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CNN'S AMANPOUR

Has U.S.-Announced Tariffs Triggered Trade War With Europe? UN Reports on Extreme Poverty in United States. 2-2:30p ET

Aired June 5, 2018 - 14:00   ET

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


[14:00:16] CHRISTIANE AMANPOUR, HOST: Tonight, the steely standoff: will America's new metals tariffs trigger a trade war with its closest allies?

From Brussels, the EU trade commissioner Cecilia Malmstrom on how Europe will fire back.

And from Washington, Grover Norquist, the founder and president of Americans for Tax Reform on the fallout for the American consumer.

Plus, why the poor are getting poorer under President Trump. The UN special rapporteur on poverty and human rights, Philip Alston, reveals the

truth about the great American divide.

Good evening, everyone. And welcome to the program. I'm Christiane Amanpour in London.

Now, if you live here in Europe, it may soon be a lot more expensive to love and to buy American motorcycles, blue jeans, or bourbon whiskey. The

EU is threatening those with import taxes in response to President Trump's decision to tax steel and aluminum from its closest allies here in the EU

and also in Canada and Mexico.

And to get around congress, the administration had to make the legal argument that it was vital to America's national security interest to

produce those metals at home.

(BEGIN VIDEO CLIP)

MICK MULVANEY, DIRECTOR, WHITE HOUSE OFFICE OF MANAGEMENT AND BUDGET: One of the reasons that we have to rely on Canada or Britain, for example, for

some of our metal, some metals that we use for the defense of this nation only come from England. While they're a great ally and a good partner,

wouldn't it be nice if we could actually make some of that stuff here at home? That's what the president is trying to accomplish.

(END VIDEO CLIP)

AMANPOUR: It might be nice, but is it worth risking a trade war?

The Europeans aren't taking all of this lying down as the trade commissioner, Cecilia Malmstrom told me from Brussels today.

(BEGIN VIDEOTAPE)

AMANPOUR: Commissioner Malmstrom, welcome to the program.

CECILIA MALMSTROM, EU TRADE COMMISSIONER: Thank you very much. Good evening.

AMANPOUR: Good evening.

So, can I just start with what you say to President Trump citing national security reasons to slap these metal tariffs on his main allies.

MALMSTROM: Well, we think that is deeply unjustified. The motivation of national security should be used carefully. And we cannot in Europe see

any way that our exports to the U.S. on steel and aluminum is in any way a threat to U.S. national security. We are friends. And we are allies. And

we feel deeply offended by this.

AMANPOUR: You're not the only ones. The Canadians have said that they feel offended and insulted. And of course the Mexicans feel the same way.

But what is the response to when President Trump says the following. This is what he said about Europe on Friday when all of this was first mooted.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: At a minimum, I want fair trade. And we're going to have it for our workers and for our companies.

And you know what, the other side understands it.

To be honest with you, they cannot believe that they've gotten away with this for so many decades.

AMANPOUR: So, first and foremost, have you gotten away with this? And what is this for so many decades?

MALMSTROM: Well, I'm not really sure what the president means there, but he seems to consider that there is a trade deficit that the European Union

is taking advantage of the United States. And it is true that there is a trade deficit when it comes to goods, but not when you look at services.

And of course trade deficits have a lot of explanations. It's about savings, it's about pensions, it's about tax systems, it's about

consumption patterns, it's about supply and demand. So you can't really cook that down to a tariff issue either.

And we have said to the administration that we are willing to engage in a positive trade agenda, looking at things that are of mutual interest for

us. We could consider to have a smaller trade agreement focusing on goods and tariffs where we would look at car and car part tariffs and take them

away, and of course then the U.S. would have to take away their tariffs, because on certain issues, such as clothes and some machinery and trucks

and shoes, the American tariffs are much higher than the Europeans.

So, we could have done a deal here and start talking about this, but not with the threat hanging over our head.

AMANPOUR: Well, indeed President Macron has said we will not talk with a gun pointed at our head. But, so what happened? If you are telling me you

could have done this, you must have said this to the United States, to their representatives. What, did they just say no?

MALMSTROM: I did. I did say this to Secretary Ross. And that was also backed by a unanimous statement by 28 heads of states from the European

Union, so I had the whole European Union backing me that this -- we were willing to engage on this and talk about other issues such as WHO reform,

energy issues, certain issues where we could cooperate when it comes to regulatory, that would have been good for both of us.

But they seem that this was not enough and that they would still impose those tariffs on us. And then, of course, they -- then the American

administration for this have closed the door.

[14:05:37] AMANPOUR: So let me just put it to you this way, Jean-Claude Juncker, the president of the European Commission, said look -- and this

was back in March when the U.S. first mooted these tariffs -- said, well, you know, if they do stupid we can do stupid. We actually have to do

stupid.

And now you've all announced that you're going to go after motorcycles, you know, Harley Davidsons, which are made in Wisconsin, home state of the

House Speaker; bourbon, made in Kentucky, home state of the Senate Majority Leader; rice, oranges, blue jeans. You're basically, just as Mexico is

doing, going to go after the Trump voters, right, you're going to go where it hurts them the most?

MALMSTROM: We do this because we have to. And we have announced that very clearly way in advance that this is what we will do. And the list of

products will contain machinery, aluminum, steel, some agriculture, some drinks. You cited a few of them. And we are just in the process now of

preparing that list. It will be ready in a couple of weeks.

And as far as I am aware, Mexico and Canada and others are doing the same, because we need to show that if you are violating the rules of the global

trading system, it has consequences.

AMANPOUR: So, commissioner, would you say, even though the Trump administration fired the first shot, would you say you are now in a trade

war with the United States. And of course there is a threat, a further threat, that the U.S. may impose tariffs on the auto industry in Europe,

which would be a much more serious thing than on the metals.

MALMSTROM: I wouldn't say that we are in a trade war, but we are in a very difficult situation that could escalate. And that is why the

countermeasures that we will be doing will be proportionate. And we will not try to escalate the situation.

If the president were to impose tariffs on car and car parts, yes, that would be very serious. And then we would be in a very, very worrying

situation. We do not think trade wars are good, neither are they easy to win. And the car industry in Europe, in the U.S., in Japan, and many other

countries would suffer a great lot from this.

But it would also affect jobs in the U.S., because we have many European companies who produce cars in the U.S. They employ American people who

then pay taxes. And they would lose out of this.

And so there are no winners in this, so we definitely hope that this is not something that will materialize.

AMANPOUR: So, let's talk about leverage. You know, you have said -- you, yourself, have said -- when they say make America great again, we say

Europe United. But isn't that the very problem? Is Europe united? You have 28 members. They don't all believe in the robust rhetoric that you're

employing right now.

Of course, the EU and the U.S. economy, in general, is about the same size, but the United States is a more powerful country. The U.S. economy has

grown and rebounded faster and better than the European economy. And you obviously are concerned about any measures that could cause further

stagnation in Europe.

So, do you have the leverage of a unified Europe when you talk about these countermeasures?

MALMSTROM: On this, yes, we do. We are 28 countries. And we have discussed it on all levels, the highest possible level. And all 28

countries are behind this.

We have -- we have our differences, but on this we are united and we are determined to do what has to be done, and we're also working with many

other countries, because this is not only EU against the U.S., this is something that is considered by the rest of the world as not legitimate.

So we are reaching out to other countries in Mexico and Japan, Canada, of course. We are doing trade agreements with a whole lot of countries,

creating this circle of friends who believe in good, fair, sustainable trade agreements that are in compliance with international rules.

And the European economy had the last two years actually recovered considerably since the crisis. And we yet now have growth and decreasing

unemployment in all countries. So, Europe is doing good. The U.S. is doing good, as well, and that's why we shouldn't jeopardize this by

entering into a trade war. And I really hope that this situation now will calm down and that we can not escalate it, because it would have affects on

jobs and growth on both sides of the Atlantic.

[14:10:09] AMANPOUR: Can I ask you sort of tactically, many Europeans obviously were surprised and worried about Trump's victory, but many

Europeans decided that they needed, obviously, to work with the president of the United States, the most powerful leader in the whole world. And

many over the last 18 months have done as much as they can to accommodate the president's policies, to put on a charm offensive. I think of Prime

Minister Trudeau, I think of President Macron and many others who have done that.

But it seems that it doesn't matter. The president will nonetheless roll over allies, not to mention adversaries, but certainly allies. And it's

been stated that you in Europe actually have to engage in this battle now in case the international rules of the road are simply replaced by raw

power.

Do you ascribe to that?

MALMSTROM: Yes. We do. And it is obvious that we want to engage with the U.S. It is for the American people to choose their president. And we have

full respect of that. And whoever sits in the White House is a person who we want to work with. EU, the European Union, Europe as a whole and the

United States, we are friends. We are allies. We can achieve fantastic things if we work together. We have created the international framework

and international organizations. And we want to work with the U.S. there.

But now if the U.S. is breaking international rules, and as I said it's not only EU who thinks that, we have to take action. And I'm not doing this

with a happy smile, but this has to be the consequences. You cannot act like this and to hide pure protectionism behind an article referring to

national security and accuse Europe for being a threat to national security. It does not make sense. We have to have consequences.

AMANPOUR: And certainly you are allies for many, many, many decades. Cecilia Malmstrom, European trade commissioner, thank you so much for

joining us.

And of course now we're going to turn to the view from America. And we're going to talk to the conservative's conservative who thinks these tariffs

are a disaster.

Grover Norquist says that this move is like trying to perform a kidney transplant with a baseball bat. Why? Well, perhaps this clip from the

cult hit movie Ferris Bueller's Day Off might help explain just a little.

(BEGIN VIDEO CLIP)

BEN STEIN, ACTOR: Anyone? Anyone? A tariff bill, the Hawley-Smoot Tariff Act, which -- anyone -- raised or lowered -- raised -- tariffs, in an

effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects? It did not work. And the United States

sank deeper into the Great Depression.

(END VIDEO CLIP)

AMANPOUR: Grover Norquist, who supports Trump in most issues of policy, joins me now from Washington.

You, yourself, tweeted over the weekend, is it possible to increase American economic success using a tariff? It hasn't worked in the past.

You've said that not all tools are the correct tools. So what is your view of this trade war that frankly the Trump administration has fired the first

shot in?

GROVER NORQUIST, FOUNDER, AMERICANS FOR TAX REFORM: They would argue they didn't fire the first shot. But I understand your point.

I am concerned that when you use the tools of tariffs, you damage movement towards more open trade. The administration's position is we think we'll

get their attention and then they'll sit down and we'll do better negotiations. There was some reason to believe that may have happened with

South Korea, but it is a very dangerous game. You end up, perhaps, with the Hatfields and the McCoys fighting, and they can't quite remember who

shot the first shot, who hit who first, but they keep hitting each other in a way that's unhelpful.

What helps the United States is we're now in a position with rather strong growth. We used to be at 35 percent business tax. Europe was at 25 and

under. We're now at 21. So, we are tremendously advantaged compared to Europe, because we're no longer hurting ourselves with the very high

corporate income tax.

That covers a multitude of sins, like this fight over trade. The stock market, I think, would be in much worse shape if we weren't buttressed by

strong economic growth coming from tax cuts. But I would rather have the tax cut benefit and more movement towards free trade.

I worry that this spins out of control in the wrong direction. You quoted earlier that 1,028 economists in the United States who back in 1930 wrote a

letter to Hoover saying don't do this tariff thing, don't do this tariff thing, and it did, in fact, move in very damaging directions.

AMANPOUR: So why is it that the president doesn't listen to allies such as yourself, and Republicans such as those who supported him all along, and

who are giving him the math, and who are referring to exactly, you know, what you just referred to in the 1930s? And, I mean, you are known for

your opposition to taxes. You support the president's tax bill. Just explain for the American people what tariffs could do to them and where it

could hit them in the pocketbook?

[14:15:26] NORQUIST: Well, tariffs are taxes on Americans. American tariffs are not taxes on foreigners, they're paid by Americans when you buy

steel or aluminum or a product from overseas and we attach -- the United States government attaches a tariffs to it. A tariff is a tax.

And, again, our tariffs are paid by us. In a shooting war, you shoot somebody in the other country. In a trade war, you damage your own

consumers. Americans damage American consumers, French people retaliate and damage French consumers.

I mean, the retaliation that the French are talking about, or the Europeans are talking about is, well, we'll tax bourbon. Great, and that hurts

consumers of bourbon in Europe. And when we tax aluminum or steel with a heavy tariff that raises the cost of inputs in the United States.

AMANPOUR: It really is quite troubling, all of this. I mean, again, a Republican senator says "make America great again shouldn't mean make

America 1929 again." I mean, I know we keep beating this dead horse, but it seems to have revived itself in the mind of the Trump administration.

And now people are saying, you know, President Trump sort of advertised himself on being this great deal maker for the American people, but it

looks like he's going to be, in this occasion anyway, a deal breaker that will hurt the American people.

So what would you all say to him as he potentially considers tariffs on car imports? You just heard what the commissioner said, those support American

jobs.

NORQUIST: All tariffs, if imposed, are damaging. A tariff that's threatened, that actually gets you more open trade, that would be good.

How do you tell the difference between the tariff that is going to start a trade war and the tariff that is going to reduce trade barriers? It is a

very dangerous game one is playing.

I understand the president's argument on this, that he's trying to get past protectionist policies, and some present ones the Europeans and the Chinese

employ against us. I am worried that as a model, as a weapon, as a tool, that tariffs are the wrong tool to reduce tariffs. But that's right where

we are now.

But the president has walked up to the brink and stepped back when it looked like we were having some progress, perhaps, with China. I hope, as

the guy who does deals in his previous life, he recognizes that sometimes you take 90 percent and call it a deal.

AMANPOUR: Well, let's hope. But China, of course, has stopped negotiations for the moment on all of this. But in any event, Grover

Norquist, thank you so much for joining us.

NORQUIST: Good to be with you.

AMANPOUR: And as this trade battle threatens to make life more expensive for ordinary Americans, consider this new report from the United Nations

highlighting extraordinary contradictions. For instance, while America can boast more billionaires than any other country, it also has more than 40

million people living in poverty, 18.5 million in extreme poverty.

What do we mean by that? We mean like in the developing world. For example, some Americans living with open sewage flowing into their homes.

The international legal scholar Philip Alston spent 12 days touring the United States investigating this crisis. He's the UN special rapporteur on

extreme poverty and human rights. And he's joining me now from Geneva.

Mr. Alston, welcome to the program.

PHLIP ALSTON, UN SPECIAL RAPPORTEUR ON EXTREME POVERTY AND HUMAN RIGHTS: Thank you.

AMANPOUR: Can I ask you to just react to the conversation we've just been listening to about what could happen to further exacerbate, you know,

financial worries for the average American if, indeed, these measures in the trade debacle heat up?

ALSTON: I think what's interesting to me is there's a certain consistency in the policy approach. What the president seems to be trying to do is

reward allies in the coal, cars, steel, aluminum, various other industries, who will benefit immediately and greatly from these tariffs.

The people who will lose are the great bulk of consumers, those who rely on cheap goods from overseas. But that doesn't seem to be a problem, it's

more a question of rewarding the wealthy and the supporters than of improving the lot of the average person.

[14:20:04] AMANPOUR: So, let's talk about the average person, not only the Trump voters, but those actually who live in much reduced circumstances,

and these are statistics which are really shocking from your report. So let me just read them out: 40 million people living in poverty in the

United States, 18.5 of those in extreme poverty, 18 percent of American children in poverty. And then, of course, when it comes to inequality, 25

percent of the world's billionaires are in the United States.

What shocked you the most about your 12 days touring the United States for this report?

ALSTON: In some ways it was encapsulated when I was on skid row, that's a pretty obvious image to present. But you've got people living in shocking

conditions. You've got a handful of toilets for close to 2,000 people who are living in tents and on the street. And just a few yards away you've

got the central business district of L.A. thriving, humming along, the technology industry, the entertainment industry all doing extremely well.

The policies that are being pursued, though, are essentially the criminalization of homelessness, rather than trying to work out how to help

these people, rather than biting the bullet and spending more money on low cost housing, the assumption is policing is the way out, and of course it's

not.

AMANPOUR: Why did you choose the United States to study? I mean, it's not the obvious place one would go to discover extreme poverty and even you

talk about absolute poverty, which is even worse than extreme poverty. And you've noted that nearly 5.5 million Americans live in absolute poverty.

ALSTON: Well, first of all, in my role as the UN special rapporteur, I go to a range of different countries. I have most recently been, for example,

to Saudi Arabia. I've been to China. And the next mission that I undertake will be to the United Kingdom. So, this is not just singling out

the United States, it's in furtherance of the agreed UN policy that all countries will be accountable in terms of the impact of their policies on

human rights.

But leaving that aside, the United States is a world leader on a lot of policy issues, and I think the sort of approach that the UN -- that the

U.S., rather, is now promoting, which is to try to reduce to the greatest extent possible the welfare budget, the sort of social protection that it

is provide, while at the same time increasing the wealth of the wealthiest, is actually sending a message to many other countries. So, I think it's

very important for both Americans and others to see the realities, to see the two Americas that are really emerging in stark opposition to one

another when we look at the extent of extreme poverty in the country.

AMANPOUR: Now, of course, America conducted a very famous war on poverty. And it was, you know -- they really went to town to try to eradicate this.

But you talk about neglectful politics, or policies in this regard, by administrations dating all the way back to LBJ. What specifically is the

sort of trend of the policies that you see leading to this place right now?

ALSTON: Well, I think -- I mean, American history is certainly very relevant, because we can't say that the United States has always had one

single approach to poverty. You've got FDR's New Deal, you've got LBJ's War on Poverty, and even Nixon was actually very sympathetic to a range of

welfare initiatives.

But since, say, 1980, or whatever, what we've seen is a very consistent trend where the notion of solidarity, the notion of judging a society by

how it treats the worst off has been systematically discarded, and now I think American policy is characterized primarily by efforts to stigmatize

the poor, to make them feel, and make others feel, that it is their fault that they're poor, to characterize them, often, in racial terms to pretend

that this is a problem that is predominately African-American and not for the white community, which of course is completely wrong, and to end up at

the point that the society owes nothing to the poorest and the most vulnerable in the society.

So, I think there's a radical change from the earlier effort to ensure that poverty is eliminated to the pretty callous policies that are being pursued

today.

[14:25:23] AMANPOUR: Your report actually takes figures that go up to 2016. And, you know, there's no sort of comparative pro -- or rather

before and after Trump. So why do you say especially today. Your figures are taken from before the Trump election, before the Trump presidency.

ALSTON: Absolutely. My figures are those of the United States Census Bureau. I don't create my own figures. The UN doesn't make up its own

figures. We take the official statistics.

The statistics that will cover the first year of the Trump presidency, that's 2017, will be available in September of this year. Until that time,

we base ourselves on the latest available statistics, which are indeed up to 2016.

Now, what's happened since 2016 is characterized by two particular trends. One is the tax cut. The tax cut has clearly, according to the great

majority of economists, made the wealthy much wealthier, made the large corporations much better off. At the same time, the administration if

pursuing, but on a lower sort of level on the radar screen, a welfare policy which keeps emphasizing the need for people who are currently

receiving benefits to get off those benefits and to start working.

That's a great idea. We're all in favor of worker. The problem is that most of the people who are receiving benefits are, in fact, working and to

simply cut benefits, which is being done with Medicaid, food stamps, housing subsidies and so on, is going to have a much greater impact on the

poor and increase the number of people living in poverty in the U.S.

AMANPOUR: Philip Alston, thank you so much with that important report.

And that is it for our program tonight. Thanks for watching. And good-bye from London.

END