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EARLY START

Upping the Trade War; Trump's Spat with Koch Brothers; Manafort's Lawyers Unveil Strategy; Manafort Trial Begins; Ceremony for Soldiers' Remains. Aired 5:30-6a ET

Aired August 1, 2018 - 05:30   ET

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


[05:30:00] DAVE BRIGGS, CNN ANCHOR: Everybody, I'm Dave Briggs.

I'm asking you for an image of a $15,000 ostrich jacket, because I don't know what that looks like, Laura Jarrett.

LAURA JARRETT, CNN ANCHOR: Send it to us, please!

BRIGGS: I want to know.

JARRETT: We want to know.

I'm Laura Jarrett. It's 30 minutes past the hour.

A federal judge blocking a government settlement that would allow plans for 3-D guns to be downloaded online. The ruling coming just hours before those plans were set to publish, with growing concerns about people being able to make their own untraceable, plastic weapons. The judge's block is temporary, but it puts a hold on the settlement between a gun rights group and the government that was reached back in June that would make it legal to post the plans on the Internet.

BRIGGS: The founder of the gun rights group Defense Distributed says his company's site is going dark until he can review the judge's order. Before the ruling came down, he spoke to CNN's Laurie Segall about concerns publishing plans could endanger the public.

(BEGIN VIDEO CLIP)

LAURIE SEGALL, CNN SENIOR TECHNOLOGY CORRESPONDENT: The democratization of guns online, giving people the ability to 3-D print their own guns, would make it feasible for felons, minors, mentally ill to have access to firearms. Are you worried about those repercussions?

CODY WILSON, FOUNDER, DEFENSE DISTRIBUTED: No, I don't believe that access to information is ever tremendously negative or a bad thing. I know that people can use information for bad things, but this isn't a justification to, what, stop a publisher from speaking?

(END VIDEO CLIP)

JARRETT: Now, nearly a dozen states sued to stop the firm from publishing the printable plans. President Trump even weighed in, tweeting, 3-D plastic guns being sold to the public doesn't seem to make much sense! The White House later confirmed it supports the existing law on the books.

(BEGIN VIDEO CLIP)

HOGAN GIDLEY, WHITE HOUSE DEPUTY PRESS SECRETARY: The president is committed to the safety and security of all Americans and considers this his highest responsibility. The administration supports this nearly two-decade-old law and we'll continue to look at all options available to us.

(END VIDEO CLIP)

BRIGGS: It is worth noting, the State Department cleared the way for the settlement that would have allowed the printable 3-D gun plans. The NRA releasing a statement saying it supports existing laws that make it illegal to manufacture, sell, and possess an undetectable firearm. But just last month NRA spokeswoman Dana Loesch defended exactly the opposite viewpoint.

(BEGIN VIDEO CLIP)

DANA LOESCH, NRA SPOKESPERSON: What Democrats call quote/unquote ghost guns and the rest of us simply call freedom and innovation, 3-D printed guns.

(END VIDEO CLIP)

JARRETT: Before the site went dark, more than 1,000 people downloaded plans to print an AR-15-style semiautomatic assault rifle.

BRIGGS: The Trump administration's pending China tariffs could be significantly higher than first announced. A source familiar with discussions has confirmed that tariffs on $200 billion worth of Chinese goods could be raised from 10 percent to 25 percent. They would cover things like fruits and vegetables, handbags, refrigerators, rain jackets, even baseball gloves. China's foreign ministry saying blackmail and pressure by the U.S. will never work and promising to take countermeasures, if need.

The president addressed the trade war at a rally last night in Tampa.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: China and others, remember this, have targeted our farmers. Not good. Not nice. And you know what our farmers are saying? It's OK. We can take it. These are incredible people. We can take it.

Now we're going to open up markets. We're going to do it the way it should be. And all of this stuff, you're going to make it back and it's going to be made back faster than anybody would know. But we haven't been treated right.

(END VIDEO CLIP) BRIGGS: The administration announced a week ago it's preparing a $12 billion emergency aid package for farmers caught up in the trade war. The move has been panned by many Republicans for being a short-term fix. Markets in Asia were down slightly overnight.

Let's discuss all this with political economist Greg Valliere, chief strategist at Horizon Investments.

Good morning, sir, and good to see you.

GREG VALLIERE, POLITICAL ECONOMIST: Hey, Dave. Yes, good to see you, Dave.

BRIGGS: So these tariffs, if they're ratcheted up now from 10 percent to 25 percent on $200 billion worth of Chinese goods, given that China essentially has a president for life in Xi Jinping, how do you expect this to play out, and can our farmers, quote, take it?

VALLIERE: Well, the polls in the Midwest show that the Republicans may be in some trouble. This is maybe a self-inflicted wound. There will be some aid, at least $12 billion, I think maybe more. But this trade story with China I think's going to get worse. I think they'll retaliate more. Maybe there's a glimmer of hope with western Europe. But I think U.S./China relations will continue to deteriorate.

JARRETT: You know, Greg, it's interesting, the president is in this very public spat with the Koch brothers.

VALLIERE: Yes.

JARRETT: "The Wall Street Journal" editorial has a pretty interesting write-up, saying, congratulations to the Kochs. They're receiving such thermonuclear attention because they decided not to bow to Mr. Trump on trade, immigration, and other issues that the brothers and their political network count as crucial to economic liberty.

Is this the right move for the president, in your view?

VALLIERE: Well, it involves money. And I think a lot of Republican candidates were hoping for major funding from the Koch brothers, are now caught in the middle of this interparty feud over largely trade. And I don't think that's going to end any time soon.

[05:35:13] So, what a story. You've got both parties now divided. You've got the Democrats divided by the increasingly far left group and the moderates. You've got the Republicans divided over trade. I think these divisions might actually widen over the next few months.

BRIGGS: But the Koch brothers don't just represent money. These billionaires represent $400 million in prepared political donations over the next two-year election cycle. And President Trump tweeted just yesterday, they've become a total joke in Republican circles. He says, I never sought their support because I don't need their money or bad ideas. They love my tax and regulation cuts, judicial picks and more.

How do you expect this could play out, not just in the midterms, but perhaps beyond, perhaps into 2020?

VALLIERE: Well, it's one of many reasons, Dave, where I think the Republicans are in trouble this fall. If I had to make a call right now, I'd say the House flips back to the Democrats. The Senate, which I always thought would stay Republican, narrowly, now is more in play. A lot more Republicans look a bit vulnerable right now.

So without the Koch brothers' money for this election, and then in 2020, I do think that's a significant story.

JARRETT: Absolutely.

Thanks so much, Greg, for all of your analysis. We're going to keep an eye on this for sure.

BRIGGS: Good to see you, Greg.

VALLIERE: All right. Yes.

JARRETT: Thanks.

Well, today will be Paul Manafort's first full day in front of a jury. One thing certainly became clear in opening statements yesterday, President Trump's former campaign chairman is ready to pin the blame for alleged financial crimes on his former top aide. CNN is also told that the president followed developments in the trial from Air Force One.

CNN's Jessica Schneider has more from Washington.

JESSICA SCHNEIDER, CNN CORRESPONDENT: Dave and Laura, it was a fiery first day in the Paul Manafort trial. Lawyers for both sides, they gave the jury their opening statements. Prosecutors called Manafort a shrewd liar and said he has made millions of dollars in secret income from what they called a, quote, cash spigot, that came from working for what they called his golden goose in Ukraine, the pro-Putin former president, Viktor Yanukovych.

Of course, that is all the basis of these charges in Virginia, that Manafort hid the money he made from foreign lobbying in 30 separate foreign bank accounts. Prosecutors say he never paid taxes on any of that money. And then they say he lived an extravagant lifestyle, complete with multiple homes and even, get this, a $15,000 jacket made of ostrich.

On the flip side, Manafort's attorneys will be mounting a dual defense. First, they say it was the Russian oligarchs Manafort worked for who actually demanded he pay into those secret accounts. And secondly, Manafort's lawyers are trying to shift the blame to Rick Gates, saying it was Gates, who, of course, is Manafort's former deputy, who's already pleaded guilty to other charges. They say Gates was really the one stealing and embezzling the money.

So, of course, it was a lot packed into this first day of the trial with the White House continuing to distance itself from Paul Manafort and pointing out that these charges have nothing to do with Manafort's time as campaign chairman For President Trump.

Dave and Laura.

JARRETT: Jessica, thank you for that report.

Joining us now from Washington is CNN legal analyst Michael Zeldin, the former federal prosecutor and former special assistant to Robert Mueller at the Justice Department.

Michael, what do you make of this move going after Gates, throwing him under the bus right there in opening statements? You can see this is clearly the strategy since Gates is cooperating with the special counsel. But is this a smart move?

MICHAEL ZELDIN, CNN LEGAL ANALYST: I don't think that Manafort had any choice but to attack Gates, and perhaps the oligarchs, to say, essentially, I didn't file these false tax returns, I failed the f-bar filings, not because I intended to do that, but because I was misled. I relied on other people. I relied on their honesty. And I was let down. And they're to blame, not me, and therefore let me free. I don't see any other defense to these cases that he faces but to say it wasn't me, I relied on others.

BRIGGS: What do you make, Michael, of the speed and the pace of day one? We expect jury selection to even play out over days. It was lightning quick. We get to opening statements. What does that tell you about how this trial might play out?

ZELDIN: Well, what we all predicted to be a three-week trial may end up being a two-week trial. They're just moving fast. The judge is making everybody spend long days in the courtroom, and I think that's actually good for everybody. There's no need to stretch these things out. The jury wants to get on with its life. And so, we'll just zip through all of this stuff.

[05:40:06] JARRETT: Michael, you know, obviously, they're not talking about Russia. They're not talking collusion. They're not talking about President Trump. But President Trump is keeping tabs on what's going on in that courtroom, according to Jeff Zeleny.

Take a step back for us. Pull back and explain, what is the danger to President Trump in this trial?

ZELDIN: Well, I think principally it's political from the standpoint of, if there is a conviction in this case, it's hard for him to try to delegitimize Mueller. If Mueller has convicted Manafort, even though these charges don't relate directly to the president, it's hard to say that this is a renegade prosecutor, out of control, on a witch hunt, and the like. So, it's really optics, Laura, more than it is potential legal jeopardy for the president, unless, of course, Manafort is convicted and decides that I don't want to do my second trial in D.C. because it will end up as badly as this one did, and, therefore, I want to start cooperating with Mueller and can answer questions, such as, did the president know about the June 9th Trump Tower meeting.

JARRETT: You know, does it strike you as interesting that we're even at this place where the former campaign chairman is in court on tax evasion charges? You know, it's interesting, his lawyer outside of court yesterday said absolutely no chance that he will cooperate. We've all been wondering whether he would flip. Did you think for a moment there might be a chance that he would actually cooperate before we got here?

ZELDIN: Yes, absolutely. I think I said on television that I would be surprised if, in the end, even if it was on the courthouse steps, Manafort and the prosecutors wouldn't reach a cooperation and plea agreement because the charges here are so straight forward -- failure to file tax returns, failure to file the foreign bank account reports, bank fraud -- that there was no real defense for Manafort, especially with Gates' testimony. But, lo and behold, Manafort is holding firm. He's going to go to trial.

But as we just mentioned a moment ago, if he's convicted, then he may think about whether or not it's better to work out a cooperation agreement now than face a second trial in D.C. and, perhaps, spend the rest of his life in prison.

JARRETT: Exactly.

BRIGGS: That's awfully expensive. Speculation being that he is counting on a pardon from President Trump.

Michael Zeldin, great to have you on EARLY START this morning. Thank you.

JARRETT: Thanks, Michael.

BRIGGS: All right, coming up, identification could take years, but this morning remains believed to be Americans from the Korean War being flown back home. We're live at the ceremony in South Korea, straight ahead.

(COMMERCIAL BREAK)

[05:46:57] JARRETT: A military ceremony for the remains of what are believed to be U.S. soldiers killed in the Korean War taking place this morning at an air base in South Korea. The remains handed over last week by North Korea will be flown to Hawaii for forensic examination.

CNN's Paula Hancocks joins us live from Osan Air Base in South Korea.

Paula, I know the ceremony has just wrapped up there. Tell us -- tell us, how's it going?

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, Laura, the final caskets are being loaded onto two C-17 planes, which will then head to Hawaii for identification. Now, we have seen 55 caskets being carried onto these planes. It's really a ceremonial and somber day for the U.S. military, for the United Nations Command, and a chance, according to the USFK commander in chief who made a speech to honor those who have made the ultimate sacrifice. And we know that officials from the DPAA, the department for the

prisoners of war, the missing in action, they have done just a few days of initial assessment of these remains, and they say they do believe that they are from the Korean War, which ended 65 years ago. They also say that many of these remains are likely American. And they also told us there was one dog tag that was included within these remains. The family has been notified in the United States. So there's at least one family who has some kind of closure, knowing what happened to their loved one.

JARRETT: A somber but important moment.

Paula, thank you for being there.

A passenger and the pilot of an Aeromexican jet are in critical but stable condition this morning following a crash in Durango, Mexico. Aeromexico Flight 2431 was headed to Mexico City but went down after takeoff in a field just beyond the runway. There were 99 passengers and four crew members on board. Forty-nine people were hospitalized, but, get this, incredibly, no one died.

BRIGGS: 5:49 and a check on CNN Money this morning. Global markets and stocks futures mixed overnight. Stocks finished July on an up note. The Dow had its best month since January, adding nearly 5 percent. Strong quarterly results from Apple could help boost the market today. The company sold about the same number of iPhones as a year ago, but sales and profits soared as it made money from higher priced devices. Apple's report comes as investors are increasingly jittery about tech stocks. Last week, FaceBook and Twitter tanked after their results disappointed Wall Street. But Apple's shares rose after hours. They're up 16 percent so far this year. Apple now within striking distance of becoming the first U.S. company ever to be worth $1 trillion. CEO Tim Cook also announced Apple Pay will be coming to CVS and 7-Eleven later this year.

Low unemployment and a tight job market are finally translating into better pay for you. Last month, American workers received the biggest raise in nearly a decade. Wages and salaries rose 2.8 percent from a year ago. That's the biggest gain since September of 2008. The number suggests employers are finally feeling the pressure to raise wages so they can attract and keep workers. So we could see more evidence Friday when the Labor Department releases the July jobs report.

[05:50:21] Another food safety scare tanking Chipotle shares. The stock fell nearly 7 percent yesterday. That's after at least two people reported getting sick at an Ohio location. Chipotle tells CNN it has shut down the restaurant temporarily, really as a precaution. It says it's working with local health officials. Chipotle has suffered a series of health scares in recent years.

Surf's up at Tesla. The struggling electric car manufacturer dipping a toe into the surfboard business. Tesla offered 200 limited edition surfboards for sale at $1,500 a pop on Saturday. They sold out by Sunday and are now fetching up to $5,000 apiece on eBay. Tesla has experienced financial turmoil lately, even asking refunds from suppliers to help turn a profit. Looks like a pretty cool surfboard. I might have to learn.

JARRETT: I know what you want for Christmas.

BRIGGS: Yes, I'm in.

JARRETT: Exactly.

Well, faster than a speeding bullet, or at least a fish. A young swimmer with a very cool name beats a record held by an American icon.

(COMMERCIAL BREAK)

[05:56:00] JARRETT: FaceBook removing a network of suspected Russian- linked accounts it says were organizing political events in the U.S. It's the most extensive effort to interfere in American politics the social network has publicly disclosed ahead of the midterms. The social media giant trying to prevent a repeat of 2016, when accounts connected to a Kremlin-linked troll group posed as Americans on its platform. Asked by CNN to respond to the FaceBook reports, a Russian official said she hoped the materials will be presented to the Russian side.

BRIGGS: A health alert issued for some salads and wraps. The U.S. Department of Agriculture warns certain beef, pork, and poultry salads and wraps sold by Kroger, Trader Joe's and Walgreens may be contaminated with parasites. If consumed, it can cause intestinal illness that can last a few days or even months. All the sell by dates have passed.

JARRETT: The Carr fire in Redding, California, now 30 percent contained. Police say 16 of the 20 missing people in the fire have been located. Still, the flames have scorched nearly 113,000 acres, and the search continues for four people. Six have died.

Celebrity chefs Guy Fieri and Jose Andres are joining forces now to help feed the evacuees and first responders. More than 12,000 firefighters are battling 15 wildfires burning across California.

BRIGGS: No prison time for a former Penn State fraternity brother who pleaded guilty in the hazing death of a sophomore pledge. Ryan Burke was sentenced to 30 months' probation, including three months of house arrest and 100 hours of community service. The charges stem from the death of Timothy Piazza in February 2017. The 19-year-old died after drinking large quantities of alcohol on his first night pledging a fraternity. An attorney for the Piazza family calls the sentence an important step toward justice.

JARRETT: If you're having an affair, this one should make you think twice.

BRIGGS: Yes.

JARRETT: A North Carolina judge just ordered Francisco Huizar to pay nearly $9 million to Keith King, whose wife Huizar had been seeing for 16 months. State law allows lawsuits for what's called alienation of affection. King's lawyer said that his company lost revenue and an employee, his wife! Huizar's attorney claims her client did not break up the marriage because it was already on the rocks. Huizar plans to appeal.

BRIGGS: Alienation of affection. Who knew?

A superhuman feat by 10-year-old Clark Kent Apuada. The swimming phenom with a very cool name shattered Michael Phelps' longest standing record set in 1995. Clark Kent beat Phelps' time in the 100- meter butterfly by more than a second. Not only is he fast, this kid is wise.

(BEGIN VIDEO CLIP)

CLARK KENT APUADA, BEAT ONE OF MICHAEL PHELPS' RECORDS: Always have fun and never give up on your dreams, no matter what anybody says. And, yes, that was one of my dreams, to beat Michael Phelps' record since I was seven.

(END VIDEO CLIP)

BRIGGS: Clark Kent has been swimming competitively for just four years. Good luck pursuing all of Michael Phelps' records, though. No pressure.

JARRETT: I don't know, I think he's off to a pretty good start.

BRIGGS: Good kid.

JARRETT: Thanks so much for joining us. I'm Laura Jarrett.

BRIGGS: Great to have you here this week. Thanks so much.

JARRETT: Thanks, Dave.

BRIGGS: I'm Dave Briggs.

"NEW DAY" starts right now. See you tomorrow.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is the first trial. This is a very important step.

UNIDENTIFIED FEMALE: The defense team saying that Rick Gates was all to blame.

KELLYANNE CONWAY, COUNSELOR TO THE PRESIDENT: This trial centers on matters that have nothing to do with the campaign.

REP. ADAM SCHIFF (D), RANKING MEMBER, INTELLIGENCE COMMITTEE: He's going to go all in for a pardon. He's going to be the last man defending Donald Trump.

SEN. RICHARD BLUMENTHAL (D), CONNECTICUT: There had been no plan to reunite these children. It amounts to child abuse.

UNIDENTIFIED MALE: I think the best way to describe them is to be more like a summer camp.

UNIDENTIFIED FEMALE: You know what the difference is between summer camp and this? You go home to your parents after summer camp.

(END VIDEO CLIP)

ANNOUNCER: This is NEW DAY with Alisyn Camerota and John Berman.

[06:00:04] ALISYN CAMEROTA, CNN ANCHOR: We want to welcome our viewers in the United States and around the world. This is NEW DAY. It is Wednesday, August 1st, 6:00 here in New York. John Berman is off. David Gregory joins me.

Welcome to August.

DAVID GREGORY, CNN ANCHOR: It's August 1st.