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The Situation Room

Interview With Rep. Josh Gottheimer (D-NJ); U.S. Trade Representative Testifies Before Congress; China and Trump Escalating Trade War. Aired 11-11:30a ET

Aired April 08, 2025 - 11:00   ET

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

[11:00:25]

PAMELA BROWN, CNN HOST: I'm Pamela Brown.

Happening now: China and the U.S. going tit for tat, the Trump administration talking top, Beijing vowing to fight to the end.

WOLF BLITZER, CNN HOST: And we want to welcome our viewers here in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

Now we begin this hour with a major escalation in the trade war between the world's two top economies. China is accusing the U.S. of bullying and blackmail.

BROWN: And, this morning, Beijing is vowing to retaliate against President Trump's latest tariff threat, while the White House says China is making a big mistake.

CNN's chief national affairs correspondent Jeff Zeleny is at the White House.

So, Jeff, walk us through this new angry exchange between the U.S. and China.

JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: Well, good morning, Pamela and Wolf.

There is no better example of the trade war under way right now than looking at the United States and Canada. It all started at the beginning of the Trump administration, when the president to put on a 20 percent tariff against China because of fentanyl.

Then, of course, he escalated last week. Then China escalated. And then the president escalated yesterday with a 50 percent tariff threat. The question is, what is the off-ramp for all of this? The Treasury secretary Scott Benson -- excuse me -- Bessent did not signal an off-ramp this morning, but said this:

(BEGIN VIDEO CLIP)

SCOTT BESSENT, U.S. TREASURY SECRETARY: I think it was a big mistake, this Chinese escalation, because they're playing with a pair of twos.

QUESTION: What -- right.

BESSENT: Traditionally, if you look at the history of the trade negotiations, the -- we are the deficit country. So what do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us.

So that is a losing hand for them.

(END VIDEO CLIP)

ZELENY: So the Treasury secretary calls today losing hand for China. We shall see.

Of course, the United States depends on the goods from China. Certainly, American consumers do. They have grown accustomed to the lower prices. But this is just one example of the trade war that is going on, even as this administration is signaling it is very open to negotiations with other allies.

But, again, of course, at midnight, these so-called reciprocal tariffs go into effect, and the China one would as well. When you add it all together, Wolf and Pamela, 104 percent, that is the percentage of tariffs that the U.S. now is threatening at least against Beijing.

BROWN: Just to follow up with you, Jeff, for our viewers watching this, why should every American be paying attention to this escalation between the U.S. and China and how this could impact them directly?

ZELENY: Pamela, just look around your living room. If you're watching this at home, look at where your television comes from. Look at things in your garage, in your office, in your home office, in your kitchen.

This is why this matters, because it drives the price up. Don't forget what a tariff is a tax, a tax on imported goods. So this is why all of this sort of confusing back-and-forth actually matters. Never mind the stock market. That's slightly separate here, and it's leveling off somewhat. But it's the price of American goods.

But, look, the bottom line of this, the Trump administration believes that it's time to do more American manufacturing, all kinds of goods, from electronics, to jeans, to cars. So that is what's at play here. But, again, if you're sitting at home, look around your house. So many things likely came from China -- Pamela.

BROWN: All right, Jeff Zeleny live for us at the White House.

Thank you, Jeff -- Wolf.

BLITZER: President Trump's tariffs could be the most significant from the United States in a century. Nearly every one of the world will feel them, at least in some way.

BROWN: And as Americans brace for the sting -- we were just talking about that with Jeff -- so are companies big and small.

So, knowing how to navigate the minefield of a new tax landscape could be essential for economic survival.

CNN's Tom Foreman is at the Magic Wall for us.

Tom, walk us through how these tariffs work and who's on the hook for them.

TOM FOREMAN, CNN CORRESPONDENT: You're absolutely right. Jeff is right. Wolf is right. You're all right to call it a tax, because that's what it is.

Here's how it works. Foreign company produces goods to be sold in the U.S. They're shipped to the U.S. and they face the tariffs. U.S. companies pay the tariff -- I will put a caveat on that -- to the U.S. Treasury. That's where the money goes, to the Treasury, and then companies pay the cost of the tariff or they pass it on to consumers.

And that really matters, because is it possible that a supplier could pay the entire tax when they send it? Possible. History says it's very unlikely -- 50/50 split, the supplier and business doing it? Also possible.

[11:05:12]

This is the one that everybody says is what most often happens. There is some absorption along the way, and this is shown as an even split, but there's no indication that it will be an even split. And American consumers absolutely, Pam, are going to be hammered by this on many things, as Jeff noted, that you use and you touch every single day.

BROWN: So, a little more specific on that, what gets more expensive? What should we be bracing for as American consumers?

FOREMAN: Well, as a practical matter, almost everything, bananas up 10 percent, wine up 20 percent, coffee up 10 percent. Interesting point here. If you drink one cup of coffee a day, average price last year is about $3. That's going to be $100 more for your coffee every year.

That's all there is to that. And then there are many other goods that will also be affected out there. Electronics, absolutely. You want a new phone, you want a new TV, you want a new anything in your house that's electronic, almost all of it is tied to foreign manufacturing.

Textiles, the jeans that were mentioned a minute ago, shirts, things like that, footwear, sporting equipment, all sorts of things, medical equipment. It's impossible to keep up with all the things that are part of world trade. So all of that is potentially impacted by this and is being impacted by it right now.

BLITZER: So when are we going to start seeing these prices go up, Tom?

FOREMAN: Well, Wolf, in some ways, that's a great question. We have targets out here that say that tomorrow 50 percent reciprocal tariffs go into effect for dozens of countries. May 2, 54 percent tariff rate applied to packages less than $800 coming from China and Hong Kong. American consumers, do you sometimes buy something more than $800?

Yes, but who really is not affected -- who is affected by this? They're applying this to those less than $800. So the wealthy people who are ordering great big things, they're off the hook. Everybody else is paying it.

Then, if these dates hold, Wolf, because the administration has been so off and on with we're putting on tariffs, we're suspending the tariffs, we're reinstituting the tariffs, we're changing the rate, it's really hard to keep track of what's happening minute to minute.

BROWN: Yes, we just heard the trade representative, Jamieson Greer, to the Senate say, yes, everything is still on.

But then, at the same time, the White House is saying that there are negotiations happening. More than 50 countries have come forward trying to negotiate. One country that isn't negotiating, that's really digging in its heels now is China.

So how could the escalating trade war impact American consumers in terms of the goods that we get from China?

FOREMAN: Yes. And that's why, Pam, when they say, oh, well, China has a weak hand here, they only have a pair of twos, we're buying this stuff.

American consumers are buying the stuff. That's part of this and too. Look, Temu over here, tons of consumer goods out there that people like to buy, they're doing very, very well. Shein does a lot of, like, cosmetics and lifestyle products out there, also big. AliExpress, this does marketing, direct marketing, tends to have a little longer delivery time.

And they're trying to find buyers around the world to deal directly with Chinese companies. These are great big Chinese companies that Americans are dealing with in a very big way. So that's out there.

And when you put it all together -- and this is the part that people have to bear in mind -- this is a tax. And one of the estimates right now is that the average home out there who's dealing with this annually from the Budget Lab at Yale University is going to pay close to $4,000 annually for this tariff plan.

Now, the White House will say, no, no, no, no, no, it's all going to come back, it's all going to be good in the meantime, but, right now, if we're playing cards, that's the bet that your household has just put on the table, whether you want to or not. And you're hoping it doesn't come out that way for you.

BROWN: Tom Foreman, thank you so much.

FOREMAN: You're welcome.

BLITZER: So I guess, Pamela, with the price of coffee going up, my venti skim latte at Starbucks is going to cost more money.

BROWN: I was going to say, this is really bad news for us early birds, right?

(LAUGHTER)

BROWN: I'm so early. I love my coffee in the morning. I'm like, should I stockpile right now before this goes into effect?

BLITZER: I think we should.

All right, let's continue the conversation.

Joining us now, CNN global economic analyst Rana Foroohar.

Rana, thanks so much for joining us.

What are the consequences if the two sides continue this escalation?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, you just heard the biggest one, which is $4,000 a year. That is something that most average people simply cannot afford.

There are a couple of other things that I would point to. I think that we're going to see continued stock market volatility, and that means big things for people with any money in the markets. Only a little over half of Americans have 401(k) plans, but a lot of Americans hold some stock, and the market itself being so jittery means that companies are buttoning down spending.

[11:10:00]

That could affect jobs. That could affect the employment picture. So I'm expecting that volatility to continue until we have some real sense of where things have landed.

I think the other thing to think about is, what's the endgame here? Donald Trump hasn't spelled out too many details, but he's said in broad brushstrokes that these tariffs are meant to bring jobs back to the U.S., help the U.S. reindustrialize.

I would question that. I think tariffs are one tool in the toolbox. I was actually four tariffs in Trump one against China. They were surgical. They were very specific. But then you saw Joe Biden coming in and creating a domestic industrial policy, which is the other thing that you need in order to really bring manufacturing back.

You saw the chips industry coming back thanks to that strategy in about 18 months. That's now being unraveled. So what I see is this one tool of tariffs being used as a very blunt instrument, a hammer to bang the entire world over the head. But you don't have that domestic piece. And I think, without that, you're just not going to get the job growth that you're looking for.

BROWN: It's interesting.

And I have reporting with my colleagues Kevin Liptak and Alayna Treene that Scott Bessent, the Treasury secretary, went to Trump over the weekend, flew down to Mar-a-Lago, and said, we need to do a better job of what -- figuring out what the endgame is and communicating that and putting more emphasis on how this will benefit the everyday American.

And now you have this ongoing tit for tat on tariffs between China and the U.S. Is China's economy able to sustain a prolonged trade war with the U.S.?

FOROOHAR: Pamela, that is a great question.

If you looked just at the math, if you looked at China's economy right now, which has been in bad shape, quite frankly, for some time -- they have a real estate bubble that's burst, they have a big debt crisis -- you might say, no, they can't take the pain.

But here's something Americans and, frankly, the president, I think, doesn't think about often enough. The Chinese are used to taking a lot of pain. They actually have a phrase in Mandarin that's called eating bitterness. It means the idea that you can take short-term pain for longer-term gain.

The Chinese are used to doing that. Americans are not used to doing that. And so there is a political psychological reality here that I would add to that math and say, I think Beijing can go on longer than we might expect, regardless of the economic situation.

BLITZER: The Treasury secretary, Rana, earlier this morning said any negotiations are being driven by countries approaching the U.S. and not by market volatility. What's your reaction to that?

(LAUGHTER)

FOROOHAR: Well, it has been surprising to me and many people that Trump allowed the markets to get as volatile as they have. That's something that a lot of people didn't think were -- was going to happen.

My sense is that, eventually, if the markets go down far enough, he will blink. Now, that said, I think we were due for a correction no matter what was going on. I think, even with the tariff situation, if things hadn't happened, we would still be due for a correction. I think stocks were overpriced. So we may -- that may be coming regardless of what happens.

But I suspect if we get down to Dow 4800, Dow 4500, that you may see Trump start to blink, particularly if Republicans that are going back to their districts and having to deal with angry shareholders and people whose pension funds have been -- have been slashed -- that may happen sooner, rather than later.

BLITZER: Yes, people are really nervous now about their 401(k)s and their pension plans, their investments, to be sure.

Rana Foroohar, thanks very much for joining us.

BROWN: And, right now, we are hearing from the United States trade representative, Jamieson Greer, as some senators push back on President Trump's tariffs.

BLITZER: The hearing has been heated at times, very heated, and with huge, huge stakes.

Today, the markets are trying to climb out of deep losses after the escalating trade war rattled investigators.

Let's go to CNN's chief congressional correspondent, Manu Raju, up on Capitol Hill.

You're monitoring this important hearing for us, Manu. The president's tariffs facing a lot of resistance now from both sides of the aisle.

MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Yes, that's right, and concerns from both sides.

Republicans are mostly divided about how to proceed on this tariff policy, because some of them are in line with Donald Trump. Some of them are giving him a wait-and-see approach. And others are downright opposed.

And we're hearing some of those concerns play out in this hearing with the U.S. trade representative. And just moments ago, he was asked, Trump's trade representative, Jamieson Greer, was asked by Senator Michael Bennet, a Democrat of Colorado, about the concerns that the increased tariffs could raise prices for consumers here at home.

(BEGIN VIDEO CLIP)

SEN. MICHAEL BENNET (D-CO): When you say that the American -- in your testimony that you expect the American people will bear the burden or that -- and I'm sure they will bear any burden on some level.

But what do you think that burden is actually going to look like?

JAMIESON GREER, U.S. TRADE REPRESENTATIVE: Well, I think the challenges, frankly, are going to be more for companies that are largely dependent on imports from China and Asia, where they have to adjust their supply chains in a quick set of time.

[11:15:10]

(CROSSTALK)

GREER: ... the way the tariffs get allocated between the foreign producer and the importer.

BENNET: And...

(END VIDEO CLIP)

RAJU: So, now the question is, what does Congress do from here going forward?

There is a bipartisan push in the United States Senate and in the U.S. House to give Congress a check on the president's tariff powers, provide new oversight to what the president is doing to slap these tariffs on countries around the world. But there's a problem. There's resistance from the top quarters in the

GOP. On the House side, the speaker of the House says that they should give the president latitude from going ahead.

And in the Senate, even though there are 60 supporters in the Senate, meaning enough to break any filibuster attempt, the Republican leader in the Senate, John Thune, says there simply is not any appetite for this going ahead, because the president has threatened to veto it, which means that Congress will essentially allow this to move, these tariffs to move ahead.

People may complain about it, but they're not going to do anything to rein in Donald Trump -- guys.

BROWN: All right, Manu Raju, thanks so much.

And still ahead: CNN has learned who will lead the U.S. side in talks with Iran on a new nuclear deal. What the U.S. could get out of the negotiations.

Plus:

(BEGIN VIDEO CLIP)

(WOLVES WHINING)

(END VIDEO CLIP)

BLITZER: Howls that haven't been heard for more than, get this, 12,000 years. Scientists say they brought back the dire wolf -- they brought back the dire wolf from extinction.

You're going to want to see this. Stay with us.

You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

[11:21:04]

BROWN: Treasury Secretary Scott Bessent is warning that China -- warning China that it made a -- quote -- "big mistake" by threatening retaliation against President Trump's tariffs.

So, let's discuss that and more with Democratic Congressman Josh Gottheimer. He sits on the House Financial Services and Intelligence committees.

Thank you so much for coming on.

So, with China vowing to escalate this trade war, where is the off- ramp?

REP. JOSH GOTTHEIMER (D-NJ): I mean, I think you're seeing, as you point out, in the next hour, a threat of another 50 percent increase from this president, right, and China's chance to back down. It doesn't look like China is backing down.

And so the president keeps ratcheting up. You know, some people are saying he's ready to cut deals out of the administration. But all I know is, you have seen in the last week the market, the S&P lose 15 percent, people really getting hosed in their retirement savings and panicking about the retirement savings, as you're looking at costs significantly go up in the next 24 hours.

So, the off-ramp, I don't know if eventually President Trump blinks and says -- when people start to really panic about the cost of life, because you're talking about everything from like coffee to clothing going up and their retirement savings going down. So this is real.

And this is not just something that he's talking about. This is actually having a day-to-day impact on people.

BROWN: Certainly, we're seeing it play out in various ways. The stock market is up a bit today, but it's been volatile since, of course, the announcement was made.

And you mentioned sort of the mixed messages coming from the White House in terms of the tariff policy. What do you make of that?

GOTTHEIMER: Well, I mean, it's just more of their chaos, right? I mean, it's -- this White House has been -- if you give it one theme, it's just chaos and confusion, to me, right?

You -- they're all over the place. They say one thing one day, and they change the next day. But the impact on people is real. They -- when you're a senior worrying about you're about to -- or you're either retired, or you're about to retire, or you have a kid going to college, and you have been trying to save, and these prices are going up, and your retirement savings going down, this is not just talk of chaos now and talk of something that he might do.

He's actually doing it, and you're talking about $3,800-a-year tax increase for families, and they had bet that this -- right, a lot of people had bet that this president was going to try to make their lives more affordable. In my opinion, he's done just the opposite.

BROWN: What do you make of the talking point from the White House -- and we're hearing it from Republicans -- Byron Donalds was on earlier -- saying, look, Trump said he was going to do this, he's doing what he said he would do on the campaign trial, and he won?

GOTTHEIMER: I think that people didn't focus on the fact that, do -- it's one thing to say, OK, let's be smart and have a strategy over time and go after our number one adversary, China, and figure out how to -- how to do that.

It's another thing to say to all of our trading partners of the world at one time, we're going to impose these huge tariffs on you. The E.U.'s going to consider retaliatory tariffs now, as you know, in the next 24 hours, and price of everything goes up.

I don't think people were betting for a second that what he meant when he ran for office about making your life more affordable was just the opposite. And I think now you're seeing this in real time of the real effects on people, and I just really -- and I will tell you, I just talked to -- I was in a diner yesterday talking to people in Jersey, and they said, but I didn't -- I thought he was going to make our lives better.

I didn't know that that -- when he was talking about that, that meant that I was going to have to pay more for everything and I would lose my retirement savings.

BROWN: Yes.

Let me just follow up with you on that, because the E.U. is also proposing a zero-for-zero tariff agreement, aiming to eliminate tariffs on industrial goods. And so the White House argues, look, you have the E.U. and these other countries that are trying to come to the table to negotiate here, and this could be better for America. What do you say to that?

And what else are you hearing from your constituents? I understand you have an online survey.

GOTTHEIMER: Yes, one of those -- what I'm hearing from my constituents is what I say. It's just, honestly, this is chaotic and panic, and what does this mean for me? And, all of a sudden, everything I buy, I think I -- nearly everything I buy comes in from somewhere else, and what am I going to do about that?

And that's what I'm hearing from, like, Democrats and Republicans at home. It's nearly universal. In terms of the world, you don't know what's going to happen any day, right? So it's just more chaos and panic. We -- and so I look at this and say long term, until they get their act together, until they actually send a clear signal, we're just going to have more of this mess.

And we got to -- we need some clear direction in the strategy. You don't want -- in general, this has been chaos, and, in my opinion, stupidity, not smart strategy. And that's what I'm hearing from people, again, from both parties.

[11:25:07]

BROWN: And you -- we should note and just kind of emphasize that you're leaving this bipartisan effort to reclaim some congressional authority over tariffs.

Right now, as we just heard from our Manu Raju, House Speaker Mike Johnson is dismissing that idea. How bad would things have to get, do you think, for Republican leaders, for them to change their minds?

GOTTHEIMER: Well, Don Bacon I introduced legislation with others, and I think you have got a lot of people who are going to jump right on board, which says the president cannot use his emergency authority as he wishes at any hour against any country, right? Right?

(CROSSTALK) BROWN: And you think even when he claims it's for national security?

GOTTHEIMER: Yes, he claims it's for national security, but it can't possibly be for national security.

It's one thing, again, if it were against China or Iran or Russia or North Korea, against a top adversary. But this -- he's literally taking it against our key trading partners and doing it across the board without any constructive discussions.

That's why we are proposing, as our legislation does, to take back that power that we gave him and say, you're not using this for emergency purposes. You're just using it as you see fit. And this is not why the White House was afforded this authority back in 1974, right?

So this is a reversal. And you're seeing Democrats and Republicans now. That's the key thing. You're seeing the Republicans raise their hand and question this chaos and say to the president, you can't go after my farmers. You can't go after my families. You can't raise costs on our folks.

And, like, there's a lot of pressure on them back home too.

BROWN: Yes, they're hearing from their constituents as well, as you are.

I want to follow up on another issue. President Trump says that direct talks between the U.S. and Iran over its nuclear program will start on Saturday. We have learned that Steve Witkoff is going to be the lead negotiator on that.

Do you see any room for negotiation with Iran? Or do you think President Trump is making the same mistakes? Because you were critical when this happened under Obama?

GOTTHEIMER: You know, I will never say you shouldn't have a conversation, a constructive conversation, especially in an indirect way.

But -- and that's clear -- it's unclear if these are direct conversations, indirect conversations. But we know what -- we know Iran and their record. We know, not just on the nuclear program, where they have lied every step of the way, which I have been saying for years, but it's proven out. They have lied. They have refused to have people on the ground actually to study their nuclear program and see their progress.

They have kept everyone out. And on top of that, they're still harboring the number one world sponsor, the parent company of terror, right, of Hamas and Hezbollah and the Houthis, all who attack America, all who say "Death to America," who are looking to undermine our democracy and freedom.

So you have got to be very careful in these discussions and realize that they have never been straightforward and honest, and you have got to really hold them accountable for not just what they have done, but what they continue to do to threaten our country.

BROWN: All right, Congressman Josh Gottheimer, thank you for your time.

GOTTHEIMER: Thanks for having me.

BROWN: Appreciate it.

BLITZER: Good discussion, indeed.

GOTTHEIMER: Thanks, Wolf.

BLITZER: And coming up: With online gambling readily available right now, when does a fun pastime turn into a problem?

We will take a closer look just ahead right here in THE SITUATION ROOM.

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