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ERIN BURNETT OUTFRONT

McMaster To Resign As Trump's National Security Adviser, Replacing Him With John Bolton; Top Trump Lawyer Quits Amid Russia Legal Team Shakeup; Dow Plunges Amid Fears Trump Just Started a Trade War; President Trump Announces Tariffs Against China. Aired 7-8p ET

Aired March 22, 2018 - 19:00   ET

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


[19:00:13] ERIN BURNETT, CNN ANCHOR: OUTFRONT next, breaking news, on several fronts tonight a stunning shake-up at the White House. The National Security Adviser for Donald Trump, H.R. McMaster is out. John Bolton, hardline former U.N. Ambassador, is in.

Also breaking this hour, President Trump's legal team in chaos, his top lawyer, out -- what the shift in strategy means for the Russia investigation and markets plunging today of the Dow off more than 700 points on fears of a massive trade war. President's trade adviser is my guest. Let's go OUTFRONT.

And good evening. I'm Erin Burnett. OUTFRONT tonight, the breaking news, a major shake-up at the White House moments ago. We are just learning that National Security Adviser H.R. McMaster is gone. The president just tweeting, "I am pleased to announce that effective 4/9/18, Ambassador John Bolton will be my new national security adviser. I am very thankful for service of General H.R. McMaster who has done an outstanding job and will always remain my friend. There will be an official contact handover on 4/9."

The president has privately expressed frustrations with the McMaster in recent weeks calling friends and other advisers to complain. A source saying that their differences stem from very different personalities and styles. Bolton meanwhile has had a positive personal relationship with the president according to sources.

His views though can at the least to be described as hawkish on issues like North Korea and Iran and they make him a very controversial pick. Jeff Zeleny begins our coverage OUTFRONT line at the White House.

And Jeff, let's just start with this, yes, we know the president wanted to get rid of H.R. McMaster but yet again here you have in the final hours of the day a major shake-up at this White House.

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Erin, no question about it. Another major shake-up really one that continues a series that we've been seeing over the last several weeks of a change of philosophy, a change in direction. People who have the president believes will be loyal directly to him.

They also share another similarity. People who he has seen on Fox News, people who he has watched during his first year in office. Of course the chief economic adviser replaced just a couple weeks Larry Kudlow coming in, a CNBC contributor.

Now John Bolton coming in with the national security adviser certainly a harder line approach. So what we are seeing here, Erin, is indeed the reshaping of the Trump presidency really only a year and three months in.

Now this is no surprise at all. We have been reporting for weeks, as you said, the president has been disenchanted with national security adviser. They've not seen eye to eye. But as recently as this afternoon, people in this White House here were pushing back hard on the very idea that John Bolton would be hired.

BURNETT: Yes.

ZELENY: We saw John Bolton walk into the doors of the west ring here around 4:00 or so a little bit before that to have a final sit down and meeting with the president. Even at that point many people did not know.

One of the reasons, Erin, that whole the North Korea meeting that still hanging out there, H.R. McMaster was at the very front of arranging that. The diplomatic talks between the U.S. and South Korea for the North Korean meeting. John Bolton is very hawkish, different views, non-diplomatic views, if you will.

The being question tonight what this means for James Mattis, the defense secretary, who was one of the last men standing if you will or certainly one them. And we've seen the secretary of state leave, of course. So what does this do with his relationship here to the White House? Another major, major change here or --

BURNETT: Yes.

ZELENY: -- one that certainly fits a pattern we've been seeing, Erin.

BURNETT: It sure it does. And we're going to more about John Bolton. But to give everyone a sense, I mean this is a guy whose head line in 2015 was to stop Iran bomb, bomb Iran. Time us short but a strike can still succeed. Just to give everyone a sense of where he stands on this issues and very different from someone like Jim Mattis.

Jeff, now we have seen so many people leave from the White House. That has been the story. So who then is next? McMaster was sort of the dead man walking and he's gone now.

ZELENY: Erin that is always the question around here. But the answer always seems to revolve around the person who sits in the corner office just a few paces from the Oval Office, that is the White House Chief of Staff John Kelly.

He has of course been here to ride (ph) the ship since last summer. You wonder how long he will be here. When you asks him and those around him, he said, he serves at the pleasure of the president, he'll be around as long as its -- he seems to be effective.

But Erin if this pattern continues here the president putting people around him who are yes men in a sense, someone who --

BURNETT: Yes.

ZELENY: -- not necessarily challenging him, I would certainly put John Kelly on the list of people who certainly may be at some point on the way out. But again all the timing of this is controlled indeed by the president. So we will have to see, Erin.

BURNETT: All right. Thank you very much, Jeff Zeleny. Interestingly, Steve Bannon today talking, saying that if Kelly is fired he doesn't think the president will even bother with another chief of staff. He'll just run it all himself.

[19:05:04] OUTFRONT now, Gloria Borger, our chief political analyst, Chris Cillizza, our political editor-at-large, and Juliette Kayyem, the former assistant secretary for the Department of Homeland Security.

Juliette, yes, we knew H.R. McMaster was as I said a dead man walking but this is a major shake-up. This is the national security adviser and this is a huge change. 2 JULIETTE KAYYEM, FORMER ASSISTANT SECRETARY, DEPARTMENT OF HOMELAND SECURITY: It is a huge change. Not for -- just for the White House, but obviously for all the agencies in the national and homeland security space who look to H.R. McMaster's office as the -- as a semblance of sanity in the insanity. And so this comes the same week that the Secretary of State Rex Tillerson has left so you have unease there. You have a shift from the CIA head over to the state departments.

You've got lots of moving pieces with agencies that don't like chaos, for obvious reasons. They like order because their job is to maintain order. So my quick takeaways from this, is if a president wants chaos, he will get chaos. That's what this president wants. There's no more adults in the room, there's no one that's going to control the process. This is what the president wants and we will see.

And then to the new national security adviser, this is someone whose checks, has no internal checks. This is a man who sees war and military effort as the only solution to a very complicated world. So if I sound a little bit more exercised or energetic than I normally do, it is because for John Bolton, he is the hammer and everything is a nail. And all we can hope is that Mattis controls that.

BURNETT: And we've -- you know, and obviously Mattis's fate obviously now in question, right. I mean he was the one, Chris Cillizza, who got along with Rex Tillerson --

CHRIS CILIZZA, CNN POLITICS EDITOR-AT-LARGE: Yes.

BURNETT: -- at least ideologically on a lot of things. There're many countries around the world that sort of saw Rex says, we don't like policies, we like Mattis, but they were very much in the same page. H.R. McMaster was another one who gone along with the more traditional policy view. Let's just say on things like Iran, don't rip up the deal and throw it in the trash. You now got Mattis alone. You got Putin (ph) in. You heard Jeff Zeleny talking about Kelly.

CILLIZZA: John Kelly. Yes

BURNETT: So what happens here?

CILLIZZA: What you've seen, and I think you have to basically go from Gary Cohn, the national economic adviser being -- resigning to today.

BURNETT: I mean this is if I can even it's in the past --

CILLIZZA: Well, yes.

BURNETT: -- two weeks that's now we've seen all these things.

CILLIZZA: I mean, it feels like 200 years. Go from Cohn to today you've severe overhauling of domestic policy. You've seen an overhauling Rex Tillerson out, Mike Pompeo in. You've seen overhauling of diplomacy broadly red.

BURNETT: Yes.

CILLIZZA: Now you're seeing an overhaul of national security because candidly as Juliette rightly notes and almost under states. The difference between H.R. McMaster and John Bolton, I think a little people going to learn more about John Bolton usually the next 24 hours is vast.

BURNETT: Yes.

CILLIZZA: Donald Trump is, as we are watching, remaking huge swaths of the people that theatrically he listens to. Now maybe he listens too, maybe he doesn't. But do not underestimate what's happened from -- I don't know when Gary Cohn resigned a few weeks ago --

BURNETT: Yes.

CILLIZZA: -- until today, you are seeing 14 months into the administration and this is not second term, this is the second --

BURNETT: Right.

CILLIZZA: Start of the second year. You are seeing things that it did happen in a normal presidency at start of the second term we've say, holy cow, wow, this is a massive pivot by this presidency --

BURNETT: Right.

CILLIZZA: -- 14 months.

BURNETT: Fourteen months, and Gloria, you know, we've seen the pattern, you know, right before your -- whatever word we're going to use, you know, resigned, fired in every case, you know, ousted I guess I'll go with.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: All of the above. BURNETT: Yes. You know, the president shows his frustration. He vents it behind people's backs to advisers and friends and then he'll vent it on twitter. And then eventually he usually fires you.

Jeff Sessions seems to be the one guy who's immune to that that's far. But for McMaster, you know, he went after him in February saying, you know, when he was talking about when McMaster came out --

BORGER: Yes.

BURNETT: -- you know, blamed Russia for interfering in the election. The president went to Twitter and he said with the FBI indictment the evidence is now incontrovertible. I'm sorry, that's what McMaster said.

Its incontrovertible that Russia interfered in the election. Trump doesn't like to hear that. So then that's when he went to Twitter and he tweeted, "General McMaster forgot to say that the result to 2016 election we're not impacted or changed by the Russians." And then he continued to talk about crooked in Hillary and her collusion.

Was that it? Was that the moment when Trump decided --

BORGER: No.

BURNETT: -- McMaster, you are out because --

BORGER: No. Look, we wrote a story as did some other publications last Thursday night, late. I remember working on this --

BURNETT: Yes.

BORGER: -- saying that the president had decided, according to our sources to fire McMaster. Then the next day you'll recall Sarah Sanders came out or that night, later that night, and said he's not going anywhere so it's kind of sticking it to the media.

[19:10:02] I think while the White House denies this, this probably had something to do with the leak the other day about what -- about the president's phone call with --

BURNETT: Do not congratulate.

BORGER: Right. Do not congratulate because that came after, you know, those were NSE notes. But the president and McMaster have had a troubled relationship for a while. The president doesn't like the way they briefs him.

They just never sort of clicked personally. And -- but taking a step back here to follow on what Chris is saying, and I talked to a friend of the president and wrote about this a couple weeks ago, because the president is now a man in full. He believes that he is in charge and he's done with people telling him how to run the White House. That he wants to put people in the White House that he knows and he likes and that's part of the reason this looks like a Fox News green room, right. I mean, you know, you see the new appointments and a lot of them are from Fox News. These are people the president knows, feels comfortable with, agrees with, and he doesn't want people who are going to say no, no, no to him anymore.

He has decided he's mastered the job. He's going to do what he promised, look at what he did today on trade with China. He's going to keep --

BURNETT: Right.

BORGER: -- his promises. And he wants people who are not going to quit if they disagree with him, like Gary Cohn. And he wants -- you know, so he wants people who will salute and he wants --

BURNETT: Yes.

BORGER: -- people who were with the program, his program. And that is what we --

BURNETT: That's what we're getting.

BORGER: -- as seeing and we will continue to see that. I mean, this is Donald Trump taking over his own administration.

CILLIZZA: But I -- can I just? Gloria makes this point. I just want to reiterate it. You cannot compare this to any modern presidency, not only in the raw number of staff here in turnover. We're not talking about the junior deputy assistant secretary of state for whatever.

BURNETT: No.

CILLIZZA: We're talking about massively important roles that shape policy in this country and around the world. And by the way, no one that I certainly talk to thinks that we are now done. But Donald Trump is done with his remodel, right? I mean I -- with -- the questions about John Kelly, the questions about Jim Mattis. These will continue --

BURNETT: Yes.

CILLIZZA: -- over and over again.

(CROSSTALK)

BURNETT: Hold on. Hold on. McMaster just came out with an e-mail so I just want to share it here, Juliette.

KAYYEM: OK.

BURNETT: He has, you know, the National Security Council, you know, his team thanking the president --

KAYYEM: OK. BURNETT: -- for the opportunity to serve, and he says he's going to address everyone at 9:00 tomorrow morning in a town hall to, "Work to ensure a smooth --

KAYYEM: Wow.

BURNETT: -- transition between me and Ambassador John Bolton." Let's just be honest here, Juliette, how difficult is a smooth transition here? H.R. McMaster and John Bolton --

CILLIZZA: Yes.

BURNETT: -- do not believe the same things about the world.

KAYYEM: No. No, but this is, I mean, McMaster is doing the right thing. Whatever he's feeling inside, however frustrating this is, we don't even know what exact moment lead to this. He's doing the absolute right thing from his military background which is transition.

I just want to talk a little bit about policy for a second and what were -- and why this is all so significant. As I've been saying on your show, the people who Trump fires are the people who disagree with him on Russia and H.R. McMaster was one of them, Rex Tillerson was the other.

McMaster -- and so I don't believe that this is a coincidence. He wants people around him who take his line on relationships with Russia as well as, of course, the investigation, which is a different issue. This --

BURNETT: Yes.

KAYYEM: The second thing which I just want to just add, there's a reason why we should all believe that he is going to fire Mueller despite the representations otherwise. Because for the last couple weeks, we have told -- we've been told that McMaster is safe. That it was very calming to our allies and to -- and maybe somewhat threatening to our enemies.

They felt like there was an adult in the room, that all shifts. And I just say you -- any words from this White House at this stage about someone's status whether they're going to be fired or hired are just --

BURNETT: Well --

KAYYEM: -- baloney.

BURNETT: They're meaningless.

KAYYEM: Well, let me add to that.

BURNETT: Let me, look, they came out with Rex Tillerson, its fake news, and then, you know, he just waited. I mean can I just ask you, Chris here though.

CILLIZZA: Yes.

BURNETT: Kaitlan Collins is reporting that from a source in the White House, that the president wanted to know whether a McMaster person was behind that leak, the leak of, you know, we told you do not congratulate. 9 CILLIZZA: Yes.

BURNETT: Right. And I put that reporting from Kaitlan with the note that, you know, McMaster says he's resigning here officially from the military this summer. All this talk about they were going to find a smooth landing and four star --

CILLIZZA: Right.

BURNETT: -- position for McMaster to show that if you leave this White House, it's not the end of the world.

CILLIZZA: It can be on amicable terms.

BURNETT: Look, who knows, maybe he just absolutely didn't want that, but there -- that's not happening, OK. And no four star position, he's done. He's resigning from public service. That's what he said.

[19:15:00] CILLIZZA: One of the most appalling and I kind of this and worked too much. One of the most appalling things I saw and this was amid all the coverage last week as Gloria rightly notes of McMaster leaving. one of the rumored to be leaving, well as to point things was there a line I think it was my old employee in "Washington Post" story, and it said essentially. Trump is ready to get rid of McMaster but he's fine with taking the time to make sure there's a smooth landing. He doesn't want to publicly humiliate him.

Well, sure. So, spreading that around is like a guarantee were publicly humiliating him. He's done with him. But wait, he's going to toy and we'll see what happens. I mean that is stunning stuff.

And again, you shouldn't do this to anyone who works for you at anything, 2whether it's the presidency or anything else. But to do it to someone who is a highly decorated, highly respected military man who, by the way, is your second secretary national security adviser, because the first one you had to fire and is plead guilty to lying to the FBI and he's now cooperating with the Mueller probe is again I use that word appalling (ph).

BURNETT: All right. With Michael Flynn. Gloria.

BORGER: Can I just say one thing, which is that Trump also today made it official or John Dowd made it official that Trump is running his own legal strategy that Dowd quit because the president wasn't taking his advice. He didn't like the fact that Joe DiGenova was appointed to the team. He felt he was conflicted.

BURNETT: Right.

BORGER: And so the president's legal team now in terms of Russia is looking for lawyers. There is a help wanted sign out all over Washington. So, you have the president saying I'm going to lead my own legal team. I'm going to run my own legal strategy.

BURNETT: Yes.

BORGER: I'm going to run my foreign policy. And, by the way, I'm going to run my White House the way I want to do it. This is what he did at the Trump organization. And this is what he's doing now.

BURNETT: Well, yes, and of course the problem is one person can't run all of those things well. It doesn't matter whether you're super human or not. By the way this comes on the day Rex Tillerson said good-bye to the State Department --

UNIDENTIFIED FEMALE: Yes.

BURNETT: -- talking about the mean spirited town, you're going to hear about that, you're going to hear Trump's economic adviser come on just talk about the tariffs that caused the market to tank 700 points today.

And more on our breaking news about McMaster out, Bolton in. So who is John Bolton? Who's the guy who writes the op to stop Iran's bomb, bomb Iran. Time is short but strike can still succeed. Is that where we're headed?

And more turmoil for team Trump, a lead attorney on the Mueller probe also out. So why is Dowd gone tonight.

And the breaking news on the markets. We will be right back.

(COMMERCIAL BREAK)

[19:21:06] BURNETT: The breaking news, the former U.N. Ambassador John Bolton and a Fox News contributor is replacing H.R. McMaster's national security adviser. The White House making this announcement just a short time ago, H.R. McMaster going to retire, not take a four star position. We've known for several weeks McMaster was on the outs.

Bolton was on the list of possible replacements. But Bolton is not just anyone. He is a very specific and controversial pick and it's a very significant one for this country and the world tonight.

Barbara Starr is OUTFRONT at the Pentagon.

Barbara, Bolton has been outspoken on issue after issue. One of the most recent North Korea, he's advocated for military intervention there instead of diplomacy. That's one of many, but what about North Korea?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, that is now front and center as we could be just a couple of weeks away from President Trump summit with the North Korean leader.

Look, this is the problem now is this puts Defense Secretary Jim Mattis in a very difficult position, unchartered territory for him in the year plus that he has been in office. Mattis, a major advocate for diplomacy backed up by the threat of military force, but Bolton ton, as you say, Erin, has been out there time and again very much talking about the use of U.S. military force, whether it's North Korea, Iran, or other scenarios. This is not what Mattis wants to see.

He has crafted a strategy where he goes to the president and he talks about options. And he makes it clear to the president that military force is the most significant step has massive costs not just to this country but to the Pacific region, to a financial circles around the world. This is very, very difficult business.

And he's been able to convince the president for the last year, keep up the diplomatic it pressure campaign, keep it going. But Rex Tillerson is gone now. That voice is gone. H.R. McMaster's voice is gone.

This now puts Mattis in the toughest of positions in terms of getting his views directly expressed to the president, getting the president to pay attention. Already tonight top administration officials saying it'll all be fine. Mattis will be heard.

But we actually don't know that for a fact. And that is causing some consternation now. Will John -- Will Bolton's voice now take precedent over the diplomatic voices that have been talking to the president, Tillerson and Mattis for the last year? Erin.

BURNETT: This has certainly given many countries and individuals around the world a lot of calm about this administration certainly not a name they want to see floated as in jeopardy in any way. Thank you very much, Barbara Starr.

I want to go now to former state department spokesperson and former Pentagon press secretary, John Kirby, Sam Vinograd also joins me, who's the national security team for the Obama administration. Thanks to both of you.

All right. I want to get the sense here of how crucial of a moment this is, Admiral Kirby. McMaster is out and John Bolton is in. What is your reaction to that? To John Bolton now being the national security adviser, the single most important voice on national security, war, and peace decisions to the president of the United States?

JOHN KIRBY, FORMER STATE DEPARTMENT SPOKESPERSON: I'm worried about two things here, Erin. One is this obviously a very hawkish record on things like North Korea and Iran deal. And now we have Pompeo potentially coming in Secretary of State. A more bellicose attitude of the United States towards the Iran deal worries me greatly in sort of just a more militaristic tone.

But number two and this is not insignificant. I'm worried that the president is more and more surrounding himself with yes men. With people who are either promising to think like he does or will think like he does on everything. And one of the great things about a good national security adviser is teeing up as, Barbara said, lots of options and different opinions even dissenting views. And I worry that Mr. Bolton is not the kind of guy with a record, a strong record of being inclusive thinker in that regard.

[19:25:01] BURNETT: Sam, I mentioned and I want to mention again, an article that was written by John Bolton, an op-ed, "To stop Iran's bomb, bomb Iran" was the head line, and he continued in a sentence to say, "Time is terribly short. But a strike can still succeed," right? Advocating a military strike against Iran. That was in March of 2015.

So that we should bomb Iran. And here is what he said on North Korea on Fox News just recently. Here he is.

(BEGIN VIDEO CLIP)

JOHN BOLTON, FORMER U.N. AMBASSADOR UNDER GEORGE W. BUSH: The only diplomatic option left is to end the regime in North Korea by effectively having the South take it over. I think you've to argue --

TRISH REGAN, FOX NEWS ANCHOR: I'm not really diplomatic --

BOLTON: Yes.

REGAN: -- as far as they are concerned.

BOLTON: Well, that's their problem, not ours.

(END VIDEO CLIP)

BURNETT: That was September of last year. Sam, are those just things that he says and now maybe he'll be different. You know, we don't need to have South Korea go to war with North Korea and millions of people die. We don't need to bomb Iran or does he actually mean that, I'm going to tell the president to do that.

SAM VINOGRAD, FORMER SENIOR ADVISER TO NATIONAL SECURITY ADVISER: I don't think there's any ambiguity here. John Bolton views military action and regime change as it preferred national security tool. I think he also added on, Erin, on North Korea, that Donald Trump and Kim should meet but only so that Donald Trump could deliver a credible military threat. So diplomacy is only happening as pretext to potential war.

And so I think the real question is, one is Donald Trump actually going to listen to this national security adviser. And if he does, is John Bolton going to put aside his personal views and have an inclusive policy process because his national security adviser, your job is to go out to all members of the inner agency, take all different views, from the State Department, from United Nations, from the Defense Department, and present all options to the president.

So if John Bolton wants to be a blocker on the diplomatic track and wants to only put forward military options, frankly, he has the power to do that. He controls what meetings happen in the Situation Room, what paper makes its way to the president. And so we're between a rock in hard place. We're either going to have another unempowered national security adviser or going to have a guy commend (ph) who doesn't actually believe in using all the tools in the tool kit.

BURNETT: So admiral, we just have this news in that John Bolton, we're learning, did not expect this announcement to come this afternoon. Now, my question to you is, what does it say to you that he seems to be surprised when you pair that with just the point, and again, we don't know, whether H.R. McMaster said, I have no interest in four star position and just decide that he didn't or here's what we know, he's not getting one, he's resigning.

KIRBY: I'm not surprised to Mr. Bolton is surprised by the announcement today. It seems to be far for the course with the White House. He just put things out there with a very little thought or process. So that almost doesn't surprise me.

But on McMaster, I think we need to be careful here. A four star was certainly I think talked about. But there's not a lot of four star jobs out there. And they don't have that many four stars, period. And the rotations are very, very awkward.

So, I don't know if we need to read too much into the fact that he's not getting a four star. I mean I think retirement was always an the option -- option for him. He was planning to retire anyway as --

BURNETT: Yes.

KIRBY: -- three star. So I wouldn't -- I don't think we should read too much into that.

BURNETT: Sam, we're also learning that the John Bolton says that the leak was unacceptable and that is the leak that came the president believes from H.R. McMaster or someone that works for him, right? About those bullet points that tells them what to do and what not to do on the Putin call which the president of course either didn't bother to read or ignored. And Bolton is calling that person a munchkin. Look, that's the way, you know, this is that the word that he used, but what is this mean?

VINOGRAD: Well, the word munchkin makes me laugh a little bit. But I actually agree with John Bolton. I think I'm strongly anti-leaking because I think --

BURNETT: Yes.

VINOGRAD: -- that is gives the other side the advantage and at this point if the president doesn't think that he can trust the five or six people that see the final briefing package, then I think he's going to rely on them even less. We already know --

BURNETT: Yes.

VINOGRAD: -- that the president likes to shoot from his hip on these calls. And so if he thinks the people that are in the room with him for that pre-brief, the national adviser, the chief of staff, the senior director for Russia. If he thinks they can't be trusted to keep information close hold as we used to call it in government.

BURNETT: Yes.

VINOGRAD: I imagine he's going to do more on his own, which doesn't make me sleep any better at night.

BURNETT: Admiral, before we go there's another thing that was said in December of 2016 by John Bolton, he questioned whether the Russians were behind the hacking of the DNC. He said why would Russia leave fingerprints. That's what he said. Now, that fits with the president's constant questioning of Russia's interference, broadly --

KIRBY: Right.

BURNETT: -- in the election. It does not fit with H.R. McMaster, right, who said the evidence is incontrovertible that Russia interfere with the election and the president then slammed him on Twitter.

KIRBY: Or as new secretary of state John -- Mike Pompeo who also has been --

BURNETT: Yes.

KIRBY: -- pretty clear about Russia's role here. Yes, I'm worried about that too. I mean, again, I think the president is now -- is a bit of a purge here and he's trying to surround himself with people who think like him as much as possible on the main issues.

And what to Sam's point, I worried that you're not only giving a national security adviser who may not be heard by the president but who with the president , but who the president may not listen to, period, or may not be empowered and encouraged to provide his own individual thoughts. Trump is surrounding himself now with people who are more and more in his line of thinking, and that's not -- and that's not healthy, particularly on this Russia issue when we have a 2018 midterm coming up and is very clear from the congressional testimony of just the last couple of weeks that we aren't doing enough to get ready for it.

BURNETT: Right, and that is under attack as the president's own intelligence chiefs have made clear.

Thank you both very much.

And next, Trump's top attorney on the Russia probe calling it quits, John Dowd. Why is he leaving?

And breaking news, the stock market plunging today. President Trump imposing stiff tariffs on Chinese imports. Real fear of a trade war and the market is plunging. So, Trump's trade adviser will weigh. Peter Navarro is our guest.

(COMMERCIAL BREAK)

BURNETT: Breaking news, we are continuing to follow the departure of the president's national security adviser. Just within the hour, H.R. McMaster is out and he's going to be replaced by the former U.N. Ambassador John Bolton, H.R. McMaster is resigning from public service. He is not going to a four-star position, and that is not only shake-up at the White House tonight.

The president is -- well, he's losing his top lawyer in the Russian investigation, John Dowd quitting today. Dowd, a former Marine Corps captain, had been the main point of contact with Bob Mueller in the Russia investigation. He had pressed the president to lay off attacking Mueller personally, which, of course, it worked for a while.

[19:35:02] But as we saw this week, the president completely disregarding that, personally attacking Mueller by name for the first time, tweeting: The Mueller probe should never have been started and that there was no collusion and there was no crime. And why does the Mueller team have 13 hardened Democrats, some big crooked Hillary supporters and zero Republicans, that along with retweeting criticism and saying there should be no special counsel at all coming from a professor.

Ryan Nobles is OUTFRONT live at the White House.

And, Ryan, you talk about the chaos right now with H.R. McMaster out, those big changes. But on the legal team, perhaps the most important thing for this president right now in the future of his presidency, the guy in charge, gone, what can you tell us?

RYAN NOBLES, CNN WASHINGTON CORRESPONDENT: Yes, that's right, Erin. This story shouldn't get lost in all this news about McMaster at all. John Dowd was the lead attorney for the president as he was dealing with this investigation by the special counsel. And what we are being told is that this is the best indication that the president himself believes that he is the one who should dictate his legal strategy.

And from what we are being told, John Dowd had really recommended to the president that he play nice with the special counsel. He's personal friends with Robert Mueller. He suggested cooperating with the special counsel on every front.

And it seems just at least from his public posture, that the president didn't seem to agree with that. You point out the tweets where he is now starting to call out Robert Mueller by name, is continuing to call the investigation a witch hunt. That doesn't necessarily show a sign of cooperation.

Another area where the president seems to disagree with John Dowd is whether or not he should interview with Robert Mueller. The president today telling our Jeff Zeleny that he would be willing to sit down for an interview. In fact, every time he's been asked about it publicly, he said that he would. That's something that John Dowd was recommending against.

So, Erin, this is definitely a shift in President Trump's legal strategy and it could impact how this investigation plays out.

BURNETT: All right. Ryan Nobles, thank you. And let's go now to Dana Bash, our chief political correspondent who's with me tonight, and Michael Zeldin, Bob Mueller's former special assistant at the Department of Justice.

Michael, what do you think of this, Dowd calling it quits? You have another lawyer coming in who has been much more friendly to Trump's far more aggressive policies on bob Mueller. Dowd said play nice, give him everything he wants, the sort of, if you have nothing to hide, then put it all out on the table.

What does Dowd resigning, quitting, whatever the appropriate word may be, tell you about what's happening in Trump's legal team tonight?

MICHAEL ZELDIN, CNN LEGAL ANALYST: Well, it appears that it may be a shift from a more cooperative to a more aggressive standpoint. But I think really all eyes have to be on Ty Cobb, the special counsel in the White House who is still in charge of this investigation from within and is still counseling cooperation.

So, if Ty Cobb stays on and the president listens to Ty Cobb, then I think we still have an opportunity perhaps for Mueller and the president to reach a compromise on testimony and continued cooperation so that we can get to an end to this. If Ty Cobb goes or if they bring in a new outside counsel, in addition to Joe DiGenova who is really going to ratchet up the fight with Mueller, then I think we're in for a long drawn out fight that will take at least another year to resolve.

BURNETT: And, of course, there's no end in sight right now.

Dana, you talked to the president who knows this very well, this is now war with Bob Mueller. That's what this means?

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: Yes, absolutely. Look, first of all, I agree with Michael that this question looking forward sort of compromise or being aggressive. But it's also about the fact that, I've been told by several sources, that the president was very frustrated that his legal team was telling him through the end of 2017 that this Mueller investigation would be over soon, because they were trying to manage their client, the president. And it blew up in their face because it wasn't over soon. And the president is not happy about that, because their expectations were said in a different way.

And perhaps as part of that the president has decided that he is going to be much more aggressive. No matter what his legal team says. And Steve Bannon did an event with the "Financial Times" late today and he said explicitly, I think President Trump is going to war. He said I think it's obvious that he's going to go to war on this, meaning go to war with Robert Mueller.

BURNETT: Which is pretty stunning thing to say.

I mean, Michael, what do you make of the fact the other reporting we have today, that the president's legal team, president has approached four lawyers, top lawyers, including Ted Olson, and others, to ask them to join his team and they are refusing. And the reasons are they either don't want to work with them or they could have conflict of interest. But either way, they are having trouble getting some of the top people that they want to get. What does that say to you? ZELDIN: So if John Dowd who is politically aligned with the president

is resigning in certain measure because the client won't listen to him, who in their right mind as a lawyer would want to step into that situation?

[19:40:00] If Dana is right, and she always is, that he's going to take his own counsel, he's going to be, if you will, his own lawyer, then what outside counsel is going to want that engagement? It's just a no-win proposition. And so, what we have to look to, if there is a war as Bannon predicts, who are the casualties? Will Sessions and Rosenstein be the casualties of that? Will the cooperation that leads to testifying before Mueller be the fall out of this?

There are a lot of things that we have to look at that will portend what the future is.

BURNETT: Dana, you mention Steve Bannon in talking about going to war with Mueller, you had a chance to speak to Bannon about a couple of things at this FT event that you mentioned, including reports that he was the one who was sort of presiding over, was in charge of the program at Cambridge Analytica.

BASH: It's what Cambridge Analytica whistleblower said that he was in charge.

BURNETT: Yes, he was in charge at Cambridge Analytica, getting all this data from Facebook. You asked him about t I want to play your exchange.

(BEGIN VIDEO CLIP)

BASH: Hi, Steve.

STEVE BANNON, FORMER WHITE HOUSE CHIEF STRATEGIST: Hey, how are you doing? CNN, my favorite.

BASH: I know. I heard. Can I ask you a question about a Facebook and about C.A.?

BANNON: Sure.

BASH: Can we stop for one sec?

BANNON: No, we're going to move --

BASH: Cambridge Analytica --

BANNON: Yes, you heard my talk, right?

BASH: I did. But we didn't get to the bottom of it. Did you know that Cambridge Analytica was using personal information for Facebook?

BANNON: Facebook data by the way is for sell all over the world.

BASH: I know. But it doesn't make it right. Did you buy it?

BANNON: I don't remember buying it. That was --

(CROSSTALK)

BASH: You were the Cambridge guy.

(END VIDEO CLIP)

BURNETT: You were the Cambridge guy. Then he had nothing to say.

BASH: It was a non-answer. He said he doesn't remember buying it. People who may not know the details of this, this obviously has been a huge breach, 50 million Facebook users had their personal data through an intermediary, a professor, given to office, bought by Cambridge Analytica.

And a Cambridge Analytica whistleblower said explicitly that Steve Bannon was on conference calls about it, knew about it, and they spent almost $1 million on this idea of buying this personal information. So that was the question, and didn't really get a full answer except that he keeps saying that it's all out there. It's all out there all over the world, basically all of our personal information.

BURNETT: So, he's trying to say, it's OK, don't worry about it, but I don't remember doing it in case it's not OK.

All right. Thank you both very much. I appreciate it.

And next, there is more breaking news. You know, look, this is originally could have been a lead of a program like this. But, you know, lawyers quit and national security advisers are ousted, and here we are, the market plunged today 700 points because the president announced tariffs against China.

Trump's top trade adviser is going to answer questions next OUTFRONT.

And the president once again looking to a television pundit to join his administration. Why is TV Trump's go-to hiring tool?

(COIMMERCIAL BREAK)

[19:46:22] BURNETT: Welcome back to OUTFRONT.

As we are following the breaking news this hour, General McMaster is out as national security adviser. President Trump says the former U.N. Ambassador John Bolton is in. H.R. McMaster retiring and not moving to a four-star job.

More breaking news: the Dow plunging 724 points. It's the fifth largest point drop in American history after President Trump says he'll slam China with wide-reaching tariffs. It's sparking more fears of a massive trade war. That's what sent stocks spiraling.

OUTFRONT now, the director of the Office of Trade and Manufacturing Policy, Peter Navarro.

Peter, thanks so much for your time tonight. And as I said, the news moving so fast and furiously.

PETER NAVARRO, DIRECTOR, OFFICE OF TRADE AND MANUFACTURING POLICY: Indeed.

BURNETT: You know, you go from 724 points being the lead of the show, to make changes at the White House.

So let me just get you on the record to understand what's happening there. Your reaction to the late breaking news on John Bolton coming in, and H.R. McMaster out as national security adviser. John Bolton apparently saying he didn't expect this news to be announced today.

Do you have any sense as to why it was so sudden? Was this because of the leak about the Putin call or what?

NAVARRO: Here's what I know -- H.R. McMaster is a gentleman, a war hero, and a great individual, who I've gotten to know really well over the past 14 months working on foreign military sales.

He's got a great staff. He's a great individual. I know he will be missed. I'm not sure why today was the day to announce this, but he's a great man, and he will be missed.

And John Bolton, I've gotten to know him over the years, and he'll be a great replacement. So what we are seeing here is a president who has great judge of talent. And we are going to keep moving forward with the president's agenda like we did today with this historic, historic decision to finally address China's intellectual property theft and force technology transfer.

BURNETT: And I have a lot to ask you about that. First, let me just ask you, though, Peter, because you've been there since the beginning with this administration.

NAVARRO: Sure.

BURNETT: Right? You've been there. You've been loyal. You've been pushing these policies.

But I have to ask you, what is it like to work in this place where you have record turnover in any administration in this country, where a lot of people frankly are not competent in how long they're even going to be in their jobs? How is it like to come to work there every day?

NAVARRO: It's a wonderful honor and a privilege to come inside the perimeter here and create jobs on behalf of the president for the men and women in this country. And what I like in this environment to is a football team like the New England Patriots where they win their division every year with different set of players, and the only things that's common really is the coach and quarterback.

2And here in the White House, the coach and quarterback are President Donald Trump. He's a great man. And, listen, Erin, whatever you say, you can say that the first year of this administration, from an economic point of view strongest performances of any president not just in modern history but in history of the presidency. This was extraordinarily year.

And I had wished that people would pay more attention to the success of this administration. And it's only going to get better. We have put in place tax cuts. We're putting in place strong trade policies. We're deregulating. We have -- we are now an energy exporter which you and I know ten years ago would have never been dreamed about.

BURNETT: That's true.

NAVARRO: So, it's a great place to work at and it's very -- a dynamic, vital place, and it's an honor to be here.

[19:50:00] BURNETT: Peter, you know, one thing that shocked me today when I looked -- and, you know, you can talk about percentage drops and absolute point value drops. But when you look at the top 10 biggest drops for the market, four of them happened during the financial crisis, and four of them happened this year, and we're in March.

So, you can talk about the performance of the economy, but the stock market has been rocked by things this president has done, including the tariffs that he announced today that you have so strongly fought for. He says they are completely just. Here he is today.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Anyway you look at it, it is the largest deficit of any country in the history of our world. It's out of control.

(END VIDEO CLIP)

BURNETT: So, the market fell 724 points on those tariffs. China's threatening to retaliate. Its embassy in the U.S., as you know, Peter, is saying, quote, China is not afraid of and will not recoil from a trade war.

Are you willing to take a trade war on?

NAVARRO: So, let's -- let's go back in time, Erin, when you and I used to work at another network and we did financial market analysis. And let's just look at what happened. Yesterday, around the noontime, I was looking at the crawler. Dow was up 200 points, and we were seeing a notice on the crawler that the president was going to introduce tariffs on China. No big deal, market was out.

Now what happened then, well, the Fed chairman came on and announced three rate hikes before the end of the year. And then we had all the Facebook stuff and that rattled the tech stocks. So, this whole notion that somehow the tariffs were the reason why the market went down --

BURNETT: That was yesterday.

NAVARRO: Well, it's just -- but the Facebook thing just got worse when Zuckerberg was on. I mean, the point is, Erin, you and I both know --

BURNETT: Peter, you and I both know that the tariffs are the big reason the market fell 700 points. It could go up tomorrow, but let's just be real.

NAVARRO: Yes, let's be real then. Let's look -- I think the scenario now is very, very bullish. Erin, let me just make a case here.

BURNETT: OK.

NAVARRO: You know basically stocks run on expectation of a future stream of corporate earnings by basically cracking down on China's I.T. theft and forced technology transfer, the outlook now of American corporations that have been stolen from by the Chinese, and going to China under really burdensome and unfair conditions are brighter today than they were yesterday. So, note that.

And then the second thing, I mean, this is going to be great buying opportunity. This is a normal deep. You've seen this stuff before.

But look at what we have in place. We've got tax cuts which are going to start to kick in, in force with additional investment and spending in '18 and '19. We've got the tremendous job by Mick Mulvaney at OMB, just amazing on deregulation. We have now a situation where we are exporting energy. We have very low-cost fossil fuel energy which is going to help our manufacturing base, and we are cracking down with tariffs on things like solar and washing machines, aluminum, steel.

And what's happening? Prices aren't going up. We are having investment flood into this country. We're seeing foreign companies build washing machines here with American hands.

So, I'm nothing but bullish on this economy and the stock market I think is going to reflect it. Let's not get too excited about today.

BURNETT: You mentioned -- well, you know, and look, one day is one day. But you mentioned aluminum and steel, and you've been a purist on this issue for as long as I've known you, which as you point out goes many years, back and to other network and interviews. You believed in the steel and aluminum tariffs, part of why you joined this administration and you fought for them. You've been consistent.

So, when you say tariff, you mean a tariff on everybody, and you said that very directly here on CNN earlier this month. Here you are.

(BEGIN VIDEO CLIP)

NAVARRO: As soon as you start exempting countries, you have to raise the tariffs on everybody else. As soon as you exempt one country, then you have to exempt another country. And so, it's a slippery slope.

(END VIDEO CLIP)

BURNETT: It's such a slippery slope that we're going down a black diamond. I mean, today, the U.S. Trade Rep. Robert Lighthizer, said the E.U., Argentina, Brazil, South Korea and Australia are now exempt from those tariffs. Canada is exempt from those tariffs. They're the largest provider of both steel and aluminum. Mexico is exempt from those tariffs. More countries are coming.

How do you be happy with that?

NAVARRO: So, hang on -- so, I'm ecstatic about this because this is the art of the deal --

BURNETT: About the exemptions?

NAVARRO: Yes, because here's what's going to happen, they're temporary exemptions, conditioned on the ability of these countries to come to the table and give us more fair, reciprocal trade. I can assure you, if we don't get a better deal within the context of NAFTA from Canada and Mexico and refigure this, we're going to have something happen.

Now, I should tell you -- this is an important thing -- every country that is not facing tariffs that we're going to negotiate with will face quotas, so that we protect our aluminum and steel industries.

And, Erin, I would just put this out as a rhetorical question because the debate --

BURNETT: So, wait, let's be clear -- Canada is going to be punished in some way?

[19:55:02] NAVARRO: It's not a question of punishment. Let's look --

BURNETT: But, I mean, you're saying, there's no tariff, but they're not going to be able to export as much as they want. There's a quota, just to be clear.

NAVARRO: Yes, for all countries, there has to be a quota, because, Erin, if you don't put a quota on, then any country that can do whatever they want will become a transshipment point for every other country. So, that's clear. And Ambassador Lighthizer, who I think is probably the toughest, smartest guy that's ever sat as the United States trade representative, will negotiate that on behalf of the toughest, smartest president in terms of this.

But let me say this, the question over steel and aluminum tariffs really boils down to whether you want to have a steel and aluminum industry. The president says we can't have a country without them. I happen to agree very strongly with that. And if we're going to defend those industries from what's been a surge of imports, the only choice we have really is a tariff regime.

BURNETT: OK.

NAVARRO: And that's good for America.

BURNETT: All right. Well, Peter Navarro, I appreciate your time. Great to talk to you again and I appreciate it.

NAVARRO: Great to see you again. Bye-bye.

BURNETT: All right.

And we are following the breaking news tonight on H.R. McMaster. He is out as national security adviser. The former U.N. Ambassador John Bolton is in. Bolton is a former United Nations ambassador. He is also part of Fox News, a very frequent commentator there.

From Larry Kudlow to Omarosa, to Sebastian Gorka, frankly, even Peter Navarro who has appeared so many times on CNBC over the years, Trump looks to people on television for important positions in the White House.

Listen to what Bolton said just moments ago actually in an interview on Fox News.

(BEGIN VIDEO CLIP)

JOHN BOLTON, INCOMING NATIONAL SECURITY ADVISER: I've never been shy about what my views are, but, frankly, what I've said in private now is behind me, at least effective April 9th. And the important thing is what the president says and what advice I give him.

(END VIDEO CLIP)

BURNETT: Brian Stelter's OUTFRONT.

OK. Look, he's said things about bombing Iran and striking and South Korea invading North Korea. I guess, we're supposed to forget that is what he's saying?

BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: He's very hawkish. That's what he's known for. That's why so many people have been concerned about this news, and yet, now, both in he's in the job, and I don't think it's possible to say, OK, everything I said today doesn't count.

A big part of why he was hired was because he was on Fox talking this way. So, as you said, the latest example of this pipeline, Heather Nauert from Fox to the State Department, Mercedes Schlapp, from Fox to the White House comms office, just last week, CNBC's Larry Kudlow over to the White House.

And now, you have Fox regular Joe DiGenova joining the legal team. He wasn't paid by Fox. He was on the network all the time.

So, it is remarkable, the number of hires we're seeing, faces on TV becoming faces of the administration.

BURNETT: I mean, it is pretty incredibly and it's a pattern, right? People who are veterans, who are used to being on TV. The president watches cable and in particular, he watches Fox News. So, if he watches you and he likes you, it sort of looks like the White House edition of "The Apprentice", and I don't say that lightly. It seems true. STELTER: Right. He's treating people's TV appearances as audition tapes. I saw a comic last week say, hey, Trump always wanted to have Trump TV, well, now, he's creating it in the White House. And, obviously, that's a joke, but there's some truth to the idea that he wants to bring these personalities in, he wants the debates on cable news to happen in his White House and he wants those personalities around him. Also, to be on TV defending him.

I did think it was interesting there, Bolton just said minutes ago, he wasn't expecting this announcement today.

BURNETT: Right.

STELTER: We know he's in the Oval Office, but he wasn't expecting this to come out. I'm not a big fan of the whole argument of Trump always trying to distract us, but there is an interview that's about to air on this network with Karen McDougal, a woman accused -- described an alleged affair with him. And I just have to wonder if he's once again making a big announcement to try to take away from an unflattering story.

BURNETT: Right. An important interview, a woman who's going to say that she had intercourse with him dozens and dozens of times, was paid off not to talk about it before the election. I mean, it's pretty stunning set of allegations, and everyone should be paying attention to that.

But, you know, there's also this habit of denying things, right? In the fall, Rex Tillerson is out. And the president says it's fake news, and then he waits in part, frankly, to show that the news is fake, but it's true.

"The New York Times" Maggie Haberman reports they're going to add a lawyer to the legal team. He says it's fake news and maligns her personally. And oh, guess what? Then, he adds Joe DiGenova.

STELTER: It was real news.

BURNETT: Last Thursday, H.R. McMaster is out. And then he waits because he wants it to be fake news, right? And here we are.

STELTER: Sarah Sanders said, just a week ago, that H.R. McMaster was not leaving the White House. The president himself was on Twitter talking about these topics. So it is the latest example, that we can't take the White House spokespeople at their word, because sometimes they don't know what's going to happen. They don't know what's going on. This is the latest example of that.

I do wonder if more cable news celebrities will be joining the White House and I do wonder, you know, what that means, whether those kind of credentials actually are valuable in leadership roles. This is a test the president is doing. But this is straight out of his playbook, the TV producer in chief.

BURNETT: All right. Thank you very much to Brian Stelter.

And thank you for joining us.

Our breaking news coverage continues now along with that important interview with Karen McDougal. That's next with "AC360" and Anderson.