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Dow Rebounds After Talk of De-Escalating China Trade War; Sources Say, Trump Softened Tone on Fed Chair After Advisers' Warnings; Columbia Student's Lawyers Accuse Government of Setting Up Citizenship Interview as a Trap to Detain Him. Aired 10-10:30a ET

Aired April 23, 2025 - 10:00   ET

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

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[10:00:00]

PAMELA BROWN, CNN ANCHOR: Happening now, breaking news, trade war off-ramp? The treasury secretary is just about to speak as the Trump administration signals the steep tariffs may soon be loosening up.

WOLF BLITZER, CNN ANCHOR: And spousal scrutiny, Defense Secretary Pete Hegseth's wife wasn't just in the Signal chat. We have new CNN reporting on her near constant presence in his inner circle, even though she doesn't have an official position at the Pentagon.

Welcome to our viewers here in the United States and around the world. I'm Wolf Blitzer with Pamela Brown, and you're in The Situation Room.

The breaking news we're following a flash of optimism on Wall Street. Right now, the Dow is up about 1,000 points. You can see right there, the Dow is up 1,033 points, about a half an hour after the market's open, and it comes off of very positive close yesterday after a four- day losing streak. This new rally is at least partially credited to the treasury secretary, Scott Bessent. The source tells CNN that he privately told investors yesterday that Washington's trade war with China is unsustainable and he expects it to de-escalate.

This hour, Bessent is speaking to an economic outlook forum, that's a public event, and we're watching to see if he moves the markets again.

Let's go live to CNN Business and Politics Correspondent Vanessa Yurkevich, who's in New York, monitoring all of this. Vanessa, secretary best comments about China at that private investment conference yesterday sent ripple effects after it was leaked, ripple effects throughout the markets. How significant is the impact of all of this, what he's about to say in public today?

VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: It would be significant, and especially for markets, Wolf, because investors and traders on Wall Street really only care about two things right now. They care about what is happening with the trade war, and the president's comments about Jerome Powell, the head of the Federal Reserve. And they got positive news on both fronts.

As you mentioned, yesterday, Scott Bessent, the treasury secretary in a private meeting, said that soon the trade war with China will have to de-escalate and that it is unsustainable right now. And then you had the president later in the Oval Office saying that the tariffs on China are going to come down. And he said that it won't be to zero, but it'll be less than what it is now, that 145 percent tariff on China.

He also said in the Oval Office that he has no intention of firing the head of the Federal Reserve, Jerome Powell. And that is why you see such good news on Wall Street, the Dow up over a thousand points right now.

President Trump also yesterday met with major retailers, CEOs of major retailers, like Lowe's, Home Depot, and Walmart. And in that meeting, we are learning from sources, according to our Jeff Zeleny, that the CEOs were pretty blunt about what this trade war would mean for retailers and consumers, saying that there would be empty shelves, higher prices, and essentially that this would be a lose-lose situation and it would make a mess of the global supply chain.

So, whether or not the president heard those blunt statements, and that's why he backed off, saying that he would de-escalate this trade war remains to be seen. But certainly encouraging news for Wall Street right now and for businesses and consumers, Wolf, who were very worried about what these high prices would mean going forward. Wolf?

BLITZER: And we'll see what Secretary Bessent says. That's coming up fairly soon and how that will potentially move the markets again.

Vanessa Yurkevich, thanks very, very much. Pamela?

BROWN: And, Wolf, as Vanessa just reported, we're learning more about the president's softening tone on Jerome Powell, the chairman of the Federal Reserve. Sources tell CNN that it came after warnings from some of Trump's top advisers.

So, let's go straight to CNN's Kevin Liptak at the White House. You have some new reporting. Walk us through it and how this message got through to the president, Kevin.

KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Yes. Some of the president's economic advisers have been warning him really for months about the potential fallout if he were to try and fire the chairman of the Federal Reserve, Jerome Powell.

[10:05:00]

These advisers warning him that it could cause market turmoil potentially to the scale that he's been seeing as a result of his trade war, but that it could also prompt a prolonged legal battle that no one was particularly convinced that he would be able to win.

Of course, Jay Powell has said publicly that he wouldn't resign and he thought it would be illegal for the president to try and fire him. All of that sort of mounting as the president continued that harsh rhetoric about Jay Powell, saying that he thought he should be, quote, terminated and saying just last week that he thought if he wanted Powell out, that he would be out.

But this week, of course, the president softening his tone somewhat, saying that it was never his intention to fire him, clearly taking stock of some of those warnings that his own team was providing him about the legality and about the market fallout of going after the independent chairman of the Federal Reserve.

And so it does now appear as if President Trump will be sticking with Powell for the foreseeable future. Powell's term will expire in about one year's time, but that's not to say that this battle between the president and the Fed will not continue, as the president continues to encourage him to lower interest rates, as the president continues essentially to trample on what has been the independence of the Fed going back, you know, since its founding.

And so this is all sort of building as the president does appear to soften on a number of these trade issues. The question, I think, is whether that will be sustained going forward. Pamela?

BROWN: Right. But, clearly, this morning, the markets are happy, relieved, it appears, about the president's softening stance on those issues.

Kevin Liptak, thank you so much. Wolf?

BLITZER: You see the Dow is up more than a thousand points already. We're watching it closely.

Also happening now, a Palestinian student at Columbia University in New York is in a Vermont courtroom for the first hearing, his first hearing since immigration officials actually detained him. Mohsen Mahdawi is a legal permanent resident of the United States, but was taken away in handcuffs last week during his final citizenship interview. CNN has confirmed that more than 340 students, faculty members, and researchers have had their visas revoked this year.

Let's go live to New York right now. CNN's Gloria Pazmino is joining us. Gloria, what's happening in court this morning?

GLORIA PAZMINO, CNN CORRESPONDENT: Well, Wolf, that hearing to have Mahdawi released on bail is currently underway, but we are learning a few more details about what happened exactly in the moments before that video that we're watching right now, the moment in which Mahdawi was walked out of an immigration office in handcuffs, put in the back of an SUV by immigration officers and taken away.

Now, we know that Mahdawi had showed up to a previously scheduled citizenship appointment. This was the last step in his process. Now, we're learning from court documents that his lawyers are describing this arrest happening at the immigration office as a, quote, trap. They said that Mahdawi had been worried that he would be targeted for enforcement considering what had been happening in previous weeks, including the arrest of Mahmoud Khalil and Rumeysa Ozturk. But he showed up to this appointment because it was the final step in his citizenship process. Here's what his attorneys wrote. They said, quote, it was a trap. At approximately 12:00 P.M., the USCIS official informed Mr. Mahdawi that he needed to, quote, check on some information and would get right back. ICE agents masked and visibly armed entered the interview and shackled Mr. Mahdawi.

So, we're learning more about exactly what happened before those moments, Wolf, his attorneys describing this as a very purposeful effort by federal agents to detain him inside that office. In the next few hours, we'll learn whether or not the judge decides to release him on bail. Wolf?

BLITZER: All right. Gloria Pazmino, thanks for that report. Pamela?

BROWN: All right. Let's go to Treasury Secretary Scott Bessent. He's given the keynote address at the Institute of International Finance. Let's listen in.

SCOTT BESSENT, U.S. TREASURY SECRETARY: Recent data shows the Chinese economy tilting even further away from consumption toward manufacturing. China's economic system with growth driven by manufacturing exports will continue to create even more serious imbalances with its trading partners if the status quo is allowed to continue.

China's current economic model is built on exporting its way out of its economic troubles. It's an unsustainable model that is not only harming China, but the entire world. China needs to change. The country knows it needs to change. Everyone knows it needs to change, and we want to help it change because we need rebalancing too.

China can start by moving its economy away from export overcapacity and towards supporting its own consumers and domestic demand.

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Such a shift would help with global rebalancing that the world desperately needs.

Of course, trade is not the only factor in broader global economic imbalances. The persistent overreliance on the United States for demand is resulting in an ever more unbalanced global economy. Some countries policies encourage excess savings, which holds back private sector-led growth. Others keep wages artificially depressed, which also suppresses growth. These practices contribute to global dependence on U.S. demand to spur growth. They also lead to a global economy --

BROWN: The treasury secretary there, he was speaking about the economy and about China, the U.S. trade relations.

I want to go to Rana Foroohar right now to get a little bit of analysis from what we just heard. And he basically was making the case, Rana, that what the U.S. is trying to do here is rebalance the playing field and have less reliance from other countries on U.S. consumption and have China work on its consumers, you know, those within China to consume more rather than rely on export. And, of course, this comes at a significant moment when you see President Trump softening his stance.

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Yes, for sure. I mean, it's interesting because Bessent is, in some ways, saying exactly what the Trump administration has been saying since it came into office. And, in fact, what Trump 1 was all about too, which is, look, the U.S.-China trading relationship is broken. It needs to evolve. The U.S. can't be the consumer of last resort. China has to stop being the factory of the world. We need balance.

That's a message that a lot of people would agree with. I would certainly agree with that. What we had seen from this administration was something much more provocative. It was sort of a trade war against the world, which then morphed into a trade war against China. And, you know, I think that what we're seeing now is this reset. Bessent is saying, look, this really is about China. We recognize that there are a lot of negative externalities. We recognize that this shift is risky, that it's going to take time. And he's just, you know, laying this message down what that's going to mean in terms of action, not just on part of the U.S. but on the part of China. We're going to have to wait and see.

BROWN: So, let me just follow up on that because, you know, he clearly -- Scott Bessent clearly wants China to back down and, you know, is making the case that it needs to play ball here, right, in this trade war. At the same time, you had President Trump say that he's going to essentially go down from where it is now, 145 percent, by a significant margin. On social media right now in China, there's the hashtag Trump is chickening out. What do you make of that, Rana?

FOROOHAR: Yes. Well, I have to say I never thought that China was just going to roll over and take these tariffs and take what Trump was dishing out. I mean, China is a very nationalistic country. It's a very prideful country. I think they've been prepared for a long time for what's been coming down the pike. And the Chinese people, the culture, the economy, they're used to taking a lot of pain. In fact, they're used to taking more pain than Americans are typically.

So, they've been prepared for this. I think they aren't backing down. I don't think the Chinese --

BLITZER: Rana, I want to interrupt for a moment because Scott Bessent is still speaking. I want to hear more of what he has to say. Then we'll talk.

BESSENT: -- to support the U.S. and global economies. Instead, the IMF has suffered from mission creep. The IMF was once unwavering in its mission of promoting global monetary cooperation and financial stability. Now, it devotes disproportionate time and resources to work on climate change, gender and social issues. These issues are not the IMF mission. And the IMF's focus in these areas is crowding out its work on critical macroeconomic issues. The IMF must be a brutal truth teller and not just to some members.

Today, the IMF has been whistling past the graveyard. Its 2024, external sector report was entitled, imbalances receding. This Pollyannish outlook is symptomatic of an institution more dedicated to preserving the status quo than answering the hard questions.

Here in the United States, we know we need to get our fiscal house in order.

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The last administration ran up the largest peacetime deficit in our nation's history. The current administration is committed to fixing this. We are open to critique, but we will not abide the IMF failing to critique the countries that most need it, principally surplus countries.

In line with its core mandate, the IMF needs to call out countries, like China, that have pursued globally distorted policies and opaque currency practices for many decades. I also expect the IMF to call out unsustainable lending practices by certain creditor countries.

The IMF should push more proactively official bilateral lenders to come to the table early to work with borrower countries to minimize periods of debt distress. The IMF must refocus its lending on addressing balance of payment problems and its lending should be temporary. When done responsibly, IMF lending is at the very core of its contribution to the global economy. When markets fail, the IMF steps in and makes resources available.

In exchange, countries implement economic reforms to resolve their balance of payments, issues, and support economic growth. The reforms undertaken during these programs are some of the IMFs most important contributions to a strong, sustainable and balanced global economy.

Argentina is a fitting example. I was in Argentina earlier this month to demonstrate the United States' support for the IMF efforts to help the country reset financially. Argentina deserves the IMF support because the country is making real progress toward meeting financial benchmarks.

But not every country is so deserving. The IMF must hold countries accountable for implementing economic reforms.

BLITZER: We're going to continue to monitor the treasury secretary, Scott Bessent, and hear what he has to say. But I want to go to our White House Reporter Kevin Liptak, who's on the scene for us right now.

Kevin, he seems to be, at least in this most recent chunk that we've been listening to, really going after the International Monetary Fund, the IMF. They issued a statement the other day suggesting that not just the U.S. economy, but the global economy was endangered right now in part because of all of the trade war that Trump has initiated and some of the statements that Trump has made about the Federal Reserve chairman, Jerome Powell.

LIPTAK: Yes. And the IMF issuing that sort of analysis as part of its spring meetings that it's holding here in Washington alongside the World Bank. You know, the Trump administration has been critical of the IMF and the World Bank, both of these lending institutions. There have been some concern among people who are supportive of those groups that they would withdraw from them all together. You don't hear Bessent talking about that in this speech, but certainly going after the IMF very critically for some of its lending practices, which he seems to claim that haven't sort of benefited the countries where those loans are heading. And so I think this will be an ongoing point of criticism as this administration progresses.

You also hear Bessent criticizing these institutions for putting an over amount of focus on climate change, which is something that occurred during the Biden administration, both of these organizations trying to help developing countries bolster their resilience to a changing climate. That's obviously counter to some of what President Trump has tried to achieve now that he's been in office. And so this will be an ongoing line of criticism.

But it was, of course, his comments about China earlier, this speech that I think were so notable, essentially laying out some of what the Trump administration wants to see from Beijing if those tariffs are to be cut, as President Trump suggested they could be just yesterday. Obviously, the question is how they get China to the table. So far, those trade talks have not begun. President Trump has had trouble getting Xi Jinping on the telephone to discuss these issues. But, certainly, you're getting sort of a clear focus of the contours, at least, of what these negotiations might look like.

BROWN: All right.

BLITZER: It's interesting, Pamela, that these are very important statements by the treasury secretary, because you can see the markets moving up and down as a result of what he's saying, it was up more than a thousand points right now. It's up 895 points up.

And Rana Foroohar is still with us. Rana, give us a little sense from your perspective how the words uttered by the secretary of the treasury impact the markets here in the United States and potentially globally as well.

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FOROOHAR: Well, I think it's -- there's a bit of a calming effect. You can see that because we're coming off of a trade war that people didn't really understand, that seemed to be against adversaries and allies alike. And what you hear Bessent saying is the message that we heard in Trump 1. It was the message that we heard during the Biden administration, frankly, which is that, look, the Washington consensus is over. The U.S. can't support the world economically on its own anymore. These Bretton Woods institutions, the IMF, the World Bank, the global trading system, that they need to change, they need to evolve. And that's something that we -- I think most of us in economic circles know.

It has pretty bipartisan agreement that that needs to happen. And so I think the markets are responding to Bessent coming out and saying what he said even before he joined the administration, which is, look, I'd like to be a part of fixing the Bretton Woods system, reforming this, bringing America and the world into a new economic era. And, you know, I think that people are ready to accept that. How it plays out, of course, we'll have to see over the next days, weeks, months, and years.

BLITZER: All right. Rana Foroohar, thank you very, very much.

It's interesting that we're watching, you know, folks don't necessarily appreciate that the words that treasury secretary says, the actions that the Trump administration does could impact their retirement accounts, interest rates, could have a huge impact on the economy here in the United States.

BROWN: Those words alone can have a huge -- and we've seen the market turmoil and we've seen how the market reacted after President Trump softened his stance on Jerome Powell, on the China tariffs and how it was up over a thousand points earlier today. Now, you see it's 896, so we'll be tracking this closely.

And we'll be right back.

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BLITZER: All right. We're following the breaking news this hour. Look at this, the markets are surging after President Trump's signal he's ready to de-escalate his trade war with China. See the Dow is up more than a thousand points right now.

Let's get some reaction to that and more from Democratic Congressman Josh Gottheimer of New Jersey. He sits on both the House Intelligence and Financial Services Committees.

Take a closer look at the markets today, Congressman. Investors seem to think the president's potential u-turn on sensitive issues, like China's tariffs, is a sign that he's backing away from his trade war with China and indeed much of the rest of the world. The hashtag Trump chickened out, direct quote, was trending on a Chinese social media platform. Millions of people were saying that. Is that what happened? Did Trump chicken out?

REP. JOSH GOTTHEIMER (D-NJ): And listen I think Wolf that it is good news that he's reconsidering his entire tariff policy and laying off the Fed chairman, right, which also happened, as you probably saw, which I think has a big impact on the markets as well. I think, unfortunately, what we're going to see here is just more chaos, right? It's a U-turn today. What I fear is the next turn tomorrow. And they're all over the map. And that uncertainty and just sheer chaos is wreaking havoc, not just on people's retirement savings, but the markets, but on prices and causing massive anxiety.

And I'll tell you in Jersey, with families all across the state, especially our seniors, right, who were relying on their retirement savings you know, more than others. So, I don't know what to make of this. Listen, it's good that things are headed in the right direction. You just never know what's going to bring -- what tomorrow brings with this administration.

BLITZER: Yes, good point. And as you mentioned, Congressman, President Trump now says he has, and I'm quoting him now, no intention of firing the Federal Reserve chairman, Jerome Powell. This comes after CNN has learned his advisers warned him of mounting legal and economic turmoil if he kept up his threats to fire the chairman. Are you confident Powell's job is now safe?

GOTTHEIMER: I mean, it should be, you know? I believe that's actually completely the way the law was intended and for this exact reason. You know, what I'm worried about is consumer confidence is down, what, I think 30-plus percent since this president took office. You've got Goldman and JPMorgan Chase and others think -- still thinking we're heading toward a recession because of all this chaos. And you see a lot of our key trading partners really not knowing what could happen any single day. We've got the worst -- literally, the Dow is on track to have its worst months since the great depression, the S&P, worst period of time in a century with biggest hits on the markets in a century.

So, Wolf, my general concern is this is what happens when you have no strategy, when it's just chaos. And every day you wake up and put your finger in the wind and decide and have no actual plan,

BLITZER: Even if Trump keeps Jerome Powell on the job, Congressman, do you think the constant threats and the attacks have already potentially undermined the independence of the Federal Reserve?

GOTTHEIMER: Well, listen, I think the chairman of the Fed has stood strong and I give him a lot of credit for that, and I think that's the way it should be. And I think people have a lot of confidence in the institution there. But, in general, I think people think institutions, as they are, a lot of the ones that we trust to be independent are constantly under attack, and this president's threatening them all the time. And, you know, this is just -- nothing is being done the way it should be with any kind of consistency and certainty. You know, you got things at the Defense Department are chaotic, right? You've got more Signal chats coming out over there.

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So, literally, every part of this government seems to every day wake up and be focused on how can we destabilize the country instead of providing some certainty.