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Markets Drop After Dismal Jobs Numbers, New Tariff Policy; Trump Admin Officials Visit Aid Site as Gaza Food Crisis Deepens; Harris Says System is Broken in First Interview Since 2024 Loss. Aired 10-10:30a ET

Aired August 01, 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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WOLF BLITZER, CNN ANCHOR: Happening now, breaking news. A lackluster jobs report and President Trump's unprecedented tariff plan. What they could mean for the U.S. economy and for you.

Also, the visit to a controversial Gaza's aid site, the U.S. envoy to the Middle East, Steve Witkoff, and the U.S. ambassador to Israel, Mike Huckabee, head to a food distribution area as a starvation crisis grips the enclave. PALESTINIANS react with hope, skepticism and anger.

Welcome to our viewers here in the United States and around the world. I'm Wolf Blitzer. Pamela Brown is off today. You're in The Situation Room.

And we begin this hour with the breaking news. Stocks are sinking sharply right now. The Dow is down. Take a look at this. The Dow is down right now, a lot of points, 1.64, 1.65 percent. The Dow Jones is down 729 points right now. That's a big number. This morning's lackluster jobs report and President Trump's new tariff policy clearly having a major impact.

The Labor Department says just 73,000 jobs were added to the U.S. economy in July, far fewer than expected and revised figures showed June with the weakest job growth in more than four years. President Trump is also cementing his break with America's longstanding free trade policy, as he announces sweeping new tariffs for the entire world. More than 60 countries now face higher rates. The new tariffs for any country with a trade deficit is now at least, at least 15 percent. And more than two dozen nations are being hit with an even higher percentage. These new rates will go into effect on Thursday.

CNN is covering all the angles with Kevin Liptak over at the White House, Matt Egan in New York.

Matt, let me start with you on the jobs report. Update our viewers.

MATT EGAN, CNN SENIOR REPORTER: Yes. Well, this was an ugly report about the most important part of the U.S. economy, the job market. We learned this morning that the U.S. economy added to 73,000 jobs in July. That was weaker than expected. The unemployment rate went from 4.1 to 4.2 percent, as expected, still low but moving in the wrong direction.

But the big thing here that has economists and investors on Wall Street alarmed is the fact that the U.S. economy added almost no jobs at all in May and June. There were these massive revisions downward to those two months, showing that the economy added about a quarter million fewer jobs than previously known. June at just 14,000, some context, that's the lowest since December of 2020. When you dig into some of these sectors, almost all of the job gains in the month of July came from one sector, and that is healthcare.

Other sectors, including manufacturing and business services professionals, they lost jobs. Leisure and hospitality, job growth in that key sector, that's bars, restaurants, hotels, it slowed to almost a complete standstill.

And so why is this happening? Well, two big things. One is the immigration crackdown. That is making it hard for businesses that want to hire to find the workers that they need. The other big factor, of course, is this historic trade war. All of this chaos with tariffs that are seemingly changing by the hour, it's paralyzed a lot of businesses. CEOs, they may want to hire, but they feel like they can't because they don't understand the rules of the road.

The bottom line here, Wolf, the job market has been so resilient for years, but right now, it is coming under significant pressure.

BLITZER: A lot of pressure indeed. I want to get to the new trade policy that's unfolding, Matt, right now. Some countries are celebrating their new tariff rates while others are slamming the U.S. Give us some perspective.

EGAN: Yes, absolutely. Look, we are looking at historically high tariffs from the Trump administration. The big key here is that countries that have a surplus with the United States, right, countries that the United States has a trade surplus with, their minimum tariff is going to be 10 percent. Countries that the United States has a deficit width, it's going to be 15 percent. That's the new minimum.

But we also know that starting on August 7th, a number of countries are going to have even higher tariffs than that, including Taiwan at 20 percent, India, 25 percent, South Africa, 30 percent, Canada, on the non-USMCA-compliant goods, 35 percent.

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The highest in the world is Syria.

The other big development is the White House has announced a 40 percent tariff on transshipments. These are goods that go from high tariff countries to low tariff countries before they come to the United States. This is a 40 percent tax on top of existing penalties.

Bottom line here, Wolf, is we are talking about historically high tariffs that we have not seen in the United States in almost a century. BLITZER: Interesting. Kevin Liptak is joining us from the White House. Kevin, the president, has been negotiating with two of America's biggest and most important trading partners. We're talking about Canada and Mexico, our neighbors. Where do things stand on that front?

KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Yes. And I think the relative fate of Canada and Mexico gives you a good illustration of how the president has approached of all of this because they have fared dramatically differently in this trade war. When it comes to Mexico, President Trump spoke to that country's president, Claudia Sheinbaum, yesterday and announced this 90-day reprieve from the heaviest tariffs. So, they'll remain at 25 percent. They were expected to hit 30 percent, but the president held off as he tries to work on this new trade deal with that country's president. He says that their relationship is improving. He says that the southern border makes a uniquely complicated trade deal to try and strike.

Canada has fared very differently. The president jacking up tariffs on Canada from 25 percent to 35 percent for what he says was lack of cooperation in trying to combat the fentanyl crisis. The president has had obviously a very testy relationship with that country and with its new prime minister, Mark Carney, who said in a statement that Canadians will be our own best customer. He says that they'll work to diversify their trading relationships throughout the world.

And so in these two examples, I think you have a good illustration of how the president is approaching all of this. One, these interpersonal relationship continue to be very important for the president, but when it comes to Canada and a number of other countries, you see the president using tariffs and using trade to try and exert his other geopolitical priorities.

So, I think the other big question is whether all of this is set in stone. The president has obviously in the past shown a degree of flexibility on these rates. I think it is clear though that we're now entering a very different trade era. Wolf?

BLITZER: We certainly are. Kevin Liptak, thank you very much.

Matt, let me get back to you and let's talk a little bit about the big picture with these new jobs numbers that are out today. I just want to underscore that in May, the original number of new jobs added in the United States was 144,000 new jobs that has now, this morning, been revised to only 19,000. That's 125,000 fewer jobs that initially reported. In June, they reported 147,000 new jobs. That has now been revised this morning to only 14,000 new jobs. That's 133,000 fewer jobs. In other words, between May and June, 258,000 fewer jobs were added than were originally reported. What's going on here?

EGAN: Yes, Wolf. This is really critical because consumer spending is the biggest part of the U.S. economy. And if people start to get concerned about their jobs, then, yes, they could start spending less. And those negative revisions, that is what is most concerning to economists. I talked to Joe Bruce Wallace. He's the chief economist over at RSM. And he said that today's report is absolutely the worst major economic report since the end of the pandemic era.

And, look, we had a number of major reports this week. There was the inflation report that was out just yesterday, and it showed that inflation heated up during the month of June, possibly in part because of tariffs. We had that GDP report, the confusing one that came out on Wednesday. It showed headline GDP was pretty solid, but underneath the surface, it showed an economy that is slowing down. The Federal Reserve seems reluctant to cut interest rates and the president keeps hiking and changing tariffs.

So, you put it all together and this economy does look like it's in a more concerning place than we realize, and that is why we're starting to see investors wake up to some of these concerns. Markets had been skyrocketing to all-time highs, but not today. You see, the Dow is basically at session lows right now, down 700 points, a little bit more than 1.5 percent. Wolf?

BLITZER: All right, we're going to continue to watch the markets. We'll continue to watch everything else as well.

Matt Egan, thanks to you as well.

Also happening now, two top Trump administration officials are getting a firsthand look at the very dire humanitarian crisis in Gaza. The U.S. special envoy, Steve Witkoff, and the U.S. ambassador to Israel, Mike Huckabee, are on a ground trip there. They visited one of the controversial aid sites run by what's called the Gaza Humanitarian Foundation.

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Hamas is slamming their trip as a, quote, staged photo-op.

Let's go to CNN's Jeremy Diamond is joining us right now from Tel Aviv. Jeremy, what did Witkoff and Huckabee see in Gaza?

JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Well, Wolf, Witkoff and Huckabee spent over five hours on the ground in Gaza, assessing conditions on the ground, meeting with officials from that controversial Gaza Humanitarian Foundation, as well as Israeli military officials. Witkoff said in a post on X that his visit is intended to give President Trump a clearer understanding of the humanitarian situation on the ground, and to help craft a new U.S. plan for a distribution in Gaza.

You know, what's clear here is that beyond the fact that Witkoff and the Trump administration are clearly showing a focus on this starvation crisis in Gaza, it is also clear that they are doubling down on the controversial distribution model of this Gaza Humanitarian Foundation, which has been heavily criticized by the United Nations and pretty much every other NGO operating on the ground in the Gaza Strip.

A lot of that stems from the fact that over 600 Palestinians have been shot and killed while trying to make their way to these Gaza Humanitarian Foundation sites, according to eyewitnesses and the Palestinian Ministry of Health.

But the U.S., we know, has already committed $30 million to GHF and, clearly, you know, the only pictures that we've seen so far of Witkoff were at one of these GHF sites in Southern Gaza. U.N. and other humanitarian aid officials say what's really needed is a huge influx of trucks into the Gaza Strip. Over the last few days, we've seen about 200 trucks a day getting in. They say that number needs to be much closer to five or 600 in order to alleviate the crisis. Wolf?

BLITZER: Did Witkoff and Huckabee take any reporters and camera crews with them on this trip to Gaza?

DIAMOND: They did not. As far as we're aware, Wolf, I actually personally asked Steve Witkoff if we could join him and, and I was told that wasn't possible.

BLITZER: All right. Jeremy Diamond and Tel Aviv, thanks very, very much.

Other news we're following that's new this morning, the former Vice President Kamala Harris's first interview since she lost the 2024 presidential election to Donald Trump. She visited CBS's The Late Show with Stephen Colbert and talked about her decision this week not to run for governor of California.

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KAMALA HARRIS, FORMER U.S. VICE PRESIDENT: Recently, I made the decision that I just -- for now, I don't want to go back in the system. I think it's broken.

And I always believed that as fragile as our democracy is, our systems would be strong enough to defend our most fundamental principles. And I think right now that they're not as strong as they need to be.

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BLITZER: CNN's Arlette is here with me in the situation room. Arlette covered the Biden White House and the 2024 presidential campaign. So, what else did Kamala Harris have to say?

ARLETTE SAENZ, CNN CORRESPONDENT: Well, Wolf, former vice president, but Kamala Harris is very clear that she wants to take a break from political office for the time being.

Now, Stephen Colbert asked her if the reason she's not running for California governor is because she wants to run for another office, and she said, no. She just wants to spend this time traveling the country, meeting with people, hearing directly from them, which is something that people typically do when they want to run for higher office.

But here's how she phrased what she thinks the next few years will look like for her.

(BEGIN VIDEO CLIP) HARRIS: I want to travel the country. I want to listen to people, I want to talk with people, and I don't want it to be transactional where I'm asking for their vote.

I believe right now that it is important to do what I can do from the positions that I have held and what I have seen about the world in our country to get out there and remind everyone who needs reminding right now of their power. It is our government.

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SAENZ: Now, Harris is expected to campaign for Democrats heading into those 2026 midterm elections. She's also coming out with a book where she says she'll talk about that very short campaign that she had after President Biden dropped out of the race. And she also said that she'll speak extensively about the challenges she faced in separating herself from Biden.

BLITZER: All right, anxious to hear more. Arlette Saenz, thank you very, very much for that report.

Still ahead, with kids heading back to school, a shocking new report from the CDC on vaccination rates.

And a new report just into CNN shows how Americans are feeling about the economy right now.

Stay with us. You're in The Situation Room.

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BLITZER: Breaking news coming into CNN right now, new numbers just released show Americans' view of the U.S. economy is improving slightly.

I want to bring back our Matt Egan, he is watching all these numbers for us. What do these numbers tell us, Matt?

EGAN: Wolf, the numbers show that the mood on Main Street improved a little bit in July. For the second month in a row, University of Michigan says that consumer sentiment went higher. You see up almost 2 percent over where it was in June. And the survey found that there was an improvement across the political spectrum, among Republicans, Democrats, and independents.

But look at that chart. That shows the trend here. And I think that what's good is on the right side of the screen, you can see there was that big drop earlier this year. That's as markets were in turmoil and then that bottomed out as markets started to go back up to all-time highs. And so you can see that things have stabilized.

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But what's also notable is that we are in a much worse situation when it comes to consumer sentiment than we were a few years ago, right? Consumer sentiment is lower than it was a year ago. It's lower than it was five years ago. When you dig into some of the internals of this report, you can see that people are feeling a little bit better about the current situation but they've actually slightly downgraded their view on what's going to happen next.

Now, obviously, these new numbers just came out. The survey took place before the latest developments of what has been a pivotal week for the U.S. economy. And you can see the U.S. stock market is down, the Dow is down by almost 600 points, about 1.3 percent. And that, again, is because we had that really dismal jobs report that came out. We've got new information on tariffs and inflation.

And so it's notable to me that consumer sentiment is where it is right now, even though there's actually some new developments that do point some to some concerns about the economy. And so we'll have to see whether or not consumer sentiment starts going down again if we're back in a situation of turbulence on Wall Street. Wolf?

BLITZER: We shall see. All right, Matt Egan helping us, thank you very much.

Economist and the president of The Budget Lab at Yale University, Natasha Sarin, is joining us right now. She was also a counselor to President Biden's Treasury Secretary Janet Yellen. Natasha, thanks so much for joining us.

I'm anxious to get your thoughts on the July jobs numbers that were just released this morning. Economists expected a much higher number. What's your reaction?

NATASHA SARIN, ECONOMIST: Well, my reaction is that what we are seeing in the economy is that the tariffs are really starting to bite. Because what happened this month is the labor market has proven to be weaker than we anticipated, both for this month here in July, but also these really substantial downward revisions for May and June, which indicate to us exactly what the models that my colleagues and I at The Budget Lab have been producing, which is when you have tariffs at these incredibly high levels, the effective tariff rate in the economy now post all these new deals that we saw over the course of the last few days is at about 18 percent. That's about seven times what it was when President Trump took office. And that is going to lead to a smaller economy. It is going to lead to 500,000 fewer jobs in the economy. And, frankly, that's what we're starting to see.

BLITZER: And as you mentioned and Natasha, numbers for May and June jobs numbers were revised down dramatically by more than a quarter million jobs. May saw just 19,000 new jobs added June at only 14,000. These are huge decreases from where they were previously reported. What does this tell you about the numbers?

SARIN: Well, what's really interesting, Wolf, is that I think it kind of comports with what you might expect in a world in which there's just so much uncertainty around where these trade deals and where policy is ultimately going to land. Because if you're a business in this country and you're trying to think about making decisions about new workers to bring on, or where it makes sense to invest or where it makes sense to build, you're frankly in wait-and-see mode because you don't at all know the environment in which you're going to be operating in. You don't know how much it's going to cost to import parts to build those cars. You don't know the environment in which you're going to be able to bring in different types of products that you need to be able to sell if you're a retailer.

And so I think what the economy is reflecting is that that type of uncertainty really has quite seismic consequences, and we're starting to see it show up in the labor market. Also this week, though, you're starting to see it show up in inflation. You're seeing durable goods inflation. That's particularly the sectors where the tariffs are having the most bite. It's things like furniture, consumer electronics. Inflation in the last six months has been grown at the highest rate that it's grown at any time in the last four decades absent the pandemic. So, this is an economy that sort of on both dimensions with respect to inflation and with respect to the labor market is showing signs of real challenge.

BLITZER: The president has been claiming almost every single day that the U.S. is the, quote, hottest country in the world when it comes to the economy. Listen to what he's been saying. I want to just play this clip.

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DONALD TRUMP, U.S. PRESIDENT: We have the hottest country in the world now. We're taking in hundreds of billions of dollars. We have the highest stock market we've ever had. We have the best numbers we've ever had.

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BLITZER: So, Natasha, what's your reaction to that? What do the numbers actually show?

SARIN: Well, the thing is, when President Trump took office, we actually had a very, very strong economy. The labor market was very strong and you had inflation. It hadn't gotten all the way back to the Federal Reserve's 2 percent inflation target, but it was well on its way.

The sort of challenge that the economy is facing right now isn't that we've had a financial crisis or that there's been some sort of seismic event, like COVID.

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What's happening right now is we have this manmade crisis that comes as a result of these trade wars, where it's impossible for businesses to make any real decisions about how to think about an investment and also where consumers, because essentially tariffs are attacks on literally everything the American consumer is buying. When you tax those goods, you make them more expensive and that impacts the pocketbooks of the American people to buy those goods, but also makes changes or choices about other goods that they're going to be able to buy if the prices of things they need for things like back-to-school shopping or buying a new car have increased so dramatically.

BLITZER: As you know, Natasha, President Trump announced new steep rates for more than five dozen countries, tariffs. How do these -- how is this going to impact American consumers?

SARIN: So our estimates that the budget labs suggest that the result of these tariffs is that the average American household is going to face price increases of around $2,400 per family. They're going to be concentrated in things like apparel, where you're going to see price increases on the order of magnitude of 35 percent, or consumer electronics, like computers, we're going to see price increases of around 20 percent.

Importantly, these are effective tariff rates as of today. We know there is a ways to go with respect to landing the trade plane in that we're not entirely sure where rates are going to land with respect to China or Mexico or Canada, where there sort of has been push to move the deadline and kicked the can down the road with respect to some of these negotiations.

And so I think both of these elements are complicated. We're in an incredibly high tariff environment that has real drag on the economy, but we're also in this moment of just tremendous uncertainty.

BLITZER: Natasha Sarin, the economist from Yale Law School, thanks very much for joining us.

SARIN: Thanks so much for having me.

BLITZER: And coming up pushing boundaries, as Republicans in Texas look to redraw Congressional districts, Democratic leaders in other states are on alert right now. We'll speak to the governor of New Mexico about that and more when we come back.

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