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Wall Street, Global Markets Sink as Recession Fears Grow; Rising Rivers Prompt Evacuations and Rescues in Kentucky; U.S. Markets Rebounding Amid Global Trade War. Aired 10-10:30a ET

Aired April 07, 2025 - 10:00   ET

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

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PAMELA BROWN, CNN ANCHOR: I'm Pamela Brown. Happening now, breaking new stocks, tumbling the Dow down about 900 points. This warning from one of the CEOs of one of the nation's largest banks about the likelihood of a recession.

WOLF BLITZER, CNN ANCHOR: Plus, rivers and danger rising, severe storms leading behind death and destruction, and the threat of yet more flooding. We've got the latest storm track. We're watching it all.

Welcome to our viewers here in the United States and around the world. I'm Wolf Blitzer. You're in The Situation Room.

And we begin this hour with breaking news. Another white knuckle day is already unfolding up on Wall Street. Right now, the Dow is down about 900 points, a little bit more than 900 points. Fear of a global recession, those fears are alarming investors here in the United States and indeed around the world, even as President Trump's advisers try to downplay the growing concern.

CNN Business and Politics Correspondent Vanessa Yurkevich is at the New York Stock Exchange for us. We're watching all of this.

All right, Vanessa Yurkevich is in New York for us, Vanessa, sorry, we wanted to hear that sound bite. We'll play it again in a moment. But go ahead and give our viewers an update what's unfolding as we see it right now.

VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Yes, we're watching the markets and it looks like not down quite as much as they were when they opened this morning. The Dow down still about 2.5 percent, I'm looking over at the big board here. You have the S&P down over 2 percent, and the NASDAQ is down just over one and a half percent.

But, really, investors this morning have been bracing for what is to come this week, which are those major reciprocal tariffs set to take effect on Wednesday. They very much see this as a full steam ahead scenario and they are pricing in the worst case scenario in markets. We had the S&P in bear market territory joining the NASDAQ there and the Dow is in correction territory.

Investors really think that we're not through the worst of it right now. We're also hearing from Jamie Dimon of JPMorgan, who said this earlier about where we are right now with markets. He said, the recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession. Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.

Now, JPMorgan last week revised their recession percentage from 40 percent to 60 percent. Jerome Powell, the chair of the Fed, was also asked about a recession. He did not comment on that.

But that is where investors have sort of forecast this may be heading. They are waiting to hear something concrete from the president. He just posted a short time ago that officials from Japan were coming to the U.S. to try to negotiate on their tariff situation. More of that news to come could be helpful for investors here, they've told me. But right now, we're looking at markets down over 2.5 percent almost across the board, guys.

BLITZER: All right. Vanessa Yurkevich, stand by. We'll get back to you. Pamela?

BROWN: Yes. I'm going to go over now to the White House and check in with Reporter Alayna Treene. Alayna, what is the administration saying?

ALAYNA TREENE, CNN WHITE HOUSE REPORTER: Well, we have heard a tour really of different top economic advisers from this Trump administration out on television this morning. All of them really trying to say, you know, don't panic, calm down. Even the president himself posted something similar this morning. He said to Americans, don't be weak, don't be stupid, don't panic, and talking about a new party based on weakened stupid people, he said.

But that's similar to what we heard, including from Trade Adviser Peter Navarro, who was on CNBC this morning. And he was saying, look, there are tax cuts potentially to come. That should maybe ease concerns. Listen to what he said.

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PETER NAVARRO, TRUMP SENIOR COUNSELOR FOR TRADE AND MANUFACTURING: That fine truth was the fact that the biggest tax cut in American history, the broadest base tax cut in American history is coming within a matter of months. So, any discussion of recession seems silly when you factor that in.

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TREENE: So, all of this, really, we are hearing from top White House and administration officials is a little bit defensive in nature, trying to tell Americans, just be patient here.

[10:05:00] Now, I will say there's two different things happening behind the scenes. One -- and we heard some of this mixed messaging over the weekend. One is that the president is still very much committed to these tariffs and long-term. I think that's the key thing here. Yes, he is open to maybe having these conversations with different foreign leaders. He said he spoke with the Japanese prime minister this morning. Two White House officials confirmed to me that he did. But also he still wants to break and reorder the global trading system. And in order to do that, we're not going to see a lot of these major deals happening anytime soon, I believe. Pam, Wolf?

BROWN: All right. Alayna Treene, Vanessa Yurkevich, thank you so much. Wolf?

BLITZER: Let's bring in economics and public policy Professor Justin Wolfers right now he from the University of Michigan. He's joining us from Ann Arbor right now. Justin, what's the significance of entering bear market territory?

JUSTIN WOLFERS, ECONOMICS AND PUBLIC POLICY PROFESSOR, UNIVERSITY OF MICHIGAN: I think it's partly people are worried about their 401(k)s and I've had all sorts of retirees reach out to me terrified about what all of this means. But I think more importantly, it's the market's judgment on the whole Trump tariff agenda. According to Trump's theory of the case, what he's trying to do is make American business outperform. They're putting tariffs on, will help American business, and then there'll be flow-on effects from there.

But what you see here is the market saying, no, we think that the value of American businesses is falling and fallen quite dramatically as a result of these tariffs. This is the tariffs -- this is Wall Street screaming at the White House, if this is help, we don't want your help. Please stop now.

BROWN: Well, we just heard from Alayna Treene at the White House talking about how the White House is defending this. Here's the president's advisers downplaying the growing concerns here of a recession.

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NAVARRO: The market will find a bottom. It will be soon. And from there, we're going to have a bullish boom.

SCOTT BESSENT, TREASURY SECRETARY: There doesn't have to be a recession. You know, who knows how the market is going to react the in a day, in a week.

HOWARD LUTNICK, COMMERCE SECRETARY: You need to reset the power of the United States for America and reset it against all our allies and our enemies alike.

KEVIN HASSETT, DIRECTOR, WHITE HOUSE NATIONAL ECONOMIC COUNCIL: It's a strategy to create a gold major in America for the American broker. That's the strategy.

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BROWN: So, Justin, what is your take on their arguments?

WOLFERS: Look, I think this -- let me explain why it is I think markets hate this so much. Essentially, Trump grew up in an era where there was quite substantial tariffs on American businesses and so some of his complaints would've been totally reasonable in 1960. It turns out today that very few countries, or a week ago, I should say, actually have substantial tariffs on the United States at all.

So, what we have is if we, quote, win this trade war we might be able to get, say, Vietnam to eliminate all of its tariffs. Right now, Vietnam actually charges on average only a 1.1 percent tariff rate. And so if we win, we get a tiny reduction in tariffs.

Now, in the meantime, what's happening is China has put a 34 percent tariff rate on the United States. So, it's incredibly asymmetric. The stakes, if we win, are very small. The stakes that we're putting online that we stand to lose are very large.

BLITZER: What will it take, Justin, for all of this, and it's pretty serious right now, very depressing, as we all know, what will it take for this to turn around?

WOLFERS: I think it's going to take Congress. The Constitution gives the power over tariffs, not to the president, but to Congress. Previous Congresses gave certain limited powers to the president. It's also possible the courts are going to stop this because it's quite plausible that the president has overstepped his authorities here.

You know, Wolf, this is the largest tax increase in a generation, and it's being -- and it's occurring at the stroke of a pen of a man in the White House not going through Congress at all. So, Congress has the power to stop this and I think they're seeing right now, there's a whole lot of them who are not going to get reelected in two years time and they're not getting reelected around an issue that the Republican Party has traditionally hated, which is tariffs.

BLITZER: And taxes too.

BROWN: Yes, exactly. Professor Justin Wolfers, thank you so much. Wolf?

BLITZER: Trade is also on the table when President Trump beats with the Israeli Prime Minister Benjamin Netanyahu later today over at the White House. The two were already expected to talk about the war in Gaza, the remaining hostages and Iran and other issues. But trade certainly has become a significant item on their agenda as well after President Trump slapped Israel with a 17 percent tariff.

Joining us now here in The Situation Room, CNN's Chief National Security Correspondent Alex Marquardt. Alex, Netanyahu was just here a few weeks ago, right? And now he's back. Give us a sense of what's going on.

ALEX MARQUARDT, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Netanyahu was the first foreign leader to visit Trump when he went back into the White House. And now he is the first foreign leader to visit Trump following this tariffs news in an effort, an international effort to renegotiate trade deals between the U.S. and their respective countries.

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So, of course, the major agenda items that are classic for these two leaders, whether it's Gaza, Iran, Syria, will very much be on the table. But the tariffs news is very much adding a new dimension to this. The Israelis had tried to prevent being slapped with new tariffs by doing away with all duties on U.S. products just a couple days before this announcement. It did not work. As you noted, 17 percent now being put on Israeli products. the Manufacturers Association of Israel says that anywhere between 18,000 to 26,000 Israeli jobs could be lost as a result.

So, that is going to be a major item that the two leaders are going to talk about. Of course, the ongoing war in Gaza, where Israel is expanding its operations, taking more territory, occupying more territory in the Gaza Strip, there are questions about whether a ceasefire can be resurrected. Of course, that was a big success early on in the Trump administration. Hamas had rejected an American proposal for what they called for an extension to that ceasefire.

Now, they're saying they're willing to go along with it. The Israelis are demanding more hostages be released. And so Steve Witkoff, the president's envoy, who's going to be in that meeting as well, is still trying to get that ceasefire back up and running. The main sticking point is Hamas is trying to end this war and they're willing to give up all the remaining hostages. Israel wants those hostages, of course, but is not willing to end that war right now.

One other thing to note, Wolf, three American teenagers, Palestinian American teenagers were shot in the West Bank last night. One of them was killed. The IDF called them terrorists who hurled rocks towards the highway. So, that could be another thing that is discussed today. Certainly, those leaders will be asked about it. There are all kinds of things to talk about today. Tariffs, it appears, near at the top, if not at the top of that list.

BLITZER: So, they're going to hold a joint meeting at bilateral meeting at the White House and then have a joint news conference. Is that right?

MARQUARDT: This is the formula that we've seen with numerous other foreign leaders where the two get together in the Oval Office. They take questions from the press. We saw that with President Zelenskyy. Of course, that one ended terribly. Then they go into a meeting and that is then followed by a press conference with the two leaders.

BLITZER: We have coverage of all of that to be sure. Alex, thank you very much. Pamela?

BROWN: A very busy newsy Monday happening now. Also, the measles outbreak in Texas is growing and a second unvaccinated child has died of the virus. 481 cases have been reported in the states so far. Nearly all of them were unvaccinated. Health and Human Services Secretary RFK Jr. was at the child's funeral yesterday and publicly backed the MMR vaccine as the most effective way to prevent the spread of the disease. Of course, that is raising the question, though. Why did he wait until now to do that?

So, let's bring in CNN Medical Correspondent Meg Tirrell. What is the latest, Meg, on this outbreak?

MEG TIRRELL, CNN MEDICAL CORRESPONDENT: Well, even though we are getting that endorsement from Robert F. Kennedy Jr., which is farther than he's gone before in terms of promoting the MMR vaccine, public health experts are telling us he's still not going far enough. He needs to emphasize not just the efficacy of the vaccine, but also its safety and the fact that people should get the vaccine in order to prevent the spread of measles.

Right now, this is not just in Texas. This outbreak has been linked with possibly three other states, New Mexico, where there's another death under investigation. Of course, there's the two in Texas and as well as Oklahoma and Kansas.

And if you guys look at the trajectory of the cases that we are seeing in this outbreak, particularly in Texas, they are still growing really fast. And the fact that we now have possibly three deaths in this outbreak suggest to epidemiologists we are not seeing nearly as many cases as are actually out there. They say they could be as high as 3,000, guys.

So, this death that we learned about over the weekend was in another school-aged child who was previously healthy. No reported previous underlying conditions, and she was unvaccinated. They say the cause of death was measles pulmonary failure. We know measles can cause things like pneumonia.

And of the cases that we know about in Texas, of 481, 98 percent of those cases were either unvaccinated or had unknown vaccine status. And so that's why there's this push for more messaging from Robert F. Kennedy Jr. from the CDC, from anyone at the highest levels of public health in the United States to say vaccination is safe and should be the way to stop this outbreak. Guys?

BROWN: All right. Mike Tirrell, thank you. Wolf?

BLITZER: Very disturbing indeed, very worried about those folks.

Happening now, evacuation orders and water rescues are underway in Kentucky after days of rain and violent storms pummeled parts of the Central and Southern United States. At least 19 people across seven states are confirmed dead.

Sheriff John Ward of Hardin County in Kentucky tells CNN that the rising waters caught people by surprise.

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SHERIFF JOHN WARD, HARDIN COUNTY, KENTUCKY: Surprised the water came so fast and didn't think it would get to them because it, you know, I've seen homes underwater that have never had water. And I don't think people were ready.

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People didn't expect just because it's never happened before.

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BLITZER: CNN's Derek Van Dam is tracking all of this for us. Derek, just how bad is the flooding after these storms and what's going on? What's next?

DEREK VAN DAM, CNN METEOROLOGIST: Yes. I listened to that same interview from the sheriff, Wolf, and he also mentioned that they ran out of barriers to close the roads in Hardin County, Kentucky, and they had to ship them in from Chicago. And that just shows you the level of flooding that is ongoing across some of these hardest hit areas in Kentucky.

Here are some visual examples for you. Check out these homes, these communities, these neighborhoods changed in an instant, Frankfurt in Monterey, Kentucky. Some of these homes isolated from their areas. Here's an example of that. That road you have no way in, no way out. That is going to be a very difficult scenario going forward.

And I want to show you just how much rain has fallen. We're talking about over 800 miles where significant precipitation fell from the sky over the past week, from Ark-La-Tex to the Ohio River Valley. And right now there are 18 river gauges all shaded in purple here that are registering major flooding. In fact, here's an example, the Frankfurt Lock on the Kentucky River, it's currently just over 48 feet. That is just shy of their record level. That is because over a foot of rain has fallen from the sky since last week, midweek.

So, the system responsible, moving eastward, it continues to edge closer to the East Coast, and then we'll say goodbye to that system. But there are still millions of Americans impacted by this slow-moving disaster. Keep in mind, Wolf, this will take several days for these rivers to crest with this amount of water.

BLITZER: Yes, bad situation indeed. Derek Van Dam, thank you very much.

Pamela, Kentucky, your home state.

BROWN: Yes. My heart goes out to my fellow Kentuckians dealing with this historic flooding. They've already been through so much with severe weather, and now this. We're also going to be checking in with the Kentucky governor, Andy Beshear, later in the show.

Still add for you escalating trade war. We're going to speak to Republican Congressman Ryan Zinke on how the tariffs are affecting America's global trade partners.

You're in The Situation Room.

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BLITZER: Let's get some more now on our top story. There's whiplash right now up on Wall Street. Right now, U.S. stocks are up, yes, up, after opening the day less than an hour ago in bear market territory as President Trump's tariffs roil the global economy.

Let's get reaction right now from Republican Congressman Ryan Zinke of Montana. He sits on both the Foreign Affairs and Appropriations Committees.

When you were here with us in The Situation Room last week, Congressman, you said you hoped the tariffs would be short-term. What's your hope now?

REP. RYAN ZINKE (R-MT): Short-term and focused. And what we see is Netanyahu coming to D.C., and I think this is the first series, the negotiation, and I do think there'll be a deal cut.

BLITZER: Between the U.S. and Israel?

ZINKE: Absolutely. Because I think it should be cut. You look at the tariffs themselves and there were broad about you'll say that Netanyahu's coming. Japan is sending their best negotiators forward.

Again, if it results in America being in a better position where manufacturing comes shore, where we're not vulnerable to our adversaries or fickle allies for the key components that run this economy I think is a good thing. But, you know, long-term, again, shotgun has consequences. Higher prices in Montana, you know, we get affected a lot because our number one trading partner is Canada. So, as long as, again, they're short-term and purposeful, I think they'll be successful.

BLITZER: So, you think President Trump is actually open to negotiations on the issue of tariffs with these other countries? Because we had heard very conflicting statements from some of his cabinet members and senior administration economic officials about negotiations to reduce the tariffs.

ZINKE: I think at the end of the day, President Trump is a negotiator. He loves to deal. And I think what we're going to find, my guess is that the first negotiated deal will be Israel, and there should be a negotiated deal.

BLITZER: Do you think that will set an example for other countries to come to the United States and negotiate a deal?

ZINKE: I do. And that's an important -- make the first deal and we'll see again country-to-country making the deals, and I think that's important. Again, if tariffs result in a better position for the U.S. than our trading partners, we're not vulnerable to fickle allies or adversaries for key components that lead this economy, critical minerals, manufacturing chips, those type of things, if results in a better position in the U.S., I think it's good.

BLITZER: Because one of the things some of these other countries, especially in Europe do, they may not necessarily have huge tariffs, but they have other ways of raising money on the basis of what the U.S. experts like a so-called value add tax. They put taxes on us imports to reduce the opportunity for the United States to sell its products in various European countries. They got to deal with that too, I assume.

ZINKE: They do. And I think the European Union, as a whole, I think we can make a deal and target. You know, British, for instance, a long time, our great friend and trading partners, I think we can make deals. And, again, this president, he's the dealmaker and oftentimes he throws a lot out. But as long as they begin to focus and begin to make deals, again, I think the first deal is going to be Israel.

BLITZER: Well, you -- I'm going to get to that in a moment, but would you support a bill reasserting at least some significant congressional authority over opposing tariffs?

ZINKE: Well, as long as they're successful and, again, it results in the U.S. being in a better position, I think it's fine.

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But if it continues where it drags on the economy, where Congress should get involved with it then at that point we're not there yet, but I think it's worth watching.

BLITZER: What else do you expect will emerge from these talks later today between President Trump and Prime Minister Netanyahu? You're on the Foreign Affairs Committee.

ZINKE: I would imagine one of the top is going to be Iran. Iran's continuing support of Hamas, continuing support of Houthis, continuing support of Hezbollah is an issue. And we see Israel looking at Gaza. Do they occupy? A very expensive proposition. You see Southern Lebanon, as you know, beginning to have control of it.

But at the end of the day, it's about the head of the snake. What do we do with about Iran? Certainly, U.S. has the capability to do great harm to Iran. We can wipe out their navy. We can wipe out their capability to produce 1.5 million barrels of oil a day. We can do a lot.

BLITZER: Should the U.S. do that?

ZINKE: If Iran doesn't change their behavior. Something has to change the behavior. And we can put more economic constraints on it. We can make sure they can't produce their oil. We can do those things. We can do joint operations with Israel. There's a lot that we can do. I think Iran should realize when President Trump says, stop it, they should take that in consideration because there will be a consequence. BLITZER: Because Iran still has a lot of military capability as well together with its own surrogates, as you point out in the region. If the U.S. were to launch, let's say, together with Israel some sort of strike against their various Iranian targets, that could explode in the region, there could be a huge, huge war.

ZINKE: You are absolutely right. There are consequences. At the same time, we could eliminate their capability to produce 1.5 million barrels of oil. We can eliminate their navy. The U.S. and Iran does not -- is not in a great position. They don't have a lot of air defenses. So, U.S. can. And I'm hoping that everyone takes a deep breath and understands what's on the table and Iran stops funding terrorism.

You know, as a former SEAL, I can tell you there's a lot of my teammates that aren't here with us today because of Iran's direct action in Iraq. And I think that also should be in consideration.

BLITZER: Congressman Ryan Zinke of Montana, a great state, thanks very much for joining us.

ZINKE: Always a pleasure.

BLITZER: We'll continue these conversations, to be sure.

And we'll be right back.

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