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Trump Threatens China with Additional Tariffs; Political Scandals Rock the Trump Administration; Sources: EPA Officials Demoted for Questioning Pruitt's Spending; Trump Breaks His Silence on Stormy Daniels. Aired 6-6:30a ET

Aired April 6, 2018 - 06:00   ET

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


(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: This is another step in the wrong direction.

[05:59:18] DAVE BRIGGS, CNN ANCHOR: President Trump threatening another wave of steep tariffs on Chinese exports.

UNIDENTIFIED MALE: There's no trade war here. We don't have a tariff enacted yet.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think that Scott has done a fantastic job.

UNIDENTIFIED MALE: This is the president who promised to drain the swamp. It is not behavior consistent with that pledge.

SCOTT PRUITT, EPA ADMINISTRATOR: I did not know that they got the pay raises until yesterday.

ED HENRY, FOX NEWS CORRESPONDENT: Are you embarrassed that --?

PRUITT: It shouldn't have happened. It should not have happened.

UNIDENTIFIED FEMALE: Mr. President, did you know about the $130,000 payment to Stormy Daniels?

UNIDENTIFIED MALE: No. The president just shot himself in the foot. We knew sooner or later he was going to crack.

UNIDENTIFIED FEMALE: We should expect this president will be forced to give testimony under oath.

(END VIDEOTAPE)

ANNOUNCER: This is NEW DAY with Chris Cuomo and Alisyn Camerota.

ALISYN CAMEROTA, CNN ANCHOR: We want to welcome our viewers in the United States and around the world. This is NEW DAY. It is Friday, April 6, 6 p.m. here in New York. Chris is off this morning. David Gregory joins me.

Happy Friday.

DAVID GREGORY, CNN POLITICAL ANALYST/ANCHOR: Still bleary-eyed today. You do this every day?

CAMEROTA: Every morning, and it does start at 6. It's great to have you.

Here's our starting line. We being with breaking new. President Trump amping up the rhetoric, now threatening China with an additional $100 billion in tariffs. Beijing is vowing to fight the U.S., quote, "at any cost." So we'll discuss who has more to lose in this escalating feud.

And the White House facing an ethics scandal involving the president's cabinet. Sources tell CNN that officials at the EPA were demoted or sidelined after they raised questions about Secretary Scott Pruitt's spending and conduct. Despite Pruitt's mounting ethical issues, CNN has learned that President Trump floated the idea of having Pruitt replace Attorney General Jeff Sessions.

GREGORY: And because there wasn't enough going on, President Trump is breaking his silence on Stormy Daniels. Now it could have legalism indications. The president said he did not know about the $130,000 hush payment to the porn star made by his personal attorney, Michael Cohen.

And President Trump literally tosses out the script, feeding his base plenty of red meat in the process, resurrecting some of his greatest fact-free hits and debunked claims.

We've got a lot to cover this morning. We're going to begin with CNN's Ivan Watson, live in Beijing with our top story.

Ivan, good morning.

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Good morning. That's right.

The Chinese government is calling President Trump's threat for more tariffs a provocation. It's been such a bumpy week in bilateral trade relations. Let's go back and look.

On Monday, China imposed $3 billion -- tariffs on $3 billion worth of U.S. goods in retaliation for U.S. tariffs on steel and aluminum imports. The next day the U.S. threatened tariffs on $50 billion worth of Chinese goods for alleged intellectual property theft.

Then the next day China responded, threatening $50 billion tariffs on U.S. Goods. Now, President Trump has threatened tariffs on another $100 billion worth of Chinese goods.

The U.S. is China's biggest export market. This would amount to, if he follows through on the threat, hurting up to 40 percent of China's exports to the U.S.

But the Chinese threats are threatening some important sectors of the U.S. economy, including agriculture. Soybean exports, for example, last year amounted to $14 billion of business for U.S. farmers selling to China. And this is alarming some voices such as Senator Ben Sasse of Nebraska, Republican, who put out this critical statement, saying that hopefully, the president is just blowing off steam again.

But if even he is half serious, this is nuts. Let's absolutely take on Chinese bad behavior but with a plan that punishes them instead of us. This is the dumbest possible way to do this. President Xi Jinping has changed the constitution, making him, potentially, leader of China for life and President Trump doesn't have that luxury. And he may anger some key parts of his base -- Dave.

GREGORY: Ivan, thanks very much.

The White House, meantime, also embroiled in a series of controversies as the president stands by the embattled head of the EPA.

CNN's Abby Phillip live at the White House this morning with that part of the story.

Good morning, Abby.

ABBY PHILLIP, CNN ANCHOR: Good morning, David.

This White House is battling one scandal after another when it comes to EPA administrator Scott Pruitt. But for now, the president is standing by Pruitt. He's happy with the job he's been doing over at the EPA. But the question is how many more scandals can this White House sustain, and how long can Pruitt hold onto that job?

(BEGIN VIDEOTAPE)

TRUMP: I think that Scott has done a fantastic job. I think he's a fantastic person.

PHILLIP (voice-over): President Trump defending scandal-ridden EPA chief Scott Pruitt, telling reporters that, despite a growing list of controversies, he thinks Pruitt will be fine.

UNIDENTIFIED MALE: Do you still have confidence in Scott Pruitt?

TRUMP: I do.

PHILLIP: CNN learned Thursday that multiple senior officials were sidelined or demoted at the agency after raising concerns about Pruitt's pricey travel, office spending and management of the agency, allegations an EPA spokesman disputes.

Separately, multiple sources tell CNN that, after Pruitt took over at the EPA, he asked his 24/7 detail chief to use the lights and sirens to avoid traffic. After telling Pruitt no, that agent was reassigned. Also under scrutiny, a massive pay hike totaling more than $80,000 for two of Pruitt's closest aides. "The Washington Post" reporting that Pruitt endorsed the raises last month, despite having said that he was not aware of the raises until this week.

[06:05:05] HENRY: Did you go around the president and the White House to give pay raises to two staffers?

PRUITT: I did not. My staff did. And I found out about that yesterday, and I changed it.

PHILLIP: Pruitt also coming under fire for renting a D.C. condo for just $50 a night from a lobbyist who donated money to his past political campaign. President Trump was asked if he was bothered about these reports.

TRUMP: I have to look at it close. You know, I hear different versions of it. But I'll make that determination.

PHILLIP: Sources close to the president tell CNN that as recently as this week, the president floated the idea of replacing Attorney General Jeff Sessions with Pruitt.

UNIDENTIFIED FEMALE: Are you thinking about switching him out for attorney general?

TRUMP: No. No. No, Scott is doing a great job where he is.

PHILLIP: This as President Trump breaks his silence on his alleged affair with Stormy Daniels and the payment to keep her quiet days before the election.

UNIDENTIFIED FEMALE: Mr. President, did you know about the $130,000 payment to Stormy Daniels?

TRUMP: No. No. What else?

UNIDENTIFIED FEMALE: Then why did Michael Cohen make those if there was no truth to her allegations?

TRUMP: Well, you have to ask Michael Cohen. Michael's my attorney, and you'll have to ask Michael Cohen.

UNIDENTIFIED FEMALE: Do you know where he got the money to make that payment?

TRUMP: No, I don't. No.

PHILLIP: Daniels's attorney telling CNN Trump's comments help his case.

MICHAEL AVENATTI, ATTORNEY FOR STORMY DANIELS: You can't have an agreement if one party claims they knew nothing about the -- 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.

PHILLIP: The president escaping these controversies at a speech in West Virginia. Mr. Trump literally tossed out his prepared remarks about tax reform.

TRUMP: That would have been a little boring.

PHILLIP: Choosing instead to resurrect some of the unproven immigration rhetoric he used on the campaign trail. TRUMP: Everybody said, "Oh, he was so tough." And I used the word

"rape." And yes, they came out where this journey coming up, women are raped at levels that nobody has ever seen before.

(END VIDEOTAPE)

PHILLIP: Well, the president has announced that he wants to spend between 2,000 and 4,000 National Guard troops to the border.

But this is all happening at a time when relationships with Mexico right now are getting worse and worse by the day, not helped at all by the president's own rhetoric.

He also has no public events today. However, Sarah Sanders is going to brief the press this afternoon. And there are a lot of questions, Alisyn and David.

CAMEROTA: Yes, there are. Thank you, Abby, very much.

Let's bring in our analysts. We have CNN political analysts John Avlon and Brian Karem. Nice to see both of you.

All right. So the new tariffs that the president is proposing on China, I'm not sure that this is what Larry Kudlow meant a couple days ago by deescalating. I mean --

BRIAN KAREM, CNN POLITICAL ANALYST: It seems the opposite, right?

JOHN AVLON, CNN POLITICAL ANALYST: -- changing my dictionary.

CAMEROTA: That this is what he meant. The markets were quelled after his advisers came on and said this is just a negotiating tactic. We're going to deescalate things. And then the president does this?

AVLON: Yes. Those two things would be in contradiction. I mean, look, Larry Kudlow's insisting the president's a free trader. And I think the president's supporters have a point. Nobody has gotten tough with China. Maybe this kind of brinksmanship is necessary to reset our relationship defined. The problem is the escalation that people worried about seems to be occurring. And those things can get out of control very quickly.

KAREM: They may already have gotten out of control.

GREGORY: There is another side to this, which is you obviously saw the president is spooked by what's happening in the markets. And so they want to tone this down and say, "You know, this is really just negotiation," which it still may be.

There's -- there's something in the criticism about all of this that is perfect for Trump, which is that the establishment doesn't like his way of approaching China, which would only fuel him to do it his way. Which is to rattle things.

KAREM: I think we're overanalyzing it. I think the president speaks off the cuff. And now, without the breaker there, which was Hope Hicks, you're seeing the staff coming afterwards and going, "OK, this is what he really meant." This is what we're describing as being unhinged.

And I would say, it's really hard to be unhinged if you've never been hinged. So this is -- this is just -- you're seeing people that -- that were able to put a damper on him, keep him from saying stuff. Now they can't. And now you're right. It's the consistent --

GREGORY: But there are -- there are no tariffs actually in place. And these -- right. The point is that this would cover much more of the waterfront for China than the impact on the United States.

CAMEROTA: It would hurt China more.

AVLON: China exports more to the United States than we export to China. But the -- you know, the problem is that we do have a real imbalance. They have also a very different situation in China than when Trump began his anti-China rhetoric.

Xi has, basically, lifetime power. They have a surplus. And look, I think the president is probably doing the right thing by going after, for example, I.P. theft. It is rampant. It is incredibly dangerous to American companies and hasn't been addressed.

[06:10:10] But this kind of brinksmanship, what's fascinating is how much of the impact would end up hurting Trump's base.

CAMEROTA: Well, let's talk about that. It's been very interesting to hear what conservative lawmakers from the Midwest, those who support the president, are saying about this. So here's a compilation of those.

For instance, Congressman Steve King of Iowa, they are not as concerned about trade deficits as they are by this emerging trade war. Talking about his voters. OK?

Then there's Senator Pat Roberts: "It's just a very unfortunate outlook that we have protectionists advising the president." So in other words, it's not the president. "And that it seems he has an intrinsic belief in protectionism." OK, there it is.

Senator Joni Ernst of Iowa: "I need for him to understand that we're hurting in the Midwest, and this is not helping." OK?

So they're already getting nervous.

AVLON: Oh, yes.

CAMEROTA: And talking about it.

KAREM: And markets are nervous, too.

CAMEROTA: Yes. What I thought was particularly interesting is you can already hear his administration, how they're going to spin it. This is not -- don't blame the president about this. Blame China. So listen to this. (BEGIN VIDEO CLIP)

PETER NAVARRO, DIRECTOR, OFFICE OF TRADE AND MANUFACTURING POLICY: What we have here is a situation where they've been basically punching us in the body, in the face for years. All we're doing now is self- defense, defending ourselves. And the way they expect us to react is to punch us some more and basically try to hit American farmers most directly.

And I don't think the American people are going to respond very well to those kind of threats.

CAMEROTA: OK. So it's China punching.

AVLON: Yes.

CAMEROTA: No?

KAREM: Well, that's -- you know, John, like you were saying earlier, this isn't -- and you were saying, this isn't inconsistent. And it is maybe needed. But what are the results going to be? And at the end of the day, if they can flip the blame, how long is that going to last if you're coming home with less money in your pocket and you have -- and you're distressed by the policies of this president. And that's the question.

GREGORY: This is, you know, a nationalist argument; it's a protectionist argument. You've got to be willing. You know, you can certainly set up China as the aggressor here, which -- there's a lot of evidence to support over the years. But as Sarah Sanders says the other day, there's going to be short-term pain. It may be more than short-term pain.

I mean, what I see is a president who's got consistent thinking but also gets incredibly jittery when the markets tank, because not only the the establishment but financial markets around the world see the prospect of a trade war and get completely spooked to the point of correction territory.

So is he going to stick by it and absorb the pain?

KAREM: Probably not.

AVLON: This is a president who's taken a lot of comfort from the fact that the stock market has surged since he was elected. That has buoyed his approval ratings.

But at the end of the day, what he should be most concerned about is his impact on Main Street, not Wall Street. And that's what a lot of these retaliatory tariffs would --

(CROSSTALK)

KAREM: It's what got him elected, as well. It's that underlying angst with American government that he tapped into very successfully. And can he maintain that if he -- if, in fact, at the end of the day, you're living in Iowa or you're living in a red state and you're coming home with less money, and you're more distressed than you were. It's going to be -- you know, it's going to be James Carville in four years: "It's the economy, stupid."

CAMEROTA: Yes. All right. Let's shift gears to Scott Pruitt. Just when you think you've heard everything.

AVLON: China, Scott Pruitt.

CAMEROTA: Well, I mean, truly, just when you think that you've heard all the possible ethical entanglements that he has, there's a new one. "The New York Times" is reporting that five of his staffers, four of them high-ranking aides and advisers, have been reassigned after raising questions about his spending and his management.

So in other words, I mean, it sounds like retaliation --

AVLON: Yes.

CAMEROTA: -- against people who try to sound an alarm that something was not ethically passing muster.

KAREM: And that wasn't actually -- that's not news what is being done in the EPA. Remember, when he first came into the EPA, there were scientists who were saying they were being kept from voicing their concerns and that they were being kept from putting out e-mail and sequestered. So that's a pattern of behavior that the president still supports and says he's a fantastic man.

GREGORY: But here's the thing. This is the tension. You know this president doesn't like somebody who gets this kind of negative publicity, who is stealing the spotlight from President Trump. And I mean, these are self-inflicted wounds. I mean, this is kind of reckless behavior on the part of the EPA administrator.

KAREM: Yes.

GREGORY: But at the same time, he's a hero among conservatives for what he's doing at the EPA. Which I'm not sure President Trump cares about as much, but he's certainly happy to have that level of support.

AVLON: Well, he said that coming back from West Virginia yesterday. That was his defense of Pruitt. He's a hero in coal country. What do you mean? He's a hero to the industries the EPA's traditionally regulate. Right? He's a hero to those folks.

KAREM: To the robber barons. That's who they --

AVLON: I don't want to characterize it. He is very good for the industry. And our environmental advocates, not so much.

But I think that's also what's interesting. You've got a series of patterns at this point, stories that are clearly abuse of power. Arrogance of power, shady behavior. Now we know that the lobbyist who he was renting this sweetheart deal, $50 a night apartment from, was in fact, their family was lobbying the -- the EPA, contrary to their original statement.

[06:15:19] And then this pattern of punishing people who are dissenting inside the organization, all against the larger backdrop of policies whether you, you know, approach it from ideological agenda or not. Silencing people who are experts in scientific agencies, saying they can't use the term "climate change." That's objectively true.

(CROSSTALK)

KAREM: Well, that worries up, but that doesn't worry -- I mean, you were right. At the end of the day, don't overanalyze it either. This is the president of the United States who doesn't like people stealing his thunder.

GREGORY: Right.

KAREM: That's what it boils down to. How much thunder is he going to allow Scott to steal from him before he --

GREGORY: Right. So the question is can he survive? Because what he's got is someone who's extremely popular with his political base, with the business base that this -- that the EPA regulates. And, you know, he could use a Trumpian tactic, which is to say, you know, "This is overblown. I'll stick by him."

CAMEROTA: Yes,

GREGORY: and who's going to -- who's going to topple him?

KAREM: And the president could change his mind 30 seconds from now and look for a new EPA director.

CAMEROTA: Well, stay tuned, as we like to say.

Brian Karem, John Avlon, thank you both very much.

Now, to this. Stormy Daniels's attorney believes his case just got much stronger after President Trump denied knowing about any hush- money payment. Did the president expose himself legally by breaking his silence? We discuss that next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

[06:20:17] UNIDENTIFIED FEMALE: Mr. President, did you know about the $130,000 payment to Stormy Daniels?

TRUMP: No. No.

UNIDENTIFIED FEMALE: Why -- why did Michael Cohen make this if there was no truth to her allegations?

TRUMP: Well, you'll have to ask Michael Cohen. Michael is my attorney, and you'll have to ask Michael Cohen.

UNIDENTIFIED FEMALE: Do you know where he got the money to make that payment?

TRUMP: I don't know.

(END VIDEO CLIP)

GREGORY: Amid the noise of Air Force One, President Trump issuing a firm denial, first public comments about the Stormy Daniels story and the $130,000 payment his lawyer, Michael Cohen, made to the adult film star days before the 2016 election.

John Avlon is back with us now. Let's bring in CNN legal analyst Areva Martin.

Areva, let me start with you. Why is this a big deal? Stormy Daniels's lawyer is saying, "Aha, now the president has said no, and therefore, he has violated the terms of this hush agreement. Everything is off.

MARTIN: Well, you can't have an agreement between two parties when one party acknowledges that he didn't even have knowledge of the material terms of the agreement. So if Trump is saying he had no knowledge of the $130,000 payment, there was never a meeting of the minds between Trump and Stormy Daniels. And that's the argument that Stormy Daniels's attorney has been making throughout this entire, you know, last several months. Is that this agreement is not valid. It's not valid for several reasons.

One, he argued that Trump never signed the agreement. And he's been arguing that, if Trump didn't know about the payment, then there was never any --

CAMEROTA: Right.

MARTIN: -- mutual consent between the parties. That was a major admission by the president.

CAMEROTA: Except, Areva, that they've never said that the agreement was with Donald Trump. I mean, Michael Cohen has said the agreement was just with Michael Cohen and Stormy Daniels and that the president didn't know anything about it.

So the president saying, "I didn't know anything about it," confirms, whatever, or at least, you know, agrees with what Michael Cohen has been saying that he didn't know anything about it.

MARTIN: But one problem with that, Alisyn. Donald Trump joined in the lawsuit that Michael Cohen is a part of to remove a case that Stormy Daniels's lawyer filed in state court to federal court. So if you are not party to an agreement, you have no knowledge about this agreement, why are you joining a lawsuit to enforce an agreement that you're not a party to? It makes no legal sense.

And you can't have it both ways. Either you're a party to the lawsuit or you're not. And by making the statement that he had no knowledge of the payment, where the payment came from, the fact that the payment was made, he's undermining his lawyer's position and makes it very difficult for him to move forward with the position that he's taken.

And I should say, most importantly, what -- really, what Stormy Daniels's lawyer really wants to do is to depose Donald Trump.

GREGORY: Right.

MARTIN: So if nothing else, they've created this big ambiguity about who knew what or when. And I can't see them refusing the opportunity to have Trump and Cohen testify under oath.

GREGORY: John.

AVLON: Look, this is a great example of the costs of shooting from the lip. And the president can't help himself. He's on Air Force One. He goes in to take questions. He talks about it for 25 seconds. You can tell by Trump's normal volubility, he's trying to say as little as humanly possible.

But in that he would seem to play into Stormy Daniels's defense, which is if you didn't know about the contract and you didn't sign it, is it really binding? And setting up, as Areva just said, a situation where he could be deposed. So that's a very costly, after a high degree of discipline by the president on message.

CAMEROTA: Let's talk about that timing. Why did he, after all of these weeks of silence and discipline, why did he respond?

AVLON: I would not overthink it or assume there is strategy here. I think this was a moth to a flame situation. He walked back on Air Force One to a gaggle, got a question, couldn't bring himself to say nothing, said as little as possible. But in doing so, said enough to create real legal problems.

GREGORY: But this is -- this is a striking aspect of the president, which is he likes to talk. He likes to be available. He likes to take questions. Because it's kind of a rolling conversation that he's in charge of. The problem is you become, you know, exposed in those things. And it's very hard for him to remember, "No, no, no, this one, I can't answer at all."

Here's the other piece. I mean, I think what Areva said is important, which is ultimately, the potential to depose him. That's what they want. Clearly, Stormy Daniels and her lawyers want that attention.

CAMEROTA: But a judge has already shot that down, Areva. I mean, that's --

GREGORY: No. He hasn't shot it down, Alisyn. He said it was a premature request.

CAMEROTA: That's right. But now is it --

(CROSSTALK)

CAMEROTA: But today is it -- Michael Avenatti says he's refiling. Is today a still premature request? [06:25:03] MARTIN: Well, it's not clear that the deposition is going

to happen today, but it's pretty clear to me, based on the statement that Trump made, there will be a deposition if this litigation continues. The question becomes when that will happen. The judge didn't say Trump is, you know, not deposable, that he won't be deposed. He just said we need to make some determinations about whether this matter gets sent to private arbitration before we move forward, orders regarding discovery.

GREGORY: Let's just pull back for a second. To me, the striking aspect of this story is the biggest pitfall is obviously a legal pitfall. We've seen this with Clinton, which is he doesn't get to a point where he's deposed and could become part of the purview of the special counsel.

The facts of the matter: I don't think anything thinks, really, in dispute despite what the president says, and I don't think anybody cares. I mean, this is the least surprising part of the Trump presidency, that this might be true for voters, right, who have made a judgement about him.

AVLON: I mean, you know, Bill Clinton sort of birthed this argument. You know, nobody -- everyone knew he was a bad boy. Nobody thought they were electing a saint for president, but he's someone who can get the job done.

I still think, objectively, let's not get too snowed in by -- by the storm, no pun intended, that we're in in terms of news cycles. The president and the porn star is a headline for the ages. He is lying about it, and also it has real-world implications, not only for deposition but for his family. Even if his core base, that 28 percent, it's not moving no matter what, doesn't care.

CAMEROTA: It's not just the base. We have -- we have polls that show that 70 percent, I think, of Americans believe that this happened. But everybody is moving along with their daily business.

AVLON: You know, life's going to go on during the Lewinsky scandal, too. But I do think this is going to have real-world implications that continue to cascade, even if people are baking it into the cake.

GREGORY: Speaking about moving on --

CAMEROTA: Wow. Masterful.

Areva, thank you.

John, thank you very much.

Coming up in our next hour, we will speak live with Stormy Daniels' lawyer, Michael Avenatti. We'll get him to answer all these questions.

GREGORY: Also, UFC star Conor McGregor arrested after going on a rampage at a media event in New York. We've got details on that coming up. (COMMERCIAL BREAK)