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Stocks Plunge as China Slaps U.S. With 34 Percent Tariffs; Trump's Message to Investors: "My Policies will Never Change"; JP Morgan Ups Odds of Recession This Year to 60 Percent; Rubio: Markets Will Adjust after Global Businesses Adjust to "New Rules"; Dow Sheds More Than 3,000 Points in Historic 2-Day Rout. Aired 12-12:30p ET

Aired April 04, 2025 - 12:00   ET

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

[12:00:00]

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DANA BASH, CNN HOST, INSIDE POLITICS: Welcome to "Inside Politics". I'm Dana Bash. And we start with another gruesome day on Wall Street, another quadruple digit loss for the DOW, which is on pace to shed 3000 points in two days. The reason, once again, is President Trump's global trade war.

This morning, China became the first country to retaliate against the United States, slapping a 34 percent tariff on American made goods. And yet, there was also some good news for the U.S. economy this morning, a much stronger than expected jobs report. The economy added 228,000 new jobs in March.

CNN's Vanessa Yurkevich is at the New York Stock Exchange. Vanessa, let's start with the Chairman of the Fed. What did he say today, and how does that play into the overall economic picture?

VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Yeah, Dana, and just as he's been speaking, we've seen the NASDAQ and the S&P drop more than 4 percent. The Fed Chair, Jerome Powell saying today that the tariffs were much more aggressive than they anticipated, that inflation is likely to rise and could linger longer, and we are headed for an economic slowdown. Listen to what he said just moments ago.

(BEGIN VIDEO CLIP)

JEROME POWELL, FEDERAL RESERVE CHAIRMAN: Looking ahead, higher tariffs will be working their way through our economy and are likely to raise inflation in coming quarters. While uncertainty remains elevated, it is now becoming clear that tariff increases will be significantly larger than expected.

And the same is likely to be true of the economic effects, which will include higher inflation and slower growth. The size and duration of these effects remains uncertain.

(END VIDEO CLIP) YURKEVICH: Now, reporters in the room also asked Jerome Powell whether he believes that the economy is headed for a recession. He would not answer that, but we know JP Morgan revised their recession outlook up from 40 percent before President Trump announced these tariffs on April 2 to 60 percent.

And you can see just what the stock market has done over time since President Trump took office in January, just a steep decline at the NASDAQ, the S&P and on the DOW. Just a precipitous decline, especially in this last week, as investors are craving some sort of uncertainty, Dana, does it look like they're getting that right now?

BASH: Yeah, they definitely do want certainty. I mean, if you just look at that graph that we had up next year, Vanessa, that is very, very telling. Do want to ask you about those job numbers? They are better than expected. How does that sort of play into the tariff news? And is it -- are they connected at all?

YURKEVICH: It is certainly a signal that the labor market is solid, heading into the trade war. Remember, this is backwards looking. We're looking at March numbers. There was an increase in hiring, a big pickup. We thought it was going to be around 130,000, it's at 228,000 jobs added.

The unemployment rate ticking up just slightly to 4.2 percent. But investors I've spoken to say that this is really ancient news at this point. They're looking forward to the trade war that you don't feel like this trade war has been captured in that March report at all, but what it does signal is that the labor market is strong and could sort of soften the blow of a recession if that's coming.

One investor told me that if we back out of this trade war now, we are likely to avoid a recession because of this stronger report. But of course, as I said that investors are really looking for some sense of certainty right now, and a lot of their, what they're getting is uncertainty around this trade war, especially as we're now hearing retaliatory measures from countries like China, Dana.

BASH: Yeah, absolutely. Vanessa, thank you so much. Vanessa talked about the uncertainty. So, let's try to figure out what the president's plan is right now to fight the trade war the one that he launched. It is hard to tell, because this morning, he posted a message to investors, to Americans, to the world on Truth Social he said, quote, my policies will never change.

Three hours later, he signaled that his policy might change. He wrote that he might make an agreement with Vietnam to reduce the tariffs. And those two messages which were conflicting came after other diametrically opposed messages from the president and his commerce secretary.

[12:05:00]

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: Every country is told us that's the beauty of what we do. We put ourselves in the driver's seat. If we would have asked some of these countries, almost most of these countries, to do us a favor, they would have said no. Now they'll do anything for us. The tariffs give us great power to negotiate. Always have --

HOWARD LUTNICK, COMMERCE SECRETARY: I don't think there's any chance to get that President Trump's going to back off his tariffs.

(END VIDEO CLIP)

BASH: So, we're going to dive into what this means, if we can make sense of it with a terrific group of reporters on this Friday. CNN's Phil Mattingly, "The Wall Street Journal's" Josh Dawsey and CNN's Alayna Treene. It's the volatility, Phil Mattingly.

PHIL MATTINGLY, CNN ANCHOR & CHIEF DOMESTIC CORRESPONDENT: Yeah.

BASH: Of course, the policy is something that needs to be figured out, but it is the volatility of whether this policy is really here to stay that is first and foremost giving the markets and businesses beyond Wall Street the most jitters.

MATTINGLY: Yeah. What's -- I think, remarkable about the 24 to 48 hours since this was announced, is every single conflict at the heart of the Trump Administration's economic agenda is being laid bare on some level, right? This was a choice. They decided to do this. To their credit, they made clear they were going to do this.

People may not have believed them, but this was the agenda. May not have understood that it was possible, but this was the agenda. But that agenda is relying on a couple of pieces, both on the tariff side and, most importantly, on the tax side. They just simply aren't in place yet, and were hopeful, aspirational and severely problematic if they don't work.

And that is that retaliation would be calibrated out of fear of both starting something with Donald Trump that they couldn't win because of the scale of the U.S. market, $3 trillion in exports. You want to mess around with U.S. consumers are far more elastic than people think. So that's part one.

The tax piece is absolutely essential to convincing companies to reshore, to move their supply chains back to the U.S. long process. They're also dealing with a long process on Capitol Hill that's not done yet. That's still very much in the works. I think the final piece of this is what you were hitting it uncertainty.

No multinational company is making any decision right now. Period, end of story. They need to make decisions to move things back to the United States in order for their theory of the case from the administration side to work. And this has all been very, very clear in these first moments.

BASH: And I think it sort of bears repeating and to underscore and highlight the following, Josh, which is, this is not something that happened to this president. This is a fight that he picked. JOSH DAWSEY, POLITICAL INVESTIGATIONS REPORTER AT "THE WALL STREET JOURNAL": Yeah.

BASH: Intentionally so. It's a fight that he has wanted to pick with all of America's trading partners for as long as we can all remember. So, he is bringing this on intentionally, so because he is convinced it is good policy.

DAWSEY: That's right. I mean, he was saying back even in the 1980s that he believed in tariffs throughout the campaign trail. He said he believed in tariffs. He was going to impose significant tariffs, his trade advisors, his team, would go out and say, oh, no, decisions have been set. That's not his policy; that's not his policy.

And Trump would say over and over, look, we are going to do tariffs. I mean, if you did not understand what was going to happen, you were living under a rock. I mean, I'm sort of surprised at these guys on Wall Street and all the other folks who are saying, you know, I can't believe this is happening.

In 2023 there were stories with Trump coming out and saying, If I went, if I win, I'm going to do tests. Now, what I think is different about this presidency compared to the last one is that in the last time he and folks around him, Gary Cohn, Steven Mnuchin, others who tried to rein him in, who tried to say they can't be that onerous.

You're going to really hurt the economy. You're going to destroy the economy. You're going to do this. You're going to do that. And oftentimes they would get him from touching the stove at the hottest part. They would get him from doing the most thing that they thought was most dangerous.

He doesn't have that much time, and he sort of is going to appetite for a limitless risk. He believes look, after 2021 everyone counted me out for dad. I went back. Had all of these cases against me. I came back. I won. It was the most improbable outcome of all time, and I am liberated to do what I want to do. This is Donald Trump doing exactly what he wants to do. It's what he wanted to do the first time.

BASH: Yeah.

DAWSEY: It's what he wanted to do the first time, and he thinks I have a mandate to do it now. I'm not saying he does or not. I'm just saying that is where he's coming from, and that's what we're dealing with, yeah.

BASH: That's such a great line. He has an appetite for a limitless risk. Lots of reasons for that. One is the fact that he got back in, also the constitution does say that he can't run again. So, the only risk politically is A, his legacy, which is not nothing. And B, everybody else in his party who will be on the ballot in the next two years, even to four years.

I want to play what his treasury secretary has been trying to say when being asked legitimate questions about how all of this is going to work. (BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Are you preparing to negotiate with some of these trading partners before that tariff rate comes into effect on April 9th?

[12:10:00]

SCOTT BESSENT, TREASURY SECRETARY: Well, I think there have been a lot of discussions, but I think we're just going to have to wait and see.

UNIDENTIFIED FEMALE: Do you plan on having negotiations before that date?

BESSENT: Again, I'm not part of the negotiations, so we'll see.

UNIDENTIFIED FEMALE: Canada and Mexico notably missing on that chart. Why is that?

BESSENT: I'm not sure.

(END VIDEO CLIP)

BASH: I mean, you know, this is the treasury secretary. It's his signature on our money. And it's understandable, knowing who he works for, why he's not going to go out on a limb, because anything he says will be determined and almost certainly changed by the President of the United States.

ALAYNA TREENE, CNN WHITE HOUSE REPORTER: You know, that's absolutely right, and Bessent is actually one of the people we're just having this conversation earlier. Not all of the president's top economic advisers are like this.

BASH: Yeah.

TREENE: He's very, very careful with his words, when he goes out there and does interviews. I mentioned another person, Howard Lutnick. He's someone who tends to and you hear this from inside the administration as well, be a little bit more candid when he does these interviews. But I think -- they're laughing.

DAWSEY: A little bit --

TREENE: -- I think the thing though, that has been so clear to me in the messaging, I mean, they really had this tour of his top economic advisers over the last 24, 48 hours coming out to make this clear, is how serious the president is about this one thing that you mentioned about what's different now than in his first term.

I agree with everything you said, but the other thing is the reaction to the stock market. I think the thing that's been so interesting for me as someone who also covered him in his first administration is he used to shape policy and definitely change policy based on how it was performing in the markets. That's something that he's not doing this time around, either. And part of that is, again, you know, he has less to lose than he did the first time. He doesn't have the people around him. But it's also because, when you get down to the fundamental nature of what the president believes at his core. He really does believe that he is going to reshape the global economy and rebuild it in a way.

BASH: Yeah.

TREENE: And it really his image, but in a way that he believes will be his legacy builder for years to come.

BASH: I do want to just play one thing, or at least mention one thing, which is the president right now is playing golf. He went to Florida. He's going to go to a Saudi backed golf tournament, but he's playing golf right now. Now presidents play golf. Almost every president plays golf. He really trashed Joe Biden for playing golf.

There's no, you know, no one's questioning the need for presidents to let loose a little bit. That's him arriving at the golf course today. But now, given what's happening right now in the world, on world economies, for the only one reason, that is because he wanted to launch this trade war.

DAWSEY: Well, I mean, last night, he was flying out to go to his club in Florida, to go to that dinner, as you said, to play golf. And I was asking a number of people around him, pretty senior folks, you know, given everything that's going on, what are you guys going to be doing this weekend?

And their reaction to me was they thought the market was going to even plummet more yesterday than it did. I mean, that do not think they were as freaked out, maybe as the market seems to be, as everyone else seems to be. I mean, Trump plays golf almost every weekend. I mean, I'm not --

BASH: Yeah again --

DAWSEY: Again. That's right --

BASH: -- to let loose, but --

DAWSEY: His team says -- right.

BASH: -- very volatile time because of his policies.

MATTINGLY: I think Alayna's point about markets and what Josh has been laying out, I think the hat that says Trump was right about everything. We might mock it or dismiss it. You have to understand within his economic team the belief that markets don't understand, Trump doesn't care anymore.

That was always the supplement from the Wall Street guys in the first term, hey, the market just went down. That's how we beat the trade warriors in this debate or negotiation. The certainty of his economic team, particularly on the kind of data research side that the people that have been telling you this can't work, the markets that are reacting are wrong.

They're wrong. We know they're wrong. We believe the first term stuff worked. We just didn't go big enough. I cannot stress to people enough.

BASH: This is --

MATTINGLY: How much that is internalized in the people that work for it.

BASH: Yep, no, it's definitely a very, very deeply held credo that this is all going to work out, and we will see. You can call the tariffs new rules, a new era, a trade war, which we are in right now. China may see this as an opportunity. It certainly appears that they do a massive global reorder is underway. We're going to talk about that after a quick break.

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[12:15:00]

BASH: Today, China threw down the gauntlet in the global trade war launched by President Trump. It slapped a 34 percent retaliatory tariff on all American exports to China. President Trump responded, China played it wrong. They panicked. The one thing they cannot afford to do.

Now, Secretary of State Marco Rubio is in Brussels this week meeting with America's European allies. Here's what he said about the new trade war.

(BEGIN VIDEO CLIP)

MARCO RUBIO, SECRETARY OF STATE: The markets are reacting to a dramatic change in the global order in terms of trade. Businesses around the world, including in trade and global trade, they just need to know what the rules are. Once they know what the rules are, they will adjust to those rules.

[12:20:00]

The president rightly has concluded that the current status of global trade is bad for America and good for a bunch of other people, and he's going to reset it, and he's absolutely right to do it.

(END VIDEO CLIP)

BASH: Joining us now is Rahm Emanuel, whose resume includes Senior Adviser on Wall Street to Centerview Partners, Former Ambassador to Japan, Former Mayor of Chicago, Former Congressman of Illinois, Former Chief of Staff to Barack Obama. I'm going to stop because this will end up longer than Cory Booker's speech on the Senate floor, but you have a very long resume that all pertains to the conversation that we're having, Rahm but let's talk about the world reaction.

The Australian Prime Minister Anthony Albanese said that the tariffs are not the act of a friend France called it brutal and unfounded, and again, those are the United States' allies. What has America done to its place in the world?

RAHM EMANUEL, CNN SENIOR POLITICAL & GLOBAL AFFAIRS COMMENTATOR: Well, there's both the world and then here at home. I'll start at home. This is the largest tax increase in American history, and the public understands it better than either President Trump or his commerce secretary, which is why they've rejected it, not just at the stock market, but also at the supermarket.

And they understand also that you promised to lower grocery prices, and this is going to raise prices for the Americans. Then at the world, I think there's a not only reacted by world leaders, there's a couple things that I look to. One in Korea, Samsung, big giant semiconductor producer and investor in the United States just announced a major deal with China.

Signal they see China safer bet than the United States, billions of dollars at stake. Second, China and Japan and Korea, rather than Korea and Japan, having been historically aligned with the United States just announced some agreements on economic relations and co-investment Japan, where I, as you said, was an ambassador there for the last four years, has been the number one foreign direct investor in the United States. Nearly half their investment is in manufacturing and industrial in the United States.

BASH: Right.

EMANUEL: They have -- are shocked at these types of investments. And Europe that set up a protection against China called on coercion, the only time they've thought about deploying it now is against the United States. And I think it's a little bit more than ironic. The president who said, I'm going to be remembered for making peace, was the first person, and his first act, within two months, declared war on everybody, a trade war.

And I think it's going to backfire on the United States and the American people fully understand it, because they don't like we're paying taxes.

BASH: Well, he, as you well know, his whole MO on this is, it's about fairness, and it's about the United States not having to pay more with its products abroad. It's about the United States having trade agreements that made manufacturing leave and so forth. Do you think that there is, regardless of how he has executed this? Do you think that there is an argument to be made in the fairness argument?

EMANUEL: Well, one is, so let's take the premise about creating manufacturing for jobs, not wrong in the sense of the economic vitality that comes from that. One, just in Iowa, the other day, Whirlpool closed and eliminated 651 jobs at a home appliance. Or why because the American consumer is depressed.

Second, rather than buying American defense equipment, Europe is saying, forget about it. We're going to do it here in Europe, so we're going to lose those manufacturing jobs. And third, if you want to create and which is a good goal of a more secure economy that has greater benefits to more people being in the manufacturing space, you invest in America and you invest in American workers.

The biggest challenge to American companies today is finding qualified workers. America has always succeeded by investing in its workers. That has been the number one challenge. And second, then the investment strategy. And if you were thinking of that, you would never, ever destroy the goose that laid the golden egg America's predominance in research and development in technology.

He is hurting that at our primary public and private universities, and he's handing the battle against China on quantum computing, AI, biotech, his unilateral disarmament. So, at every level, I get the argument and you say, well, let's forget how you're executing. You can't forget how you're executing, because it's really creating a bruised economy here.

BASH: That's fair. Yeah.

EMANUEL: And not just bruised your you literally are going to pay more at the grocery when your 401k is going down in value. That doesn't add up.

BASH: You mentioned --

EMANUEL: -- a PhD from Harvard economics to know that.

BASH: You mentioned investing in the American worker. One of the things that is so striking is that when I started covering Washington, you were in the Clinton Administration. And obviously one of the big pluses and one of the big hallmarks of that administration was NAFTA and getting through the free trade agreement in Congress.

[12:25:00]

And so, my question for you is, in retrospect, were those trade agreements, I mean NAFTA in particular, is that something that set the stage for Donald Trump to have this kind of mentality?

EMANUEL: Right. Look, first of all, Donald Trump renegotiated it just a short time ago.

BASH: Yeah.

EMANUEL: But the fact is a fair point, which is, look what happened there is there was an abandonment. And said to Peoria to Flint, Michigan to Saginaw, you're on your own. And that was wrong. We did not co invest in America over those periods of time and left communities on their own to challenge China, Mexico, other Vietnam, Cambodia, other countries.

There is no doubt, the lack of investment, and I'm not just saying like the type of investment in major research, major manufacturing, major investment in the workforce, in the type of the skills that they need, there is no doubt that putting those communities on a world stage to compete against a China by themselves was a mistake by both parties and has to be corrected.

And it's going to be corrected by investing in the people, investing in the communities and investing in their competitiveness. So, there's no doubt in the sense of that, but I will say that American workers given the opportunity out compete out work anybody.

BASH: Rahm, I wanted to get to some democratic politics with you, but I got too caught up in this conversation.

EMANUEL: Sure.

BASH: So, we're going to have to leave it there. But you know what? You'll come back. I know you will, and we'll have those political conversations.

EMANUEL: Thank you.

BASH: Thank you. Nice to see you coming up. The White House admitted he was deported to El Salvador because of an administrative error. Now the Maryland father's case is in court. Plus, is there anything Democrats in Congress can do to stop President Trump's trade war? I'll ask the Senate Minority Leader Chuck Schumer. He will be here ahead.

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