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China to Impose 25 Percent Tariffs on $50 Billion Worth of U.S. Goods; Dow Set to Plunge After China Retaliates on U.S. Tariffs; Intelligence Chief Says White House Has Made Decision on Syria Withdrawal; Trump Not Currently a Criminal Target in Mueller Probe; Trump Will Be "Taking Strong Action Today" On Border Laws. Aired 9- 9:30a ET

Aired April 4, 2018 - 09:00   ET


[09:00:14] ERICA HILL, CNN ANCHOR: Good morning. I'm Erica Hill in for John and Poppy. This morning we begin with fears of a trade war and Wall Street bracing for a massive plunge when the markets open.

Taking a live look now at Dow futures, we can see that they are down, as I'm just looking on the screen along with you. After China of course has fired back as promised, announcing some $50 billion in proposed tariffs on American goods. And this morning calling in the World Trade Organization over what it says are, quote, "flagrant violations" of the rules by the U.S.

We are covering this from every angle. We begin with CNN's Ivan Watson who is in Beijing.

And Ivan, when we look at this, the president tweeting about this morning as well about, noting we're not in a trade war, but then we're hearing China of course now taking this issue to the WTO. Fill us in.

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I mean, clearly China is making it clear that it will retaliate for any tariffs imposed by the Trump administration by, as it puts it, the same scale and the same magnitude so it announced tariffs for 25 percent slapped on $50 billion worth of U.S. goods.

Among the sectors that are targeted are soybeans, aircraft, cars and chemicals. Why are soybeans and aircraft important because those are the two biggest export sectors from the U.S. to China. Each of them in 2016 earned about $14 billion worth of business and those would theoretically get this 25 percent tax if China goes ahead with it. And it says that the time of the imposition of these tariffs has yet to be determined.

Top officials saying that now is the time for negotiation. They are responding of course to the Trump administration's imposition of a 25 percent tariff on $50 billion worth of Chinese goods. And the list is of some 1300 goods that includes everything from artificial teeth and defibrillators and industrial driers to, get this, flame throwers and seismographs.

But basically you have the two world's biggest economies on the verge of a trade war. Already you had earlier this week China imposing tariffs on $3 billion worth of U.S. exports to China including pork products, wine, fruit, nuts as well. So it looks like the two countries now need to engage in some kind of bargaining process.

The justification that the Trump administration has used for imposing its tariffs are allegations that China engages in intellectual piracy, intellectual theft. When a top official here was asked at a press conference about that, he responded by saying that the allegations are fake news, throwing that term, that Trumpism, back at the Trump administration -- Erica.

HILL: All right. Ivan, thank you.

Want to check in now with Cristina Alesci who's down at the New York Stock Exchange, just under a half an hour away, of course, from the Opening Bell. And what's the sense there? Futures down pretty significantly -- Cristina.

CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Futures have been down all morning. And what is happening is that investors just don't like any kind of uncertainty in security about how this trade war will play out.

Now Ivan went through the nuts and bolts but it seems like a very specific tit-for-tat. In fact the 25 percent tariff that China announced overnight is exactly the same amount, percentage-wise, that the U.S. announced, so the amount of goods that this will affect is also exactly the same. But what's different is that the Chinese tariffs seem to be specifically targeted to states that voted and supported of Trump.

So the Chinese seem to be sending a very specific message and sort of going after the Trump voter. You're talking about the farm belt in America, right, like soybeans and other agricultural products.

I think the problem here for investors is that Trump really campaigned and after that really put a message out there that he was going to be a pro-business president and the one thing that businesses both, you know, CEOs and the c-suite and the market, the one thing they do not like is uncertainty, and that's what he is injecting into the market.

So for a president who really, you know, touted the message of being pro-business, of helping U.S. business become more competitive, at this point it doesn't seem to be going his way. Look, down the line who knows where these tariffs -- you know, what they may produce in terms of more, you know, economic growth for the U.S. we don't know how they'll will play off -- play out. But this posturing, this back and forth tit-for-tat, is not healthy for the CEO that doesn't know how it will play out in the c-suite and investors here on the floor and at home.

[09:05:02] HILL: Two of the things we'll be watching it very closely.

Also to bring in Mark Zandi, who's chief economist at Moody's.

Mark, the president in his tweet this morning also noting the U.S. has a trade deficit of $500 billion a year with intellectual property theft of another $300 billion. Is he right?

MARK ZANDI, CHIEF ECONOMIST MOODY'S ANALYTICS: We do have a trade deficit with China that's actually $570 billion. That was last year, 2017. I don't know where he got the number on intellectual property. I'm not sure where that number comes from. But, you know, I think it's pretty clear that the Chinese do engage in intellectual property misappropriation theft. So, you know, there is reason to be frustrated there on that issue.

HILL: Mark, thank you. Mark, Cristina, and Ivan, thank you all.

We'll continue to follow this, but I do also want to get to some other breaking news this morning involving the U.S. plan in Syria. Our Barbara Starr is on phone now with more.

Barbara, do very we have a decision at this point? We've been hearing conflicting messages.

BARBARA STARR, CNN PENTAGON CORRESPONDENT (via phone): Good morning, Erica. I have just walked out of a breakfast with a number of other reporters where the director of National Intelligence, Dan Coates, was speaking and I have to tell you he surprised the entire room when he said that -- when asked that yes, a decision has been made about the way ahead for U.S. troops in Syria, he was asked has a decision been made about withdrawal and he said yes.

Now, to be clear, the director of International Intelligence went on to say he would not discuss what the decision was. So he is not telling us that troops are being withdrawn anytime soon. But he is telling us that at the White House yesterday a decision, in his words, determinations, also his words, were made about the withdrawal of U.S. troops from Syria. And he went on to say that a statement is expected relatively soon from the White House on this subject.

It's pretty interesting stuff because as these meetings were going on at the White House yesterday, the top commander, General Joe Votel, and the president's envoy, Brett McGurk, were both speaking in Washington publicly and they were talking about the need to stay in Syria to see it through, to defeat ISIS, to engage in rebuilding of cities in Syria and provide humanitarian support to people there.

So if this statement in fact is coming from the White House today about a way ahead in Syria, it's going to be scrutinized very carefully for what it means and it's going to be scrutinized especially by Russia and Iran who very much would like to see the U.S. -- the 2,000 U.S. troops there pack up and go -- Erica.

HILL: It is quite a development this morning. Barbara, thank you. We'll continue to follow that. We'll be looking for that statement as you said which should be coming from the White House.

Also some major developments to get to this morning in the Russia investigation. The "Washington Post" reporting Special Counsel Robert Mueller told the president's legal team that the President Trump is not a criminal target in his probe. He is, though, a subject of the investigation. CNN's Abby Phillip is live at the White House.

Abby, so tell us, what is the special counsel's team investigating? Especially in pointing out that the president is not a criminal target.

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Good morning, Erica. Well, this is an interesting development from the "Washington Post" that seems to tell you what direction the special counsel probe is going in and some of the conversations that Mueller's team has had with the president's lawyers over the last month about a potential interview with the president. They've indicated to the president's lawyers that he is not a target of their investigation, but is rather a subject of the investigation.

What that might mean is that the Mueller team believes that the president has engaged in some kind of conduct that is worthy of investigation, but there isn't sufficient evidence at least not yet to charge that person with a crime.

The problem for the president's lawyers is that Mueller has insisted that they need to sit down with President Trump in order to continue and to complete this investigation. And the risk for President Trump is that in the course of that interview or perhaps in the course of the investigation, those facts can change and that he may shift from being a subject to a target.

So this is not any sort of static development here that it is potentially a moving target. And some legal experts warn that there is risk in the president sitting down with the Mueller investigators because they could find something in the course of that interview that makes him more of a target than a subject.

In addition the Mueller team is expected to put forward a written sort of report of their findings as a result of this probe. They are looking into the issue of potential obstruction of justice. What the president may have done in the last year that might have been an effort to obstruct the ongoing Russia probe -- Erica.

HILL: So there's that one part of it. I also do just want to get some more reporting to on this as well.

[09:10:02] The president this morning slamming U.S. border laws in a tweet calling them very weak noting he is taking strong action today. Do we have any further indication as to what that action today means -- Abby.

PHILLIP: Well, this situation has really escalated over the last several days. The president this morning indicating in this tweet that Mexico and Canada have very strong border laws and Congress must change these Obama-era and other laws now. Though what the president is saying that he is expected to take some action today, what the White House said yesterday was that they are working on a proposal to potentially put National Guards troops on the border between the U.S. and Mexico. That's something that wouldn't be unprecedented. Both Obama and

George W. Bush did similar things in the past. And a White House official told us last night that there is a number that they have in mind, that they are mulling over a sort of troop level here. But that that number hasn't been announced yet. So if there is something to be announced, it's very likely to be that or something along those lines. Of course the president here trying to pressure Mexico to do, also trying to pressure Congress to do more as well -- Erica.

HILL: We will be looking at all of that. Abby Phillip, with the latest for us there. Abby, thank you.

Obviously a lot to get to this morning. Here to discuss it with us, CNN contributor Salena Zito and CNN political analyst Alex Burns.

I want to start where we just left off with Abby in terms of what we're hearing about the border. We may get more specifics today which obviously would be helpful.

But as we look at this, Salena, in some ways is this the president as he threw this idea out there yesterday pulling at straws in order to check off a campaign promise as we move closer to November?

SALENA ZITO, CNN CONTRIBUTOR: Well, it's hard -- it's always hard to understand what his motivation is. There has been this story that's been percolating up through -- in the news about this caravan of people that are heading towards the border. Maybe that has inspired him. As Abby said, this is not unprecedented. President Obama did this as well in different circumstances. But this -- you know, a lot of things with the president, how he talks about DACA, how he talks about anything, a lot of it is optics. So it's probably part that but also probably he believes that this is an important enough situation that calls for protection at the border.

HILL: So as we watch that developments, I want to take through this because we are a little tight here, but Alex, as we look at the tariffs, is this a case perhaps of off-the-cuff remarks from the president really coming now back to bite him as we have China saying look, we're going directly to the WTO because this is a flagrant violation of rules in their estimation?

ALEX BURNS, CNN POLITICAL ANALYST: Look, this may be the most predictable conflict of the Trump presidency so far. If you paid attention to him during the campaign, or pay attention to him as a real estate developer in New York in the 1980s, you could have predicted that trade would be where he would have his really first massive -- potentially massive international conflict.

What's so alarming to folks in Washington here is that the president has a very precarious political coalition that is based on have being folks in the business community and having your sort of center right, tax and spend minded Republicans on his side. Even though they don't particularly care about the border, or other issues that he's deeply invested in, if suddenly you see 500-point drop on the Dow at any given day because of action that China takes to retaliate against Trump's policies, that is a very, very -- it's a very, very precarious development for his whole political model.

It's hugely popular, I should say, with the sort of Midwestern base that the president has cultivated that is kind of unique to him and not to the Republican Party in general but that doesn't necessarily get Trump and it doesn't necessarily get his allies in Congress what they need in November.

HILL: It may be hugely popular to some folks in the Midwest, but Salena, we should point out, too, especially if we look at the map, Cristina touched on this, as to where some of these proposed tariffs now from China could really hit the U.S., we are talking about states that are not only they were important to the president in 2016, but increasingly important heading into November. And so once again this is tied in fact to politics.

ZITO: Yes, absolutely. I mean, if you look at the Great Lake Midwest where -- that sort of helped take President Trump over the line, Pennsylvania, Ohio, Wisconsin, Michigan, Iowa, these tariffs would negatively impact in particular the large agricultural economies of those states. So I think -- and you know, this is pure speculation on my part. But I think what the president is doing and what China is doing right back at them is they are beginning how they approach this economic challenge between the two of them.

I think they're both approaching it with like a shot across the middle and, you know, this is the beginning of their negotiating tactics and we would like to believe that in the end calmer heads prevail. Remember, none of this goes into effect. I think we have about 60 days before the tariffs go into effect. And China also said that their tariffs -- they'll go into effect immediately.


So, I think we just have to sort of wait and see if this is a negotiating tactic or if this then becomes the new policy going forward, that is his challenge politically if that happens.

HILL: We'll be watching for all of that as you point out. Both proposals could be the opening for negotiation. Salena Zito, Alex Burns, thank you.

Mixed messages, just hours after the president said nobody is tougher on Russia than him, his own outgoing national security adviser says the U.S. haven't done enough.

Plus, we are breaking for a wild day on Wall Street over trade tensions. Stay with us.


HILL: The breaking news, moments ago, Director of National Intelligence Dan Coats saying a decision has been made about withdrawing from Syria. We are waiting for more details on that decision.

Joining me now, a member of the House Foreign Affairs Committee, Democratic Congressman Ted Deutch of Florida. Sir, good to have you with us. I want to get your reaction to that as well.

[09:20:04] We're just learning from own Barbara Starr, she was in a breakfast with reporters when that news was given. And that the decision had been made yesterday and we'd get a statement from the White House.

REP. TED DEUTCH (D), FLORIDA: I'm interested to hear the details also, but what we know already is that the president yesterday there was an announcement that the funding was going to be cut, the funding used to for infrastructure to help build up those areas where ISIS has been defeated.

But the bigger concern when the president says, and I guess, we'll hear more today, but when the president says that we will let others take care of this in Syria, I don't understand where the consistency in the administration's foreign policy is.

The president talks tough about Iran, but when your position, the administration's position is to leave it up to others, the others that we are leaving it up to in Syria would be Russia and Iran and Iran's proxies, Hezbollah.

And I cannot understand why we would want to threaten the region by allowing Iran to expand their influence throughout Syria to have essentially a foothold from Tehran all the way over to Beirut, and to put at risk our allies and others.

Erica, it is important to remember that the crown prince of Saudi Arabia talked openly when Israel's right to exist. The thing that our gulf allies and Israel have in common, the reason that they can work together is the Iranian threat and now it looks like our policy is going to be to allow Iran to go free and expand their influence in Syria.

It makes no sense and I look forward to hearing the details, but I don't know how it is that we would want to leave Iran and Russia in charge of Syria and walk away completely.

HILL: We will be watching for those details as well. In terms of Russia, I also want to get your take on where this administration and the country stands in terms of its message on Russia. Take a quick listen to both the president and H.R. McMaster, who, of course, is due to be departed.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: Nobody has been tougher on Russia but getting along with Russia would be a good thing, not a bad thing. And just about everybody agrees to that except very stupid people.

H.R. MCMASTER, OUTGOING NATIONAL SECURITY ADVISER: Russia brazenly and implausibly denies its actions and we have failed to impose sufficient costs.

(END VIDEO CLIP) HILL: Where do we stand at this point? What is that message on Russia?

DEUTCH: Well, the national security adviser, the person who works most closely with the president of the United States on addressing threats to our country on his way out has said that we haven't done enough.

And you have a president who continues to ignore the national security agencies, intelligence community, who have talked openly and worried not just about what Russia did in the 2016 election, but their ongoing efforts to influence our elections and democracy.

And you have a president who has said as he did yesterday that having a good relationship with Putin seems to be what matters most to him. It's inexplicable how it is that given the threats that Russia poses to our country and to our democracy, that the president seems to always take Putin at his word, seems to always accept what Putin tells him rather than what, in this case, national security adviser and what the intelligence community tells him.

He ought to be focused on getting to the bottom of what happened in 2016. That is why so many of us worry when the president talks about getting rid of Mueller before Mueller completes his work. The message is very confusing coming out of the administration. I was glad to hear the national security adviser make very clear that we need to do more.

But then the president turned around and said that having a good relationship is what matters most. We have to take seriously these threats from Russia and we need to act accordingly.

HILL: In terms of action, I'm going to shift topics again. As we know, the president talked about putting troops along the border. He would not be the first president to do so. Tweeting this morning that it is Democrats who stand in our way, that he plans to take strong action today.

Number one, do you have any hint of what that strong action today may mean? And number two, Democrats standing in the way, it sounds like this is talking about the border wall and DACA. Where do we stand on that? Are you still willing to go back to the table?

DEUTCH: I don't understand. I haven't understood a single tweet coming out of the president about DACA or the Mexican border. I don't understand how he blames Democrats when there was a bipartisan deal to address DACA.

If the president were serious about doing something to help the DREAMers, what he would do is demand that we have a vote on the House floor of the bipartisan legislation that will do that.

[09:25:12] It makes no sense when he simply tweets these things out instead of actually exerting leadership and demanding that the speaker and Senate majority leader do their job and let us vote on this bipartisan solution. HILL: Congressman, appreciate your time today. Thank you.

DEUTCH: Of course, thanks for having, Erica.

HILL: Stay with us. Moments away from the opening bell. We'll be there live.


HILL: Moments away from the opening bell and what is shaping up to be an ugly start to the day on Wall Street. This morning, China retaliating to those U.S. tariffs. (Inaudible) Sandy back with me.

I want to begin though with CNN's Cristina Alesci, who is there on the floor at the New York Stock Exchange. I mean, what is the sense down there --