Tuesday, he did say that that there's unlikely to be any conclusive or there's nothing conclusive at this point just to hope that the war will end.

So, certainly, any optimism from Monday's comments were gone by Tuesday -- MJ.

LEE: Yeah, we'll certainly be keeping a close eye on that White House meeting.

Paula Hancocks, thank you so much.

Still ahead, Donald Trump's special envoy is expressing hope for an end to Russia's war in Ukraine, even as Russian troops inch forward in Ukraine's southeastern region.

And Harvard University is showing no signs of giving in to the Trump administrations demand for a half a billion settlement. The school's possible next steps, that's coming up.

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