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Isa Soares Tonight
Canada to Fight U.S Tariffs with Countermeasures; Capito Hill Reacts to Tariff Turmoil; Pentagon Watchdog Opens Probe for Hegseth's Signal App Use. Global Stocks Plunge After Trump Imposes Tariffs; Temporary Layoffs at Auto Plants in the U.S., Canada and Mexico After Trump's Tariffs; U.S. National Security Council Staffers Fired After Trump Meets with Far-Right Activist Laura Loomer. Aired 2-3p ET
Aired April 03, 2025 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[14:00:00]
ERICA HILL, HOST, ISA SOARES TONIGHT: Hello and welcome, I'm Erica Hill in for Isa Soares. Tonight, we begin with the worldwide pushback to President
Donald Trump's big bet on tariffs, triggering the escalation of a trade war that has sent markets plunging and fueling fears of a global recession.
This is what the U.S. markets look like right now.
And when we talk plunging, you see it right there. All three major indices clearly in the red today. Leaders across Europe and Asia meantime, striking
a defiant tone to Mr. Trump's tariffs. One long-time U.S. ally saying that by, quote, "playing with matches, the United States will end up getting
burned."
One hundred, eighty five countries have been hit with this minimum 10 percent across the board tariff. China, the EU and others though facing
significantly higher rates. In response to a 25 percent tariff on cars that went into effect today, Stellantis, one of the largest automakers in the
world, says it is pausing its production at some plants in Mexico and Canada, and the company says about 900 U.S. workers who helped to supply
those plants with parts will be among those impacted. Earlier, the U.S. Commerce Secretary told my colleague Pamela Brown, the President has no
plans to back off these tariffs.
(BEGIN VIDEO CLIP)
HOWARD LUTNICK, SECRETARY OF COMMERCE, UNITED STATES: This is a re- ordering of global trade for the benefit of America. We have been -- these people have all been living in our house. They've been driving our car.
They come by and visit, open our fridge and eat our food whenever they want. They've taken advantage of us.
Today was the day of the beginning of saying, I'm sorry, you can't just live for free off of us.
UNIDENTIFIED FEMALE: And why not --
LUTNICK: You have to pay. And what's going to happen is, the United States of America will get stronger, our economy will grow much faster than the
rest of the world. So, they go sit --
UNIDENTIFIED FEMALE: So, it sounds like he might back off down the road, but not --
LUTNICK: That's not back off. And that's not back off --
UNIDENTIFIED FEMALE: OK, so, let me -- so then let me just --
LUTNICK: That is, let the deal maker make his deals when and only if these countries can change everything about themselves, which I doubt they will.
(END VIDEO CLIP)
HILL: CNN's Fred Pleitgen has a closer look now at the impact already being felt in Europe.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): As shiny German cars roll onto massive cargo ships for export, fear is
spreading here that the seas could soon get a lot rougher after President Trump hit auto imports to the U.S. with a 25 percent tariff. European
exporters hoping Americans love German cars more than the U.S. leader loves tariffs.
"For the American market, this port handles mostly higher priced vehicles", the port CEO says. "We hope the buyers who purchase these rather expensive
cars are not so price-sensitive that they would refrain from buying them simply because they're subject to high tariffs."
But the German auto industry is already in a major crisis, with massive sales and revenue drops, leading to job cuts and restructuring programs.
And it's not only the German auto industry that's in trouble.
(on camera): This country is in the midst of a protracted and worsening recession, and the last thing Berlin needs now is a trade war with one of
Germany's most important trading partners.
(voice-over): In Berlin, people lashing out at the U.S. President for potentially exacerbating the woes. "We in Europe really need to concentrate
on ourselves at the moment", this man says. "The strengths are there in Europe in terms of industry development and technology." And this man says
nobody will actually gain anything except perhaps Donald Trump's ego.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This is one of the most important days, in my opinion, in American history. It's our declaration of
economic independence.
PLEITGEN: From fine Italian cheese and delicious Parma ham to French champagne and Cognac. The Trump administration is slapping a 20 percent
tariff on goods from the European Union, citing the EU's trade surplus with the U.S., a move the Europeans say is deeply unfair. While they acknowledge
Europe runs a trade surplus of about $173 billion with the U.S. when it comes to goods for services, there's a trade deficit with the U.S. of about
$120 billion, Brussels says largely evening things out. And the blocs leadership vows they will strike back at Trump.
[14:05:00]
URSULA VON DER LEYEN, PRESIDENT, EUROPEAN COMMISSION: We are already finalizing the first package of counter-measures in response to tariffs on
steel. And we are now preparing for further counter-measures to protect our interests and our businesses if negotiations fail.
PLEITGEN: And if those negotiations do fail, small businesses are set to suffer. The small Greek Kalavryta Cooperative for Feta cheese had its
sights set on entering the U.S. market this year, but Trump's tariffs could drastically change that equation. "The tariffs certainly add a cost to the
product", the CEO says. "And what share of that will go to the final consumer where the roulette ball will land remains to be seen."
Like for so many on both sides of the Atlantic, for those working here, the Trump administration's trade policy first and foremost means one thing,
uncertainty about who our friends and who our foes in international trade. Fred Pleitgen, CNN, Berlin.
(END VIDEOTAPE)
HILL: Joining me now for more perspective, CNN's Matt Egan is here in New York, CNN politics senior reporter Stephen Collinson joining me from
Washington. So, Matt, let's first take a look at where things stand right now. We looked at the three major indices, of course, here in the U.S.,
just at the top of the hour, red across the board, we are seeing massive declines there. This could just be the beginning though, Matt.
MATT EGAN, CNN REPORTER: Yes, Erica, I think that's the big concern among investors, right? I mean, the President's trade plans have really alarmed
and shocked investors around the world. We're seeing the Dow move down by more than a 1,000 points, look at that, almost 1,400 points, 3 percent. The
S&P 500 plunging 4 percent, and the Nasdaq plunging 5 percent on pace for its worst one day loss since March of 2020 during the height of the COVID
19 pandemic.
Investors are really punishing some of those multinational companies with delicate supply chains, Apple, Nike falling very sharply as investors worry
about the fact that they source a lot of their goods from China and other nations now facing higher tariffs. You see Wayfair down 27 percent today,
Best Buy 17 percent. Ralph Lauren, I mean, these are very significant losses.
Now, Wall Street was bracing for the President to increase tariffs, but not by this much. Not this fast and not this broad. This is definitely caught
investors off guard. When you look at this historically, the tariff rate that the U.S. charged was for a very long time, for decades and decades, it
was relatively stable.
But as that chart shows, that this represents a massive and unprecedented year-over-year increase in the tariff rate. And that is something that is
going to be very hard for the economy and for businesses to adjust for. The tax foundation just put out an analysis where they find that the cost of
these tariffs to the typical U.S. household amounts to about $2,100 per year.
And that's mostly in the form of higher prices. From the investor standpoint, Liz Ann Sonders over at Charles Schwab, she told me that a lot
of investors just assumed that the President was bluffing on tariffs, right? That he was really using them as a negotiating tool. But she said,
now the market is saying, wait, this is actually happening.
We should have taken him at his word. What we weren't liberated from yesterday is uncertainty. And of course, Erica, the concern increasingly is
over the state of the economy and whether or not this could severely slow the U.S. economy or even cause a recession, both here in the U.S. and
really overseas as well.
And there's still a lot of questions here, right? We don't know when -- whether or not these tariffs are definitely going to kick in. We don't know
how long they're going to be in place or how other nations are going to retaliate. And so, we have to wait and see what happens. I mean, we don't
know if this is going to, in the long run, play out the way the President says it will, and it's going to level the playing field in a way that's
going to help American workers or if this is going to backfire and cause that recession.
Time will tell. But I think the message from the market is that investors are clearly getting more nervous about how this is going to end.
HILL: Yes, because no one knows, to your point, the uncertainty is still there. Stephen, I was struck by actually the first line in your excellent
analysis overnight, calling this the greatest political gamble of any modern President. And you went on to say that this measure is about to
inflict real pain on Americans, likely not just Americans either.
This is a major gamble. And yet, as we heard from the Commerce Secretary, Howard Lutnick just a short time ago on CNN, this is here to stay, Stephen.
STEPHEN COLLINSON, CNN POLITICS SENIOR REPORTER: It looks like it. During the campaign, President Trump said he was going to avenge what he thinks is
the pillaging of the American consumer and the American economy.
[14:10:00]
He said he was going to act because he believes that for decades, America has been taken advantage of. Perhaps, people didn't listen to him as
closely or perhaps his previous actions, where he's often made threats and blinked, lulled everyone into a full sense of security. So, the key thing
that's going to happen here is, there are millions of voters who bought into that Trump vision.
People in rustbelt states who have been really hit by globalization and de- industrialization. But I don't believe that there was a widespread appreciation of what the costs of addressing this, of blowing up, basically
the global trading regime would be. For example, if a -- if a TV that's manufactured in China is suddenly going to be 40 percent more expensive
when someone's TV breaks down and they try and buy a new one, they're going to face this.
If what Matt was talking about takes place, you know, a lessening of consumer confidence, the economy goes into a reverse, we see a recession,
people start losing their jobs. That is another cost. So, I think the White House has been rather blase about the potential cost that this is going to
impose.
And I think the question for Americans at least, is, as they watch the entire world turning on the American economy, if they see their own
economic circumstances worsening, how much hold the President still has on American sentiment, and how that plays out politically is going to be very
interesting to watch.
HILL: Yes, it certainly will be. Stephen, Matt, appreciate it, thank you both. As we're watching how this is being received and playing out, the
Norwegian Foreign Minister says President Trump's tariffs could actually violate the NATO treaty, which mandates economic collaboration. Those
comments, coming amid a trip by the U.S. Secretary of State to Brussels to reassure weary members of America's commitment to the alliance.
Secretary Rubio is dismissing what he calls hysteria over the future of U.S. involvement, and is also urging allies to spend more on defense, even
as Mr. Trump's tariffs deliver shockwaves to the global economy. Rubio's first -- Rubio's visit, rather, marks his first trip to NATO headquarters
as Secretary of State. CNN's Alex Marquardt is covering that meeting in Brussels and joins us now. Officials certainly have a lot to say today.
Alex.
ALEX MARQUARDT, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: They really do, Erica. And Secretary Rubio, on this first trip had specific things that he
wanted to do, wanted to address in this agenda, you mentioned two of them: reassure allies that the U.S. will remain in NATO, and talk about defense
spending, which has really been something that the Trump administration has really been pushing NATO allies to do, raise their defense spending.
They also want to talk about Ukraine and questions over security agreements and security guarantees. But in a large way, the fact that this meeting
started the day after this monumental news about tariffs, this was -- that was inevitably going to hijack in some sense, or at least, partially
overshadow the conversations that are taking place here.
Now, there's no official meeting going on about tariffs. This is a security gathering about a variety of different issues. But those conversations are
taking place in the hallways, in side rooms. One western official told me that it is hard to get normal work done. I just talked moments ago, Erica,
with the Canadian Foreign Minister, Melanie Joly, who while saying that they expected this to happen yesterday, she did express her frustration,
making the point that this is going to harm Americans. But they are trying to have constructive conversations about this. Take a listen.
(BEGIN VIDEO CLIP)
MELANIE JOLY, FOREIGN MINISTER, CANADA: We knew that reciprocal tariffs were going to happen on April 2nd, it wasn't, you know, a secret. President
Trump had mentioned it many times. So, we knew that by this meeting being scheduled the day after, we would be in an environment where allies would
be talking about trade and about reciprocal tariffs.
So, in that sense, we were ready. And today, we just announced a new counter-tariffs against U.S. cars and car parts that are not compliant with
our free trade agreement.
(END VIDEO CLIP)
MARQUARDT: Erica, Joly has been one of the more forceful voices from countries being targeted with tariffs. She has also pushed back on the
Trump administration, arguing that Canada should be the 51st state. But neither Joly nor other foreign ministers appear to be holding these tariffs
news against Rubio.
They are trying to focus squarely on the matters at hand for NATO and matters that they actually agree on and can work on. But there was one
other issue that could have raised or made for an awkward moment. Secretary Rubio meeting with his Danish counterpart. Of course, the U.S. has talked
about annexing Greenland, which is a Danish territory.
[14:15:00]
That meeting appears to have gone fine. The two men acting normally and like friends before the meeting. We understand that it was -- Greenland was
not discussed during that meeting, but a whole host of issues that Rubio has had to juggle on this trip. And there's a second day of meetings
tomorrow again. Erica.
HILL: Yes, still much more to discuss, Alex, appreciate it as always, thank you. Diane Swonk is the chief economist at KPMG and joins me now.
It's good to have you with us. You noted, Diane, that the risk of recession, in your view, just went up dramatically, warning that inflation
will go up. Do you believe we could see actually a recession this year in 2025?
DIANE SWONK, CHIEF ECONOMIST, KPMG: If these -- if these tariffs fail to unfold and hold as we expect they will, the baseline now is that we will
see a recession with inflation, which the financial markets have yet to fully grasp. The financial markets have been much more slow on the uptake
to understand how serious the administration was about tariffs.
Consumers have been really reflecting the sort of stagflation sort of nature of what is going on right now. And I think that's very important
because financial markets are now looking for the Federal Reserve to cut sooner than they can, given the size and magnitude of the tax hike and
increase in prices that we are likely to see in response to terrorists even as the economy goes into a recession. And I think that's something that is
really lost in translation at this moment.
HILL: Well, as you're laying all that out, I can't help but think of some of the comments that we heard from Howard Lutnick, the Commerce Secretary
just a short time ago, telling CNN that this was a re-ordering of global trade and that, in his view, the U.S. will get, quote, "stronger", our
economy will grow faster than the rest of the world. How can that happen in this environment?
SWONK: We're not seeing that. We are actually seeing the U.S. economy slip into recession now. Our recession may not be as deep as that for the rest
of the world, but that's not the way you want to win. And I think that's an important thing to take into account. This is a major tax increase on the
U.S. economy.
And remember that administration sees this as sort of a means to an end of many ends, not only as a negotiating tool, which financial markets were
hoping it was only a negotiating tool, but as a way to generate revenues to offset tax cuts elsewhere and expand tax cuts in 2026.
Also, they see it as a way to onshore, which the evidence on that for protected industries, yes, you do save jobs, but at the expense we saw in
2018 and 2019 trade war with China and the steel tariffs then, we saw steel jobs gained at the expense of overall manufacturing jobs that more than
offset those gains in steelworker jobs. And we did not see any increase in steel production capacity in response to those tariffs back then either.
HILL: There's also the reality of bringing more manufacturing back to the United States, that it is not just a switch that you can flip, and all of a
sudden put factories back online, have workers ready to go. Some of these even facilities would need to be built. When we look at this, this is
fundamentally a re-alignment of the United States trade philosophy moving forward. What are the specific areas that you are going to be watching in
the coming weeks and months?
SWONK: Well, you know, this is really important. You talked about uncertainty and how uncertainty has not gotten better as a result of this.
Many traders were thinking on financial markets on Monday and Tuesday that perhaps they get clarity, and that with these announcements, they would
feel certain about the future.
Well, when you've got tariffs that are implemented via a stroke of a pen, an executive order and could be rolled back or ratcheted up, in the same
manner, that does not give you the certainty you need to actually commit to a plant that may take 3 to 5 years just to put into construction, let alone
knowing who you are going to have to be able to work in that plant.
You wouldn't have as many people working in that plant, because it would have to be highly automated. That means you also have to have a highly
educated labor force to work in that plant. And we don't have enough workers in manufacturing sector to do that where we stand today. In fact,
there are many worried about how the chip plants that are being built here will be staffed.
So, these are very big issues to overcome. And what we're going to be watching for is how fast we are seeing retaliation and the escalation of
trade wars across the globe, because that will leave a more permanent imprint on the global economy and on the U.S. economy.
HILL: Certainly. And before I let you go, you referenced stagflation when we began our conversation off the top. That is something that we're hearing
more and more just in the last several hours. How real -- how real do you think that is?
[14:20:00]
SWONK: It's extremely real. Our recent -- we're running scenarios right now as we speak. We just ran a scenario where we have a recession that is
triggered yet the annualized pace of the measure the Fed watches most closely goes up to a peak of 7 percent annualized. That is not
insignificant, and that does not allow the Federal Reserve to cut rates even as the labor market weakens and we start to see red ink in employment.
HILL: Diane Swonk, really appreciate your insight and your expertise. Thank you for joining us.
SWONK: Thank you.
HILL: Still ahead here tonight, many Asian countries have been hit the hardest by these sweeping tariffs from Donald Trump. Their response next.
Plus, the right-wing conspiracy theorist who apparently has the U.S. President's ear. How she's now shaking up the White House -- when we
return.
(COMMERCIAL BREAK)
HILL: Quite the day on Wall Street. And of course, we're not done yet. A little more than 90 minutes still to go in the trading day, but there is
certainly a strong reaction to these new tariffs announced by the Trump administration just after the close of trading on Wednesday. Stocks
volatile today, here you see the big board down 3.3 percent there, right? Very steep drop.
We're also seeing significant tumbles southward when it comes to both the Nasdaq and the S&P as well. At least, three members of Donald Trump's
National Security Council have been fired. And sources say the move is connected to radical right-wing activist Laura Loomer. Loomer, who has
promoted conspiracy theories about the 9/11 attacks, visited with the U.S. President on Wednesday and urged him to fire the NSC staffers for being
disloyal.
Sources say it's possible more staffers will be fired. You may recall Loomer was seen with Mr. Trump during the 2024 presidential campaign until
several Trump advisors urged him to distance himself from her. CNN's Kevin Liptak is standing by at the White House with more on this for us. So, just
how much influence does she have, Kevin?
KEVIN LIPTAK, CNN WHITE HOUSE REPORTER: Well, apparently, her influence is pretty broad. If she has this ability to convince the President to fire his
own staffers after she claims that they were disloyal. And it's quite an extraordinary sort of state of play. You know, Laura Loomer is someone who
is a conspiracist.
[14:25:00]
She's described herself as an Islamophobe. She has claimed that 9/11 could be an inside job, and she did create a lot of concern within the
President's inner circle when she was seen traveling quite frequently with President Trump during last year's campaign. They were successful at that
point in limiting her access. But what is clear now is that she still now has extraordinary ability to speak with Trump in the Oval Office and
convince him that some of these members of his team were not the people for the job.
And what we have been told is that she arrives to the White House yesterday, essentially with a sheaf of papers ticking through the reasons
why she believes the people that Trump had hired in the National Security space were what she calls neocons, associated potentially with the second
Bush administration, but also who were just not loyal to him as part of this MAGA movement.
Now, the people who have been fired were included in the Intelligence directorate within the NSC. Also, individuals who were involved in liaising
with Capitol Hill, as well as people who were involved in the technology space within the National Security Council. One name that hasn't been fired
yet, but has been the subject of Loomer's online tirades is Alex Wong, who is the deputy National Security adviser here at the White House.
He is someone who Loomer has claimed without any substantiation, was behind that Signal scandal that engulfed the White House a couple of weeks ago
involving, you know, Mike Waltz, the National Security adviser, adding a journalist to a Signal encrypted chat, discussing the strikes on the Houthi
rebels in Yemen.
There's no evidence that suggests that Wong was behind that, but that's something that she has claimed he may have been involved with. Now, Wong,
as of today, still has his job. But I think this all -- I think puts into perspective the relative influence of Michael Waltz here at the White
House. These are individuals that he hired to work on his National Security Council.
But now, we know that someone like Laura Loomer can come into the White House and convince Trump to let them go. We know Waltz's influence is
waning after that Signal scandal. President Trump has decided at this point not to fire him over that. But it is evident that his ability to do his
job, at least, when it comes to having his own staff members work for him, is now becoming imperil.
And so, you know, I think all of this points to the fact that Donald Trump's White House is very different than the first time around, for
example, when chiefs of staff tried to limit the types of people who were allowed into the Oval Office to whisper in Trump's ear, to convince him
that the staff that he has hired is not the staff that should be working for him.
Clearly, this is a much more sort of open-ended Oval Office that the President is overseeing, and I think this will be sort of an important
thing to keep an eye on going forward is just how much a role these figures on the far-right, these figures who are sort of immersed in online
conspiracies, have in determining how the President moves forward with his second term. Erica.
HILL: Yes, certainly. We'll be closing -- keeping a close watch, I know your watch will be even closer, though. Kevin, really appreciate it, thank
you. Well, supporters of TikTok may be experiencing a bit of deja vu this week. The U.S. Vice President says a deal on the popular app will be
reached before Saturday's deadline.
It comes, of course, three months after President Trump delayed that TikTok ban in the U.S., hoping to help broker a deal for the app to be sold to an
American owner. And while the bidders for TikTok are piling up, some U.S. officials continue to raise security concerns over the app's ties to China.
You may recall that's what inspired the ban.
The measure in Washington that was then signed into law with broad bipartisan support. TikTok and its owner, ByteDance, deny there is any
risk. U.S. stocks as we have been following are plunging today in the wake of the massive tariffs announced by the U.S. President Donald Trump on
Wednesday. The so-called magnificent seven stocks among them, take a look at this, Apple. Alphabet, Amazon, Meta, Microsoft, Nvidia and Tesla all as
you can see there, suffering significant losses.
For its part, Apple, well, that equates to about $300 billion in market value, down around $800 billion from its all-time high. Many U.S. tech
giants make their products in places like China, Vietnam and India, which could take a significant hit, of course, because of these tariffs. Still
ahead tonight, Canada's Prime Minister is now responding to the Trump administration's tariffs, we're live in Toronto with those developments.
Plus, the world's second biggest economy also responding to these tariff hikes, a closer look at how China is reacting and perhaps an opportunity
next.
(COMMERCIAL BREAK)
[14:30:00]
ERICA HILL, CNN ANCHOR: Like Mexico, Canada is exempt from the reciprocal tariffs from the tariffs that were announced on Wednesday. It's still
subject, however, to tariffs on a wide range of goods that are not covered by the USMCA. And Prime Minister Mark Carney is now saying again that old
trade relationship with the U.S. it's over. Canada announcing a new counter-tariff on vehicles and also says it is strengthening its trade ties
with Germany.
The prime minister says he will direct money raised from the tariff to go directly to auto workers and other companies impacted and is also vowing to
fight the U.S. tariffs until they're removed.
(BEGIN VIDEO CLIP)
MARK CARNEY, CANADIAN PRIME MINISTER: As I told President Trump during our call last week, Canada will respond to the U.S. auto tariffs. And today,
I'm announcing that the government of Canada will be responding by matching the U.S. approach, by matching the U.S. approach with 25 percent tariffs on
all vehicles imported from the United States that are not compliant with CUSMA, our North American Free Trade Agreement. And on the non-Canadian
content of CUSMA compliant vehicles from the United States as well.
(END VIDEO CLIP)
HILL: CNN's Paula Newton is live in Toronto. Canada's been very clear, they are not backing down and we're hearing more of that today.
PAULA NEWTON, CNN CORRESPONDENT: Yes. Although, they did hold back, you know, Erica, there was about $60 billion worth of counter-tariffs on the
table because Canada kind of got preferential treatment on that, Prime Minister McCarney calling it the best of a bad deal. They held back.
[14:35:00]
I mean, this is probably going to cost around $5 or $6 billion in the end. Having said that though, and you just illustrated it, right, the Mark
Carney saying that the relationship with the United States, as it has been, is now over.
Now, look, there is an election here right now, Erica, April 28th. If Mark Carney becomes prime minister, he is promising to renegotiate everything
with the United States on an economic level, but also looking at the security partnership. And he was quite clear, look, the United States is
still a close ally, but he is even looking at things like defense procurement.
So, when you think about the fact that Canada and defense takes 80 percent of everything it buys from the United States, they're saying they're going
to take another look at that. So, really already looking at a strategy. But it was quite an indictment, Erica, from the prime minister saying, the
Trump administration, what it's doing is unjustified and he believes it will hurt principally Americans in the months and years to come.
HILL: We'll be watching it. He also did mention some of the impacts that has already happened, and we've heard this from other Canadian officials
just on CNN's air earlier today, about the impact that it's already having on Canadians and even jobs.
NEWTON: Absolutely. You know, already about 3,000 layoffs at a Stellantis plant. It's in Windsor. That's right across the water there from Detroit.
It's 3,000 people for a couple of weeks. But think about this, Erica. It's not like the company Stellantis gave them any kind of confidence that they
would be coming back in two weeks. And also, as the union there has made clear, you take out an assembly plant for a couple weeks, well, there are
all the parts manufacturers and everything else linked to it. So, it becomes not just 3,000 jobs, but more than that, perhaps double or triple
that amount. And that includes people who are making parts for that plant in the United States.
And again, Erica, you don't need reminding, right? It's about people's livelihoods. You take two weeks of pay out of their monthly income and
that's going to hurt. Again, I will make clear, Prime Minister Mark Carney, just a reminder to everyone, he's a former Central Bank governor, not just
in Canada, but in Britain. He is someone that people look to all -- many leaders around the world look to in times of crisis. It will be really
interesting, if he is elected, what his strategy will be in the months to come.
HILL: Yes, certainly in that election, again, as you pointed out, is 28th, I believe. Paula, appreciate it. Thank you.
As we turn our attention now to Asia where the world's second largest economy is now threatening to retaliate against President Trump's sweeping
tariffs, China vowing to hit back after the levies on Chinese imports were raised yet again, escalating that global trade war. Markets around the
world, as we have been following throughout the day, are plunging.
So, what does this mean from that Asian perspective? Joining me now to discuss Diana Choyleva, who's the chief economist at Enodo Economics, who
joins me now from London. So, Diana, when we look at this, some of these tariffs that were announced yesterday are just astronomical, and I'm
thinking of -- I believe it's 49 percent for Cambodia. There is the China element, but there are a number of other countries, Cambodia, Vietnam, a
number of developing nations in Africa who have been targeted with really high numbers. And as we look at this, is this actually creating opportunity
for China?
DIANA CHOYLEVA, CHIEF ECONOMIST, ENODO ECONOMICS: Yes, absolutely. This is creating a strategic opportunity for China to basically attract the
countries of the Global South to its own trading and financial sphere of influence. Of course, from America's point of view, some of these very high
tariffs on some of the Asian countries and others were aimed at essentially China itself, which used those countries to sort of circumvent Trump's
original tariffs. So, this is really about tightening the noose around China's neck, but simultaneously offering China the opportunity to attract
those countries to its economic sphere of influence.
HILL: When we look at this, we heard from the U.S. commerce secretary earlier today, he said he doesn't think there's any chance that Donald
Trump is going to back off of these tariffs. If he is not backing off of some of these higher numbers, how will that -- how quickly will that impact
be felt?
CHOYLEVA: Well, the impact will be felt instantaneously across the globe, and it's a differentiated impact with respect to the U.S. Actually, it'll
be difficult for Trump to come true on his promise to reign in inflationary pressure because by tighten not just -- or increase it, not just China's
tariffs, but the tariffs in all the countries that China used as roots to enter the U.S. market, that will now have a significant inflationary
impact.
[14:40:00]
And academic economists might talk about a relative price adjustment, but this is a multi-quarter, multi-year supply chain disruption and rejigging
that actually is likely to impact the rate of change of inflation.
If we look at China, the short-term impact will be negative. It will be difficult for China to counter that, but they're very focused on developing
their domestic demand and in consumption in particular. So, they'll double down and they have the fiscal scope to support this. Europe is in a very
difficult position and it'll be interesting how Canada and Mexico interact with the U.S. and what happens in that regional trade block.
HILL: It's such an excellent point as we're watching, you know, how -- what -- how and what that reaction will be. And there's certainly has been
a shift in the way a number of world leaders are reacting to Donald Trump in his second term that we're hearing from him. There's also this reality
that we're seeing today that the hope for that uncertainty that we have all been living with for the last several weeks or even months, that it would
be lifted with these tariffs. It really only moved us into a longer period of uncertainty.
CHOYLEVA: Absolutely. This is a very difficult and volatile period for financial markets in particular because it's very difficult to predict how
this will pan out. However, the easiest way to try and approach this is to think of where certainty could come from.
And actually, when we look to China, you can expect certain sort of trodden path from China's point of view and behavior. So, that would make it easier
to kind of see where we could be going on from here. But it is a very different world, and it was true that the global trading and financial
system needed a wholesale division. However, the way the U.S. is going about it being so dramatically erratic, not working with allies behind the
scenes to build a buy-in and offer not just sticks, but carrots, all of that is actually making the situation very difficult. It's almost like
Trump with a chainsaw attacking the post-World War II global trading system rather than in a much more constructive, which would've also likely been an
effective way too.
HILL: And yet, here we are. Diana, really appreciate it. Thank you. Still ahead here tonight, how U.S. lawmakers are reacting to the tariff turmoil.
We are live on Capitol Hill.
(COMMERCIAL BREAK)
[14:45:00]
HILL: Breaking news just into us at CNN, the Pentagon's Office of the Inspector General announcing it is opening a review of the secretary of
defense, Pete Hegseth's, use of Signal to discuss military strikes against the Houthis. We are taking a closer look at that, noting that they are
looking into not just the use of that messaging app but will also be looking at how information was shared in compliance with the classification
and records retention requirements. So, again, this just coming into us. The Pentagon's inspector general announcing that it has opened this probe
into Secretary of Defense Pete Hegseth, his use of the messaging app, Signal, and the information that was shared, of course, in that chat
leading up to the attack in Yemen.
As we continue to follow that, staying with Washington now, Republican lawmakers backing President Trump, for the most part, on his tariff policy.
That's despite Congress, of course, holding the power when it comes to taxing the American people. It's important to note though, there are some
efforts underway that are trying to change that.
In the Senate, a bipartisan push to wrestle more control over imposing tariffs. This comes after lawmakers took what was really a purely symbolic
vote on Wednesday to deliver rebuke to President Trump's trade policy. In the House, Democrats are pushing for a vote to block the president's access
-- sorry the president's across the board tariffs. This is coming just weeks after Speaker Mike Johnson tucked (ph) language into a procedural
measure that would guarantee house lawmakers would never have to hold a vote condemning those tariffs. That move effectively seeding congressional
power on the matter. But is it that simple?
Manu Raju is live on Capitol Hill for us, there is some jockeying, but what does all of this really mean, Manu?
MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Well, look, it depends on how Republicans ultimately respond here, because they control, of
course, the U.S. House and the U.S. Senate. And right now, the Republican leadership is uneasy, uncertain, and to some extent in line with Donald
Trump. They're in line with the House side. Speaker Mike Johnson is all for Donald Trump's strategy here and is not trying to deviate from the
president at all.
But on the Senate side, there is much more unease. The Senate Republican leader, John Thune, has -- is not explicitly saying if he's endorsing
Donald Trump's strategy. He said that he wants to give him the benefit of the doubt. Other top Republicans, like Senator Chuck Grassley, just told me
moments ago is they're going to take a wait and see approach to see if this will be effective.
And then, there's a concern about how consumers will bear the brunt of the increased prices that we are expected to see in the coming weeks, and how
that may impact how Republicans respond after they hear from concerns from constituents, particularly as we get closer to the midterm elections in
2026. And that's a question I put to a number of senators, Republicans and Democrats alike, about the impact that their constituents may feel and what
they may say to Donald Trump if they start to feel pain at the grocery store and their wallet. Listen.
(BEGIN VIDEO CLIP)
SEN. STEVE DAINES (R-MT): President Trump is looking at the long-term opportunities that we have to make sure we've got fair and level playing
fields into these really important markets.
RAJU: Could it hurt you in the midterms? Do you worry about that?
DAINES: I mean, always worry about the short-term, what could happen. There's always short-term blow back. But we're looking at the long haul
here to make sure our farmers and ranchers are taken care of, not only now, but also for future generations.
RAJU: You also represent people who buy cars. Are they willing to buy -- spend more money on cars?
SEN. ERIC SCHMITT, (R-MO): We're going to make -- I mean, look, I think what's interesting is ignoring the idea that there's been trillions of
dollars in investment the first a hundred days, we're going to be building cars in this country.
RAJU: Senator, I mean, you've obviously been very critical of tariffs, but are you worried about --
SEN. RON JOHNSON (R-WI): No, I've been concerned about that. Yes, been concerned about what you heard yesterday. Well, listen I'm going to give
the president benefit doubt. There's no doubt that we've lost critical manufacturing overseas. How do you bring it back? You know, it's -- there's
no doubt that our trading partners have not treated us fairly. How do you get them to trade -- you know, treat us fairly? So, again, I've just said
tariffs are double, sort --
(END VIDEO CLIP)
RAJU: Yes, and a lot of senators or Republicans are indicating that they'll let Donald Trump move ahead with this strategy, even though they
say that their voters will feel some pain in the immediate term here. And the question is whether or not voters will be OK with that. They're trying
to make the argument, Erica, that this is going to be a long-term strategy, that the regulatory environment will change, that the tax cuts will become
permanent and people's wages will grow.
[14:50:00]
But all those things are promises. Can they actually deliver on that? How long will it take and will that be enough to offset increased prices at
home? All big questions that this critical political and economic moment facing the country, facing Donald Trump, and facing his party. Erica.
HILL: Yes, absolutely. Manu, appreciate it. Thank you. We are also just hearing from President Trump making brief comments on the White House lawn
just a few moments ago. Let's take a listen.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT: Thank you very much. We're going to see the biggest golf tournament at Doral. I'm speaking tonight for charity and then
we'll be coming back here pretty quickly. But they're having a big event. A lot of charitable causes are involved. So, we look forward to that. It's in
Miami at Doral.
UNIDENTIFIED MALE: The markets today are way down the worst day here because of the tariffs. So, how's it going?
TRUMP: I think it's going very well. It was an operation, like when a patient gets operated on and it's a big thing. I said this would exactly be
the way it is. We have $6 or $7 trillion coming into our country. And we've never seen anything like it. The markets are going to boom, the stock is
going to boom, the country's going to boom, and the rest of the world wants to see is there any way they can make a deal.
They've taken away advantage of us for many, many years. For many years we've been at the wrong side of the ball. And I'll tell you what, I think
it's going to be unbelievable. The thing that people have to talk about, we're up almost to $7 trillion of investment coming into our country. And
you'll see how it's going to turn out. Our country's going to boom.
(END VIDEO CLIP)
HILL: So, you heard the president there. It's sometimes tough to hear those shouted questions, but a reporter noting the fact that the markets
are tanking, not just in the U.S. but negative reaction really around the globe to these tariffs. The president not really reacting to that, but
saying that the markets, the stocks, the country, in his estimation, are going to boom, in his words. Saying, once again, he believes the U.S. has
been taken advantage of for years. He cited the promise of investments coming into the U.S. Of course, it's not immediate money right now, but
talking about up to $7 trillion in investments. Again, saying this is part of an operation.
Essentially, we heard from him yesterday. He is bullish on this move and believes that will in -- it will in fact be a major boom for the U.S.
economy. We will see how that plays out amid what we are hearing from other officials, from economists who are raising concerns of a recession, of
stagflation, of the long-term impact here. We will continue to watch the development. Stay with us. We'll be right back after quick break.
(COMMERCIAL BREAK)
[14:55:00]
HILL: And to update you on the breaking news that we're following this hour, the Pentagon's Office of the Inspector General alerting Secretary of
Defense Pete Hegseth in a letter that it is opening a review of his use and other personnel at the Pentagon of their use of Signal, that messaging app
of course, to discuss military strikes against the Houthis last month.
Again, that letter saying that it is -- the evaluation will determine whether they complied with DOD policies and procedures in not only using
that messaging app for official business, but it's also going to look into whether Hegseth complied with classification and records retention
requirements. We'll keep you posted as we learn more about that.
I'm Erica Hill in Isa Soares. Thanks so much for joining me this hour. Before we leave you, one last look at the markets. Much more to come right
here on CNN. Stay with us.
(COMMERCIAL BREAK)
[15:00:00]
END
