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U.S. Imposes New Sanctions on Russian Oligarchs, Government Officials; Stock Futures Fall After Trump Proposes More China Tariffs; China Not Afraid of Fighting Trade War; Sources: EPA Officials Sidelines After Questioning Pruitt's Conduct; Trump Says He Didn't Know About Stormy Daniels Payment. Aired 9-9:30a ET

Aired April 6, 2018 - 09:00   ET


[09:00:16] ERICA HILL, CNN ANCHOR: Good morning. I'm Erica Hill in for John and Poppy. And we begin with breaking news.

The Trump administration imposing new sanctions on Russian oligarchs with ties to Vladimir Putin along with companies they own or control.

CNN's Michelle Kosinski has those details for us.

Michelle, good morning.

MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: Right, Erica. We're seeing the administration hit these sanctions, including Putin associates, advisers.

Let's take a look at these sanctions. Seven oligarchs, big-time Russian businessmen and billionaires with political connections targeted here, 12 companies that they own or control, also 17 senior Russian government officials, so 38 of these people and entities in total targeted. And the reason is what the administration is calling the totality of Russian activities.

Their takeover of parts of Ukraine, continued violence there, cyber attacks, meddling in elections, although those words weren't used, and also connections to Syria. So the -- some of the people are notable that are targeted here. We have several advisers to Putin, we have a Putin son-in-law who became extremely rich not long after marrying into the family.

We have the chairman of the huge Russian energy company, state-owned, Gazprom. We have Oleg Deripaska, a Russian billionaire and aluminum magnate, who has connections allegedly to Trump's former campaign chairman Paul Manafort and his partner Rick Gates, both of whom were indicted in Robert Mueller's Russia probe.

A number of others here, too. But, you know, this will raise several questions. First of all, the original list back in January that the Treasury Department and State Department were required by law to come up with. They came up with more than 200 people, officials, oligarchs who could be subject to sanctions. Today they're targeting 38. So -- but fewer than those are

individuals. It would be 24 individuals. I think, you know, it's a fair question why so late, why so few of those original more than 200 names. Also the time that has passed between making the list and actually putting on the sanctions, would these people have time to move around their investments and help protect them from these sanctions? And thirdly, in all of this talk about Russian activity, nowhere in the briefing that we were given by administration officials do they mention meddling in the U.S. election.

They did mention Russia's continued attempts to subvert Western democracy, but again nothing about meddling in the U.S. election. Here is a quote, though, from Treasury secretary Steve Mnuchin, that this is basically a start here. He says, "Russian oligarchs and elites who profit from this corrupt system will no longer be insulated from the consequences of their government's destabilizing activities," -- Erica.

HILL: We will continue to watch and see the fallout from all of this. Michelle, thank you.

Meantime, there is also breaking news on Wall Street. Just minutes away now from what could be the latest plunge amid fears of an all-out trade war with China. President Trump proposing once again new tariffs, this time on $100 billion in Chinese imports.

CNN's Abby Phillip is at the White House with more on that story.

Abby, good morning.

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Good morning, Erica. President Trump today is doubling down on his pledge to impose tariffs on China despite the fears in the markets and also among some of the industries that stand to be hurt by such tariffs.

The president this morning in a tweet said that despite imposing tariffs earlier this year on steel and aluminum, aluminum prices are down. He wrote, "Despite aluminum tariffs, aluminum prices are down 4 percent. People are surprised, I'm not. Lots of money coming into U.S. coffers, and jobs, jobs, jobs."

He also this morning in an interview, a radio interview that he recorded yesterday defended his decision in spite of China's pledge to retaliate against the United States. He said he is left with no choice. And despite any sort of pain that the U.S. economy might experience, it would be worth it. Take a listen.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We've already lost the trade war. We don't have a trade war. We've lost the trade war. The easiest thing for me to do would be just to close my eyes and forget it. If I did that, I'm not doing my job. So I'm not saying there won't be a little pain. But the market has gone up 40 percent, 42 percent, so we might lose a little bit of it. But we're going to have a much stronger country when we're finished. (END VIDEO CLIP)

PHILLIP: Republican senators are also criticizing the president for this decision, warning that it would hurt farmers in the United States, for example, soybean producers.

[09:05:06] But Trump is not fazed by that and he's also not fazed by China saying that they will not just stand by while the United States does this. Meanwhile, today, of course, the jobs numbers are coming out showing that the economy has missed some marks in the last month. We'll see how the White House and the president respond to that. He often sites the job numbers as evidence that he's heading in the right direction when it comes to economic policy -- Erica.

HILL: We're watching that. Abby Phillip, at the White House. Abby, thank you.

CNN's Alison Kosik joining us now to break down the real time impact on Wall Street on the markets -- Alison.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Erica, you know, you can see the numbers overnight and throughout the morning. Futures were down much lower overnight when the news came out about the president going ahead to add those hundred billion dollars of tariffs, additional tariffs on Chinese goods.

Right now we're seeing futures down 217 points on the Dow. They're actually much lower, down 400 points overnight so we are seeing a bit of improvement. But don't be fooled here because Wall Street is very rattled by these two -- two of the world's biggest economies apparently going closer and closer toward a trade war with Mr. Trump, you know, fighting back with this threat of $100 billion on tariffs of additional Chinese goods.

This comes after, of course, China retaliated with $50 billion on tariffs of American goods including important products like soybeans. And soybeans are interesting because what you're seeing is politically motivated sort of tariffs that China is looking to impose on American products -- Erica.

HILL: As we watch that, of course, also the March jobs report just coming out. What did we learn?

KOSIK: Yes, this was a big miss, showing job growth slowed in March, only 103,000 jobs were created in the month of March. A big miss from 185,000 expected.

You know, you look at this chart and you wonder if there's a pattern here because you see the March from last year, only 73,000 were created. Maybe something is going on in the month of March where employers just aren't hiring. One month doesn't make a trend, but this is definitely a weak jobs report for March.

And look at the sectors where we did see -- where we saw employment actually added, manufacturing jobs added 22,000, health care added 22,000, mining 9,000. So you are seeing some of those higher paying jobs being added to the economy -- Erica.

HILL: Alison, appreciate it, thank you.

Facing the prospect of $100 billion in additional U.S. tariffs, China says it is not afraid.

CNN's Ivan Watson is in Beijing with the latest from there -- Ivan.


The Commerce Ministry here had a rare late-night press conference in which the spokesperson warned that if the U.S. comes up with another list of Chinese good to slap tariffs to follow up on President Trump's threat of tariffs on $100 billion worth of additional Chinese goods that China has countermeasures ready. And it will implement them.

Now let's take a look back at how quickly this trade dispute has escalated, Erica. First of all, if you go back to Monday of this week, China imposed tariffs on $3 billion for the U.S. goods in retaliation for last month's tariffs on imported steel and aluminum. The next day the U.S. threatened tariffs on $50 billion worth of Chinese goods, made allegations of Chinese theft of intellectual property.

China responded on Wednesday with its own list of $50 billion worth of U.S. goods, including soybeans, a $14 billion export market, that it said it could hit with tariffs. And then President Trump made a subsequent threat to add $100 billion of additional Chinese goods with tariffs. If he follows through on that, that will be roughly 40 percent of China's overall exports to the U.S.

The U.S. is important to China. It is China's biggest export market. But the pain can go both ways. And that's what China has threatened in the past with soybeans, for example, or pork producers or airplanes. All of these have been listed on tariff lists. And it's making some people worried in the U.S., particularly in the agricultural sector.

And you've got some Republicans voices worried about their constituents. Let's take a look at a message, a statement from the Republican Senator Ben Sasse who put out a statement warning that President Trump's policies threaten to set U.S. agriculture on fire going on to say, quote, "Hopefully the president is just blowing off steam again. But if he's even half serious, this is nuts," -- Erica.

HILL: Ivan Watson. Ivan, thank you.

Let's dig a little deeper now. CNN political commentator Errol Louis and CNN senior political analyst Ron Brownstein.

And I want to start right there where Ivan left off, in terms of what we're hearing from Ben Sasse, calling it nuts, and hopefully the president is just blowing off steam again.

[09:10:05] Larry Kudlow we heard on Wednesday came out and said look, this is all a negotiation. He is using all the tools there in his shed.

Is this just the art of the deal, Ron, for the president?

RON BROWNSTEIN, CNN SENIOR POLITICAL ANALYST: Well, you know, that's the way they want to present it. You know, sometimes you start using weapons and things get out of control. I mean, that is the fear. And I think that the comments from Ben Sasse are to me are indicative. I believe that politically this is going to be decided not so much on the stock market, but primarily in rural America, in agriculture.

And I say that for two reasons. One, because agriculture is enormously dependent on exports. 20 percent of all farm income for the last several years has come from exports. And China is our biggest market for the export of U.S. agricultural products. And second, rural America is the absolute geographic foundation of the Republican strength in both the electoral college and in Congress, and it is the firewall in the November election.

If you think about what we've been watching, Erica, over the last 15 months, we've seen a very clear erosion for Republicans in these white-collar suburbs, in the big metros, and that seems to be guaranteed losses coming in November. What they're counting on is holding the line there and protecting this dominant advantage they now have in rural and small town America.

When these tariffs provide Democrats I think their best wedge they have had to try to talk to rural voters in the rural economy, which is the agricultural economy has already been struggling for several years, and that's why I think you see so much anxiety about this from these farm state Republicans, for example, the entire Iowa Republican delegation wrote a letter to the president opposing this.

If you look at down state Illinois or Iowa or the Central Valley in California, I think that is the point of maximum pain for Republicans on this. And I think as I said it is where you can see the most pushback as this moves forward.

HILL: And we already start to hear that pushback the first time we begin talking about these proposed tariffs, of course. And we heard from farmers. We heard from all this coming out. When we look at this on a broader scale, I noticed this tweet from Richard Haass, who wrote, and I think we can put it up there, basically I wonder if any of those advising --


HILL: Donald Trump on trade have pointed out the U.S. will be far stronger vis-a-vis China if it had joined TPP and was confronting China not unilaterally but in concert with Japan and 10 others who with U.S. constitute 40 percent of global economy."

Errol, is this working? I mean, can the U.S. go it alone especially based on what we're seeing in terms of proposed retaliation?

ERROL LOUIS, CNN POLITICAL COMMENTATOR: Well, the decision has been to go it alone. And that is unfortunate because just as suggested by the tweet that you just read, if we had been part of a multilateral sort of global or even regional sort of discussion with China, they have a lot more strength, they have a lot more possibilities. You have a lot better way of sort of making it less about tit-for-tat as opposed to taking the hit ourselves.

And what will happen is the damage could go even beyond the rural areas that Ron was talking about. When you see stocks like Caterpillar dive in value, stocks like Boeing dive in value, everybody watching this broadcast right now who's got a pension or a 401(k) probably has a stake in the outcome of that. So when Ben Sasse says he could be setting things on fire, it goes really beyond the wheat fields in Nebraska. It really could be a big chunk of the economy.

HILL: Also I want to touch on these sanctions as Michelle laid out for us earlier. Notable that there was no mention of the U.S. elections.


HILL: It mentioned cyber attacks, it mentioned meddling in Western democracies.

Ron, that is obviously by design.

BROWNSTEIN: Right. And look, it is not tenable for the administration to do nothing after this overwhelming vote in Congress last year to pass the legislation from which these sanctions eventually derive. They can't do nothing. They have to -- they have to respond in some way. But once again, you see the strangely grudging nature of the way they deal with these infractions and intrusions by Russia. By not citing that, again I think you see the ambivalence.

And I suppose the question would be not only this kind of retrospective look back at who we punish, but the issue that comes up over and over again. Is there a sense of urgency in the government about safeguarding our election systems against further incursions in 2018 and beyond? And once again you get this kind of mixed signal from the top about how seriously they take that threat.

HILL: Ron Brownstein, Errol Louis, appreciate it. Thank you, both.

LOUIS: Thank you.

HILL: So he didn't know. The president speaking out on the Stormy Daniels hush money scandal for the first time. Why her attorney now says his case just got better.

Plus, will he stay or will he go? The president says the EPA's embattled chief is doing a fantastic job. So did that mean he could actually be out of that job soon?

Plus the president says up to 5,000 troops could be headed to the U.S. border with Mexico. What will they do there and at what cost?


HILL: President Trump is praising his embattled EPA chief despite growing questions about how Scott Pruitt is spending taxpayer money. Sources tell CNN some officials at the EPA questioned Pruitt costly proposals like renting a private plane or spending $70,000 on a bullet-proof desk. Those officials were then demoted or sidelined.

CNN's Sara Ganim joins me now. So, Sara, the president says, as we know, Secretary Pruitt has been a fantastic job at the EPA. That said, his job may still be on the line, what are you learning?

SARA GANIM, CNN CORRESPONDENT: Well, the bad headlines are continuing, Erica, for the EPA administrator, Scott Pruitt. This time reports that he sidelined or demoted senior officials after they pushed back or raised concerns about his pricey travel, his office spending on furniture and overall management of the agency.

Two sources with direct knowledge of the matter told CNN that both career and political appointees who disagreed with Pruitt were iced out. In one case an official was reassigned when he refused to drive Pruitt through town with lights and sirens to help him avoid heaving Washington, D.C. traffic.

[09:20:02] Others were simply raising concerns about his spending, his frequent trips home to Oklahoma, his international trips that often cost taxpayers thousands of dollars but included a lot of leisure time for Pruitt.

Now, this, of course, adds to a long list of ethical issues that are piling up on him in the last few days. "The Washington Post" this morning reporting that two EPA officials are contradicting Pruitt, their boss, about improper pay raises that were given to senior members of his staff.

They say he authorized the raises, and he denies it. All of this leading some top White House officials to grow very frustrated. Of course, the most important official at the White House, President Trump so far, has indicated that he is still backing Pruitt at least for now. Take a listen.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: I think that Scott has done a fantastic job. I think he's a fantastic person. I just left coal and energy country. They love Scott Pruitt. They feel very strongly about Scott Pruitt and they love Scott Pruitt.


GANIM: Now, of course, Erica, I don't have to tell you that we've seen many times before where the president shows support for a member of his team one day, but then changes his mind the next. So, we're going to have to keep an eye on this one.

HILL: Exactly have. Sara Ganim, thank you. There is a new chapter in the president's battle with a porn star. For the first time President Trump publicly acknowledging the scandal and also claiming he didn't know his personal attorney paid Stormy Daniels $130,000 to keep their alleged affair quiet. That claim could cause some legal trouble for the president's team.


MICHAEL AVENATTI, STORMY DANIELS' ATTORNEY: You can't have an agreement if one party claims they knew nothing about one of the principle terms of the agreement. So, the president has just shot himself in the foot, thrown his attorney basically, Michael Cohen, under the bus in the process, put him in dire straits with the state bar of New York because according to the president now, Mr. Cohen was negotiating this agreement and doing this all on his own.


HILL: CNN legal analyst, Paul Callan joins me now. Michael Avenatti obviously pouncing on this, saying, hey, this is great for me. Is he right in what his assessment is, that because Donald Trump says he didn't now, all this is invalid because Michael Cohen knew and he was part of that?

PAUL CALLAN, CNN LEGAL ANALYST: I think there may be problems with Mr. Avenatti's analysis, but if he's correct that Cohen knew nothing, had no authority given to him by the president to negotiate deals like this, there would be an ethical problem for him. He could be brought up on charges.

Lawyers have to consult with their clients before they enter into deals. That's true. However, what I see happening here is the president is setting up the defense that Cohen was sort of his minister of disgruntled mistresses.

In other words, he had his lawyer acting as an agent to go out and negotiate settlements with people who might cause problems for him, and he might have given him that general authority. Maybe he even said you can spend up to $130,000 to get rid of one of these problems legally.

And Cohen is out doing this, because we know it happened in two cases, McDougal and with respect to Stormy Daniels. Were there other cases? Maybe there were, maybe there weren't. I think it's something we'll find out in the litigation.

HILL: So, that's something we'll be looking at. Meantime, he does, Avenatti we know believes that this just made his own case, Stormy Daniels' case stronger. Did it?

CALLAN: Not necessarily because once again, if it turns out that Cohen had general authority to negotiate on behalf of the president, it's a legal contract. Secondly, lawyers talk about something called a third-party beneficiary theory. That is, you can enter into a contract with somebody else to help a third party. A grandmother maybe wants to buy a car for her granddaughter to reward her for good grades. She can go in, do the deal, and the car dealership has to give the car to the granddaughter. That's a third- party beneficiary.

So, they're going to be saying that the president was a third-party beneficiary of a contract between and negotiated between Cohen and this EC LLC and Stormy Daniels.

HILL: We've also heard from Michael Avenatti that he plans to refile his motion to depose the president and Michael Cohen. He wants to refile that on Monday. Does this change anything for him?

CALLAN: Well, I think it's going to change something for Avenatti because I think he may be sanctioned by the court for making a frivolous motion. Remember, the federal judge last week when he issued his order throwing out Avenatti's request to move his case to the front of the document and get immediate trial and immediate depositions, ended the decision by saying the parties are notified that this is not the most important case on my docket.

And the judge also said it was not ready for trial and it's certainly wasn't ready to be put at the head of the line. So, I think Avenatti is going to have trouble with this judge if he files such application.

HILL: Is he starting to lose steam?

CALLAN: Well, I think when you're out there every single day playing the same tune, people kind of get tired of hearing about it and wondering why you're spending so much time in television and not so much time in court.

[09:25:06] So, I think sometimes you can beat the drum a little too loudly. Sometimes people do that when they don't have a case.

HILL: Paul Callan, we'll have to leave it there. Plenty for people to think about. Thank you.

CALLAN: Thank you.

HILL: Still ahead, trade turmoil about to hit the markets again. We are live for you at the New York Stock Exchange.


HILL: As we take a look, trading day about to start there on Wall Street. As we're looking at what could be another wild ride, as we try to figure out where stocks are headed today, CNN's Cristina Alesci joins us from the exchange floor. Also with us, Monica Mecca, for the investment firm, Seventh Capital.

Cristina, first to you, what are we hearing? What are we seeing there?