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The Situation Room

Canada Ends U.S. Trade Talks, Will Start New Tariffs Sept. 8; Today, U.S. Expected to Announce New Iranian Sanctions; Fury Builds as Indiana Residents Struggle for 13 Days Without Power. Aired 10-10:30a ET

Aired August 24, 2026 - 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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[10:00:00]

WOLF BLITZER, CNN ANCHOR: Happening now, we'll soon know more about the terms of the economic D-Day for Iran.

Plus, what everyday items could get more expensive in the United States amid Canada's deepening trade war with the U.S.

Also, one-on-one with the man who wants to lead Florida, Joining me in The Situation Room, GOP Congressman and Florida Gubernatorial Candidate Byron Donalds.

Plus, putting more pressure on the free press, the Pentagon firing leaders of the U.S. military newspaper, Stars and Stripes.

And state of emergency, 90,000 people urged to evacuate, and firefighters are working against windy conditions to contain a truly massive wildfire burning in Nevada. Welcome to our viewers here in the United States and around the world.

I'm Wolf Blitzer. Pamela Brown is on assignment. You're in The Situation Room.

Canada doesn't blink, and Prime Minister Mark Carney doesn't back down at all. This morning, the U.S. and Canada, historically two very close allies, are sliding deeper and deeper into a deepening trade war. Canada says it will match President Trump's 50 percent tariffs dollar for dollar.

Last-ditch negotiations between the two longtime allies completely fell apart over the weekend, and Americans are now facing higher prices. Some examples, milk, honey, smartphones, liquor, and even wigs and fake beards.

CNN's Alayna Treene is joining us now live from the White House. Alayna, the president just posted about Canada on social media. Tell our viewers what he's saying.

ALAYNA TREENE, CNN WHITE HOUSE CORRESPONDENT: Yes, that's right, Wolf. And, clearly, he's very frustrated with the collapse of negotiations on a potential deal. The president wrote that Canada had been ripping off the U.S. -- the United States of America, for years.

He goes on to say, On January 1st, 2027, tariffs on all cars, trucks, both large and small, automative parts, and steel will be increased to 50 percent. Build in the U.S. and there are zero tariffs. Canada will be treated like a state no longer. He also mentioned that he believes Canada is entitled and that the United States doesn't need Canada, but they need the United States.

Look, there's a lot of questions about the impacts of this increasing trade war, especially because, of course, Canada, the United States' northern neighbor, has long time been a close ally, one of the closest allies, I should say, that America has ever had, and one of their top trading partners. And there's no real, you know, viewpoint of how this -- what kind of off-ramp or where this will lead. We heard the U.S. trade representative, Jamieson Greer, say this morning that there are no planned negotiations at this time.

I will note as well, though, Wolf, that he also tried to downplay the impact of this overall on the health of the U.S. economy, arguing that this is -- the amount of goods, which I should say is 50 percent tariffs on $20 billion of goods being imported from Canada, arguing that's a little amount compared to the broader outlook when it comes to trade. Listen to what he said.

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JAMIESON GREER, U.S. TRADE REPRESENTATIVE: I think the market understands that. I think the market knows that at the end of the day this is 5 percent of imports from Canada. It's .06 percent of our, you know, overall consumption in this economy. So there's no possible way it can really affect U.S. wellbeing, right?

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TREENE: So, that's what you heard from Greer there, Wolf, saying not really expecting this to affect U.S. wellbeing.

I do think some small businesses who are already struggling with of course the other war that we're seeing, the economic war, that it's going to get even more highlighted today by the treasury secretary, Scott Bessent, with Iran, struggling from that you know, not sure that's reassuring for them to hear.

So, a lot more we need to piece together and really get a determination on when and how this could end, or if this is going to be prolonged for several months.

[10:05:04]

BLITZER: And as you say, Alayna, the White House says today is economic D-Day for Iran as it unveils new sanctions against Iran. And just a short time ago, President Trump delivered this very short and pointed jab on social media, and he said, Iran is completely collapsing, end quote. Tell us a little bit more about this.

TREENE: Yes, Wolf. We're going to be hearing from the Treasury Secretary Scott Bessent today around 1:00 P.M. at the Treasury Department where he's going to announce a lot of these new measures which this administration is arguing is the most comprehensive assault on Iran's economy thus far.

And, really, what we're seeing, particularly when it comes to strategy inside the Trump administration as it relates to the war, is one from a military strategy, to now an economic war. And the goal, and from everything I've been hearing in my conversations with officials to what you've been hearing in public statements from Bessent and the president, is this idea that they want allies around the world to partner with the U.S. to try and isolate Iran and choke off their economy.

I think today you can expect to hear potentially secondary sanctions on countries that are still doing business with Iran, you know, hitting back against others that have been propping them up. I think you're going to hear a lot of that. And I will just preview what we had heard, what we're expecting to hear later today, we kind of heard yesterday from Bessent where he said, The world should understand our objective is to sever every economic lifeline that sustains the tyrannical regime until Tehran stands alone.

So, more to come, Wolf.

BLITZER: We will stay on top of it. Alayna Treene reporting for us, thank you very much.

I want to go live right now to CNN's Jeremy Diamond, who's joining us from Tel Aviv. Jeremy, just ahead of these new U.S. sanctions against Iran, Iran's new security chief is issuing a new threat to Gulf Arab states. Tell us about that.

JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT: Yes, that's right, Wolf. Well, just as the United States is ramping up the economic pressure on Iran, Iran is vowing to retaliate, and perhaps not just with economic measures, but with military means against any Gulf allies of the United States that would seek to join the United States in its effort to cripple the Iranian economy and further isolate Iran.

Mohsen Rezaei, Iran's top security official, has vowed to neutralize this economic war. He says that he believes the United States is backed into a corner. And he is vowing again that if any of these Gulf neighbors of Iran allied with the United States, if they try and join this economic warfare program, then Iran will move to shut down all traffic going through the Persian Gulf should any of that begin to take place.

Of course, it is one thing for Iran to threaten that. It is another thing entirely for Iran to actually be able to make it a reality. We know, of course, that Iran has proved that it has the military means to deeply affect the economic situation in that region. It has managed to take partial control at least of the Strait of Hormuz. But we are also seeing ways in which the United States has managed to begin to blunt those efforts, getting, according to the U.S. Department of Energy, millions of barrels of oil per day through U.S. naval escorts. And we are also seeing some signs in Iran of kind of different viewpoints. The Iranian president, Masoud Pezeshkian, saying in recent days that Iran cannot continue with this war forever, a reflection of the fact that everyday Iranians are facing growing economic pains as a result of this war and the sanctions that have been coming with it. Wolf?

BLITZER: You're in Tel Aviv, Jeremy. How worried are the Israelis right now that Iran or its terrorist proxies, like Hezbollah in Lebanon, Hamas in Gaza, or the Houthis in Yemen, will launch new strikes against various targets inside Israel?

DIAMOND: Well, so far there's been no indication that Iran is preparing to strike Israel again. And that's because Iran does recognize that the Israelis are frankly ready and you know, eager, if anything, to reengage in a military conflict with Iran. The Israeli prime minister, Benjamin Netanyahu, has made clear repeatedly that he believes that there is still more work to be done militarily inside of Iran.

He has not gone to attack Iran at the request of the United States, but certainly Iran understands, the region understands, that should Iran attack Israel, then Israel would immediately strike back, and we could be seeing this region return to an all-out war once again. Wolf?

BLITZER: All right. Jeremy Diamond in Tel Aviv for us, thank you very, very much.

Still ahead, thousands without power for nearly two weeks after storms tore through Gary, Indiana. We're joined by the city's mayor, and we're asking why it's taking so long to get the lights back on.

And later, courtside confrontation. A former NBA player ejected from a WNBA game.

You're in The Situation Room.

[10:10:00]

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BLITZER: Happening now, 13 days in the dark. Thousands of people in Gary, Indiana, are struggling after a truly devastating storm blew through the region nearly two weeks ago. And now the community, which is 76 percent Black, is frustrated by the delays. More than 360,000 customers had their power restored, but nearly 8,000 in Gary are still waiting.

I want to play video for you from one resident who filmed her hallway. It shows the absolute darkness without her flashlight. Look at this.

[10:15:00]

The local utility company estimates power should be restored by the -- in the area by tomorrow. But for a city where a third of the residents live in poverty, it leaves so many people asking, would it take nearly two weeks to restore power anywhere else?

I'm joined now by the mayor of Gary, Indiana, Eddie Melton. Mayor, thanks so much for joining us. What's the latest you can tell us about progress being made in your community?

MAYOR EDDIE MELTON (D-GARY, IN): Yes. Thanks, Wolf, for having me. As of this morning, I was receiving a report from the utility company that we're at about 6,500 individuals still without power yet this morning. Like you said, we're going on past two weeks at this point and this is far too long.

BLITZER: Why has it taken this long for your city of Gary, Indiana, to restore power, Mayor? What are some of the major challenges you encountered?

MELTON: Well, at the onset of the storm, the entire service area that NIPSCO has was about 300,000 people with outage. Out of that 300,000, Gary had 38,000. And at a certain point, as they were releasing the information in terms of the restoration, Gary was omitted in that timeframe of restoration, which caused the community to be frustrated and upset, which we still are today. At the onset, we believe that more boots on the ground in terms of electrical linemen and vegetation crews should have been here on day one, and I believe that's the delay.

Now, this 99-mile-an-hour wind caused severe destruction throughout Northwest Indiana. So, it's not just Gary that is out of power. But Gary is a city of 68,000 people, 52 square miles, and every single block has been devastated with trees uprooted, demolishing homes as well as cars.

BLITZER: I assume, Mayor, you've spoken with the utility company that services your area, your town, NIPSCO, as it's called, about potential recourse from this extended outrage.

MELTON: Yes, absolutely. I know that there have been several class action lawsuits already filed that I'm aware of. But what we've discussed with them is, number one, there should be no disconnects of residents, of the individual customers of NIPSCO post this storm. There should be a credit to customers post this storm. There should be also an evaluation of the process and looking at the infrastructure to figure out how do we harden the infrastructure to prohibit this in the future.

Last year, we had six storms throughout the Chicagoland, Northwest Indiana area. This year, Wolf, we have 14 thus far. And we predict that winds are only going to get stronger, so we have to do something to ensure that communities like Gary are not left in the dark on even the most simplest storms moving forward.

BLITZER: A proposed class action lawsuit was filed on behalf of the residents of Northwest Indiana claiming negligence that made the power grid highly vulnerable. The utility company, as we pointed out, NIPSCO, as it's called, denies the allegations. Will the city, the city of Gary, pursue legal action? MELTON: We're looking at all options right now to participate and figure out how do we hold them accountable right now as we talk to our legal counsel to figure out what's the next best step. But conversations right now, the primary focus is to get the power back on, and also how do we figure out how do we prevent this from taking place in the near future and years to come.

BLITZER: Mayor Eddie Melton, thanks very much for joining us. Good luck to all the people in Gary and in that part of Indiana. We appreciate you joining us very much. Thank you.

MELTON: Thank you for having me.

BLITZER: Also happening now, another round of scorching temperatures. Roughly 60 million people across the South right now are under extreme heat risk in areas including Texas and Louisiana. Many cities could see highs up to 15 degrees hotter than normal as potentially record- breaking heat sets in.

Let's go live to our Meteorologist Derek Van Dam. He's over at the CNN Weather Center. Derek, when, when can we expect to see these truly extreme temperatures?

DEREK VAN DAM, CNN METEOROLOGIST: Look, we're in for a punishing heat dome across those areas that you just mentioned. So, it's yet another relentless heat wave that's going to build across portions of the South and then eventually spread into the Southwest as we head into the second half of this work week.

That's the last thing we need, though because we have had this just relentless heat that has built across the Southern Plains, specifically across the heart of Texas this summer. And guess what? That's where we're going to focus a lot of our attention right now. That's where millions of Americans are under this heat alert, inclusive of Houston and Dallas. But notice the Southwest from Los Angeles to Phoenix, Arizona, those areas also in heat alerts as we speak.

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So, dozens of records could be broken with this one through the course of this week, and you can see how the heat kind of spreads to the west as this heat dome settles in across that part of the United States. We're talking temperatures 10 to 15 degrees above average. We all know you factor in the humidity, it feels downright oppressive outside across the South. Wolf?

BLITZER: Yes, it certainly does. All right, Derek Van Dam, thank you. Thank you very much.

Coming up, are higher prices from the war with Iran here to stay? The warning from a leading member of the Federal Reserve as we look at some of the items you're paying more for now versus six months ago.

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BLITZER: New this morning, a stark warning from a top Federal Reserve official. The war with Iran is fueling inflation, and as long as the conflict drags on and on, high inflation here in the United States is likely to stay. You don't have to look far to feel the financial damage that the conflict with Iran is causing in the United States. Gas prices have skyrocketed nearly 40 percent since the conflict began, with the national average now sitting at around $4 a gallon, $4.10 a gallon, to be specific.

Let's go live right now to CNN Senior Reporter Matt Egan. Matt, are higher prices here to stay?

MATT EGAN, CNN SENIOR REPORTER: Well, Wolf, it's hard to say with certainty. A lot of it depends on what happens next with the war with Iran and how long it lasts. But what we do know is that inflation has been stuck above the Fed's 2 percent target for the past five years, right? It's been driven up by shock after shock, by war after war.

And Fed officials, they have enormous power to fight inflation, but they don't have a magic wand to reopen the Strait of Hormuz or make oil cheap again. And some items that consumers pay for, they have gotten a lot more expensive over the last six months, including fruit and vegetables, airfare, fertilizer, gasoline, as you mentioned, diesel, and jet fuel.

And it's really that energy cost impact that has been the most painful financially for consumers. Brown University's Climate Solution Lab, they estimate that just since the war began, gasoline and diesel costs, they have hit American consumers to the tune of $90 billion and counting. Again, that is just gas and diesel, and that tally goes up every day that this war continues.

And another thing that we've seen is that borrowing costs have jumped, and that's happened for a number of reasons, including concerns about inflation. For example, a 30-year mortgage before the war started, the average was just under 6 percent. Now, it's almost 6.7 percent. And that might not sound like a lot, but that is enough to increase mortgage payments by hundreds of dollars per month.

Look, the bottom line here is affordability, the cost of living, it remains the number one concern for many voters. It has been caused by a number of different shocks, including tariffs and the A.I. boom, but, clearly, the Iran war has made matters worse. And, Wolf, the longer the war goes on, the bigger the impact to inflation. Back to you.

BLITZER: I just filled up my car yesterday in suburban Washington, D.C., in Maryland, $5 a gallon. Not cheap at all.

EGAN: No, not cheap.

BLITZER: Matt Egan, thank you very, very much.

EGAN: Thanks, Wolf.

BLITZER: Matt Egan reporting.

Coming up, bracing for Canada's retaliatory tariffs. I'll be joined by the former premier of Quebec on what, if anything, can be done before September 8th.

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