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Dow Sinks on Trade War Fears; Trump Lawyer Resigns; Trump to Testify; Tillers Speaks to Colleagues; Tillerson's Leaving Message. Aired 1-1:30p ET

Aired March 22, 2018 - 13:00   ET

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


[13:00:00] RANA FOROOHAR, CNN GLOBAL ECONOMICS ANALYST: Already been discussions of that. The big fear, of course, is this -- is that this is just the beginning of a more global trade war. You know, we've already heard Trans-Atlantic fighting, Europeans if they get involved.

Trade wars don't have winners. You know, the president has said trade wars are easy to win. They don't have winners. If you look at history, you know, the Great Depression was prolonged because of a trade war. In almost every kind of tariff incident in the last 20 years, you've see U.S. jobs, U.S. companies be losers.

And, you know, I'm already fielding concerns, complaints from a number of CEOs, industry groups, about the president's actions.

WOLF BLITZER, CNN HOST: Stephen Moore, what do you think about the president's announcement that this is the first of many. It looks like there could be a major trade war which would result in enormous implications for the United States and higher prices for American consumers for a lot of products.

STEPHEN MOORE, CNN SENIOR ECONOMIC ANALYST: So, I'm of two minds on this. I'm a free trade guy, so I don't like to see trade barriers rising, and that certainly is happening under Trump. And that will have negative implications for U.S. consumers, you're right about that, Wolf.

BLITZER: Chinese exports to the United States --

MOORE: That's exactly right.

BLITZER: Whether you go to a Walmart, you go to another store, families want to buy clothes for their kids, books for their kids --

MOORE: And cell phones. Cell phones are something imported.

BLITZER: Whatever the products, the costs of those are going to go up. This is like a hidden tax when you impose a tariff like this.

MOORE: It is. So that's all true.

Now, let me say something in defense of the president on this. Number one, you know, I was with Donald Trump on the campaign. This is exactly what he said he was going to do. And I think that if he had taken a more conventional Republican position on trade, Hillary Clinton would be president today. This position is actually popular with a lot of voters, especially in those industrial states that feel like their jobs have been taken because of trade with Mexico and China and other countries.

The other thing, you know, that I think is important here is this issue of intellectual property. This is a big deal for the United States. And I think the president is right about this. I mean as we advance as a -- as a nation, more and more of what we produce is intellectual property. This --

BLITZER: And your -- and what you're -- and you're pointing out to our viewers --

MOORE: They're stealing.

BLITZER: That China steals --

MOORE: That's right.

BLITZER: U.S. intellectual property.

MOORE: Now I think -- that's right.

BLITZER: And this is the way the president is responding, by imposing tariffs? Is that what you're saying?

MOORE: Exactly. And the question is whether or not you can -- I mean, and I don't know the answer to this, but I think this is the question. Can we have free and fair trade with a country that is stealing $500 billion from us every year? And that -- that's --

BLITZER: Well, it's not -- that's the trade --

MOORE: That's how much --

BLITZER: That's the trade surplus that China has.

MOORE: No. No, no, that's how much it's estimated that China is stealing from us every year.

BLITZER: And where did you get the $500 billion?

MOORE: That comes from a report that just came out not long ago, a couple weeks ago, from a very credible source.

BLITZER: From a U.S. government report?

MOORE: Yes. You know, I'll look it up.

BLITZER: OK.

MOORE: But, I mean, people are citing it as kind of one of the definitive studies on how much is being stolen.

BLITZER: The president, you know, Gloria, did, as a candidate, repeatedly go after China -- GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Sure.

BLITZER: The Europeans, the North American Free Trade Agreement with Canada and Mexico, other countries that have trade surpluses with the United States. And now his argument is, I'm delivering what I campaigned on.

BORGER: That's right. And I think the question is, will this -- will the impact of this wipeout the positive impact of his -- of his tax cuts?

MOORE: Look at the stock market today.

BORGER: Exactly, look at the stock market today.

MOORE: I mean it's down by, what, 300?

BORGER: And I think that's the political questions that members of Congress are asking, which is, we told you we were going to put more money in your pocket and now maybe we're taking that money out of your pocket. That's the problem.

BLITZER: You know, Rana, the argument now is the fear is that the Chinese will impose tariffs on all sorts of U.S. agricultural experts, whether wheat or soybeans or corn, a lot of products, meat, pork- related products, and that's going to hit a lot of U.S. agriculture and farming states, whether Kansas, Nebraska, Iowa, states like that. Their lawmakers are not happy, and they're mostly Republicans, with what the president is doing out of fear that this is going to cost American farmers a lot of money.

FOROOHAR: Absolutely. I mean you're seeing agricultural trade industries already coming out and complaining about these tariffs.

And, you know, you're hitting the nail on the head. Tariffs are something that a lot of Republicans oppose, you know? I mean most Republicans are free traders.

The thing that really concerns me, this isn't a sexy point to make, but, you know, China -- yes, China steals intellectual property, absolutely. Stephen's right, the president himself is right on that. But China also has been doing a lot in the last 20 years to enrich its own supply chain, its own ecosystem. You know, we should have been doing all of that stuff all along as well. And I would like to see the president talking more about how to bolster the rust belt instead of slapping on tariffs that are actually going to end up hurting his base ironically.

You know, people think this is great. OK, maybe we get 10,000 steel jobs. We're going to lose 80,000 manufacturing jobs because input costs are going to go up and that's going to make products more expensive on global markets.

MOORE: Well, Rana, we did do something important to, you know, improve our economic climate, and that happened two or three months ago with the tax cut, which is having a very significant cost effect. FOROOHAR: Which is going to be whipped out if we have a trade war.

MOORE: Well, no, look, I mean I think there's something to that. I mean a great point (ph).

But, I mean, I think one point to think about, and this is part, Wolf, of I think this kind of new kind of Trump trade doctrine, if you will, which is, you know, I think China is playing a very dangerous game here as well. Trump understands, and I think this is an unquestionable truth, that China needs to trade with the United States more than we need to trade with them. It's unquestionable.

[13:05:15] I mean, look, you're right, if we can't trade with China, we have to pay more for toothpaste and maybe $20 more per cell phone. If they can't trade with us, they go into a recession. So they need access, Rana, in my opinion, to America's, you know, $3 trillion consumer market. And if they -- if this becomes a tit for tat, this is where I think Trump -- sometimes he doesn't say exactly what he means, when he said we can win a trade war, I think what he meant to say is, China has more to lose here, so they better cooperate with us.

BLITZER: Well, it looks like they'll going to retaliate. And, you know, and that could have enormous implications.

MOORE: They will.

BLITZER: The U.S. economy, the global economy if -- unless they can head that off.

MOORE: Well, but nobody's answered the question yet.

BLITZER: What's the question?

MOORE: I mean, Rana, you -- about how do we go forward if they continue to steal, if they continue to be (INAUDIBLE)?

BLITZER: Well, let me ask Rana. What do you think if the Chinese continue this intellectual property theft, what should the U.S. do about it short of a trade war?

FOROOHAR: You know, you -- well, OK, for starters, China has already announced its intention in its five-year plan to be independent of U.S. technology in the next 10 years or so. And that's a goal that they're actually moving forward. I spend a lot of time talking to Chinese entrepreneurs. I'm not in any way saying that their model is the correct one, but they are doing a lot to support local players, to support their local tech ecosystem. And we should be doing more of that.

I also would like to see us actually talking with Europe and getting in alignment about how to deal with China. It would be much more powerful for the U.S. and the E.U. to be on the same page, rather than having the U.S. go off --

MOORE: That's true.

FOROOHAR: And start -- you know, start a unilateral trade war.

BLITZER: You know, it's interesting, Gloria, there was a serious split among the president's economic advisers --

BORGER: I recall.

BLITZER: Whether to go into this potential -- this fear of a trade war by imposing tariffs on steel and aluminum imports into the United States, and now $60 billion on tariffs. It was originally thought it was going to be 50. Some of his advisers recommended 30 billion. Now the president just said $60 billion. And that's just a start of China.

Gary Cohn --

BORGER: Left.

BLITZER: Who was the head of the National Economic Council, he resigned. He didn't think this was a good idea.

Larry Kudlow, who's being brought into the -- the (INAUDIBLE) --

BORGER: He doesn't think it's a good idea.

BLITZER: He doesn't think it's a good idea either.

BORGER: He doesn't.

BLITZER: But he sees it as a negotiating ploy to try to get better deals with these other countries.

BORGER: Right. And I think this is reflective -- we've been talking about this over the last week or so, of the president's newfound sense that I can do this and I know how to run this country and I know how to run the White House and I'm not going to depend on these people anymore to tell me what to think. I succeeded by telling the voters this is what I'm going to do and I'm going to do it and I'm not going to have anybody in my White House who is going to stop me.

So while Larry Kudlow disagreed with him, I was told by a source the president doesn't believe Kudlow would quit over it. Which he won't, because he's not even there. But it is -- it is -- you know, it is a different president. You know, one that is kind of unshackled, if you will. And with Cohn gone, I don't know who's going to argue against this. I mean Kudlow might. We know that. (INAUDIBLE) quite already (ph) --

MOORE: Well, look, I just said, you know, I'm very close to Larry and --

BORGER: Right.

MOORE: And he -- you know, one of the reassuring things of having Larry over there now is he will be a voice for free markets and free trade.

He -- you know, I've talked to him a lot about this. He does think that getting tough with China, maybe now is the right time for that.

Rana, I mean, look, the one thing I disagree with you, and you said, is that somehow they're going to overtake us technologically.

BLITZER: All right.

MOORE: And China's so far behind us technologically, all China does is copy down our --

FOROOHAR: Oh, you know what -- you know what, I'm going to --

BLITZER: Very quickly, Rana, go ahead.

FOROOHAR: I'm going to push back strong on that. I have got --

BLITZER: Well, what have they ever -- what have they ever produced that hasn't been a copycat technology from what we've --

FOROOHAR: You know what, there are more people engaging in digital commerce in China than there are in the U.S. The Chinese are actually --

MOORE: Yes, but they have -- they have a lot of people doing that because --

FOROOHAR: Excuse me, the Chinese are actually -- the Chinese are actually very well poised in certain strategic areas, artificial intelligence, et cetera.

MOORE: We'll see. I'm skeptical.

FOROOHAR: Lots of reasons for that. But it is very important for us to actually develop our own technologies, our own supply chains, rather than just getting into a trade war. And I haven't seen the president doing enough of that.

And also policy has been totally incoherent. You know, I mean we're -- we're protecting -- you know, we're saying, OK, Broadcom, you can't come in and buy QUALCOMM, and yet we're letting some of the largest tech players in Silicon Valley do plenty of business in China.

BLITZER: All right.

FOROOHAR: We need a coherent policy if we're going to -- if we're going to start a trade war, let's at least have a coherent policy.

MOORE: Well, with the $60 billion -- we're going to raise -- if we're going to have $60 billion of tariffs, I mean that's a pretty significant wallop against China.

BLITZER: The president says that's just the first of many. And he's not just going after China. He's mentioning South Korea, Japan, the European Union, mentioning NAFTA, the North American Free Trade Agreement. He said the WTO, the World Trade Organization, is a disaster for the United States. Very strong words from the president. And he says China better reduce that trade deficit by $100 billion and they better do it quickly, otherwise more are on the way.

[13:10:09] All right, we're going to --

MOORE: And that means they're going to have to buy more of our stuff, not less of our stuff, right? I mean --

BLITZER: Let's see what -- let's see what happens. Very, very sensitive moment. Look at the Dow Jones, it's down almost 400 points right now. We'll continue to watch that.

As we've been speaking, the House of Representatives has passed this -- what's called this omnibus spending bill to keep the government open. It goes to the Senate. We'll watch that. You see the vote there that just passed, the legislation just passed, Democrats and Republicans voting for this compromise.

There's much more news right now.

ANNOUNCER: This is CNN breaking news.

BLITZER: And we have breaking news.

President Trump's lead lawyer handling the Russia investigation has now resigned, adding to the legal drama playing out among his personal attorneys. John Dowd's departure comes as the president has stepped up his attacks against the special counsel, Robert Mueller. It also comes right in the middle of negotiations over whether the president will actually sit down for an interview with Robert Mueller.

Another of the president's lawyers, Jay Sekulow, issued this statement. Quote, John Dowd is a friend and has been a valuable member of our legal team. We will continue our ongoing representation of the president and our cooperation with the office of the special counsel.

Let's bring in our CNN senior White House correspondent, Jeff Zeleny.

Jeff, the president just told you something very significant. Tell our viewers what he said.

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: He did, indeed, Wolf. At the end of that signing of that proclamation there in the diplomatic reception room just a short time ago, we did ask the president if he would still like to testify before Special Counsel Robert Mueller. Of course he had said several weeks ago he is excited at that prospect. Indeed he wants to.

And, Wolf, this is exactly what he said. He says, I would like to. I would like to. And then he walked out of the room. So that is -- it was not clearly in a mood or moment to stand and engage in questions.

We did also ask him about John Dowd, specifically if this represents a new strategy. He did not answer those, Wolf. But so significant.

The president, at least, in his view, was standing just about, I would say, two feet from me, looking me directly in the eyes, and he said, yes, I would like to. Now, we will see if this lawyers agree with that. Of course he has

said before he must follow the advice of his lawyers. He is indeed changing up his legal strategy, as we've seen, Wolf.

But, at this moment, at this hour, the president, at least from his point of view, still would like to testify. Again, we have seen the outlines of the subject matters of what the special counsel is interested in. Our Pamela Brown and Gloria Borger have been reporting exactly what Bob Mueller is looking for. Now, the president today saying he would like to.

Wolf, this is getting close to a decision if he will or not within a couple weeks or so. We'll see if it actually happens.

Wolf.

And we'll see what his lawyers recommend.

ZELENY: Right.

BLITZER: Whether or not they think it's a good idea for him to actually sit down.

Gloria, you've been doing a lot of reporting on this. Why did John Dowd decide to quit?

BORGER: Well, I've been talking to many sources about this who are familiar with what's going on inside the legal team. I think the final straw, quite honestly, was the bringing on of Joe diGenova to the legal team.

BLITZER: A former U.S. attorney --

BORGER: Right.

BLITZER: Who's been outspoken in alleging that there's a group of individuals in the FBI, in the Justice Department, that are actively trying to frame the president.

BORGER: Right. And it's not that Dowd disagrees with him on that particular point, to be honest. He just didn't want to be co-counsel with him. He felt that he was driving the engine. He felt it was a lack -- you know, not a -- not a vote of confidence from the president.

He's been hammered by the president, I was told by one of my sources, lately. You'll recall that he tweeted over the weekend saying that the Mueller investigation should end. That tweet was at the urging of the president of the United States, our sources say. And he just felt that he couldn't do this anymore.

There is consternation inside the rest of the legal time, I'm told, at the way Dowd has handled this. They felt that it wasn't professional. He is the point of contact with Mueller. Now they're left without a main point of contact with Mueller. Jay Sekulow has been in those meetings as they negotiate about whether the president's going to testify or not. So it is a problem for his legal team.

BLITZER: It certainly is. And there's a lot more to access.

I quickly want to go over to the State Department. The outgoing Secretary of State Rex Tillerson offering some final words to his colleagues there at the State Department now that he has been fired.

REX TILLERSON, SECRETARY OF STATE: To lead our foreign policy efforts and conduct the statey (ph) diplomacy and can -- that is the work of the department on behalf of the American people. None of this is possible without your daily contributions. From the mailroom to the seventh floor and all points in between, and all of our missions abroad, our locally appointed staff and our, EFMs, eligible family members, to our ambassadors and chief of mission, everyone is important in the delivery of the mission of the State Department.

[13:15:13] In preparing for the transition to the secretary-designate, I've compiled all of the policy decks that were developed by you and your colleagues. They were first the basis for discussion at the National Security Council, and ultimately with the president. These decks of which I counted 13 since February the 1st of 2017 provide not only the policy basis but the strategies and tactics which guide the department's execution against those policies. It also provided the secretary-designate recent decks which were under development to provide updates on how tactics may need to adjust to current circumstances. Because while the policies and the strategies should never change, we must constantly review how the tactics are delivering on the objectives.

The country faces many challenges. In some instances, perplexing foreign affairs, relationships, and in other instances, serious national security threats. In these times, your continued diligence and devotion to the State Department's mission has never been more necessary.

As you go about your duties, each of you carrying out your individual responsibilities, as well as your collective duty, it is my hope that you will be guided by and test your actions each day against the values that we have spoken about over this past year.

First to value the safety and security of yourselves, your loved ones and your colleagues. Second, to maintain a commitment to accountability by first holding yourselves accountable so that you're able to hold others accountable and that the positive environment of accountability is underpinned by honesty and integrity in all that you do. Never lose sight of your most valuable asset, the most valuable asset you possess, your personal integrity.

Not one of you was gifted it. You were born with it. It belongs to you and always has and will belong to you and you alone. Only you can relinquish it or allow it to be compromised. Once you've done so, it is very, very hard to regain it. So guard it as the most precious thing you possess.

And finally, I hope you will continue to treat each other with respect. Regardless of the job title, the station in life or your role, everyone is important to the State Department. We're all just human beings trying to do our part.

In closing, I would like to ask that each of you undertake to ensure one act of kindness each day toward another person. This can be a very mean-spirited town, but you don't have to choose to participate in that. Each of us gets to choose the person we want to be, and the way we want to be treated, and the way we will treat others.

God bless you all, your loved ones and God bless America.

BLITZER: Rex Tillerson, the outgoing secretary of state, his final words over at the State Department. Strong words, indeed, especially at the very end when he said pointedly, this can be a very mean- spirited town. Then he was applauded, and then he added, but you don't need to choose to participate in that.

Clearly a reference, I believe, to the way he was dismissed by the president of the United States, and the president did not invite him in for a one-on-one meeting, did not sit down with him, didn't even call him on the phone to let him know that his tenure for more than a year as the secretary of state, the top diplomat in the United States, was over. He simply tweeted, it's over, and it was over.

Rex Tillerson now saying good-bye to diplomats at the State Department.

[13:20:01] Elise Labott, our global affairs correspondent, is over at the State Department.

It was not very subtle, those final words at the very end about this being a very mean-spirited town, Elise.

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Not at all, Wolf. And when he said each of us gets to choose how we participate in that, Rex Tillerson made a choice very early on that he was not going to play Donald Trump's game in terms of the taunts, in terms of, you know, getting fired. You remember that I sat down with him earlier this year and he said that he was going to stay through the year. That was a message to President Trump. His aides told me, if you want me to go, call me in and fire me like a man. And that didn't happen.

And so I think, you know, this is a secretary, everybody knows, that had a very fraught relationship with this State Department. There were a lot of questions about his leadership, about some of his policies and the staff cuts and not defending the staff budget in terms of the White House wanting to cut 30 percent of the budget. But, in the end, Rex Tillerson has a lot of sympathy for the way that President Trump treated him. And I think, you know, he is going out -- I think when he talks about integrity, you always have your integrity, that's what people who are saluting here right now.

He did not have the accountability that he talked about. I thought there were a lot of contradictions in his remarks. He talks about accountability. He never thought that he did anything wrong, Wolf. He always defended the way his leadership -- he never really saw that he had a problem with the State Department rank and file. But, in the end, what was more important to Rex Tillerson was his

integrity and going out without any bitterness, without any meanness, going out like a gentleman. Certainly he has a lot of bitterness personally towards this president and the way he was treated, Wolf.

BLITZER: Yes.

Let's get John Kirby's reaction. He's a former State Department spokesman during the Obama administration.

John, what do you think?

JOHN KIRBY, CNN MILITARY AND DIPLOMATIC ANALYST: Yes, look, I think Elise is right, he certainly is getting a lot of sympathy, and deservedly so, for the completely ungentlemanly way in which he was let go. No excuse for that at all.

But I think it's important that we also remember his checkered tenure at the State Department. It won't go down as one of our best chief diplomats. Didn't get the respect inside the White House that he really needed to get the job done and to speak for foreign policy with one strong voice. And he didn't really stand up for the career foreign service. And we've seen many of them leave almost in droves. He didn't fight, as Elise said, for the budget. So it wasn't a real strong institutional patriarch in that -- and leader in that sense.

So, again, I feel for the guy, for the way he was let go. Completely abominable. But I do think, as we look back on his time, we need to do so with very clear eyes about what didn't happen while he was there.

BLITZER: Yes. He's getting a nice round of applause from the diplomats who have gathered over at the State Department. Whether he did a good job as secretary of state, whether he did a bad job as secretary of state, whether he agreed with the president, disagreed with the president, he certainly deserved a more cordial sendoff by the president, rather than simply finding out about it in a tweet. That's what the president did and there's clearly a lot of anger at the State Department over the way the outgoing secretary of state was treated by the president.

Everyone stand by. There's more breaking news we're following, including the president's lead lawyer in the Russia investigation also just quitting a little while ago over disagreements clearly with the president. And now the president says he wants to testify. He says he's ready to testify. I would like to, I would like to, the president said, testify before Robert Mueller. Let's see what he winds up doing after his lawyers weigh in.

Plus, the other breaking story, the Dow tanking right now after the president announces new tariffs, $60 billion on tariffs involving Chinese exports to the United States. There's fear this could spark a major trade war which could impact U.S. experts to China, mostly agricultural products.

(COMMERCIAL BREAK)

[13:28:10] BLITZER: More on the breaking news right now.

President Trump's lead lawyer in the Russia probe, John Dowd, has just quit.

Let's get some more analysis on the breaking news.

And, Gloria, reset the scene for us, because I know you've been talking to John Dowd, you've been talking to others close to the president on this. This is a significant moment because John Dowd, he was the point person between the president's legal team and Robert Mueller, the special counsel.

BORGER: Right. I e-mailed with John Dowd, who said to me, I quote, I love the president and wish him well. And I think that's all true. They had a great relationship until recently.

The president has been hammering Dowd, who has led the legal team, because he feels this -- that he was misled, that his legal team was telling him, hold your fire, this is going to be over, whether it was Thanksgiving, and then it was Christmas, and then it was early in the new year, et cetera. They got an indication from Mueller, as they were trying to negotiate over the president's testimony, about where Mueller was going in his questions. It's very clear it's not over.

And the president, who originally wanted to push back, as did his initial attorneys, Marc Kasowitz, sat back, took the legal advice of John Dowd, and is now thinking it didn't work, that he was misled or that they didn't represent him well, one or the other. So Dowd has been hammered by the president and then they brought on Joe diGenova. And he was not happy with being co-counsel to Joe diGenova. And the rest of the legal team, I would say, is quite upset about the way that Dowd resigned because they kind of -- it kind of leaves them without a lead attorney in the negotiations that they're smack-dab in the middle of.

BLITZER: Yes.

[13:29:56] BORGER: And so Dowd, I think, felt that he could no longer represent the president because he felt his advice was being ignored. And now I asked somebody familiar with what's going on inside the legal team, so who is running the legal strategy now? And this person