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Trump Expected to Announce Sweeping New Tariffs After Markets Close at 4 p.m. ET; 25 Percent Tariff on Imported Cars Starts Tomorrow, Parts Tariff by May 6; Millions Brace for Tornadoes, Once- in-a-lifetime Flooding in the United States From Texas to Michigan. Aired 2-2:30p ET

Aired April 02, 2025 - 14:00   ET

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

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BORIS SANCHEZ, CNN CO-ANCHOR OF "CNN NEWS CENTRAL": It is officially tariff day and what President Trump announces roughly two hours from now could reshape the global economy. Whether it makes things better or worse really depends on who you ask. One thing that most experts can agree on, prices are about to go up.

BRIANNA KEILAR, CNN CO-ANCHOR OF "CNN NEWS CENTRAL": And a Democratic Senator is ramping up his efforts to fight cutbacks at the Department of Veterans Affairs. He says he will now place holds on all nominations for top positions at the agency. That Senator will join us live. And then later, a miracle in Myanmar, a survivor pulled from the rubble five days after the deadly earthquake there. We're following these major developing stories and many more, all coming in right here to "CNN News Central."

SANCHEZ: We are now fewer than two hours out from a moment that Donald Trump has been bracing us for, for weeks now, one that could have enormous ramifications. His big tariff announcement coming right after markets close for the day so far. Details are scarce, but soon all of the speculation is going to end.

KEILAR: Yeah, ever since he dubbed today "Liberation Day" anxiety has been building to this moment and knew (ph) this hour lawmakers on both sides of the aisle are speaking out. Top House Democrat Hakeem Jeffries just said that today is "Not liberation day, it's recession day." And then listen to this concern from Republican Senator John Kennedy.

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SEN. JOHN KENNEDY, (R-LA): And the long run is right. But as I've said repeatedly in the long run, we're all dead, short run matters too. Nobody knows what the impact of these tariffs is going to be on the economy. I've heard experts, economists say it'll be positive. I've had had other -- I've heard other economists in Washington say it'll lead to the apocalypse.

(END VIDEO CLIP) KEILAR: In the long run, we are all dead. CNN Business Editor at Large, Richard Quest is with us now. Richard, is there any scenario in which the president's announcement today does not hurt the American consumer?

RICHARD QUEST, CNN BUSINESS EDITOR AT LARGE: No, not really. Because if you put tariffs on, somebody has to pay for it. Yes, the president is right. Billions of dollars will go into the external revenue service. But whilst the economy adjusts to these new things, then prices will go up. Show me a scenario in which that doesn't happen. It's just not -- it's not realistic. You may have an isolated case here or there with one product or another, but across the vast suede of tariffs, prices will go up. That is a fact. Take it to the bank.

SANCHEZ: Richard, at times the White House has said that tariffs are being used as leverage to negotiate better trade deals. They've also, however, officials like Peter Navarro have touted the potential revenue to come in from these tariffs. He's describing them as a huge offset for pending tax cuts. How do you see it?

QUEST: OK, I'm just making a note about that because I just wanted to tell, you know, they are contradictory goals. Let's be clear about this. Yes, there are some countries, they tend to be less developed countries that don't have a large tax base and they don't have -- and they're not terribly well off. So they tend to use tariffs as a way of raising taxes and revenues. But that is not what this is about, or at least it shouldn't be about.

Now, if Peter Navarro is right, and this is all about bringing billions, trillions into the economy, then that is contradictory to the idea that it is designed to improve American production and bring production back. Because, think about it logically, if you bring American production back, then you won't be getting the import tariff. Therefore, you won't be getting the revenue. You can't have both. They are two sides of the same coin.

Now, where I think you can get an advantage is in the short run. In the short run, you are going to see billions of dollars coming into the U.S. Treasury, fact. Take that to the bank as well. But you're going to have to weigh that against this vast economic experiment, the like of which we've not seen before, and there's a good reason for that. Because let's just take one example. Let's say the president brings on the tariffs and immediately goes into negotiations to try and get rid of them. Then what the hell was the point?

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What were we all getting it for? I mean, where's the certainty for business?

SANCHEZ: Well, let that thought breathe for a second. Richard Quest, thank you so much for the analysis, appreciate it. So unless President Trump rolls it back during today's announcement, a 25 percent tariff on every imported car is set to go into effect tomorrow. And as a result, the average price of a vehicle could increase by up to $15,000 overnight. That's according to an analyst at Goldman Sachs. And that's of course, before Trump is expected to place a tariff on car parts next month.

KEILAR: CNN's Danny Freeman is at a car dealership in Pennsylvania. And Danny, I understand there is a car on the lot that the owner is trying to get off his hands before some of these tariffs take effect, so that he doesn't take a $20,000 hit. Tell us about this. DANNY FREEMAN, CNN CORRESPONDENT: The challenge, Brianna, for -- in

this particular situation is that actually the car has not gotten to the lot yet. Basically, David Kelleher who, Boris and Brianna, you both know. You interviewed him back during the first scare of these auto tariffs back at the beginning of the month of March, I should say. He had a customer who bought a car back in January. All right? That was the plan, but there were some delays in the shipment of that car, so the car is still waiting, basically, on the other side of the border to get into the United States.

What the owner of this dealership says is, I hope that that car can cross the border today, get on a train, get to the lot today. Because if it comes tomorrow, all of a sudden it will be subject to these tariffs, which means the $80,000-plus car will all of a sudden overnight become $100,000-plus car. And he's worried that he will ultimately eat the cost.

It's just another example these are real dollars, real cents and real cars that we're talking about. This is a Jeep Grand Cherokee right here. This car manufactured and put together in Detroit, but a lot of the parts still from overseas, so it will still likely, eventually get hit by tariffs. This car right here, this is a Dodge Charger, it does not get more American than a Dodge Charger. This car was assembled, final assembly was in Ontario, Canada. So this car, or a new car like this tomorrow would be subject to those 25 percent tariffs as well.

I want you to take a listen to how the owner of this dealership really put that into perspective, especially when it comes to more affordable cars.

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DAVID KELLEHER, PRESIDENT, DAVE AUTO GROUP: That car could go from $30,000 ostensibly to $37,500 and it's that quick. And that kind of change in a price, moves that payment $175 a month. And our customers, they're middle-class people, they just can't afford that kind of bump.

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FREEMAN: And Boris and Brianna, we've really been seeing this pattern over the course of the past month, largely that folks have been rushing to purchase cars before these tariffs go into effect. Ford saying that they saw higher amounts of sales in March. And then just here anecdotally, at this dealership, the owner says that he saw a lot of people here over the weekend. He sold more cars than they normally would in early spring weekend over the weekend.

And we met a woman just a little while ago who told us that she was hoping to buy a new car. She was going to wait a few months, but she's been watching the news, watching the tariffs, and she said, you know what, I'm going to come in and buy it today because if the prices go up anymore, she just really couldn't afford it. Boris, Brianna?

SANCHEZ: Wow. Danny Freeman, thanks so much for bringing us that reporting. Let's get some perspective now from Dr. Arthur Laffer. He is the founder of Laffer Associates, the Former Economic Adviser under President Ronald Reagan. Dr. Laffer, thank you so much for being with us. How would that spike in auto prices affect consumer spending and the overall economy in your eyes?

ARTHUR LAFFER, FORMER ECONOMIC ADVISER UNDER PRESIDENT RONALD REAGAN: Well, thank you very much for having me on, Boris. It's a pleasure. Let me just say that the spike in is a short-run effect. What really concerns me here is what is the long-run effect? Will there be retaliation? What will spread to other products as well? You know, we have experienced historically as what can happen if there is retaliatory measure, like trade war.

We know what happened in 1929, 1930 in the crash. It was literally the Smoot-Hawley Tariff that caused the Great Depression, which really did cause World War II. We also know what happened when Nixon put on tariffs. In fact, I was in the White House back then when he put on the tax surcharge, import tax surcharge, which was a tariff and denied foreign capital from the Job Development Credit as well, which was also a tariff. And you can see what it led to in a very bad economy in 1974.

Now, what I believe Donald Trump, I hope he's doing, and I believe he does, is he understands this fairly well. He is, I believe, using these tariffs as a negotiation strategy to really bring back lower tariffs, lower impediments to free trade, just as he did in the first term. If you look at what he did as opposed to what he said, the USMCA agreement was really a very good deal, lowering tariffs.

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The deal with Japan was good with lowering tariffs. Likewise, South Korea or the one with Brazil or with Colombia. So if you look at the long-run plan here that Donald Trump has, I would not look at it as the one impact that it has on one tariff. It's a long process that I think we're going through and to see how it all shakes out, I'm not sure. But watch the stock market because the stock market understands this very well. And if there's a sharp continued decline in the stock market, you've got a problem with tariffs and they're causing trouble.

If it bounces back, I think you can see it was used as a negotiation device and will make things better. So, we're waiting to see sort of how it comes out, but it will have a negative impact for sure on autos and anything else you put the tariffs on. But the long-run effect may well be to negotiate lower tariffs, lower trade barriers, which is what I hope the president is doing.

SANCHEZ: So is it -- is it fair to say that this is a test of sorts of how much pain the American consumer can handle until there is a tariff renegotiation?

LAFFER: I don't think it's focused on the American consumer. I don't know why making pain for American consumers would help the negotiation. It really is aimed at foreigners and making pain on them. If you look at other countries, the major countries in the world, not some of these little ones, they have many more tariffs on the U.S. than the U.S. has on them. In fact, we're one of the most free trade big countries in the world.

So what he had done in the first term was he put -- threaten the tariffs and put them in for short times to put on pain on them, and then they came back --

SANCHEZ: Sure.

LAFFER: -- and negotiated much lower tariffs on the U.S. So I don't think he's focusing on hurting Americans. I think he's focusing on getting the attention of foreigners who all they want to do is tariff U.S. products.

SANCHEZ: Understood. I do wonder though, how you differentiate those two ideas, because you're talking about everything getting more expensive. Well, how is it not painful for us consumers if they're going to be paying more for goods, including cars?

LAFFER: It will be, it will be. You're exactly correct. But it'll also be more pain for foreign suppliers and foreign countries. And if you look at it, the U.S. has a great deal of leverage with respect to other countries on trade. I mean, we're a biggest market where everyone needs to be in the U.S. market to sell. And so the pains, I mean, trade wars, no one is a winner in trade wars, let me just assure you.

SANCHEZ: Sure.

LAFFER: That's true. But not everyone loses the same amount. And the U.S. has a great deal of leverage on threatening tariffs and threatening a trade war over other countries, and to get them to concede and lower their tariffs. That's what he's after, I believe. I hope. I hope very much so.

SANCHEZ: I've a lot of questions to ask you and limited time.

LAFFER: Please.

SANCHEZ: I am curious, as you're describing your view of things that he's eager to sort of renegotiate these trade deals, the argument that I've heard over and over again from conservatives is that American manufacturing is lagging and American supply chains are lagging behind other countries, most notably a rising power in China. And in order to make them competitive and as sophisticated as they need to be to continue to compete with China over the next decade and further, there needs to be a focus and incentive to bring back American manufacturing and to bring back jobs here.

But you're suggesting that as soon as these negotiations end, then the tariffs will go away. So then, where's the incentive for folks to build stuff in the United States?

LAFFER: Well, one of the incentives, if you look at where we're having a manufacturing problem is all in the very highest tax states in the nation. You look at Illinois, you look at Michigan, Ohio, Indiana, all of these states are very high tax states. Now, I come from Tennessee where we have no income tax and we are not having any problem with manufacturing. Businesses are moving into our state all the time. You know, it's really an intra-country problem for the U.S.

You know, when I look at what's going on, he also has lots of options, not only to put on tariffs on manufacturing, but also to subsidize domestic production rather than tariffing foreign production. So, you know, there are a lot of options open to bring back jobs and output and employment to the U.S., but there's nothing that comes close to rapid economic growth, getting the tax bill passed, deregulating the economy, sound money, free trade, lower interest rates, that will do far more benefit for jobs, output and employment than any tariff policy could do possibly.

SANCHEZ: Dr. Arthur Laffer, I wish the conversation could go on all day. I very much appreciate your insight.

LAFFER: Thank you.

SANCHEZ: Thanks for joining us.

LAFFER: Thank you, Boris.

SANCHEZ: Of course. Still to come, two Democratic senators vowing to block President Trump's nominations for top positions at the Department of Veterans Affairs in protest of the administration's sweeping cuts to that agency. One of those lawmakers will join us in just moments.

KEILAR: Plus, we're tracking potentially deadly weather across the U.S. that has already triggered tornadoes and could cause once-in-a- lifetime flooding.

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And then later, five days after that deadly earthquake in Myanmar, a survivor is pulled from the rubble alive. These stories and many more coming up on "CNN News Central."

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KEILAR: As the Trump administration plans to cut 80,000 positions from the Department of Veterans Affairs, one Democrat in the Senate is blocking President Trump's nominees from getting confirmed. Democratic Senator and Marine Corps veteran Ruben Gallego is planning to block the Senate from approving top leaders at the V.A. unless the cuts are suspended.

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The announcement came just hours before the Senate Committee on Veterans Affairs was set to hear testimony from three of President Trump's nominees. Senator Gallego is with us now. Senator, thank you so much for being with us. We should note that the top two positions at the V.A. have been already filled. So tell us why you're doing this and what your demands are to lift these holds?

SEN. RUBEN GALLEGO, (D-AZ) VETERANS AFFAIRS COMMITTEE: Well, I came into this administration with a belief that we should try to work together for the betterment of veterans. I've used the V.A., I received V.A. disability benefits. I have a lot of friends that I served in the Marine Corps. They're currently using the V.A. and I voted for actually the first two V.A. nominees. And then they came out with these drastic draconian cuts that are going to cut more than 80,000 employees, and more importantly, the services they provide to veterans.

And there was no explanation how they were going to do this without actually affecting the services to these men. We're talking about PTSD therapies that could be lifesaving, other types of therapies that are really important for fulfilling lives. And they just expected, I think, us in the Senate and in Congress in general just to accept that you could do this. And so, I'm just not going to accept that. I'm going to fight for these veterans like they fought for us. And so I'm going to use whatever tool I can to make sure that I protect them. And this is one of the few ones I have.

KEILAR: So you want better assurances that the cuts won't affect care and benefits, or you want these job layoffs, these job cuts to go away?

GALLEGO: I'd like the job cuts to go away. I don't believe in -- by any stretch of the imagination, I've been working on bettering the V.A. now for more than 10 years, that you can cut 80,000 V.A. employees and at the same time provide services to a population that's going to grow. We voted for the PACT Act for marines and veterans like myself who were exposed to toxic burn pits. And now, we have more and more men and women enrolling right now that are going to need services. And we're going to cut people that are working there.

We would encourage people like myself to go get PTSD therapy. And we're trying to recruit the therapists to make sure that we're dealing with the growing men and women that are doing PTSD. And now, what I'm hearing from people is that they have to actually have therapy in open air cubicles. We're hearing about people not being able to have their phone calls answered. In Phoenix, the Phoenix V.A. that I've gone and gotten services to, they're demanding that they have a 15 percent cut of employees by June. There is no way, and I know that V.A. very well, there's no way they can cut 15 percent of that employee base and it's not going to affect veterans.

This cuts -- these arbitrary cuts that make no sense whatsoever will kill veterans and we need to do everything we can to stop it.

KEILAR: Of course, you've heard Secretary Collins, I want to play a little bit of what he said because he's insisting that he can do these cuts without affecting benefits and care. Here he is.

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DOUG COLLINS, VETERANS AFFAIRS SECRETARY: Our goal is to reduce V.A. employment levels 2019 in strength numbers, roughly 398,000 employees from our current level of approximately 470,000 employees. Now, that's a 15 percent decrease. We're going to accomplish this without making cuts to healthcare or benefits to veterans and V.A. beneficiaries.

(END VIDEO CLIP)

KEILAR: What do you say to that?

GALLEGO: Well, you still have to -- maybe that's true, but the problem is that you got to deal with the services that they provide. And your modern veteran really needs sometimes wraparound services. It's not just the direct benefits. It's someone is going to help you find that housing since we have growing, unfortunately, a population of veterans that are homeless. There are veterans that are going to be maybe getting services, but now they're just going to have to wait longer, going back to the dates of these huge wait times that we used to complain about, and the fact that they're going back to 2019 is the low point.

We passed a PACT Act, which has added more and more demands to the V.A. for the services, and they're going back to a time that is -- that predates that. So there's -- you're definitely going to be cutting off these veterans from services and/or making them wait longer and longer for whatever benefit that they deserve. And so, this is unnecessary. Where did this come from that you needed to cut? Was there some kind of Signal demand that just came from Donald Trump saying, you have to cut 00 V.A. has to cut 80,000?

Why did that number come up? If we're trying to deliver services, let's figure -- let's focus on that first, minus these arbitrary cuts that were designed by either Elon Musk or Donald Trump. They really are not based on any reality of what the veterans need right now.

KEILAR: So your Republican colleague, Senator Tommy Tuberville held up flag in General Officer promotions over the Biden administration's Pentagon abortion travel policy, ultimately caved because of pressure within his own party.

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Now, we have to be very clear, he was holding up military leadership over civilian leadership decisions. That's a very different thing. But nonetheless, I wonder if you have any concern this is going to backfire, you must be prepared that you are going to face a tremendous amount of pressure here.

GALLEGO: I am. But who's really facing the pressure are the veterans that are trying to get care, the dedicated veterans and V.A. employees that have given up working in the private sector to serve their country that are now basically living on the edge. And I just want to point out how difficult it's going to be for us going into the future for us to recruit the doctors, the nurses, the providers into the V.A. if they think at any point they're going to just be arbitrarily cut for no reason.

Because the first amount of cuts that came through, by the way, they told those first couple thousand employees that they were let go because of bad performance reviews. So now, when we go into the future, we try to recruit these people back into the V.A. or new people into the V.A., they're not going to want to come and work for us. It's a very difficult community to work with to begin with. We don't pay as well.

And now, what the Donald Trump administration is saying is that we are going to arbitrarily get rid of you. We're going to give you a mark, a bad market (ph), by the way, on your employment. And you know, thank you and goodbye. That's not how you run a modern organization. That's really not how you're going to get the top, top-tier recruits that you need to take care of our war fighters and our veterans.

And for -- the administration claims to be pro-veteran and all my Republican colleagues, the least we could do is to make sure that services aren't cut, and that these men and women aren't waiting longer and longer to see their doctors, to get their treatments they need just because some genius at the White House or among Elon Musk's little weirdo boy group, decided that 15 percent is a cut, that just came out of nowhere. It's not really based on any type of reality.

KEILAR: Senator Ruben Gallego, thank you so much. We appreciate you being with us.

GALLEGO: Thank you.

KEILAR: Next on "CNN News Central," federal judge dropping the corruption case against New York City Mayor Eric Adams, but not before taking a swipe at the Trump DOJ. And President Trump calls it Liberation Day, while a top Canadian official says it's more like termination day.

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