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Connect the World
Trump Slaps 25 Percent Tariffs on Canada and Mexico, 20 Percent on China; U.S. Continues to Share Intelligence with Ukraine; Arab Leaders Discuss Alternative to Trump Gaza Plan; Trump Urges Nations to Build Manufacturing Plants into U.S. to Avoid Tariffs; Fears Trump Tariffs Could Drive U.S. Into Recession. Aired 9-9:45a ET
Aired March 04, 2025 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
BECKY ANDERSON, CNN HOST, CONNECT THE WORLD: Well, this is the scene in Washington, D.C., where later today, U.S. President Trump will deliver a
joint address to Congress billed as the renewal of the American dream. It's 09:00 a.m. in the U.S. Capitol. It is 06:00 p.m. here in Abu Dhabi from our
Middle East programming headquarters.
You're watching "Connect the World" with me Becky Anderson. Well ahead of his speech, Mr. Trump's tariffs on China, Mexico and Canada take effect,
spooking global markets. Meanwhile, China and Canada retaliating against those new tariffs. And President Trump announces a pause in aid to Ukraine
just days after a tense meeting with the country's president.
Stock markets in New York open about 30 minutes from now, with investors digesting that news of immediate retaliation by China and Canada against
Trump's tariffs, futures certainly indicating a lower open. Watch this space. We will be live at the New York Stock Exchange at 09:30 a.m. for the
open there.
And let's start with Mr. Trump's decision to press the button on these tariffs, slapping 25 percent levies on many goods from Canada and Mexico
and doubling tariffs on China to 20 percent. Well, the White House says the president imposed the tariffs because those countries have failed to stop
the flow of legal drugs into the United States. President Trump gave his own explanation on Monday night.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: They can't come in and steal our money and steal our jobs and take our factories and take our
businesses and expect not to be punished, and they're being punished by tariffs.
(END VIDEO CLIP)
ANDERSON: Well, they use tariffs coming at a time of increased stress on the U.S. economy. Inflation remains somewhat worrisome, and they are, of
course, sparking trade wars. Canadian Prime Minister Justin Trudeau says his country will immediately slap $20 billion worth of tariffs on American
goods, raising that to 86 billion within weeks, China also retaliating.
We've got Vanessa Yurkevich connecting us this hour from New York. Marc Stewart is in Beijing, and Paula Newton has reaction from Ottawa in Canada.
Vanessa, let me start with you. Let's break down what we know about these tariffs, first and foremost.
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Well, certainly we know now that there are tariffs in place on Canada and Mexico. 25
percent from all goods from Canada and Mexico coming into the United States, an additional 10 percent on goods coming in from China into the
U.S. right now.
And this is critical, because American consumers get a lot of things from these three major trading partners, things like oil, food, electronics and
cars. And we can expect that prices on these key commodities will rise. And we just learned moments ago that the President of Mexico announced that she
will be putting retaliatory tariff and non-tariff measures in place, starting on Sunday.
We will learn what those are, but we've already heard from China, who is retaliating with 15 percent and 10 percent tariffs on agriculture exports
coming from the U.S., going into China and also, similarly, Canada has put additional tariffs in place hitting agriculture products.
And that is key for American farmers here, because they were hit with retaliatory tariffs in 2018, so much so that the U.S. federal government
had to provide financial assistance for them. So yet again, they are taking the brunt of these retaliatory tariffs here in the U.S. and for U.S.
consumers, this is coming at a very shaky time, economically.
Consumer sentiment fell in the month of February. Inflation is starting to heat up, and these tariffs bring a lot of uncertainty in terms of prices,
and then consumers usually, as prices rise, they start to pull back. And that has made Wall Street here very nervous. You mentioned at the open
there those stocks closed, markets closed the DOW down by 650 points.
Becky, what wiping away all gains that were made since Trump was not -- was elected back in November. So, there's a lot of uncertainty here playing
out. Businesses are nervous. Consumers are starting to become nervous.
[09:05:00]
And we are really starting to see the beginning of a trade war. And I emphasize beginning, because this could obviously only escalate from here,
Becky.
ANDERSON: Yeah. And Marc, let me bring you in out of Beijing. Vanessa, thank you. China, hitting back then on U.S. agriculture, and it says it
won't be bullied. What more on the response from Beijing?
MARC STEWART, CNN CORRESPONDENT: Right, Becky, I think the response from China is very sharp, and it's very strategic. As Vanessa mentioned, in 2018
American farmers dealt with the hardships of tariffs. China has made this very calculated move to again, target farmers, target people who work in
food service, to target the agriculture industry.
These are jobs. These are people in the United States, who live in the Midwest, who live in the middle of America, the heartland. China knew
exactly what it was doing. One item on the list of these various tariffs on agriculture products. Tariffs that range in anywhere from 10 to 15 percent
in addition to what we already seen are soy beans.
Soy beans are important here in China because they are used to feed pigs. Pigs make up the pork industry, a very important commodity, a very
important part of the Chinese economy. But it's not just these tariffs, it's the language that we are hearing from the Chinese government, from the
Ministry of Foreign Affairs.
The response today, it's a lot more pointed than we've heard even just days ago. Take a listen to some of the remarks we heard just earlier today here
from Beijing.
(BEGIN VIDEO CLIP)
LIN JIAN, CHINESE FOREIGN MINISTRY SPOKESPERSON: If the U.S. has ulterior motives and insists on waging a tariff war, trade war, or any other kind of
war, China will fight the U.S. till the end. We advise the U.S. to put away its bullying face and return to the right track of dialog and cooperation
before it is too late.
(END VIDEO CLIP)
STEWART: None of this is truly a surprise this -- it's not a surprise move by Beijing, and certainly the United States isn't going to be that
surprised by it. I've been talking to a number of sources who are both in diplomatic and economic circles. And the real question was, it wasn't if
China was going to respond, it was when and just how strong of a response it would be.
And now we have these actions from today. And Becky, as we've talked before, this very much falls in line with China's foreign policy playbook
of tit for tat. You hurt me, we -- I will hurt, you back. And now China is responding in this very forceful way, Becky.
ANDERSON: And perhaps we might have expected that from Beijing, as you rightly point out, Marc. Paula, let me bring you in what we might not have
expected two months ago is a tit for tat, sort of trade war between the U.S. and Canada. And today Canada, going so far as to suggest that it faces
an existential threat from its neighbor.
Walk us through what's been done out of the gate in response to these U.S. tariffs? And Paula, what more could come from Canada?
PAULA NEWTON, CNN CORRESPONDENT: Well, Becky, you bring up the salient point here, right? Canada has a free trade agreement that Donald Trump
negotiated and signed in 2020. This is not China, someone that the U.S. had considered an adversary. This is Canada, and really it is ripping up the
trade book, if you will, for what they have negotiated already with allies.
So, what is Canada doing? Well, it is hitting back with 25 percent tariffs on goods like meat and vegetables, dairy products, alcohol, think about it,
Becky, anything in the United States, and we're talking about things like Bourbon or wine or beer will get a 25 percent tariff, but more than that,
many provinces here in Canada.
I would say the majority, will now be taking U.S. alcohol off their shelves and refusing to sell it. This is the kind of trade war that we're in for
right now. We do expect to hear from Prime Minister Trudeau at 10:30 giving us more details on all of this, but I do want to give you some insight into
what is already going on both sides of the border.
So right now, Customs Brokers on the border are trying to figure out, when they have a truck that comes in with their bill of shipment, what they must
charge those companies that are now shipping from Canada into the United States.
It is already leading to delays, but more than that, it is already changing the way people, businesses have basically designed all of their assembly,
all of their inputs and it is really wreaking havoc, as I'm hearing from some business owners already.
[09:10:00]
Keep in mind this morning, Becky, we have already had two top CEOs in the United States from both Best Buy and target say that Americans will feel
this in terms of not just the tariffs that the U.S. has put in, but the retaliatory tariffs from Canada and Mexico and China, that Americans will
feel that in the coming days, not just weeks, but days, all of this to make clear that when we say the wood tariff.
What we could actually be talking about is inflation, because that is the way it's going to lead? What can Canada do next? We will find out more at
10:30 but one thing that is on the table is either adding a levy that Canada would charge more for the United States for any hydro power gas,
natural gas they take from Canada, so putting a levy on that. And also, perhaps restricting supplies, which would be an incredibly serious move.
ANDERSON: It's a fascinating time for Canada, given that the people of Canada, or certainly the ruling party, faces an election, a leadership
election at present, there will be a new leader of the governing party very soon. How is what is going on between the U.S. and Canada, this tit for
tat, sort of trade war at present affecting the atmosphere with regard these forth coming elections?
NEWTON: There are two things to note here I will deal with what we call an own goal here in Canada, that the governing party, the Liberal Party,
Justin Trudeau, has already said that he will walk away from his prime ministerial role. That will happen, likely in less than a week, because on
March 9, the Liberal Party of Canada will elect a new leader.
Whoever that leader is, will become prime minister, could be for a matter of days, could be for a matter of weeks. That means we will very soon be in
an election here in Canada that notwithstanding, there has been, I would say, unprecedented unity here. Becky, take the word war.
Canada feels as if, economically, it is at war with the United States right now, and given that there has been a cross-party alignment. But more than
that, Becky and you and I have talked about this before, an anti- Americanism that I have not seen present in this country in my lifetime.
And that is really saying something, given the disputes that have gone on between these two countries. And significantly here, Canada has prepared
Canadians for how much this will hurt economically. I'm not sure the same has been done in the United States. Canada will continue to fight back hard
because they believe that they have prepared Canadians for what is ahead.
Make no mistake, Becky, this will hurt Canada economically, and the fact that politically, we are right now on the back foot. That is also not
ideal. This should resolve itself in the next few months, and at that point in time, Canada will really have to chart a new path, as many allies are at
this hour to figure out what they do because the protectionism and the isolationism coming out of the United States, most people do not believe
that will change in a matter of months.
ANDERSON: Yes, fascinating, isn't it? It's great to have you, Paula. Thank you very much indeed. More from Paula and what is going on in Canada as we
move through the hours to come. Thank you. Turning to Ukraine now, a country grappling with what to do next after U.S. President Donald Trump
pulled U.S. military aid overnight.
It was a simmering threat, of course, made all the starker and more sudden with that White House decision. The issue topping Ukrainian news coverage
and on the minds of millions across the country, as Russia launched nearly 100 attack drones overnight.
Soldiers are expressing their hopes that Europe will now step up one while one Ukrainian lawmaker urges the government in Kyiv to appease Mr. Trump
with an apology, if that is what it takes to resolve the rift. CNN's Nick Paton Walsh explained the significance of this latest move from the Trump,
White House when he spoke to one of my colleagues earlier.
NICK PATON WALSH, CNN CHIEF INTERNATIONAL SECURITY CORRESPONDENT: There is no more seismic move frank in the Trump Administration can make, other than
pausing this aid. How much well Ukraine appears to rely on, depending on your listening to anything between 40 percent to 20 percent of this
military aid from the United States is trying to get down to 20 at least.
But it's the kind of aid that is so utterly important. We understand that intelligence sharing that's utterly vital for Ukraine's forces to know what
the Russians are planning against them that does continue, it seems, at this stage. But utterly vital are the air defense patriot missiles only the
United States can provide them.
And Ukraine's Prime Minister was utterly clear, that's a key part of what they need. And Zelenskyy himself has said, every morning, frankly, they
wake up and count how many they have to stop Russia's ballistic missiles.
[09:15:00]
That is utterly key now. Also important in this is the fact that there wasn't much clarity as to whether Trump Administration was going to
increase its own funding militarily towards Ukraine. I think they argue a peace deal will make that unnecessary. So, this is essentially about
freezing out or slowing down the remnants of Biden authorizations that were still trickling their way towards Ukraine.
But it sends a huge seismic blow to Ukrainian moral here, because all the talk, the rhetoric, the theater of the past two weeks has left people here
dizzy, frankly. But this is an actual, immediate, practical consequence. Now, of course, there will be a lack of clarity as to some of these issues
when they become critical or not, but we did know that round about in the summer, Ukrainian officials were concerned about the shortage of ammunition
that may become more acute.
Yes, drones do a lot of the fighting on the front line here, but be in no doubt. This is a hammer blow to Ukraine. And at least President Zelenskyy,
in a very complicated bind, because it is clear that Trump officials want to see him apologize in some way, possibly publicly.
It's clear they want him to sign up to a rare earth minerals deal, but within that, there's no promise of aid or security guarantees. And it's
also clear now that -- to be committed to peace, but it's the kind of peace, frankly, that's the big question here.
Ukraine and its European allies say that without security guarantees to protect Ukraine, if Russia refits, replenishes and attacks again, the peace
is rushed and meaningless and works in Moscow's favor. So, Zelenskyy basically has to apologize, do everything the White House wants for no
obvious immediate gain on his side, apart from the continued good graces of the U.S. President.
It's an exceptionally hard choice, but this morning, Ukrainians again waking up to the unimaginable happening before their eyes.
ANDERSON: Nick Paton Walsh reporting for you. You are watching, "Connect the World". There is a lot more ahead. It's busy news cycle. Stay with us.
(COMMERCIAL BREAK)
ANDERSON: Well, the world will be watching as U.S. President Donald Trump addresses a joint session of Congress in the hours to come to outline his
administration's agenda, accomplishments and goals for the year ahead. The White House says that the theme of the president's speech is, and I quote
here, the renewal of the American dream.
Well, immediately after his address, Democratic Senator Elissa Slotkin of Michigan will deliver her party's rebuttal. And CNN, of course, carry both
events live. CNN's Alayna Treene joining us now from the White House. So, what should we expect from the president's address. First 45 days, of
course, what do you expect the focus to be?
ALAYNA TREENE, CNN WHITE HOUSE REPORTER: Well, I'm told, from my conversations, Becky, with White House officials and Trump Administration
officials that essentially, the president is looking to take a victory lap, not only of his first six weeks in office.
[09:20:00]
But also, still looking back to the election and to argue what I know you know he personally still believes, which is that he believes he has a
mandate to carry out his agenda, even though, of course, he's still won by some margins. Now, slim margins, I should say, excuse me, but just to get
into some of what the White House has laid out that we know he's going to cover.
So, as you mentioned, the theme of this speech is going to be the renewal of the American dream. But I'm also told that this speech is going to be
very heavily focused on domestic policy. You can expect him to talk about what the work that DOGE and his administration has done to greatly slash
the federal work force and really reshape the government into the eyes of Donald Trump.
He'll talk about the economy, something that, of course, is top of mind for members of Congress right now, especially as you know that House and Senate
Republicans are divided on how they want to move forward with this bigger budget resolution and trying to work on the president's economic
priorities.
He's going to talk about tariffs, so one of the biggest issues, of course, of today, I'm told, as well. And then we'll also talk about immigration and
the border. And then I think the big thing that everyone is really trying to figure out how he's going to frame this as he's going to talk about
foreign wars.
And really his desire to end both the wars in the Middle East and between Russia and Ukraine. Now one key question I have is, which version of the
president will we see tonight? One, of course, is, and I'm someone who's covered the president for dozens and dozens of his campaign rallies and
speeches over the last two years is, will he go off script?
Will he stick to the script that his speech writers have kind of designed for him? Or will he go off script? Will he try to appear presidential
credit call for unity, as we know that his advisers have been telling him behind the scenes to do, or will he really, kind of given to his impulses
and try to throw red meat to his base and MAGA supporters.
So that's a key question. But again, I think one of the biggest things that is not only that the speech is suit Congress and the House and the Senate,
but the world will be watching as well, and the language he uses, particularly as it relates to foreign policy, I think, is going to be one
of the most important moments of the evening.
ANDERSON: OK, well, we will look forward to that later, today. Alayna, thank you. Well, U.S. Democrats will face a fresh test of whether they can
effectively counter Donald Trump's prime time programming, following what is this speech, this joint address to Congress that comes as the Democratic
Party is still figuring out the best way to handle the president's second term.
The party hopes to present a united front and zero in on how Trump's actions, they say, are negatively impacting people and falling short of his
promises. CNN Congressional Correspondent Lauren Fox has more.
LAUREN FOX, CNN CONGRESSIONAL CORRESPONDENT: The biggest challenge for Democrats is going to be deciding how and what to respond to in the
president's address on Tuesday night. It's really clear from conversations that I had with Democrats across the capital on Monday evening that they
are really grappling with what exactly is going to resonate with Americans across the country.
Now, Elissa Slotkin is going to be giving the official Democratic response. She is a newly elected senator from the state of Michigan, and a lot of
Democrats are arguing that she's a pro at messaging. That is how she won her election to the United States Senate. That is how she was successful in
Congress, how she was able to win a really difficult House seat over and over again.
And they believe that she's going to be focusing on the issues that they believe matter to a lot of voters, including the economy, including
protecting Medicaid and Social Security. Those are the things that they think that she's going to be really successful at. Now there's a lot of
other things that Democrats are concerned about with the Trump Administration.
A lot of Democrats are going to be bringing fired or furloughed federal workers as their guests to this presidential address. That's an issue that
they're going to be focused on. There's also so much concern in the aftermath of that Oval Office meeting on Friday with President Zelenskyy,
where a lot of Democrats are very concerned about the fact, they believe that the U.S. is entering a very, very different position on the war in
Ukraine.
And Democrats said that it's going to be really challenging to not get hung up on going after every single thing that Donald Trump says that they
disagree with. Instead, they believe that they need to have a unified message that is going to resonate overall though. Democrats very confident
that Slotkin is going to be able to deliver that message for them.
ANDERSON: Well, our Lauren Fox reporting for you from D.C. Let's get you up to speed on some of the other stories that are on our radar right now.
Importantly, Arab leaders are in Cairo to discuss an alternative to Donald Trump's hugely controversial plan to take control of Gaza and displace its
population.
The U.S. President has suggested Gaza becoming a quote, Riviera in the Middle East. The draft of the proposal under discussion in Cairo has been
obtained by CNN and the plan would exclude Hamas from governing the Enclave once the war ends.
[09:25:00]
Well, Israel says it is not ruling out cutting Gaza's water and electricity supply. It's according to a spokesperson for the country's prime minister.
Israel has stopped the entry of humanitarian aid to pressure Hamas into agreeing to new terms for a ceasefire extension.
Hamas wants to stick to a deal Israel agreed to in January, which could lead to the end of the war altogether. Well, more than 55 million people
across the central and southern United States are bracing for a line of violent storms that may sweep across the region on Tuesday.
The severe weather brings a threat of tornadoes and blizzards and fire weather. Powerful storm is altering Mardi Gras celebrations in Louisiana,
where New Orleans officials have modified parade routes across the city. You're watching CNN. I'm Becky Anderson, and this is "Connect the World".
Next up, could Donald Trump's new tariffs push the U.S. into recession? Well, it is a good question. We'll speak to leading economist Mohamed El-
Erian and get his insight on that. Plus, Pope Francis faces another setback with his health. We are following the pontiff's condition from his Rome
hospital. More on that after this.
(COMMERCIAL BREAK)
ANDERSON: -- cut down the first one. Just good question though. Welcome back. I'm Becky Anderson in Abu Dhabi. You are watching "Connect the
World". These are your headlines. This up U.S. President Donald Trump's tariffs on Canada, Mexico and China are now in effect.
Canada and China responding by announcing retaliatory tariffs almost immediately on U.S. imports. Well, Ukraine stressing the importance of U.S.
support a day after President Trump decided to pause aid shipments. Ukrainian Prime Minister says American patriot missiles are the only way to
deflect some Russian attacks.
[09:30:00]
In the coming hours, President Donald Trump will address a joint session of Congress. The White House says the theme of the president's speech is the
renewal of the American dream. 45 days into his administration, CNN will carry that event live.
All right, that is, or was -- the opening bell on Wall Street. The markets open and shares well, they are looking decidedly. I want to say ugly,
because that's not ugly, but it's decidedly sort of pessimistic. I will say these markets we need to watch closely today.
This is only the beginning, of course, we need to let them settle. But the futures were indicating that investors would be selling off these markets,
wider economic fears growing that Donald Trump's new tariffs could push -- just could push the U.S. into recession.
Now, the dollar weakening earlier, as investors fear that the trade war could drive up inflation, as I say, weaken the U.S. economy. As we've been
reporting, President Trump hit Canada, Mexico with 25 percent tariffs. He doubled levies on China to 20 percent Beijing and Ottawa already fighting
back with their own measures. Trump, though insisting there is a way around this. Have a listen.
(BEGIN VIDEO CLIP)
TRUMP: What they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs. I would
just say this to people in Canada or Mexico, if they're going to build car plants, the people that are doing them are much better off building here,
because we have the market where the market where they sell the most.
(END VIDEO CLIP)
ANDERSON: Right. Joining us now is Mohamed El-Erian, who is Chief Economic Adviser at Allianz and Chair of Gramercy Fund Management. He's also the
President of Queens College Cambridge. Joining us from the city, it's always good to have you, sir. Thank you for joining us.
Donald Trump, the art of the deal, we are seeing, at least some would argue his negotiation tactics out there, whatever he is up to, at this point, we
are seeing tit for tat retaliation on these levies that the U.S. has imposed. Back in February, you wrote about the wide-ranging impact of
Trump's barrage of new policies.
Writing that, with the growing uncertainty, quote, the world would face not just the threat of a slowdown in U.S. growth. It would put at risk the
American economic exceptionalism that has played, you say, such a critical role in shielding the global economy and markets from many disruptive
forces.
And I don't think anybody would disagree with you on that. How big a risk, though, do you believe Trump's trade wars are for, what you describe as
American economic exceptionalism at this point?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER AT ALLIANZ: They are a consequential risk, Becky, and we're already seeing the impact. We're
seeing a wait and see attitude on the part of business. We're seeing households also getting more concerned. And what that does, it slows down
economic growth.
And if the U.S. economy slows down, there is no other meaningful economy to step in. Europe has its own issues. China has its own issues. So, this is
consequential, not just for the U.S., but for the global economy as a whole.
ANDERSON: I think it's really interesting that the backdrop of what will be his first State of the Union later today, could be a blood bath on these
markets. And I mean blood bath perhaps is, is going a bit far, but we're down more than one per cent on these markets. On the open here, how does
the stock market, global markets, perhaps, is a wider story, and indeed, the U.S. economy shield itself from this volatility, Mohamed?
EL-ERIAN: So, it's difficult to shield yourself from this volatility, because what tariffs do is they blow what's called a stack inflationary
wind. That means lower growth and higher inflation. That combination, Becky, is very difficult for policy to counter. Think of the Federal
Reserve.
They have a dual mandate, employment and inflation. What happens when employment goes down, inflation goes up, they get paralyzed.
[09:35:00]
So, this is a particularly difficult cocktail for policy to deal with, and that is why economists have always warned about tariffs. Once you let them
out, once you let the genie out of the bottle, it's actually very difficult to put it back. And already you talk about the fact that Canada and China
have announced their own set of tariffs.
Mexico just announced that on Sunday they intend to unveil their response to the U.S. So, there was this risk of tit for tat, where everybody ends up
worse off.
ANDERSON: Brian Cornell, the CEO of major U.S. store Target, has said today that consumers are likely to see price increases in just a few days. So,
you look at these markets sort of minute by minute. And you've got a good sense of what higher prices and inflation might mean for the Federal
Reserve, or at least how investors are betting the fed might act going forward. What's your sense at this point?
EL-ERIAN: So, first, I think companies are going to react much more quickly in passing through to the consumer the higher cost, which means high
inflation. Why? Because they learned a lesson from 2021, 2022 when inflation went up and caught them by surprise. So, the reaction functions
this time around is going to be much faster.
We've already seen that some companies have moved ahead of the tariffs, so called anticipatory or preemptive price increases. That puts the fed in a
difficult position. The market right now believes that the fed will cut rates by two or three times for a total of 0.75 percentage points. I'd be
surprised if we get 1 this year.
ANDERSON: Yeah, that's fascinating. That's really fascinating. It will be interesting to see how this Trump Administration deals with the U.S.
Federal Reserve. Of course, it isn't clear at this point how much pressure the admin will put on the central bank. Donald Trump was elected on a
mandate to reduce the cost of living for U.S. consumers.
At this point, what do you expect him to say today to sort of shore up that promise? Because, as I say, this State of the Union 45 days into his
administration is likely to be. We don't know for sure, but it's likely to be sort of, you know, off the back of pretty volatile markets. Is not
looking pretty out there.
EL-ERIAN: I suspect he will say two things. One is, I'm already succeeding. Look at oil prices. Look at energy prices. They are down to levels that we
last saw a little bit in September of last year, but we haven't seen since November of 2021. So, you'll say, first of all, look, I am succeeding on
the energy front, and that's important, as you know, for Americans who drive a lot.
And then second, he will say, yes, they may be a bit of pain in the short term, but the gain over the longer term is going to be much more
significant, if you like, let's just absorb a bit of a bumpy journey to a much better destination. I suspect those will be the two economic messages,
ANDERSON: Yeah. Yeah. And he'll be helped by OPEC Plus, of course, on that energy price promise, given that they have already announced as a group
that they will open the taps on production. So, you make a very good point. Look, finally, President Trump, he's taken aim at Europe.
And it is expected that is in his State of the Union address, he'll continue to do so tonight, both with tariffs, of course, and with the war
in Ukraine. German markets reacting to the possibility of increased defense spending over Donald Trump's decision to suspend aid to Ukraine.
With the U.S. pulling away Mohamed from its traditional allies. What do you anticipate the impact of being on Europe's economies?
EL-ERIAN: So, the optimist, Becky, are calling this the Sputnik moment, the moment where you realize you've got to do something very different. And
what does this very different look like, it looks like Germany relaxing the self-imposed debt break and spending some of its fiscal space.
It looks like more defense spending across the continent, and it looks like taking seriously the need for reform.
[09:40:00]
And they have a really good road map for it in the -- report. So, the optimists are calling for the Sputnik moment. I think that is a little bit
too optimistic. I hope it is, but I think it's a little bit too optimistic right now, Europe has a number of structural and political issues that make
it difficult to move quickly.
ANDERSON: It's always good to have you, sir. Thank you very much indeed for making the time. We are going to take a very short break. Back after this.
(COMMERCIAL BREAK)
ANDERSON: You're watching "Connect the World". Well, Amanda Davies has "World Sport" after this break. We will be back in 15 minutes with the
second hour of this show. Stay with us.
(COMMERCIAL BREAK)
[09:45:00]
(WORLD SPORT)
END
