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Stocks Dive After Trump Escalates China Trade War; 10 Percent Universal Tariff still in Place, Along with 145 Percent on China; Trump: People Were "Getting a Little Queasy" on Bond Markets; House Republicans Approve Key Budget Plan to Unlock Trump Agenda; Speaker Johnson: No Cuts to Medicaid, Jeffries: They're Lying. Aired 12-12:30p ET

Aired April 10, 2025 - 12:00   ET

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

[12:00:00]

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DANA BASH, CNN HOST, INSIDE POLITICS: Today on "Inside Politics", Trump's trade war isn't over yet. Yes, he paused most tariffs on most of the world yesterday, but he also made them bigger on China, which could cost you and your family thousands of dollars a year. Plus, Republicans take a big step toward passing their budget blueprint that would unlock huge new tax cuts and other Trump priorities.

They're also promising to cut more than $1.5 trillion in spending. The big question here in Washington is, where will those cuts come from? And the Trump revenge tour rolls on. The president orders investigations into two first term officials. He now considers enemies, including one whose only offense was saying the 2020 election wasn't rigged.

I'm Dana Bash. Let's go behind the headlines and "Inside Politics". We are looking at major losses this morning in an incredibly volatile stock market. The DOW is down more than 1500 points, the S&P 500 down nearly 5 percent. That, of course, is after yesterday's very big rally.

It was one of the biggest ever, after President Trump's announcement that he's scaling back his trade war. Today, investors might be realizing that scaling back doesn't mean ending. In fact, there's still a stunning 145 percent tariff on all imports from China, 25 percent on many products from China and Mexico, 10 percent on nearly every other country, 25 percent on all imported car and car parts.

Jeff Zeleny is at the White House for us. Jeff, as we speak, the president is meeting with his cabinet. We have any early indicators on how that's going?

JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: Dana, we do know the meeting is underway and it will be opened up to journalists to see what is going on in just a short time, we are told. But for now, at least that victory lap yesterday, that really was quite clear here at the White House. You can see it in the president's eyes as he was explaining to us why he made the decision to a pause that is anything but a victory lap this morning.

Now it is clear the trade war is well underway. Never mind what the markets are doing, the conversations that are going on here at the White House and indeed across Washington, at the State Department and elsewhere, about what type of conversations and discussions will there be with China, ultimately, because the trade war is very much underway.

So, what the U.S. is trying to do. What the president and his team are trying to do, are essentially round up the allies from South Korea, Japan and others to a former unified front against China. That is very much an open question, if that will happen or not, but the president's Top Economic Adviser, Kevin Hassett, this morning, he said the Cabinet had an assignment for today's meeting.

(BEGIN VIDEO CLIP)

KEVIN HASSETT, DIRECTOR OF NATIONAL ECONOMIC COUNCIL: The chief staffs office has asked all the principals that have, you know, skin in the game, to come and discuss what their views are about how this should go, and that's what the purpose of the meeting is.

(END VIDEO CLIP)

ZELENY: So, skin in the game, that is clear. I mean, this really affects department -- to a department. But these the trade war with China now in the ag sector alone, that could be extraordinary for ag producers. But as well as what is happening on Capitol Hill with the budget, this could have a dramatic effect.

But for now, at least one other central question hanging over all of this a day after the major development here is, who is the president listening to? Is he still listening to all of his advisers? It is clear that the Treasury Secretary, Scott Bessent was able to make the case through the bond market that the president needed to find an off ramp.

But Peter Navarro, the Top Trade Advisor, is also still very much a part of the president's inner circle. So, we shall see. But Dana, another question is Elon Musk in this cabinet meeting or not, we are told he is likely to be, but again, we will see once we get those live pictures that should be coming up.

BASH: And we know how he feels about these tariffs.

ZELENY: We --

BASH: Thank you so much, Jeff. We obviously will be hearing from you as soon as we get information about what we can see in that cabinet meeting. I'm joined here by an outstanding group of well source reporters, CNN's Phil Mattingly, Jasmine Wright of "NOTUS" and CNN's Lauren Fox.

Phil Mattingly, let's just kind of look at the big picture of where we are once again, and I just want to put back on the screen so people have an understanding of why there is still so much volatility. [12:05:00]

Again, 145 percent that is what China is facing from the U.S. when it comes to tariffs. 25 percent on some from Mexico and Canada, 10 percent on most other countries, and 25 percent still there on steel, aluminum and foreign cars.

PHIL MATTINGLY, CNN CHIEF DOMESTIC CORRESPONDENT: That's enormous.

BASH: Yeah.

MATTINGLY: And I think this is important context in the sense of, you can talk to a lot of Republicans right now, or people who are generally in support of this administration, saying, hey, we always wanted this to be very, very targeted on China. That was the key issue. That's obviously the primary geopolitical competition that's going on right now.

But there is a market recognition that even as they exhaled yesterday and were thrilled that there was a pause for 70 plus countries and the rates that were going to be put in place on a seemingly ad hoc basis, depending on your view of measuring trade deficits, that oh, wow, the world's two largest economies who have been tip toeing towards conflict for the better part of a decade, probably even longer than that, are now in a full scale trade war.

A trade war that is not just tit for tat from a sector-by-sector basis, or kind of gradually ratcheting up. Over the course since January, the president has taken four actions. Those actions have led to 145 percent tariffs, which is effectively a trade embargo on the second largest economy in the world, 14 percent of U.S. imports.

And those actions, just in the last 24 hours were the equivalent of roughly 50 percent increase like this escalated to a level that I don't think anybody has fully gotten their heads around yet. And I think markets, and frankly, businesses, consumers, everybody else is just trying to map out how this all works now.

JASMINE WRIGHT, WHITE HOUSE CORRESPONDENT AT NOTUS: Yeah. And I think that what's next is, not only are they going to have to figure out how to negotiate with 70 plus countries, and how to figure out how they contact China or wait for China to call them, they were unclear about how the steps to actually come to some solution with China would go.

But also, they have some credibility problems, right? Because for the last four days, five days, seven days, they were telling us that there was no -- it was non-negotiable, that this is about trade deficits. Now it is negotiable. Now there was a secret plan all along, and so they're going to have to come once they outline the next steps plausibly what's going to be decided in this cabinet meeting.

Outline the next steps. How are reporters going to know that that's actually what they want to do, or is there another other secret plan?

BASH: Well, reporters, I mean, I like that you're putting us in that category, because we do explain to the world, what's going on, but it's also the perception.

WRIGHT: Yeah.

BASH: And maybe most importantly, the perception by business, not just on Wall Street, but on Main Street.

MATTINGLY: Well, I just --

BASH: Yeah, please.

MATTINGLY: I spent the vast majority of the last 15 hours thinking the rate on China was 125 percent.

BASH: Yeah.

WRIGHT: We all --

MATTINGLY: -- Turned out that it was stacked. It was not in place up. We also thought that perhaps some of the Canada and Mexico --

BASH: -- by the way, it's not because you're not an excellent reporter. It's because -- they didn't explain it.

MATTINGLY: This was based on what we were being told by cabinet officials.

BASH: Right.

WRIGHT: Yeah.

MATTINGLY: About how things were going to work now --

WRIGHT: -- back and forth between lower pressure today, like a chicken with its head cut off, asking, what are the rates? And it was very clear, at least in the first hours initially, that a lot of people talk about -- yes, today.

BASH: -- in the White House press conference.

WRIGHT: In the White House press office running back, trying to ask people exactly what these tariffs are, and a lot of the aids did not have an answer. And now, 24 hours later, the answers are changing. So again, credibility. And then we can talk about messaging. But that's another 10 minutes.

BASH: Well, it's because I want to look at what some of the key cabinet officials or slash advisors, in the case of Peter Navarro, have said, and then are saying now, when it comes to what is actually going on with these tariffs, this is Howard Lutnick and Peter Navarro.

(BEGIN VIDEO CLIP)

HOWARD LUTNICK, COMMERCE SECRETARY: The president, is not going to back off. There is no postponing. Donald Trump is the best negotiator that there

is. PETER NAVARRO, COUNSELOR TO THE PRESIDENT OF THE UNITED STATES: This is not a negotiation. This was done in a beautiful negotiation.

(END VIDEO CLIP)

BASH: But then all of that was undercut, because Donald Trump, as he is wanting to do, said the real thing that happened, which is he said, what did you call it the --? People got the --.

WRIGHT: Yes.

BASH: Which I'm going to get to you in a second about what that means. But Lauren, I do want to get from you what you're hearing from Republicans on Capitol Hill. You just got here from the Hill. And as much as Mike Johnson and other Republicans say we're going to let the president ride this out.

We're going to let him do it. We know that they're the ones who have the -- a lot of them, because it's their constituents who are very nervous about the volatility of not only their bank accounts, but also the local economy, because it goes down to every single level.

[12:10:00]

LAUREN FOX, CNN CONGRESSIONAL CORRESPONDENT: Yeah, absolutely. I mean, there was, as John Cornyn put it yesterday, not quite jubilation in the Republican Senate lunch when they started to understand that some of this had been pulled back and paused for 90 days. But there was this sense of relief.

Now, I think that we've talked about the fact that, I think it's not clear yet that the U.S. economy is out of the woods.

BASH: Yeah.

FOX: And that's going to be something that Republican Senators and House members are going to have to grapple with. I would also note, though, it was amazing, because I was standing in the House when this announcement came down. And there was a Republican Study Committee meeting, and as members are filing out of that meeting, like one by one, they are on message that this was the plan all along, that this was a negotiating tactic.

Meanwhile, it seemed like the U.S. Trade Representative was in the dark about exactly what was happening as he was testifying on Capitol Hill. So, it's really remarkable to me that even as lawmakers may not have understood the full breadth of what was happening, they were on message supporting the president. I think that just speaks to the relationship --

BASH: Yeah, and we definitely are very much in the here and the now, trying to figure out where we go from here. But I do want to take one beat to, once again, put the pieces together on how this happened, like an hour after our show, or not even an hour after our show ended yesterday. And Phil, you have some excellent reporting talking about the bond market. And among the things that you report is inside Trump's tariff retreat, how fears of a bond market catastrophe convinced Trump to hit the pause button.

MATTINGLY: Yeah. So, it turns out everybody thought that Trump would be reactive to the stock market, and that certainly had parallels to his first term, less bothered by that very clearly than he ever has been before, willing to watch the pain play out. And yet the bond market is different.

The bond market is the life blood of the U.S. government, of the U.S. system, and the U.S. bond market is the life blood of the entire financial system. And so, over the course of about 72 hours, there was a rapid increase in sell offs of treasury bonds. Now when you say, why does this? Why does that matter?

Well, in moments of crisis, in moments of panic, investors desperately look for the safest place to move their assets. That safe haven is U.S. treasuries. It is more liquid. It is guaranteed by the U.S. government. There is no sense in any crisis that there will ever be problems there. The sell off and the speed with which it accelerated, really, really concerned, not just market participants, but also government officials, administration officials, folks at the fed.

We're watching it very closely as well, because of what it may -- now from a household basis. That's mortgage rates, that's small business financing, that's big business corporate financing, everything's tied to the benchmark 10 year. And so that matters in the near term, immediately, tangibly longer term. The U.S. debt and the ability to market it, is critical to not have a debt crisis.

BASH: Yeah.

MATTINGLY: To not have a full-blown spiral. And I think while that is certainly not something we were on the verge of, the direction it was headed was very concerning, just because it's not what was supposed to be happening in this moment.

BASH: Yeah, and so that was the, sort of, seems to be the trigger, at least the sort of final straw for the president. Thanks to a lot of his senior advisors who finally convinced him. But we should also note, as we look at the market now. And just as we go to break JP Morgan did say last night that it remains difficult to see the U.S. avoiding a recession.

This is after the big rally that we saw on the market last night. Coming up, a victory for House Speaker Mike Johnson, with the help of President Trump, he once again dragged reluctant Republicans from a no to a yes on a budget blueprint. He has a long way to go. We'll explain, after a break.

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[12:15:00] BASH: Moments ago, House Republicans cleared a harder than expected hurdle to advance President Trump's tax cuts and broader priorities, including the border, the southern border. They passed a Senate crafted budget plan quelled a rebellion by conservatives. Again, it created a big sense of uncertainty until the final vote was cast. House Speaker Mike Johnson talked about this moments ago.

(BEGIN VIDEO CLIP)

REP. MIKE JOHNSON (R-LA): The American people are counting on us. Time is of the essence. We know what's going on around the world. We know that the debt limit cliff is approaching us pretty quickly here. We know that markets have been a little unstable. They want to know that Congress is on the job, and I'm here to tell you that we are.

(END VIDEO CLIP)

BASH: CNN's Manu Raju is there on Capitol Hill. I think he finished that sentence by saying, go buy and -- go buy stock, or something along those lines. So that was an interesting moment. But look, I mean once again, Manu, we saw Speaker Johnson and other members of the leadership poll the conservatives who did not want to vote for this kicking and screaming over the finish line.

MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Yeah, and look, part of the speaker's leadership strategy has been survived in advance, and that's really what it was here, trying to get past the next hurdle. And this is just one hurdle, much bigger hurdles remain. Remember, this must be adopted, and it was just adopted by a 216 to 214 vote.

This budget blueprint an identical one in the Senate, in the House, in order to move on the larger Trump agenda. This just simply lays out the general fiscal goals that they actually must meet.

[12:20:00]

And there was such a furious fight in order to get this across the finish line because of holdouts on the far right of the House Republican Conference concerned that the Senate would not go as far as they would in terms of spending cuts, but ultimately, they got some assurances, verbal assurances, that they would agree to spending cuts to the tune of $1.5 trillion and also commitments that they would go deeper on issues such as entitlement spending.

And also, one big thing, saying that they would not add to the budget deficit, really a major promise, given the fact that they're also looking at a significant overhaul of the tax code that could potentially lead to a significant hole in the budget. Now I caught up with some of the key holdouts in the aftermath of all this, including Congressman Chip Roy.

And I asked about the concerns among some Senate Republicans and some moderates about the demands that the conservatives were making.

(BEGIN VIDEO CLIP)

RAJU: We're talking to the senators. They're not, definitely, they're not committed to $1.5 trillion in spending cuts, I mean.

REP. CHIP ROY (R-TX): They better get committed. I mean, look, the speaker made his commitment clear. The president made his commitment clear to the level of spending cuts necessary. And the White House is very clear that touching and addressing the waste, fraud, abuse of Medicaid was critical to all of this.

So, I think we've unlocked the path to actually deliver something that because they're responsible. But if it ends up being all tax cuts and no cuts, then it's not going to pass the House.

(END VIDEO CLIP)

RAJU: And there are just so many details that need to be worked out now, Dana. They have to actually agree to how this legislation will be structured, and then get a commitment on both sides of Congress through the -- each chamber, which is have so many different views among Republicans in the Senate and the House, which raises a lot of questions about whether this can get done, get done quickly, can satisfy the life of Chip Roy in the House and Susan Collins, a moderate from Maine, Dana.

BASH: Piece of cake. Sounds so easy. Also survive in advance. I feel like that should be my daily motto. I might put that on a pillow. Manu --

RAJU: -- great parenting strategy --

BASH: Yeah, that's true. It is a good parenting strategy. Thank you, Manu. Appreciate it. So, Lauren, as somebody who walks those halls along with Manu every single day, can you try to, and this is maybe not a fair question, because it's very complicated, but try as well as we can, to sort of put into English.

FOX: Yeah.

BASH: The challenge, as Manu laid it out, very well, but the challenge that the House Speaker has, and John Thune, the Senate Majority Leader in the Senate has moving ahead to take, which, again, this was something that shouldn't be hard.

FOX: Yeah.

BASH: This is just the outline.

FOX: Yes.

BASH: But take it and make a giant bill that has huge tax cuts and huge spending cuts, and still makes the math-math.

FOX: Yeah, I mean, it's almost an impossible job. We'll see what they can do together. But it's so important to remember that this budget blueprint essentially punted every difficult decision they're going to have to make, specifically on the cuts front, they had to work so hard to get these assurances that Senate Republicans were open to $1.5 trillion in cuts. I'm not sure that all of the senators are really that open to $1.5 trillion in cuts, but let's say that they are. You have to find that money somewhere, and the easiest place to get it is changes to Medicaid. And they can talk all day long about the fact that they are not going to cut Medicaid, but cuts are in the eye of the beholder.

And when you start adding work requirements, if you start chipping away at how much money the federal government is giving to states for Obamacare expansion of Medicaid, those get into really difficult questions, and that's before you get into everyone's tax wish list.

BASH: Yeah.

FOX: Which is going to be a bear in it of it itself.

BASH: And Phil, there's so much incoming for Democrats, just on the politics of what they can focus on from the Trump Administration, but they have clearly chosen on the politics on the campaign front, looking ahead to the midterms Medicaid, saying that Republicans are going to cut your Medicaid. I want you to listen to Mike Johnson on that, followed by the Democratic leader, Hakeem Jeffries.

(BEGIN VIDEO CLIP)

JOHNSON: The Democrats are out right now trying to make hay out of the fact that we're going to gut Medicaid and all these other things just simply not true. We're going to protect the essential programs for everybody who's eligible to receive those.

REP. HAKEEM JEFFRIES (R-NY): For months, they've lectured us, claiming that they have a mandate to do what, to take away health care, to enact the largest Medicaid cut in American history. They have no mandate for any of this.

RAJU: And they say they're not going to cut Medicaid. What do you say to them?

JEFFRIES: They are lying.

(END VIDEO CLIP)

BASH: Phil?

MATTINGLY: Well, I think Lauren laid out the math issues with the kind of process that they're going through right now, excuse me, Republicans to actually make this work and be able to hang on to the idea that it's just waste, fraud and abuse, which is often a hyperbolic way of saying we're probably going to cut some version of Medicaid.

I think the way you kind of listen to Democrats over the course of the last couple months, and I think some people have had a lot of questions, rightfully so, about how they are reacting.

[12:25:00] And it's kind of the full-blown steam rolling that Donald Trump has partaken in over the course of his first three months in office is a recognition that there are historical analogs in this moment of what works. They became the majority in the 2018 elections. They became the majority in the 2006 elections.

What were they fighting on.

BASH: Healthcare.

MATTINGLY: In 2017, 2018 it's all about Obamacare was all about healthcare. In 2005, 2006 it was all about Social Security. That's how they rally, not just their base. That's how they rally on kitchen table issues, and have a massive turnout. That's very clearly kind of the model here. And I think people get so overwhelmed by all the other things going on that you can say, why are you just focused on that? This is why.

BASH: Yeah. This is why --

MATTINGLY: This is what more just laid out. They know that's an opportunity.

BASH: And it's because it really is hard to see how you find, as you said, over a trillion and a half dollars in cuts, without cutting from Medicaid. And you know, this is coming from KFF former the Kaiser Family Foundation, the math is conclusive. Major Medicaid cuts are the only way to meet House budget resolution requirements.

WRIGHT: And so, if they do make those cuts, right again, I am the beholder. But if they do make those cuts, what are Republicans going to do when they have to go back to their districts and explain to people why those folks who are receiving Medicaid, and put that on top of all of the little cuts that are happening in Social Security.

Put that on top of all of the things that are being changed because of DOGE. How are they going to explain that away? And I think what's really interesting is that even though their relationship with Trump right now is very good, and he's basically told them, grin and bear it right, pass what I want you to pass, and I will reward you down the line.

I was at the NRCC dinner on Tuesday when he told them to stop grand standing, when he told them to stop meddling in his agenda and do what he's asking. But then how do you turn that around and talk to your voters who are already pissed off and say, yes, we did cut more of your Medicaid.

BASH: Yeah.

WRIGHT: Even if it was just waste, fraud and abuse? People don't necessarily understand that.

BASH: Yeah.

WRIGHT: I think that's going to be the question in a couple months. BASH: Yeah, yeah, for sure. All right, everybody standby, before we go to break, I want to remind everybody that tonight there is a live CNN Town Hall with the country on edge swing district members of Congress face tough questions from real voters, Jake Tapper and Kaitlan Collins moderate the CNN Town Hall America asks Congress airs live tonight at 09:00 Eastern.

And before we go, we want you to look at the markets. They have been tumbling just even since we came on the air. They're now down around 2000 points. We are standing by at a look inside President Trump's ongoing Cabinet meeting. Any minute they apparently, we are told are going to let reporters in to ask questions. Stay with us.

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