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Trump Signs Sweeping New Global Tariffs; Israel To Seize Parts Of Gaza As Military Operation Expands; Myanmar Military Announces Temporary Ceasefire; Israeli PM Defies International Arrest Warrant To Visit Hungary; Senior Russian Official Visits Washington For Talks With Trump Administration; Trump Announces Sweeping New Tariffs On All Imports; Impact Of Trump Administration's Tariffs On Canada; Trump Tariff War With U.S. Wine Makers. Aired 1-2a ET

Aired April 03, 2025 - 01:00   ET

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

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[01:00:23]

JOHN VAUSE, CNN HOST: The U.S. President declares a national economic emergency. Ahead on CNN Newsroom.

(BEGIN VIDEO CLIP)

DONALD TRUMP, U.S. PRESIDENT: This is one of the most important days, in my opinion, in American history.

(END VIDEO CLIP)

VAUSE: With new reciprocal tariffs on trading partners who the president says have looted, pillaged, raped and plundered trading partners like the EU.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: If you take one of us, you take on all of us.

(END VIDEO CLIP)

VAUSE: And so next comes retaliation with warnings of a global trade war which could be devastating for the world economy.

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER (through translator): Last night in the Gaza Strip, we switched gears.

(END VIDEO CLIP)

VAUSE: Which means the Israeli military creating security buffer zones, seizing and occupying territory in Gaza. But how much and for how long remains unknown.

UNIDENTIFIED MALE: Live from Atlanta. This is CNN Newsroom with John Vause. VAUSE: Donald Trump declared Wednesday Liberation Day, announcing the

steepest tariffs in almost 100 years on some imports, part of his plan to reshape a global economic system which the president believes has allowed other countries to loot, pillage, rape and plunder the U.S. economy for more than 50 years.

Economists and world leaders are all warning this escalation of Trump's trade war will have devastating consequences, with consumers everywhere facing higher prices while increasing the likelihood of a U.S. and global recession this year. President Trump enacted national emergency powers to impose a baseline tariff of 10 percent state starting Saturday on almost every U.S. trading partner with higher rates of countries, which the president described as the worst offenders, notably China.

A week from now, Chinese imports will be hit with a 34 percent reciprocal tariff on top of a 20 percent levy which came into effect a few weeks ago. And in this past hour, a 25 percent tariff on all cars imported into the U.S. came into effect.

Despite widespread criticism and much skepticism, the president believes ending 80 years of free trade will trigger a rush of manufacturing jobs and investment back to the US.

(BEGIN VIDEO CLIP)

TRUMP: This is one of the most important days, in my opinion, in American history. It's our declaration of economic independence.

(END VIDEO CLIP)

VAUSE: But amid the unease about these tariffs, four Senate Republicans joined with Democrats to deliver a rare rebuke to the president, adopting a resolution 51 to 48 aimed at blocking the administration's proposed tariffs on Canadian imports.

(BEGIN VIDEO CLIP)

RAND PAUL, U.S. SENATE REPUBLICAN: The president is set to have a 25 percent tax on goods coming from Canada and Mexico. This is a tax, plain and simple, on the American people.

(END VIDEO CLIP)

VAUSE: Wall Street now bracing for a steep decline Thursday. U.S. futures tumbling overnight way down there. Also, markets across Asia. Let's check out what's happening. Also down across the board down by more than 3 percent. The Hong Kong Hang Seng down by more than one and a half, Shanghai down by about half a percent. And in Seoul cost me down by three quarters of 1%. For the very latest from the White House, here CNN's Jeff Zeleny.

(BEGIN VIDEOTAPE)

JEFF ZELENY, CNN CHIEF U.S. NATIONAL AFFAIRS CORRESPONDENT: Moments after the closing bell on Wall Street Wednesday, President Trump declaring a national emergency in the Rose Garden, finally announcing his reciprocal tariffs that he talked about throughout his presidential campaign and most every day since he has arrived here at the White House.

The president laying out a sweeping set of tariffs that is going to potentially reorder the global economic scene as well as the trading agreements with allies and adversaries alike. But the president said the United States has been taken advantage of. It's time for that to end.

TRUMP: In short, chronic trade deficits are no longer merely an economic problem. They're a national emergency that threatens security and our very way of life. It's a very great threat to our country. And for these reasons, starting tomorrow, the United States will implement reciprocal tariffs on other nations. It's been a long time since we even thought of that. We used to think about it a lot. We didn't think about it for many decades.

ZELENY: The president's correct. It has been decades since something like this has happened. Think back to before the Second World War. That is what is worrying some economists. They said this new protectionism that the Trump administration is ushering in will simply cause prices to rise for American consumers.

So the next shoe to fall here, if you will, is the potential for retaliatory tariffs across the board in the ag sector, the lumber sector, pharmaceuticals, and so much more.

[01:05:00]

Now, when you look at these country by countries, line by line, there's a baseline 10 percent that the Trump administration imposed of tariffs but then added on for several other countries that the president deemed bad actors. China, for example, 54 percent on tariffs, of course, think how much, how many imports come into the United States. And a tariff, of course, is a tax on a good. So American consumers already bracing in this jittery economy. The question now this certainly is a big gamble for the president. Is it one that will pay off? Jeff Zeleny, CNN, the White House.

(END VIDEOTAPE)

VAUSE: Global reaction to these tariffs has been mixed. Some countries looking to negotiate exemptions while others are talking retaliation. The E.U. is looking at both. E.U. Commission President Ursula von der Leyen says the tariffs are a major blow to the world economy and adds the E.U. is ready to negotiate with the White House but is also ready to safeguard its best interests.

(BEGIN VIDEO CLIP)

URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: I know that many of you feel let down by our oldest ally. Yes, we must brace for the impact that this will inevitably have. Europe has everything it needs to make it through the storm. We are in this together. If you take one of us, you take on all of us. (END VIDEO CLIP)

VAUSE: Canada and Mexico were exempt from these reciprocal tariffs announced Wednesday, but still they're subject to a 25 percent tax on goods not covered by the free trade agreement. Here's the Canadian prime minister.

(BEGIN VIDEO CLIP)

MARK CARNEY, CANADIAN PRIME MINISTER: We are going to fight these tariffs with countermeasures. We are going to protect our workers and we are going to build the strongest economy in the G7.

(END VIDEO CLIP)

VAUSE: The Australian Prime Minister, Anthony Albanese has ruled out retaliation by imposing tariffs on U.S. goods. He says under an existing free trade agreement with the U.S. there is a mechanism to resolve these kind of disputes.

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ANTHONY ALBANESE, AUSTRALIAN PRIME MINISTER: The administration's tariffs have no basis in logic and they go against the basis of our two nation's partnership. This is not the act of a friend.

(END VIDEO CLIP)

VAUSE: Live now Tokyo CNN's Hanako Montgomery is standing by live for us. Hanako, when you look at these tariffs and Albanese, he made this point that this is not the act of a friend. That doesn't seem to matter, especially when it comes to China, which is an adversary. They've been hit hardest. Also Japan, which has also been hit quite hard.

HANAKO MONTGOMERY, CNN CORRESPONDENT: Yes, John, I mean, as you rightly described here, we're seeing no friend or foe really spared by Trump's tariffs where we've seen allies of instance South Korea and Japan hit pretty hard as well because of Trump's tariff hikes. For instance, South Korea is seeing a 25 percent tariff hike, and Japan is seeing a 24 percent tariff hike.

Now, these two countries have expressed grave concern about the economic impact this will have on bilateral ties, bilateral economic ties specifically. Now, earlier today, we heard from the Japanese chief cabinet secretary about the impending economic fallout that this could potentially have on the country. Give this a listen.

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YOSHIMASA HAYASHI, JAPANESE CHIEF CABINET SECRETARY (through translator): Prime Minister Ishiba has already instructed that we continue to strongly urge the United States to exclude Japan from the tariff measures while thoroughly examining the content of these measures and their impact on Japan. At the same time, we will continue to examine their impact on domestic industrial employment and take all necessary measures, such as cash flow assistance.

(END VIDEO CLIP)

MONTGOMERY: Now, South Korea has said that it's going to prepare emergency support measures. And Japan also has said that it's going to seek conversations with Trump about potentially reducing those tariffs, as you just heard the chief cabinet secretary say there.

But also important to note here, John, is that Japan is actually the biggest foreign investor in the United States. In fact, in an official visit, we saw between the U.S. leader and Japanese leader, the Japanese prime Minister, Shigeru Ishiba vowed to spend $1 trillion investing in the United States.

So whether those deals are still on the table, whether those relations will still be continued is really anybody's guess here. But of course, there's a lot of concern about the potential economic impact that these tariffs will have in South Korea and Japan.

And now separately, as you mentioned there, John, China is also seeing massive, massive tariff hikes, 54 percent to be exact, very close to that 60 percent benchmark that the United States president pledged during his campaign trail.

Now, China has responded by saying that it is going to slap some other countermeasures and has called Trump's actions bullying. Now, in a statement released earlier today by China's Commerce Ministry, a spokesperson for that ministry said, quote, there are no winners in a trade war and there's no way out for protectionism. China urges the United States to immediately cancel its unilateral tariff measures and properly resolve differences with its trading partners through equal dialogue.

[01:10:07]

Now, John, I just want to note here that of course, a lot of eyes are on how global leaders and global CEOs, companies are reacting to Trump's latest measures. But of course, a lot of experts and analysts are saying that U.S. consumers will be hardest hit because of these tariffs, because they'll be spending a lot more and paying a lot more for goods that were previously much cheaper. John?

VAUSE: Hanako, thank you. Hanako Montgomery there live for us in Tokyo. Join us live from Canberra is Richard Denniss, executive director of the Australia Institute, who's also an economist, author and public policy commentator. Richard, thanks for being with us.

RICHARD DENNISS, EXECUTIVE DIRECTOR, AUSTRALIA INSTITUTE: Thank you.

VAUSE: So even under Donald Trump's own formula for imposing reciprocal tariffs, the Australian prime minister points out that a 10 percent tariff is nonsensical. Here he is.

(BEGIN VIDEO CLIP)

ALBANESE: For Australia, these tariffs are not unexpected, but let me be clear, they are totally unwarranted. President Trump referred to reciprocal tariffs. A reciprocal tariff would be zero, not 10 percent.

(END VIDEO CLIP)

VAUSE: Australia and the U.S. signed a free trade deal about 20 years ago. Now, under that agreement, there are mechanisms -- to mechanisms rather to resolve disputes like this. So how will it be resolved under that FTA? And is that one reason why the prime Minister says there will be no retaliation from Australia?

DENNISS: Look, I think this is a much bigger day for Americans who eat hamburgers than it is for Australia's economy. The reality is we don't export much to the U.S. the 10 percent tariff on beef. Well, you know, Americans will pay a bit more for our beef and we'll send a bit more beef to countries that aren't the U.S.

So I think the reason the Australian prime minister is playing it down is because, you know, in reality, this is very small beer for Australia, much bigger beer for Americans who eat hamburgers. And as to how it will be resolved, well, yes, there are processes in place. But, you know, to be clear, Donald Trump hasn't paid a lot of respect for processes. So whether it gets fixed or not, time will tell.

VAUSE: OK, so you're my second question there, which is, you know, Australia is one of the few countries which the U.S. has a trade surplus with. Last year, the U.S. imported almost $17 billion worth of Australian goods. As you noted, it's mostly beef. Very good beef, very good tasting beef as well, I might say. Australia imported almost $35 billion worth of American goods.

So if this 10 percent tariff remains in place, you're saying that there will essentially be no impact or minimal impact on the Australian economy.

DENNISS: A very small impact. Again, much bigger impact on Americans who eat hamburgers. But if there's a small reduction in demand for Australian beef from Americans, Australia is just going to sell beef to other countries. Most of the world isn't going to put a tariff on that beef if Americans want to pay more for it. That sounds like a them problem, not enough problem.

VAUSE: Good point. The issue though is when it comes to recent years and relations with China and Washington, Canberra has relied on Washington as a counter to what has been an increasing adversarial and aggressive China.

So does that relationship anyway change because of this now tariffs coming from the US? Albanese did say it's not an act of a friend.

DENNISS: Well, I think again, the problem is more with the U.S. than it is for Australia. I think Australia and the U.S. had grown increasingly close in the last 10 or 20 years and obviously America previously seemed to appreciate that proximity.

Well, now we've been spurned. We've got a free trade agreement with them that they've ripped up and said they're not so worried about. I'm sure the Australian government and U.S. government are going to continue to work closely on a lot of things, but the U.S. has just shown itself to be an unreliable partner. Is that going to lead to Australians broadening their relationships? Of course it is.

VAUSE: There is a much bigger problem though too. When you take the view from 30,000 feet, if these tariffs, especially what, 54 percent on Chinese imports, that's not so easy to, to eat from a Chinese point of view as a beefy tariffs in Australia, part of the pun.

But that could have the effect of slowing down the Chinese economy. We could be looking at a global recession, production in China as well elsewhere in Asia, countries which import a lot of iron ore and other resources from Australia. So there could be a much bigger knock on effect here down the line.

DENNISS: Look, there's no doubt that Donald Trump starting a trade war with the world is for economists around the world agree is bad for the world economy. No one's doubting that. So to the extent that the U.S. trade war with the world slows down the world economy, yes, that will have an impact on Australia's exports of commodities, particularly things like iron ore.

But the Australian economy is far more diverse than that. You know, Australia produces a lot and consumes a lot. Exports are part of our economy. Again, what Donald Trump's doing is not good for the world economy. So no one's saying it's going to be good for Australia.

But I think again, it's going to be far worse for Americans who buy things from China, far worse for Americans who buy hamburgers.

[01:15:06]

I think America will probably sort this out amongst themselves. I think Australia and the rest of the world will just sit back and, you know, change their trade to other countries.

VAUSE: Do you think the world has been ripping off the U.S. for the last 50 years?

DENNISS: No, of course not. I mean, trade. No one. Well, no one forces you to trade. That's what trade is. Trade is a voluntary exchange. So the fact that Americans have been choosing to buy beef from Australia rather than choosing to buy beef grown in America suggests that Americans thought Australian beef was either cheaper or better than American beef.

No one was holding a gun to the American's head saying, you have to buy beef from Australia. So the reason America was buying our beef was they wanted to. If they now want to pay more for it, again, that's them problem, not an Australia problem.

VAUSE: Seem very relaxed there, Richard, which is good to see. Richard Denniss in Canberra. Appreciate your time.

DENNISS: Thank you.

VAUSE: We'll take a short break when we're back in Gaza. Israel's military is digging in, seizing and occupying large areas of territory while escalating the offensive on Hamas. Details in a moment.

Also, the death toll from Friday's earthquake surges in Myanmar. More on that also.

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VAUSE: Myanmar's military dictators have declared a 20-day ceasefire in its ongoing civil war with armed opposition groups. The military offensive had continued for almost a week, including airstrikes on some areas hit hardest by Friday's quake. The death toll from the earthquake has now passed 3,000 and is likely to continue to rise, with hundreds of others listed as missing.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): To show sympathy to the victims of the earthquake across the country to provide the effective rescue operation and rehabilitation with regards to the stability. The period between the 2nd and 22nd of April is declared a temporary ceasefire by the military.

(END VIDEO CLIP)

VAUSE: Relief efforts have been hampered by the ongoing fighting. The Red Cross warned that access to health care and clean water is now severely limited.

Israel's Prime Minister Benjamin Netanyahu is now on an official visit to Hungary, greeted by the Defense Minister on arrival in Budapest. Despite an arrest warrant for possible war crimes in Gaza, which was issued by the International Criminal Court in November, Netanyahu appears to be on safe ground while in Hungary the far right government or Viktor Orban unlikely to serve that warrant.

Now, ahead of the visit, Netanyahu delivered a speech announcing a military escalation in Gaza, vowing to ramp up pressure until all Israeli hostages are released by Hamas. The defense minister was the first to announce a major expansion of military operations which he said would involve seizure of land in the territory.

The announcements come as Israel continues its aerial assaults on Gaza, killing at least 17 people in Southern Gaza overnight Wednesday. Netanyahu says this is all about the renewed offensive.

(BEGIN VIDEO CLIP)

NETANYAHU (through translator): Last night in the Gaza Strip. We switched gears. The IDF is seizing territory, striking the terrorists and destroying the infrastructure. Because we are now dividing the strip and increasing the pressure step by step so that they will give us our hostages and as long as they do not give them to us, the pressure will increase until they do.

(END VIDEO CLIP) VAUSE: Right now, 59 Israeli hostages are believed to be superhelped by Hamas in Gaza. 24, at least 24 I believe he's still alive. In his statement, Israel's defense minister said the expanded operation would also involve a large scale evacuation of Gaza's civilian population from combat zones. He did not provide specific details.

The escalation of strikes has sparked fresh anger among Palestinians who are calling for an end to the war while also lashing out at Hamas. There have been large crowds protesting in the streets in recent weeks, but one family says public criticism of the militant group cost a 22 year old his life. Here's more now from CNN's Jeremy Diamond.

(BEGIN VIDEOTAPE)

JEREMY DIAMOND, CNN JERUSALEM CORRESPONDENT (voice-over): Look children, at what Hamas has done, this man shouts as others gather around a body in prayer. The man they are mourning is Uday Rabie, a 22 year old Palestinian from Gaza City. Rabi's family says he was killed by Hamas militants, tortured to death for publicly criticizing Hamas.

Rabie's brother Hassan told CNN his brother was abducted from the streets of Gaza City by a group of Hamas militants. Six hours later he was handed over barely alive, cuts and bruises marking his back, arms, feet and face, parts of his hair and one eyebrow shaved.

Rabie's brother says his body was delivered with a message. This is the fate of everyone who disrespects Al Qassam Brigades and speaks ill of them, referring to the armed wing of Hamas. Rabie died hours later of his wounds.

You killed the boy. May God hold you accountable, one man shouts as another fires into the air. As his body is carried through the streets the crowd erupts in chants calling for Hamas to get out, his family now demanding justice and retribution. Hamas government media office did not reply to a request for comment and the Al Qassam Brigades has not publicly commented on the accusations.

Rabie was killed a week after he and thousands of other Palestinians. Palestinians took to the streets in Gaza's largest anti-Hamas demonstration since the war began.

[01:25:06]

Rabie had already scuffled with Hamas members a month earlier, his brother said, and feared Hamas would kill him. They want to take me, they want to kill me, he said in this video. I don't know what they want from me. A week later, he was dead. Jeremy Diamond, CNN, Jerusalem.

(END VIDEOTAPE)

VAUSE: Now to the very latest on U.S. brokered ceasefire talks brokered between the United States, between Russia and Ukraine. A senior Russian negotiator is in Washington meeting with U.S. Officials, including presidential envoy Steve Witkoff. Kirill Dmitriev is a close advisor to Vladimir Putin who worked with

Witkoff on the prison exchange that freed teacher Marc Fogel. This is the first time a senior Russian official has been to Washington since Moscow invaded Ukraine in February of 2022.

The U.S. reportedly had to lift temporarily sanctions which were imposed against Dmitriev in order for the State Department to issue a visa.

Vladimir Putin is implementing one of the largest rounds of conscription to Russia's military in several years, signing a decree which announced the drafting of 160,000 men between the ages of 18 and 30 Russia's Armed Forces in the next few months.

Russian law does not allow conscripts to be sent to active combat zones without proper training. Moscow claims draftees are not sent to Ukraine. But there are reports of conscripts being pressured or tricked to signing contracts which led to their deployment on the front lines in Ukraine.

Well, there's a lot of outrage around the world over the U.S. tariffs, but President Trump's strategy also has quite a few fans. We'll hear from a conservative analyst in just a moment.

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[01:32:01]

VAUSE: Welcome back everyone. I'm John Vause. You're watching CNN NEWSROOM.

Financial giant JPMorgan is warning of a likely economic recession this year in both the U.S. and globally, triggered by the new Trump tariffs on almost all U.S. trading partners.

They started with a baseline of 10 percent, but 60 countries deemed by the president to be the worst offenders will be subject to additional levies.

Among the highest is Cambodia 49 percent, Vietnam 46 percent. Not even the closest of U.S. allies will be spared. Japan, South Korea, the E.U. all facing tariffs of 20 percent or more.

But in President Trump's view, he's being generous.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once-beautiful American dream.

We will charge them approximately half of what they are and have been charging us. So the tariffs will be not a full reciprocal. I could have done that, yes. But it would have been tough for a lot of countries.

CNN's Richard Quest now breaks down the numbers on the new tariffs and who's expected to pay the most.

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RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: There is only one thing that everyone seems to be agreed upon. The new trade policy of the United States, based on global tariffs, is the biggest shift in trade policy since the Second World War. It's going to affect every trading country in some shape or form.

The president was clear this is about America first, making sure that countries that he said had taken advantage of U.S. trade policy would now pay the price.

So there's a new basic minimum tariff globally of 10 percent. Everyone pays that. But then there are those countries that are seen as far worse, where tariffs and non-tariff barriers sometimes reach up to 67 percent in the case of China, says the U.S. In those cases, the country involved will pay half the bigger tariff rate.

Let me give you some numbers. China 34 percent, European Union 20 percent, Japan 24 percent, and in many cases, these higher tariffs are on top of tariffs already been announced.

It is going to have the most dramatic effect on the trading relationship that any of us have ever seen.

Some countries will watch and wait. Australia, for example, isn't immediately going to retaliate. Others, like the European Union, the United Kingdom, Japan, South Korea are deciding exactly how to proceed having said that, they will take retaliatory measures in the fullness of time.

[01:34:51]

QUEST: All in all, this great trade experiment, the like of which we've not seen before, is about to get underway. And no one knows who will finally pay the bill, except perhaps for the consumer.

Richard Quest, CNN -- New York.

(END VIDEOTAPE)

VAUSE: Richard Stern is with the conservative think tank the Heritage Foundation, where he focuses on federal budget policy. Thank you for being with us.

RICHARD STERN, HERITAGE FOUNDATION: Thank you for having me on tonight.

VAUSE: Ok. so now the U.S. President made this announcement on tariffs. And he again put forward what he believes will be the extraordinary benefits to the U.S. economy. Here he is.

(BEGIN VIDEO CLIP)

TRUMP: Jobs and factories will come roaring back into our country and you see it happening already. We will supercharge our domestic industrial base. We will pry open foreign markets and break down foreign trade barriers. And ultimately, more production at home will mean stronger competition and lower prices for consumers.

(END VIDEO CLIP)

VAUSE: A lot of people disagree with that. But you believe he's actually on the right track here.

Before we get into that, very quickly overall, has the U.S. benefited from the opening up of world trade?

STERN: Oh, the U.S. has definitely benefited from the opening up of world trade. But what I would say, though, is the thing we're looking at here is that a lot of countries have actually closed their borders. A lot of countries maintain barriers that are the opposite of free and open trade.

Now, what I would say is the president's right insofar as he uses these tariffs to negotiate, that they open their markets and actually get back to the free trade -- the fair trade that we all talk about.

VAUSE: So I guess here's the rub though. So instead of fixing the rules, which many countries have taken advantage of to build up big trade imbalances with the U.S., is it better just simply to blow up the whole system and sort of return to this era of trade wars and trade barriers?

STERN: Well, again, the goal isn't to get into trade wars. And absolutely, if you listen to the president, the goal is to get rid of the trade barriers, right?

What we're talking about here is that a lot of countries still maintain subsidies, and they dump products, and they have different regulatory standards. They steal IP, they use these trade barriers, tariff rate quotas and et cetera to limit market access.

What Trump is talking about here is using these tariffs not as tariffs themselves, but as a negotiating tool of statecraft to break down these barriers and actually get to truly free and open global trade, where you can buy what you want and sell what you want. And you don't have any government restricting your ability to do so.

VAUSE: Ok.

STERN: That's the goal.

VAUSE: That's the goal. But I guess the question is, between now and then, what is unknown is the level of economic pain for Americans in the short and medium term.

Here's Republican Senator John Kennedy.

(BEGIN VIDEO CLIP)

SEN. JOHN KENNEDY (R-LA): The president saying, if you're a business on a foreign country and you want to sell to America, move your business here and hire Americans. And in the long run, he's right.

But as I've said repeatedly, in the long run, we're all dead. Short run matters too.

(END VIDEO CLIP)

VAUSE: I guess, in many ways, if tariff policy is not targeted, if it's not consistent, if it's not clear and predictable, will it achieve those goals?

And then how big is the risk that there'll be a lot of economic pain for no big payoff?

STERN: Well, I would actually say that I think this has been pretty consistent, right? The president has talked about countries who do this whole slew of trade barriers, currency manipulation. We've walked through these forced labor, a lot of these other things.

And so he's applying tariffs on countries that do that, countries that have a lot of Chinese malign influence. And of course, China themselves is the biggest abuser of all these sorts of things.

So I think, you know, you're asking before trade wars of the past where the countries were protectionist and viewed tariffs as the ends. We view tariffs as the means to get to the ends of truly open global trade.

Truthfully, we've seen countries backing down almost immediately. Israel going to zero percent tariffs on the U.S., Canadian province premiers saying that they want to do that.

So I think in the long run here, what you're looking at is probably very, very short-term time horizons to get to open more free trade than we've ever had before.

And that, in a very short-term fashion, will lead to much more prosperity. Let alone the dividends in the long run of getting to true, real free trade.

VAUSE: And while it is true that some countries have backed down, like Israel announcing zero percent tariffs on U.S. goods, a lot of countries haven't and they are retaliating and there does appear to be some kind of global trade war, you know, in the making in a very big way.

STERN: But keep in mind, right, you know, even the terrorists that Trump's talking about here don't take effect for three days for some of them, a week for the other ones. A lot of the retaliatory tariffs everybody else is talking about are going to be on similar timelines.

A lot of that, again, is that the politicians on the back end are going to negotiate with each other. So you know, let's have this conversation again in a week and see where the negotiations are. But so far in the two months that Trump has been president, they've been pretty good.

VAUSE: It's a date.

In the meantime, there was a time when Democrats were the ones who were in favor of protectionism while conservatives were opposed. Here's President Ronald Reagan speaking in 1987.

[01:39:52]

(BEGIN VIDEO CLIP)

RONALD REAGAN, FORMER PRESIDENT OF THE UNITED STATES: At first when someone says, lets impose tariffs on foreign imports, it looks like they're doing the patriotic thing by protecting American products and jobs. And sometimes for a short while, it works, but only for a short time.

(END VIDEO CLIP)

VAUSE: Even today, some Republicans still believe that. In a statement, former Senate Leader Mitch McConnell wrote, "Tariffs are bad policy and trade wars with our partners hurt working people most.

Tariffs drive up the cost of goods and services. They're attacks on everyday working Americans."

On the eve of the first tariffs on Canada and Mexico in January, an op ed by "The Wall Street Journal" editorial board came with this headline, "The Dumbest Trade War in History". Are they all wrong?

STERN: Well again, I think there's a differentiation here between tariffs and protectionism. I agree, the Heritage Foundation agrees that protectionism is not good. But that's not what we're talking about here. What we're talking about is the use of tariffs as a tool to negotiate, to get other victories.

Keep something in mind about this. The tariffs we're talking about that other countries impose are imposed by their special industrial interests that have captured their government.

Whenever you see those subsidies, those trade barriers, there's some business venture that has bought politicians abroad and has used those to do protectionism, which harms not only their workers and their customers, but American families and American workers as well.

What we are talking about here is wielding tariffs against theirs. Wielding tariffs as a tool to break up their special interest capture to end their corporate cronyism abroad.

Frankly, again, to get to a world that has less protectionism. We have tolerated for far too long protectionism in all of our trade partners and across the globe.

So again, I think there's a real important distinction here between protectionism and what Trump is talking about doing with tariffs.

VAUSE: It does sound very counterintuitive, but you explained it very well, Richard. Thank you for being with us. STERN: Always appreciate. Thank you for having me on to discuss this.

VAUSE: In a moment, the impact of U.S. tariffs on Canada. What they're saying in the hometown of Canadian hockey legend Wayne Gretzky.

[01:41:57]

(COMMERCIAL BREAK)

VAUSE: Canada is among a few countries not subject to these reciprocal U.S. tariffs which were announced on Wednesday, possibly because the U.S. president targeted Canadian imports within the first few days of his second term.

A 25 percent tariff came into effect weeks ago, a move which shattered more than 200 years of friendly relations which is why this is how Canadians react when they hear the U.S. anthem these days.

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VAUSE: Just a few hours ago in Vancouver, an NHL game just before the face off.

And CNN's Paula Newton reports the hometown of hockey's Great One, Wayne Gretzky, is now on the front lines of this trade war with the U.S.

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PAULA NEWTON, CNN CORRESPONDENT: We've come to a place that leans into a Canadian stereotype quite naturally, and is now on the front line of a trade war.

GRAEME ROUSTAN, OWNER, ROUSTAN HOCKEY: This business here has been in place for 178 years, and has been selling product and trading products with the United States since before Canada was a country.

NEWTON: We're in Brantford, Ontario a little more than an hour away from both Toronto and Buffalo, one of the places likely to be hardest hit by tariffs and the birthplace of hockey's Great One --

LARRY KING, FORMER CNN HOST: Where did you grow up?

WAYNE GRETZKY, HOCKEY PLAYER: I grew up in a town called Brantford, Ontario.

NEWTON: -- Wayne Gretzky.

ROUSTAN: These are all signed by Wayne Gretzky.

NEWTON: With tariffs looming, owner Graeme Roustan says business is already down about 10 percent.

ROUSTAN: Well, for us it's a disaster day.

NEWTON: U.S. customers want their orders before tariffs hit. ROUSTAN: All these are going to the Miracle on Ice, Team U.S.A. 45th

anniversary.

NEWTON: President Trump's tariffs and taunts to make Canada a 51st state are biting here.

ROUSTAN: It's just ridiculous to insult your neighbor and as a dual citizen Canadian and American, I don't understand it from the American point of view either. Why would we insult Canadians?

NEWTON: In Brantford and across Canada, buying American now seems like an act of treason.

INES KOWAI, PLANT MANAGER, UNIQPOL: Even in our store, we get asked all the time, you know, are these products local? Have they been made in Canada?

NEWTON: Brantford's mayor is incredulous about how the U.S.-Canada bond so frayed in the last few weeks.

MAYOR KEVIN DAVIS, BRANTFORD, ONTARIO: It's a mutually beneficial relationship --

NEWTON: Until it wasn't.

DAVIS: -- until it wasn't. You know, we're nice until we're not. And yes, if you want a war, then it's a war. But it's a -- it's a totally meaningless war from my perspective. And I just -- I really, frankly don't understand it.

NEWTON: Something else he doesn't understand how Wayne Gretzky, Brantford's hometown icon, got wrapped up in all of this.

TRUMP: I have so many great friends. One of them is the Great One, Wayne Gretzky.

NEWTON: He has been called a traitor, a turncoat, a MAGA junkie, a MAGA sidekick.

DAVIS: Based on 30 years of knowing Wayne and his family. So I'm getting a little bit emotional.

NEWTON: There are people that want to take his name off the buildings here.

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DAVIS: Well there are, I agree with you. There are people that feel strongly about it and feel emotional, very emotional about this, because we do feel under attack here in Canada.

NEWTON: Wayne Gretzky declined comment to CNN.

At the local community center --

UNIDENTIFIED MALE: There's a goal. NEWTON: -- the Brantford Titans are on the ice. Gretzky's name on the

rink.

TERRY CORBIN, BRANTFORD, CANADA RESIDENT: He hasn't lived here for how many years. I mean I almost see him as, you know, kind of somebody with dual citizenship, but who has chosen, you know, United States of America to live in.

NEWTON: You want him to speak up for Canada?

RICK MANNEN, BRANTFORD, CANADA RESIDENT: I do, I do. He's -- he's kind of the voice of Canada. He has been that way in the past, and he is now if he chose to do that.

So I really would like to see Wayne do that. But I still don't feel any ill against Wayne for -- just because he's a friend of Donald Trump.

NEWTON: Do you think he could put in a word?

KAREN ROBB, BRANTFORD, CANADA RESIDENT: We'll love it if he would, you know. We don't want anybody to get hurt. We want businesses to flourish both in the U.S. and in Canada. There's got to be a way to do that without just slapping tariffs, you know, here and there and everywhere.

ROUSTAN: I think that as soon as you start talking about invading another country or taking it over, the disrespect that that presents to people, it wakes them up and it creates a tremendous anger.

NEWTON: How long that anger lingers here will depend on what happens with tariffs and the taunts (ph). And while Gretzky has a solid reserve of goodwill here, after decades of donations and devotion to his hometown, Brantford like Canada has found its limit.

Paula Newton, CNN -- Brantford, Ontario.

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VAUSE: TikTok is again running down the clock with no apparent way of avoiding a ban in the U.S. and we've been here before. A January deadline for TikTok's parent company to sell the U.S. operations was extended by President Trump until this Saturday.

The demand is over national security concerns regarding its Chinese ownership. So far, there have been no serious offers. Trump even suggested reducing tariffs on Chinese imports as part of the sale, but also says he'll, quote, "probably extend the deadline further if needed".

Still to come, how those Trump tariffs could push the cost of your next bottle of wine up, just making it more expensive. Those details in a moment.

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VAUSE: 15 million Americans from Ohio to Mississippi remain under tornado watches this hour. In one city in Arkansas, at least five houses were destroyed. Power lines were brought down on Wednesday.

Officials in Kentucky say four people were injured after taking shelter in a vehicle not far from a church, which was destroyed by a tornado.

A line of severe thunderstorms were seen tracking through parts of the Midwest across Missouri, Mississippi, Arkansas and Indiana. Almost 400,000 energy customers have been left without power following severe weather.

The tit for tat tariffs between the U.S. and its trading partners are already squeezing American winemakers. They're effectively paralyzing some small vineyards and affecting what consumers pay for a bottle of wine.

Here's more now from CNN's Natasha Chen.

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NATASHA CHEN, CNN CORRESPONDENT: It takes years from planting a vine --

UNIDENTIFIED MALE: Boom, the buds start to burst.

CHEN: -- to turning grapes into a drinkable wine. But those years of planning are being uprooted by tariff wars.

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NICHOLAS MILLER, 5TH GENERATION OWNER, MILLER FAMILY WINE COMPANY: We understand they're trying to make the best decisions possible, but without guidance it's sure hard to have a business plan.

CHEN: These are muddy waters for Nicholas Miller, a fifth-generation owner of Miller Family Wines on the central coast of California.

MILLER: This is our (INAUDIBLE).

CHEN: The company makes wines under different labels.

MILLER: It tends to be a lot more kind of that chocolate, that mocha.

CHEN: From very high end to more affordable ones. Miller says 10 percent of their wines are typically exported to Canada including some custom blends.

MILLER: We became the official wine partners for the Calgary Flames and the Edmonton Oilers.

CHEN: Wait, So what happens to that wine like we're in hockey season.

MILLER: Right, that's what we're trying to face right now, is what happens to that wine.

CHEN: Canada is typically America's biggest wine customer, importing $435 million worth of U.S. wine per year but province-controlled liquor boards there have largely stopped stocking American wine in retaliation for President Trump's tariffs on aluminum and steel.

About 12,000 Miller family wine bottles, or $90,000 worth of their wine, is stuck in a California warehouse. They're already packaged with Canada-specific labeling requirements but going nowhere.

And what about slapping on the required American label to sell it domestically instead?

MILLER: It may sound like an easy fix of just putting a label on it. It really is tantamount to going through a second bottling.

CHEN: That's not a cheap process to do that.

MILLER: It's not.

CHEN: So they continue to sit in storage at a cost while Miller waits for more information.

MILLER: The politics of all that's happening right now is costing everyone something, right?

CHEN: Even Trump's idea of imposing a 200 percent tariff on European wine imports.

MILLER: It feels a little bit like fighting fire with fire which doesn't seem like that's the right solution.

CHEN: Miller says there has to be a conversation about the real problem. An unfair fight where American wines, often highly regulated and costly to produce are up against heavily subsidized European ones.

And while there are clues about the future harvest if you read the grape leaves --

MILLER: This tells us a lot about how the season is going to be for us when we start seeing clusters and/or tendrils.

CHEN: -- there's no clarity for the makers of the wine these grapes will become.

Natasha Chen, CNN -- Santa Barbara, California.

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VAUSE: Thank you for watching another hour of CNN NEWSROOM. I'm John Vause.

Please stay with us. The news continues after a short break with my friend and colleague, Rosemary Church.

See you back here tomorrow. [01:57:04]

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