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Dow Tumbles as China Retaliates; Kudlow Contradicts Trump; Tlaib Sparks Controversy with Remarks; Biden Makes Trip to New Hampshire. Aired 12-12:30p ET

Aired May 13, 2019 - 12:00   ET

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

(COMMERCIAL BREAK)

[12:00:20] JOHN KING, CNN ANCHOR: Welcome to INSIDE POLITICS. I'm John King. Thank you for sharing your day with us.

China retaliates with tariffs of its own, and the markets drop. President Trump says all will be fine, but many of his fellow Republicans are nervous about a trade war heading into an election year.

Plus, Joe Biden makes his first 2020 campaign stop in New Hampshire this hour, as the frontrunner.

And the president who refuses to cooperate with congressional investigations says it's the Democrats who are causing a constitutional crisis. His attorney general calls it something different.

(BEGIN VIDEO CLIP)

WILLIAM BARR, ATTORNEY GENERAL: That's a nicer reception than I get on Capitol Hill, obviously.

I've been attorney general now for less than three months, and I haven't been able to get out of Washington. But once I deal with this beltway silliness you'll be seeing me.

(END VIDEO CLIP)

KING: We begin the hour with world markets in turmoil. Investors panicking as the trade war between China and the United States escalates yet again today. Take a look at the big board right now. The Dow down nearly 580 points right there. That's more than 2 percent. Just minutes before today's opening bell, China announced it will raise tariffs on $60 billion worth of U.S. goods. Those new tariff rates go into effect on June 1.

It's the latest tit for tat, that after President Trump increased tariffs on Chinese goods last week when trade negotiations flat-lined between the two nations. This morning, President Trump showing no signs of relenting in this fight with China, tweeting repeatedly about tariffs and trade, promising, quote, China wants to make a deal so badly and the president vowing China would, quote, hurt very badly if it doesn't make a deal.

CNN's Cristina Alesci joins us live from the New York Stock Exchange.

Cristina, after last week, some modest drops today, it seems like investors think this one's going to be with us for a while.

CRISTINA ALESCI, CNN BUSINESS AND POLITICS CORRESPONDENT: That's right, investors clearly sending a signal to President Trump. They don't buy his spin that tariffs are actually a positive for the domestic economy and the economy globally, and we see that today. It's red across the board. Really taking a dramatic turn here.

And what you're seeing is investors pricing in the possibility of a protracted tit for tat. Now, listen, that may change because right now President Trump says the U.S. has the leverage. It's reporting great GDP numbers. But as we head into 2020, he's going to start feeling the political pressure and he's not going to want this kind of a day when he's on the campaign trail.

Also, we will see these tariffs start to hurt the U.S. consumer. Unlike what Trump has been putting out there on Twitter, the U.S. consumer does pay for the tariffs. And we might see that come through the economic data over the coming months, which might put pressure on President Trump.

But one thing is clear, President Trump loves to blame Fed Chairman Jerome Powell for dramatic drops in the market. This is all Trump's doing.

John.

KING: All Trump's doing today. Cristina Alesci, live in the markets. Keep us posted as the day progresses. Thank you very much.

With me in studio to share their reporting and their insights, CNN's Kaitlan Collins, Toluse Olorunnipa of "The Washington Post," Matt Viser, also with "The Post," and "Politico's" Heather Caygle.

The president does follow the markets, probably too often. Presidents should not get fixated -- nobody should get fixated on any one day at the market, but this does affect him, but not on this one. He seems to be -- and if you believe his tweets, that he's willing to stay in this for the long haul.

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: But it seems to be the president making the case for this because of the coverage that is being shaped.

And, privately, his advisers are saying that these tariffs and implementing them is not a long-term policy. It's not sustainable. They can't keep it up, even though the president is sending the opposite message. They do know that. And that's why you're seeing the president's allies and his own advisers, including Larry Kudlow, say that, yes, these are going to hurt Americans because it's the importers who pay the costs of these tariffs and they either choose to pass it on to the consumers or they eat the costs themselves. So they do not think this is a long-term policy, even though that's what the president's message is that he's trying to push.

KING: To that point, if you read the president's tweets, you read them and we often correct them. This is one area where he's consistently wrong, much like NATO dues. NATO nations don't pay dues into NATO. It's what they spend on defense that's counts.

The president says that somehow the United States treasury is getting billions, billions of dollars with these tariffs. That's not how it works. His chief economic adviser begrudgingly acknowledging that.

(BEGIN VIDEO CLIP)

CHRIS WALLACE, FOX ANCHOR, "FOX NEWS SUNDAY": It's not China that pays tariffs. It's the American importers, the American companies, that pay what, in effect, is a tax increase, and oftentimes passes it on to U.S. consumers.

LARRY KUDLOW, WHITE HOUSE NATIONAL ECONOMIC COUNCIL: Fair enough. In fact, both sides will pay. Both sides will pay in these things.

[12:05:03] WALLACE: It's U.S. businesses and U.S. consumers who pay, correct?

KUDLOW: Yes, to some extent. And I don't disagree with that. Again, both sides -- both sides will suffer on this.

(END VIDEO CLIP)

KING: It's the polite way of saying the boss is wrong?

MATT VISER, NATIONAL POLITICAL REPORTER, "THE WASHINGTON POST": Yes, not a message that I think President Trump wants out there.

But he's right, and I think consumers are going to start to feel this. And I think that's the gamble that President Trump is taking with a relatively strong economy by other metrics. He's willing to put that a little bit at risk. And in the past this strategy has worked, with Japan or Mexico, other times where he's threatened tariffs, the other countries come along.

But China is sort of a different animal in terms of their strong economy and how much damage they can do to the U.S. economy. And this is a little bit also through a 2020 prism where President Trump has talked recently about his opponents, Pete Buttigieg, imagine him negotiating with China. He's criticized Joe Biden on this. So you can see him sort of transitioning into a re-election posture with these China negotiations.

KING: But, to that point, if you -- again, a dozen tweets the other day, more this morning. If you read them, it gets a little scatter shot sometimes, but the president is trying to make the political case for this. You write in the Sunday paper, it's interesting, you know, that the president has been talked out of this in the past by economic advisers who say, sir, you know, it's not good for the economy, it's not good for you politically now as we get closer to 2020. But during the first two years of his administration, Trump was hemmed in by constraints, including people who tried to limit his impulses and prevent quick decisions that might upset other parts of the Republican agenda. That has all changed this year. Trump is now surrounded by top advisers and GOP leaders who applaud and embolden his instincts.

Well, we know, dating back 30 years or more, when he was a businessman, China is one of his reflexive instincts. He believes this fight is long overdue.

TOLUSE OLORUNNIPA, WHITE HOUSE REPORTER, "THE WASHINGTON POST": Yes, earlier in the presidency, the president had people around him who would sort of speak truth to power and say, no, Mr. President, if you put these tariffs on, they're not going to be paid for by China. They're going to hurt the American consumer. Now it seems like a lot of those people have left the administration, and the president is being sort of forced to make some of these decisions on his own, and he's doing it in a way that sometimes belies the facts and allows him to move forward without necessarily thinking about the consequences for the voters. And some of these consequences will be for voters that voted for President Trump in 2016 because China has been very shrewd in the way that they've retaliated, hitting agriculture products, products in places that President Trump needs in order to win again in 2020. And a lot of these farming communities are starting to have their patience wear very thin because they were thinking that this might be a deal that came to fruition very soon. And now it looks like it might be a long fight and that's something to watch, whether or not some of the patience of these Trump voters starts to wear thin.

KING: And Republicans in Congress, because this is anathema to them to begin with in the sense that it's not traditional Republican establishment economic policy to have tariff wars in trade. That's just not the way.

But he is very different. He has pulled his party here. The question is, how long can he keep them? Especially if you're Mitch McConnell, you're trying to keep the Senate. If you're Kevin McCarthy, you think it's a longshot but maybe you have a chance. You want to be at least competitive in these House races in 2020.

If you look at -- to your point about the political calculations from Beijing, the new tariffs, cotton, machinery, grains, aircraft parts, optical instruments, certain types of furniture, corn flour, wine, certain types of chemicals, rare earth, medical equipment like MRI machines. And so you have -- here's a farmer quoted by WCCO, in Minneapolis on Sunday, Brad Hovel, he says, the problem is we need help now -- that's kind of the crux of it. We've been dragging along here for a little while and we need something done sooner rather than later. We understand in agriculture no trade deal will be a perfect deal for everybody. You know there's going to be some sacrifices have to be made here and there. But the way it's been, ag has been the sacrifice here so far.

How long until people on Capitol Hill start raising their hand and saying, Mr. President, we can't take this?

HEATHER CAYGLE, CONGRESSIONAL REPORTER, "POLITICO": Right. I mean, as you point out, this is an area where we've seen top Republicans on The Hill break with Trump in ways that we don't normally see. And who is hurt most by these retaliatory tariffs from China? It's farmers. Who represents farmers? Mostly Republicans. And, you know, we saw Senate Finance Chairman Chuck Grassley, who represents Iowa, already saying, look, if you don't back off these tariffs, there's no way we're going to move to ratify your signature trade deal with Mexico and Canada, which Trump has called his top legislative priority.

So Republicans are already digging in on this and trying to pressure him. Will it work? I don't know. We'll have to see.

KING: And will he hold. Will he hold in the sense that the president believes this fight is long overdue. The president is right that China violates all the rules when it comes to intellectual property. The president is right that China subsidizes a lot of its economy. That's one of the fights he has with the European union as well. Will the president stay firm here if China doesn't budge and we get closer and closer to 2020?

COLLINS: So they are counting on China budging. That is essentially what they are betting everything on right now with this and they think that China is not in the best place right now, that they will also want a deal, which is true. Both sides here do want a deal. So the question is, are they going to be able to get to that because we've seen in 2017 the president's economic team saying we're getting very close to a deal. They said it last year. They just said it as recently as this 11th round of talks that did not end great. So that's the question. They're banking on this.

[12:10:07] But what they don't know is what they're going to do if it doesn't work out. That just doesn't really seem to be something they're planning for. So they're really betting on China actually coming to the table. But the last week did not leave people very hopeful about that.

KING: And the president didn't seem very hopeful at one point, tweeting he thinks Xi is trying to wait out the election to see if he gets a Democrat with a different posture.

VISER: And I think Democrats here are a little bit scrambled too because I think there are many Democrats who probably agree with the tough on China stance.

KING: Chuck Schumer -- Chuck Schumer is the president's chief ally in this one.

VISER: Schumer's on board. Elizabeth Warren might have similar rhetoric. Joe Biden, too. They just don't agree with the way that he's going about it. So it's a much more limited argument I think for them to make politically to criticize him for how he's doing it while still standing by the end to that means.

KING: Fascinating to watch. And, again, the president follows the stock numbers closely. He likes to brag when it's going up. We'll see if it's going down several days now. It affects his take in all that.

Next for us here, freshman Democrat wades into history and rewrites it.

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[12:15:40] KING: Today, a new controversy circling a freshman Democrat and a big question about what you might call the burden of proof. The source of the stress test, Congresswoman Rashida Tlaib and remarks she made on Yahoo's Skullduggery podcast. The topic was Israel and Tlaib's support for a one-state solution to the Israeli-Palestinian crisis. Before looking forward, Tlaib looked to the past and, listen closely, said this.

(BEGIN VIDEO CLIP)

REP. RASHIDA TLAIB (D-MI): And there's, you know, this is kind of a calming feeling, I always tell folks, when I think of the Holocaust and the tragedy of the Holocaust and the fact that it was my ancestors, Palestinians, who lost their land and some lost their lives, their livelihood, the human dignity, their existence in many ways have been wiped out and some people's pasts -- I mean just all of it was in the name of trying to create a safe haven for Jews, post the Holocaust, post the tragedy and horrific persecution of Jews across the world at that time.

(END VIDEO CLIP)

KING: Now, calming is at best an awkward word choice in any sentence referencing the Holocaust. And one readily made for Republican critics, including the president of the United States. On Twitter today, quote, she obvious has tremendous hatred of Israel and the Jewish people, the president tweeting. Can you imagine what would happen if I ever said what she said and says?

Now, Tlaib says Republicans, like the president, are policing her words and twisting them into something they are not. Quote, the truth will always win, Tlaib says in her tweet.

Now, remember what you just heard a moment ago. Tlaib did call the Holocaust horrific and a tragedy. So the Republican focus on the word "calming" does twist the congresswoman's words out of contest, but she also fails a critical fact in context test. Yes, as she said, Palestinians lost land in the creation of Israel, but she ignored the fact that Palestinian leaders at the time allied themselves with Hitler and the total war was how the Arab world reacted to the declaration of Israeli independence.

Joining our conversation, our global affairs analyst and former State Department negotiator Aaron David Miller and CNN's Sunlen Serfaty.

Aaron, let me start with you in the sense that she can't rewrite that history and you can't project revisionist history, so why?

AARON DAVID MILLER, CNN GLOBAL AFFAIRS ANALYST: First of all, you know, I think there ought to be a ban of the deployment or employment of Holocaust imagery in metaphor in Washington politics. Every time it's used and deployed and has been by Republicans, Democrats, it's wrong. Genocide is not a unique event, but the willful murder -- systematic organized murder of six out of every seven million European Jews is a unique event and every time it's done it leads to misunderstanding antagonism.

She also has her history wrong. I mean I -- on two points. Number one, it's an arguable proposition, even had there been no Holocaust. Most of the institutions of the current state of Israel were in place before Hitler started killing Jews. So the Holocaust added urgency and international support, but I suspect with or without it, the state of Israel would have -- would have come into being.

And finally on this notion that Palestinians, either negatively or positively, helped to create a safe haven for Jews, the reality is that the Arabs of Palestine, (INAUDIBLE), the grand mufti (ph), in Nazi Germany collaborating, coordinating with the Nazis about what would happen if Rammel's (ph) third court actually had been successful in Egypt and been present in Palestine. They were concerning extermination of the entire Jewish community there as well. So this was ill-timed, ill-advised and I think it clearly is simply going to antagonize and polarize the already polarized debate on Washington.

KING: Which Congresswoman Tlaib, one of the freshman Democrats, who's already been getting a lot of attention, and most of that attention unfavorable. Congressman Omar the same. Republicans saying they're anti-Semites, that they're hurting the cause. Liz Cheney, the number three in the House Republican leadership tweeting over the weekend, surely now @SpeakerPelosi, @LeaderHoyer will finally take action against vile anti-Semitism in the ranks. They must cross -- this must cross the line, even for them. Rashida Tlaib says thinking of the Holocaust provides her with a calming feeling.

And, again, the calming bit is a bit out of context. But, to the bigger picture, that Aaron just laid out about the history and the why, is this deeper trouble for Congresswoman Tlaib and the Democrats?

SUNLEN SERFATY, CNN CONGRESSIONAL CORRESPONDENT: It certainly is. And we've already seen, as you said, Republicans really very eager to seize on those comments, whether they're taken out of context a bit, of course, really focused their fire not only on Tlaib, but we've seen them also do this with other more controversial House freshmen, as you mentioned, Ilhan Omar. They're very eager to kind of paint this as the new norm of what the face of the Democratic Party looks like and Liz Cheney, in her statement about Tlaib, she specifically called it the new norm of the Democratic caucus, very easy to paint this with broad strokes, this is what the face of the Democrats look like now, this -- paint them as out of touch, as extreme.

[12:20:34] You know, not too long ago Nancy Pelosi was the boogie man of the Democratic Party, very eager now Republicans to paint this wing of the party, these views on Israel as mainstream.

KING: And I'm struck, not just in this case, but again in this case, how closely this has followed in the Israeli media in the sense that they see these freshman, they see these proactive, in many cases anti- Semitic statements coming. And it gets coverage I've never seen before in years of doing this. You've got deeper experience than me and you follow it more closely. Is that -- is that right? Is that fair? MILLER: Yes, I mean I think there's a tweeting going on here. There's a certain sympathetic connection between Benjamin Netanyahu recently re-elected and Donald Trump. And I suspect that the prime minister has made a judgment that in fact these progressive Democrats, and the base of the party, are ammunition and advocates to try to essentially turn the Republican Party into the go-to party with respect to Israel. That has electoral consequences. But for the U.S.-Israeli relationship, if this means the end of bipartisanship, if there's an "R" vision of Israel and a "D" vision of Israel, then the U.S. is really relationship over time is going to be in trouble.

KING: Now, Speaker Pelosi has insisted that's not the case, or at least that she doesn't see it that way. I haven't seen anything from her on that. She prefers to deal with these things privately. Is there any indication that she's going to have to deal with this publically?

SERFATY: She does. She has not mentioned it. She's not commented about it. Her office has not gotten back to us when we've asked for comment. I think she will have to face this when they get back to Washington tomorrow, the fact that this is a controversy that's growing. But this, again, just puts Democratic leadership in a very awkward spot, a spot that they have not liked to be in since the start of this new Congress. Only five months already these new members have been here and we've seen time and time again leadership have to answer for the controversial statements of their House freshmen, this small group of House freshman in particular, knocks them off their legislative priorities, knocks them off what focus they want this week, and I think this, again, sets up to be that example this week.

KING: And we'll watch as the week plays out.

Aaron David Miller, Sunlen Serfaty, thanks for coming in.

Up next for us, Joe Biden back in New Hampshire. Middle class Joe wants you to think of him, but in 1988 high IQ Joe, ah, might have been a better fit.

(BEGIN VIDEO CLIP)

QUESTION: What law school did you attend, and where did you place in that class? And the other question is --

JOE BIDEN: Oh, man.

QUESTION: Could you quickly -- I think we --

BIDEN: I think I probably have a much higher IQ than you do, I suspect. I graduated with three degrees from undergraduate schools and 165 credits, only needed 123 credits. And I'd be delighted to sit down and compare my IQ to yours.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

[12:27:41] KING: This hour, just moments from now, Joe Biden makes his very first New Hampshire appearance of the 2020 cycle. Unlike the two times prior, he'll be in a new position, speaking to the first in the nation primary voters as the clear Democratic front-runner.

CNN's Arlette Saenz joins us now from Hampton, New Hampshire.

Arlette, front-runner Joe Biden. Set the stage for us.

ARLETTE SAENZ, CNN POLITICAL REPORTER: Well, John, Joe Biden is going to be arriving here at the community event, a pizza restaurant in Hampton, New Hampshire, in just a short while. People are waiting over by the doors to see him walk in.

But as you mentioned, he's here on his first trip to New Hampshire as the clear front-runner in the Democratic field. We have a poll that came out last week that showed Biden above his Democratic rivals by double digits. He clocked in at 36 percent, followed by Bernie Sanders and a few others behind him.

But Biden is going to be here making his pitch to voters in this first in the nation primary state. And this event has the potential to be a little bit different than his previous events in states like Iowa and South Carolina, where he's stood on a stage and delivered remarks but hasn't really engaged in voter question and answered. And here at this small restaurant, he is going to -- he's expecting to be taking a few questions from voters towards the end. And Biden and his campaign are very aware of trying to maintain that authentic New Hampshire feel here with their events.

Now, it's not just New Hampshire voters who are here in Hampton. I talked to several people who also crossed the state line from Massachusetts to come see Joe Biden speak. And a majority of the people that I've spoken with here today told me that they are focused on selecting someone that will beat Donald Trump. Right now they're trying to figure out if Joe Biden is that candidate.

John.

KING: Be fun to watch. Arlette, enjoy your time on the trail. A little jealous.

Come back into the studio.

It's interesting, if you read all the press in recent days, the common theme seems to be like, oh, it's remarkable Joe Biden hasn't messed up yet. I don't know if that's fair to him, but that seems to be the -- because he has had a history of gaffes in prior campaigns. Is -- I guess, let me just ask it, is that fair to him?

[12:29:43] OLORUNNIPA: Well, he has a long history in his previous presidential campaigns and his 40-year life as a politician of making sort of gaffes, speaking off the cuff, saying things that get him into hot water. So he has surrounded himself with a number of handlers and people who have sort of kept him away from doing that and people have been sort of surprised at his ability to put together not only a campaign that has been mostly gaffe-free, but also he's been able to raise a lot of money. He's been able to really shoot up in the polls in a number of early states.