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U.S. And China Agree To Suspend Most Tariffs For 90 Days; Opening Statements Underway In Sean "Diddy" Combs Trial; Trump Signs Executive Order On Prescription Drug Prices. Aired 11-11:30a ET

Aired May 12, 2025 - 11:00   ET

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

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[11:01:21]

PAMELA BROWN, CNN ANCHOR: Happening now, a major trade breakthrough. The Trump administration announcing a deal with China, temporarily rolling back his 145 percent reciprocal tariffs on Chinese goods. Right now, stock markets around the world are rallying on the news.

WOLF BLITZER, CNN ANCHOR: Dow Jones up about 1,000 points already. We want to welcome our viewers here in the United States and around the world. I'm Wolf Blitzer with Pamela Brown, and you're in The Situation Room.

New this morning, President Trump embarks on his first major international trip. Of this, his second term in office. And he leaves for the Middle East, claiming a huge victory, a surprise breakthrough in the trade war he started between the U.S. and China.

BROWN: The world's two largest economies, they are declaring a temporary truce here, and they will each freeze their retaliatory tariffs, putting them on hold for 90 days. And the economic superpowers are vowing that they will keep negotiating to work out a long-term deal. We are covering all the angles of this developing story.

CNN's Phil Mattingly is here in the Situation Room and Vanessa Yurkevich takes a closer look at this morning's reaction to the news. First off to you. Walk us through this deal, Phil.

PHIL MATTINGLY, CNN CHIEF DOMESTIC CORRESPONDENT: The deal is that the self-imposed, essentially trade embargo on the two -- the world's two largest economies is no longer in place. However, over the course of the next 90 days, there are still very significant tariffs that are in place. Now, what does this all mean going forward? It means worst-case scenarios, again, put into place by the Trump administration quite intentionally, are no longer on the table.

That obviously is very important for the entire global economy, but also small businesses, U.S. consumers, in terms of what was going to happen in the days and weeks ahead. What we know now is there is a process in place and a pathway over the course of the next 90 days for legitimate negotiations between the U.S. and Chinese trade teams where they are going to try and hammer out some kind of a deal that addresses the president's broader concerns.

What we also know is that there's been a shift in kind of the tariff Overton window of sorts. There are still very high tariffs still in place. China maintains a 10 percent tariff on U.S. goods, all U.S. goods. The U.S. maintains a 10 percent baseline tariff, as well as 20 percent tariffs that were put in place related to fentanyl. So tariffs are still higher between these two countries than they've ever been over the course of the last century.

But the fact that there are talks, the fact that there has been some type of release of the pressure that we've seen over the course of the last several weeks, obviously markets reacting very positively, and President Trump making very clear he believes this is the pathway to an eventual outcome.

BLITZER: So what is each country, Phil, getting from this agreement?

MATTINGLY: They're getting, I think first and foremost, they are getting a walk back from the precipice. And -- and I think that's what is important to note. When they talk about the fact that essentially a trade embargo was in place for the global economy, not just the $600 billion in trade flows annually between these two countries, but really the entire global economy, the linchpin is this bilateral economic relationship. That steps back from the brink, and that is obviously critically important.

What this means going forward, though, I think it's very much an open question. You heard the President seem very open to the idea of China's willingness to open up markets, the China's willingness to address the fentanyl concerns that still have tariffs in place. That is a key piece of this. The reality, though, is we don't know exactly how this is going to end in the coming months.

BROWN: And, you know, we're all wondering, I know I am, how is this going to impact me, the economy at large, the fears of global recession? So what do you know about that, Vanessa?

VANESSA YURKEVICH, CNN BUSINESS & POLITICS CORRESPONDENT: Well, Pamela, I think for so long now, consumers, small businesses, Wall Street have been holding their breath. And right now, everyone can kind of breathe a sigh of relief, at least for the next 90 days. We know that that 145 percent tariff, that 125 percent tariff that China put on U.S. exports was crippling for small businesses.

[11:05:08]

We already know of businesses that have had to close their doors. So right now, due to this de-escalation, businesses can at least plan for 90 days. Dropping that percentage on exports coming from China to 30 percent is somewhat more manageable. But what we can expect, Pamela, is that as we've been reporting over the last couple of weeks, that there has been a slowdown in imports, slowdown in cargo coming into the U.S., that's now going to switch.

We're now going to see a ton of imports coming into the United States as businesses try to get as much into the country to beat sort of this expiration of this 90-day pause, because, of course, after 90 days, things could ratchet back up again. And looking at sort of where we are with recession fears, well, Mark Zandi of Moody's Analytics says that he now expects the recession to come at out of -- come in at about 45 percent chance compared to the 60 percent chance that he was initially expecting.

And markets, as you mentioned, really responding obviously positively to all of this news, the Dow, the S&P, the Nasdaq, all up this morning. And Asian markets as well, very pleased that there's been a de-escalation during this trade war. And for folks watching at home, what does this mean for you? Well, just to point out, though, that any cargo vessels that were loaded with cargo before today are still carrying that 145 percent tariff.

But any vessels coming from China starting today will have that lower tariff rate. That is really good news for back-to-school shopping and holiday shopping, because those were the goods that were starting to come into this country carrying that higher tariff rate. Now, with the lower tariff rate, it's a little bit better for U.S. consumers. But, of course, 90 days from now, we'll have to re-look at where we are with all of this, Pamela.

BLITZER: We will relook, to be sure. Vanessa Yurkevich and Phil Mattingly, to both of you, thank you very, very much.

There's more breaking news we're following right now. Opening statements are underway in the sex-trafficking trial of Sean "Diddy" Combs. Just in the last hour, all 12 members of the jury were agreed upon and sworn in. Combs has pleaded not guilty to all charges.

Let's bring in CNN legal analyst and former federal prosecutor Elliot Williams and CNN legal analyst and criminal defense attorney Joey Jackson. Elliot, to you first. The jury, as you know, is made up of eight men and four women. Is that a good or bad sign for the prosecution?

ELLIOT WILLIAMS, CNN LEGAL ANALYST: I think a bad sign for the defendant is the charges here. It's hard, Wolf, to really read in too much to what we see in the makeup of a jury, only because the kinds of things that are at issue in this case, number one, fame, number two, power, and number three, sexual assault, or at least very serious allegations of them are all things that people feel very, very strongly about. And it is just hard to know how an individual is going to act when in that room.

Now, again, the allegations are explosive. There's video that many of us have seen, and I think that's probably the thing to look for.

BROWN: And what about the defense here? I mean, look, the evidence, you have that tape, of course, from the hotel, where, you know, P. Diddy's ex-girlfriend was getting beaten up, allegedly, by -- by him. So, you know, when you look at all the evidence there, what is the defense looking for in terms of jurors here?

WILLIAMS: Well -- well, in terms of jurors here, I just think anyone who can poke a hole in the prosecution's case. Now, the biggest thing, and I think, Joey, my friend the defense attorney will back me up on this, the relationships, for instance, the star witness, Cassie Ventura here, is someone who had a long-term relationship with -- with Diddy, where there's allegations that they were violent with each other, and that is going to at least get in a juror's head.

If, in fact, the defense can successfully put people on who can at least poke holes or at least have some doubts about the prosecution's arguments here, you know, that -- that's really what they need.

BLITZER: Let me go to Joey right now. Joey, you're a criminal defense attorney, and a very good one, I should say. There's a possibility Combs' ex-girlfriend, Cassie Ventura, will be on the witness stand very early on, maybe even today, and her expected testimony could take up most of this first week. How significant is all of this?

JOEY JACKSON, CNN LEGAL ANALYST: Yes, Wolf, Pamela, that's a big deal. It's a big deal because, remember, she's going to lay out the prosecution's narrative, but the wild card to me is, remember, there was a long-term relationship here apparently involving her and Mr. Combs, and so the issue is going to be it's much different behind closed doors to dish on, right, what was happening in the relationship, and does it sound differently to the jury or does she sort of change her tune and maybe, you know, not be as forceful, vociferous, or aggressive in terms of any wrongdoing that Mr. Combs may have engaged in.

So although she will lay out chapter and verse, right, sex, drugs, rock and roll, in that order, what she says, how she says it, whether there's any contradictory nature of what she says is important. Remember also that she's pregnant. Why do I say that? I think that you treat a witness differently because, remember, the defense is about cross-examination, and that is trying to get inconsistencies, trying to suggest that perhaps there's exaggerations, trying to say, as Elliot pointed out, that there was a relationship that was mutually volatile. It wasn't only the tape and him hitting you.

[11:10:24]

Let's look at the context of that, may we? In fact, you were violent with him, is that correct? And in terms of this drug issue and everything, he never plied you with drugs. You engaged in drug use, if at all, it was you and him, and that was consensual, by the way, wasn't it? Right? And you don't know everything, going to the rock and roll involved in his enterprise, the people that they were doing, what he was saying. You can't speak to that, can you?

So it's going to be really walking a tightrope because you don't want to savage her too much because I think she'd be very sympathetic, but they have to, Wolf, Pamela, Elliot, as Elliot knows, go after her because she may have the keys to what could be, you know, significant evidence in terms of what he did and who he did it to, when and where and how.

BROWN: And they're already saying that they are going to take that approach that you just laid out. In this statement, it said, we are going to take the position that there was mutual violence in their relationship, that there was hitting on both sides. We're probably going to refer to it as domestic violence. How do you think that will play, Elliot?

WILLIAMS: You know, again, domestic violence is something that people feel very strongly about and many people are touched by. To step back, it's not just about the sex acts. What Diddy is charged with here is racketeering, a series of criminal acts in furtherance of -- of a criminal enterprise. And the arguments are, yes, the sex acts are part of it, but there's obstruction of justice, there is drug use, there's drug trafficking, there's human trafficking. And all prosecutors have to prove is that over a period of years, at least two of those acts happened. They've thrown so much at the wall here.

This is, frankly, the criticism that many defense attorneys have with RICO racketeering, that it allows prosecutors so much latitude. And so, yes, even if they don't find -- the jury does not find some of these sex acts, evidence of them compelling, there are other ways that he could be convicted here. And so it's a complicated and somewhat strong case that the prosecutors have.

BLITZER: Let me go back -- let me go back to Joey. Joey, as you know, as all of us know, that juror was shown on hotel surveillance video being physically assaulted by Combs back in 2016. How big of a role will this footage play in the trial?

JACKSON: So it's huge, right? It's so huge that the defense obviously tried to exclude it, that is, not allow it to be part of the case. The judge said, no, it's coming in. But I think what the defense will attempt to do is say that this is one component. Number one, right, it was viewed out of context, so let's apply some context, even though prosecutors will say abuse is abuse. What do you mean context?

And in fact, Sean "Diddy" Combs, what did he do? He went out and apologized after it. But at the same time, the defense will say, this doesn't make him a person who ran a criminal enterprise for 20 years. He was a very serious, right, and very esteemed person in the music community. He had all of this to satisfy his sexual desires and gratification? Are you kidding me, the defense will say?

And by the way, does this show anything with respect to this tape about sex trafficking and male prostitution and female prostitution and transporting people across state lines? Look at it in isolation, the defense will say. Avoid all shiny objects. Take it for what it is, which is a horrible piece of evidence, right? But they have to own it, embrace it, but say that doesn't make him a criminal.

BROWN: And we are -- we know that the opening statements, they are going on right now. I'm wondering, Elliot, what would each side make sure to establish at the start of this trial, which is such a crucial time?

WILLIAMS: Two very different jobs. Prosecutors have to lay out what the law is and how the facts, as alleged, support their theory of the law. And as I said, it's racketeering. They're essentially arguing a criminal enterprise. Doesn't have to be a business, but -- but a group of people or an individual committed to a series of criminal acts over an extended period of years.

And, like I said, it's racketeering, forced labor, coercion, obstruction of justice, and so on. And, ladies and gentlemen, this is what you're going to see at the end of the trial. I'm going to tell you that you saw it. Defense just has to say, this is as Joey was talking about, this is why you shouldn't believe everything that the prosecution's putting on, because you have witnesses that are biased, relationships that were arguably consensual, or at least that they will say are consensual, even if people may not feel that way.

And that, you know, the evidence itself isn't that reliable. Again, all the defense has to do is get one juror to say that they don't believe these allegations, and then you have an acquittal there.

BROWN: Yes, and the stakes are so high for him because he bases up to life in prison if convicted.

WILLIAMS: Yes.

BROWN: All right, Elliott Williams, Joey Jackson, thank you so much.

BLITZER: And there's more news we're following. Still ahead, President Trump vowing to drastically lower some drug prices here in the United States with a new executive order that he just signed. How much, he says, you could potentially save.

[11:15:03]

BROWN: And Air Force One could be getting a major upgrade, but who's paying for it? The multimillion-dollar luxury jet that President Trump says as a quote, gift, free of charge. You're in the Situation Room.

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[11:19:59]

BROWN: And new this morning, President Trump is reviving a controversial policy from his first term that takes aim at high prices for prescription drugs. Just moments ago, the President signed an executive order to fight what his administration calls, quote, unreasonable policies keeping medicine prices low for the rest of the world, but not here in the United States.

So let's go live now the CNN medical correspondent Meg Tirrell. Walk us through how this plan is expected to work, Meg.

MEG TIRRELL, CNN MEDICAL CORRESPONDENT: Yes, this is really interesting and encompasses a lot of different facets. People are still trying to sort through whether it's actually enforceable and how it will work. But it is true that the United States pays a lot more, on average, for prescription medicines than peer nations. A RAND report found that, on average, compared with 33 other countries, the U.S. pays about 2.78 times more for prescription medicines than they do.

And for branded drugs, that's even higher, more than four times higher. And so this plan has a few different facets to it. One that's really interesting, and it's unclear exactly how this is going to work, is the first part of this. The Trump administration says they are trying to go after policies in other countries that they say unreasonably keep prices low in those countries, forcing Americans to share the highest burden of paying for prescription drugs around the world. So it'll be interesting to see how they try to go after that.

Now, they also say they're going to use this most favored nation idea. This is the entire idea that we've been hearing about even since the first Trump administration, where they're trying to tie prices in the U.S. to essentially what peer nations pay, so that the U.S. isn't paying more. Really, they're going to go through here, and they're talking about direct-to-consumer sales. They're trying to force pharmaceutical companies really to offer these deals, going around middlemen, they say, like pharmacy benefits managers, to offer these lower prices.

But they are warning, if the pharmaceutical companies don't do that, they're going to try to impose that more broadly. They also say they're going to go after anti-competitive actions, keeping prices high in the U.S., and consider importing more drugs from other countries in addition to Canada, as well as perhaps even keeping drugs from being exported outside the United States.

This is a very broad plan, but there's still a lot of confusion right now, Pamela, about whether all the aspects of this can be implemented.

BROWN: And the pharmaceutical companies are really pushing back on this, arguing that this will actually make it worse for American consumers. Why so?

TIRRELL: Well, the pharmaceutical industry doesn't like any attempt to lower their drug prices, particularly in the United States, because the United States is by far their largest market. But what's really fascinating, Pamela, is I covered business for a very long time, and you look to Wall Street, really, to see how people are digesting information.

Drug stocks are actually up on this news a little bit. I'm hearing that's because there's just some relief in getting through the announcement. But also people are sort of interpreting this to be vague. They don't know how it's going to be enforced. But what you are seeing pressure on is the pharmacy benefit manager companies, those companies that are sort of the middlemen, that we might see more pressure on as part of this. We're going to have to watch it all play out over time.

BROWN: All right, Meg Tirrell, thanks so much. Wolf?

[11:23:06]

BLITZER: And any moment now, Pamela, Edan Alexander, the last known living American hostage, is expected to be released from Hamas captivity in Gaza. We are monitoring all of this. We'll bring it to you live as soon as it unfolds. Stay with us. You're in the Situation Room. (COMMERCIAL BREAK)

BLITZER: This morning, we're getting new details about what could be an unprecedented -- and an unprecedented move by the Trump administration. President Trump shedding new light this morning on reports that the Qatari royal family is donating a luxury Boeing 747 that will be retrofitted so Trump can use it as a brand new Air Force One.

Let's go live right now to CNN White House reporter Alayna Treene. Alayna, what's the latest? What we're learning about this deal?

ALAYNA TREENE, CNN WHITE HOUSE REPORTER: Well, clearly, Wolf, this raises a lot of ethical and legal questions unprecedented ones, I should say. And, you know, the President was pressed on this just moments ago when speaking to reporters in the Roosevelt Room who were asking, you know, many Democrats are framing this as you grifting, that you shouldn't be accepting a gift from a country like Qatar because, you know, we normally don't allow this because they normally expect something in return.

And it's not just Democrats, Wolf. We've also heard from some of the President's more conservative allies, people like Laura Loomer who are arguing that this is not a good decision or move by the Trump administration to accept such an expensive gift like a Boeing 747. But listen to how the President described this. He really tried to downplay the those critics.

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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: They said we would like to do something and if we can get a 747 as a contribution to our Defense Department to use during a couple of years while they're building the other ones, I think that was a very nice gesture. Now, I could be a stupid person to say, oh, no, we don't want a free plane. We give free things that we'll take one too. And it helps us out because again, we're talking about we have 40-year-old aircraft. The money we spend, the maintenance we spend on those planes to keep them tippy top is astronomical. You wouldn't even believe it.

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[11:29:56]

TREENE: So as you could hear there, well, he's saying he would be a stupid person not to accept a gift like this. But one thing to be clear on, the President has been fixated on wanting a new and improved Air Force One for several years now, even back during his first term. But --