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Mattis Focused on China; Mattis out of the Loop; Harley- Davidson Moves Production. Aired 6:30-7a ET

Aired June 26, 2018 - 06:30   ET

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

[06:30:00] WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Trump administration expected to block Chinese investment in key areas of U.S. technology. The United States feels China has been stealing or would steal potentially in the future. We know that Chinese President Xi Jinping was speaking to a group of American businessmen here in Beijing. He said that China will punch back against the U.S. There's a new round of tariffs, $50 billion of them, set to kick in next month.

So the defense secretary has to somehow convince the Chinese president and his counterparts here to keep up the pressure on North Korea even as the trade situation and other tensions in the region, including the South China Sea, continues to escalate.

And, of course, all of this happening after their reports that Secretary Mattis has been shut out of President Trump's key decisions on many areas of national defense, including North Korea, for six months since December.

Erica.

ERICA HILL, CNN ANCHOR: And what could that mean. So many people looking to that and to try to read into it. Will, appreciate it.

Just ahead, we'll look a little bit closer at that. Just how out of the loop is Defense Secretary Mattis?

(COMMERCIAL BREAK)

JOHN BERMAN, CNN ANCHOR: There might be some tension between the president and a different cabinet member these days, talking about Defense Secretary James Mattis. NBC News reports that the president has kept the defense secretary sort of out of the loop on key issues of global importance. Key issues that relate directly to the Defense Department, including whether to stay in the Iran nuclear deal. Ultimately the president decided to get out of that deal.

[06:35:17] Want to bring in CNN national security analyst, the former director of National Intelligence, James Clapper. He's also the author of "Facts and Fears: Hard Truths from a Life of Intelligence."

There are a number of issues where, at a minimum, it seemed like there was a disconnect between James Mattis and the president. We talked about the Iran nuclear deal, but it started way back with the issue of transgender troops, canceling military exercises with South Korea as well, National Guard -- putting National Guard at the border. And then this creation of a space force. An entire sixth branch of the military where the defense secretary didn't seem completely read in there.

What does that tell you, director?

JAMES CLAPPER, CNN NATIONAL SECURITY ANALYST: Well, first, John, I think that their -- you know, history is replete with examples of where there have been, shall I say, communications gaps between the White House and the Pentagon. And that was certainly true in the -- during the last administration and the four secretaries of defense that I served with.

But, of course, it's a particularly acute issue here with President Trump, who I think as more time has elapsed in his tenure, feels more and more confident that, you know, he doesn't really need any advice from anybody. And he's omniscient and smarter than everybody else.

I think for Secretary Mattis' part, I think he knows what the deal is here. But I do think even he, as dedicated as he is to this country and particularly the men and women of the armed forces that he leads, that even he would, at some point I think, would have a tipping point if he's completely cut out of things.

BERMAN: What would it mean to you if James Mattis, General Mattis, is being circumvented here? A lot of people have looked at Mattis and others who were gone from this administration as being the, quote/unquote, adults in the room. I'm not saying that I necessarily agree with that, but we have heard that analysis from a lot of people.

CLAPPER: Well, I think it would be -- I mean if this trend continues and Secretary Mattis reaches a point where he may feel irrelevant, then that would be, you know -- and takes the plunge, I think that would be a huge, huge loss for the country and certainly for the Department of Defense. He's a great patriot, a great American, and, you know, it would be terrible.

BERMAN: From where you sit, knowing what you know, would you be fearful if Secretary Mattis were no longer part of this administration?

CLAPPER: Well, I would be very concerned about it, put it that way. Of course, a lot of that would depend on who might succeed him. But the Pentagon, the Department of Defense is a huge institution. And it kind of has a -- like a big aircraft carrier, has its own momentum.

BERMAN: At the very beginning, the president bragged, seemed to bask in the glow of what he called my generals. Of course there was General Michael Flynn at the beginning. He left pretty quickly. But also General Mattis, his defense secretary, General Kelly, who was Homeland Security secretary, then ultimately chief of staff, and then General McMaster, who came in as national security adviser after Michael Flynn. The president was so proud of what he called his generals. He seems to be drifting apart from them. Why do you think that is?

CLAPPER: Well, as I alluded to before, John, I think as time has gone on, I think the president has gotten ever more confident in his abilities and his intelligence and his smarts and feels less and less of the need for advice from anybody. I think there was initially a certain fascination, perhaps, with generals and I think even that seems to be wearing off.

BERMAN: What do you think would cause James Mattis to leave? There's no reporting that he's on the way out. Let me make that clear. But if, in fact, there is this discord or tension or just space created between General Mattis and the president, do you think General Mattis would stay from a sense of duty?

CLAPPER: Well, I think if it reached the point where he himself felt that he was just ineffective and had no voice, no influence, I don't know how long he would linger. Other cabinet members, notably attorney general, doesn't seem to bother him. But I don't know about Secretary Mattis. I think -- I think he does -- he would have a tipping point and only he knows what that is that would maybe cause him to say that -- to feel that perhaps he would be less effective if he stayed on.

[06:40:01] BERMAN: General Mattis is in Beijing at this moment. And, obviously, China policy toward the U.S. and U.S. policy toward China right in the middle of the news. Not just with North Korea, but also on the issue of trade. If you're a stock trader, an investor this morning, you care very deeply about that relationship. What do you think the Chinese make of what's happening right now between the U.S. negotiations with North Korea and this hardening trade stance that the White House has taken?

CLAPPER: Well, I think, you know, it's the -- kind of the mixed bag syndrome. I think the Chinese welcome the detente, if you want to call it that, with North Korea. And it will probably be supportive of sustaining it.

One issue you didn't mention, which I think certainly would be on Secretary Mattis' platter to talk about would be Chinese military activities in the South China Sea. So I think what -- the task for him, which is no small one, would be to try to separate these issues. The national security issues, as opposed to trade and tariff and tariffs and all the consternation that's causing, and try to work on those issues that are actually germane to his portfolio.

BERMAN: Director Clapper, always a pleasure to have you with us. Thanks so much.

CLAPPER: Thanks, John.

BERMAN: You know, guys, I do think one thing is crystal clear here. Early on in the administration, the president would talk about James Mattis whenever he could. Mad Dog. He would talk about Mad Dog Mattis. Now, you know, I can't remember the last time he has.

JOHN AVLON, CNN ANCHOR: Yes. I mean, you know, you talk about how he starts to talk about my generals, right? And there was also the sense this was the so-called axis of adults. That they provided a degree of continuity that would balance the president's charisma, but more erratic nature.

But Mattis being sidelined does send a different signal. Clapper kept pointing out that, is it because the president feels more confident about his own intelligence. But, you know, confidence and actual knowledge of the bureaucracy of the Pentagon is a totally different thing. And if you're creating a sixth branch of the military, so- called space force, without notifying or consulting your defense secretary, that's a problem people.

BERMAN: I think you have to say it with a deep voice if you say it, space force.

AVLON: Space force. I'll work on that.

HILL: Very (INAUDIBLE).

BERMAN: Well, look, there's also the possibility this is about the rise of Mike Pompeo as secretary of state and John Bolton as national security adviser in their roles.

HILL: It could be that this still an important part, right, of that relationship?

BERMAN: Yes.

HILL: And when we talk about James Mattis and he can't be completely moved out of that equation. And to keep someone like that in the dark, especially when he's there in China, and this is truly a delicate dance right now. So we are dealing with all of the tariff issues, all of the trade issues, as we are trying to work on the denuclearization and China a part of that.

AVLON: Yes. (INAUDIBLE).

BERMAN: All right, with 2,000 kids -- 2,000 kids still separated from their parents all around this country, the president engaged in a full-force fighting match with late night comics. The president was at it again overnight. Jimmy Fallon firing back.

(COMMERCIAL BREAK)

[06:46:52] HILL: Voters head to the polls in seven states today with primaries in New York, Oklahoma, Maryland, Colorado and Utah, where Mitt Romney is expected to win the nomination for a Senate seat against State Representative Mike Kennedy.

In New York, former Congressman Michael Grimm is fighting for his old job after doing prison time for tax evasion.

And a big runoff in South Carolina, where the president is all-in trying to help Governor Henry McMaster keep his job.

Mississippi also holding runoffs for two federal offices.

BERMAN: Jimmy Fallon firing back at President Trump on "The Tonight Show" after the president slammed him on Twitter. The president mocked Fallon for addressing this moment, the hair messing up moment, in an interview with "The Hollywood Reporter." Jimmy Fallon had the interview with "The Hollywood Reporter." This is what Fallon said overnight.

(BEGIN VIDEO CLIP)

JIMMY FALLON, HOST, "THE TONIGHT SHOW": As you may have heard last night, the president of the United States went after me on Twitter. So, Melania, if you're watching, I don't think your anti-bullying campaign is working. It's not working.

When I saw that Trump insult me on Twitter, I was going to tweet back immediately, but I thought, I have more important things to do. And then I thought, wait, shouldn't he have more important things to do? He's the president of the -- what are you doing! You're the president.

(END VIDEO CLIP)

BERMAN: As if on cue, the president seemed to answer Jimmy Fallon's question by saying, no, no, I don't have more important things to do. At this rally overnight in South Carolina, the president went after Jimmy Fallon again. And just for good measure, he sort of covered the full late night, you know, panoply.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Jimmy Fallon apologized. He apologized for humanizing me. Can you -- the poor guy -- because now he's going to lose all of us.

He's like a nice guy. He's lost. He looks like a lost soul. The guy on CBS is -- is -- what a low life. What a low life. I mean, honestly, are these people funny?

CROWD: No.

TRUMP: Jimmy Kimmel would meet me, before the election. I'm telling you a true story. I don't even think he'd deny it. No talent. There's no talent. He's not -- they're not like talented people.

Johnny Carson was talented. Some of these guys -- no, seriously.

(END VIDEO CLIP)

BERMAN: The president give -- did give the "Incredibles 2" one thumb up and one thumb down, also, I --

HILL: OK. So then maybe I'll check it out.

BERMAN: Yes.

This was a rally last night in South Carolina. Not clear to me how it helps elect Henry McMaster governor of South Carolina, but it does show where the president's mind it.

HILL: It does. And it showed that, in all seriousness, it was a recycling of, I think, what the president sees in many ways to be his greatest hits. You go after the celebrities. You go after late night comedians. You attack the press once again as the enemy of the people.

AVLON: Sure. HILL: Saying all he wanted was honesty. This from a president who many Americans would like some honesty from on a regular basis when it comes to things that he's accessing (ph).

AVLON: Yes, no, this is -- this is the president's arena rock tour. He plays the greatest hits. He digs it. But he really does enjoy opining on late night talk show hosts, including Colbert, who he apparently refuses to name, and extending these --

HILL: He's like the Voldemort --

BERMAN: Like Voldemort --

AVLON: That's how much of his psyche he occupies.

Then dealing with real policy, let alone substance, let alone civility. So he's ripping off his greatest hits, but it is a departure from anything resembling a tradition of the presidency, as well as not particularly helping Henry McMaster in South Carolina.

[06:50:10] HILL: And, once again, as we've been saying all morning, and we've said for some time now, it's also a distraction.

AVLON: Yes.

HILL: It's a distraction to the legitimate answers that are needed about where these kids are --

AVLON: Yes.

HILL: Policy, lots of stuff.

BERMAN: Those late night comics, by the way, focused for the last week on those children separated from their families as well.

AVLON: Yes. Yes.

HILL: Still to come, we're going to take a look at the impact of this trade fight now growing between the U.S. and Europe. Harley-Davidson now poster child in many ways.

BERMAN: Hitting the road.

HILL: Oh.

BERMAN: Get the motor running.

HILL: Head out on the highway.

BERMAN: Head out on the highway.

(COMMERCIAL BREAK)

HILL: A threat by President Trump to impose tariffs on cars assembled in Europe is a backfiring? Harley-Davidson now says it's shifting some production overseas to avoid new tariffs from the E.U. And that move, of course, in retaliation for the president's tariffs on steel and aluminum.

[06:55:01] CNN's chief business correspondent Christine Romans joins us now with more.

Listen, when it was about China, the president said, there's going to be a little blowback. I don't know that it was anticipated when it comes to Europe.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Look, Harley- Davidson is a quintessential American brand, right, and the president has even brought the Harley team to the White House and he has praised the Harley team for being this American iconic company.

But when you have tariffs on steel and aluminum, that means Harley has to pay more for the stuff it's importing to make its bikes, right? Its motorcycles. And then they're exporting it to a country where there are these retaliatory tariffs. The E.U. motorcycle tariff is now 31 percent, up from 6 percent, in response to this president's tough trade rhetoric and tough trade policies. The cost to Harley is $2,200 per bike to export.

Europe is a real big growth market. Its second largest market overall. So it's going to move production. Move production. That will mean jobs in Wisconsin. It will move production somewhere else over the next 18 months to compensate for that.

This is what the company said. Harley-Davidson believes the tremendous cost increased, if passed on to its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region.

This is what happens when you start messing around with tariffs. Companies pay the price and companies make business moves to counter it.

BERMAN: Who ever would have predicted something like this might happen?

ROMANS: Everyone. Everyone.

And the president, interestingly, he sort of hit Harley-Davidson back and said, who would have thought they'd be the first to wave the white flag. He said they just need to be a little bit more patient. Well, it's hard to be patient when you're a company and you're looking at $2,200 difference here.

And this what is Ben Sasse, the Republican senator from Nebraska said, this will go over like a Vespa at Sturgis, a very funny guy. The problem isn't that a Harley is unpatriotic, it's that tariffs are stupid. They're tax increases on American. They don't work and apparently we're going to see more of this.

There is another example here of the Trump steel tariffs could mean about 200 jobs this summer at a Missouri nail plant, a company that makes nails. What do you use? You use steel. They're importing. The cost means they're going to have to start laying people off and they could be out of business, they say, by labor day.

HILL: So who's next is the question. I mean, you know, does this last? Could something change? If this really does hit home with the president?

ROMANS: Well, the president is saying be patient. But what "The Wall Street Journal" editorial board is saying that this could -- who's next? It could be a November issue here.

HILL: Yes.

ROMANS: If you are going to try to campaign on tariffs and the president finally getting tough on all these bad actors who are hurting the United States on the trade policy, but you're looking at Wisconsin and you're looking at Missouri and you're looking at some of these places where companies are saying, hey, I got creamed by Chinese competition for years and now I'm getting creamed by the retaliation to the Chinese companies, that hurts.

BERMAN: And the markets hated all of this yesterday.

ROMANS: They hated it. Yes.

BERMAN: And the White House was sort of falling inwards all over itself to try to explain things.

ROMANS: I'm not sure what they were doing yesterday to explain. Yesterday I heard the treasury secretary saying, don't worry, we're not trying to single out China. And then I heard Peter Navarro, a trade representative, then trying to say, oh, no, I think we are trying to signal out China. We're not trying to hurt anybody else.

I'm not sure what the message was there, but the message from the stock market was, they didn't like it. And we have seen, if you look at the market yesterday, all of these tech stocks tumble. They're also concerned about this part two of the U.S. strategy against China, in particular, which is going to be export restrictions.

And we were told -- reporters, we've been told for a few weeks now what this is going to look like and we're going to hear more about it for sure on Friday. And now I think, will the White House keep that tough tone? I mean tech companies are concerned about this as well.

AVLON: Well, look, I mean, the China trade stuff I think probably plays well. But, politically, Harley, and, in Wisconsin, a state the president picked up, this goes to the heart of his vision of America. Harley is an avatar for America. If Harley's feeling the pain and starts pulling out, that has political implications, as well as perception implications.

ROMANS: Yes. Europe and Asia's a big market for Harley. I mean the biggest, fastest growing consumer markets for motorcycles, American, iconic motorcycles are Asia --

HILL: Yes.

ROMANS: Are, you know, their -- it's China and it's Europe.

AVLON: Yes.

ROMANS: And the other thing I will say, though, is the White House has been saying publicly and privately for the past couple of -- the trade officials in the White House have been saying publicly and privately for the past couple weeks that the economy is so strong now this is exactly the time to take a little heat near term in some of these companies, in some of these industries, because the economy is so strong, this is the time to make these changes because overall they think the American economy can absorb any kind of hit.

BERMAN: Tell that to Harley.

ROMANS: Tell that to the nail company in Missouri.

HILL: Yes.

BERMAN: (INAUDIBLE).

Christine Romans, great to have you with us.

ROMANS: Nice to see you guys.

BERMAN: All right, thanks to our international viewers for watching. For you, CNN "TALK" is next. For our U.S. viewers, NEW DAY continues right now.

(BEGIN VIDEO CLIP)

SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: I was asked to leave because I worked for President Trump.

UNIDENTIFIED MALE: Last time I checked, being an (INAUDIBLE) liar working for an (INAUDIBLE) liar was not a protected class.

UNIDENTIFIED MALE: Our country is strongest and best when we respect each other.

UNIDENTIFIED MALE: We should throw the Republicans who have these policies out of Congress.

UNIDENTIFIED MALE: The president here is setting a very negative tone. He's a big bully.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: They want to protect illegals much more so than they want to protect you.

UNIDENTIFIED MALE: It is inhumane. It is cruel. And the American people don't like it.

UNIDENTIFIED MALE: Our laws should be changed so --

UNIDENTIFIED MALE: Removal is expedited.

[07:00:01] UNIDENTIFIED MALE: Sending people back means for them a possible death sentence.

(END VIDEO CLIP)

ANNOUNCER: This is NEW DAY with Alisyn Camerota and John Berman.

BERMAN: Good morning. Welcome to your NEW DAY.