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U.S. Announces New Tariffs, World Markets React; Myanmar Quake Death Toll Breaches 3000 Mark, Temporary Ceasefire Declared; Canadians React to Trump's Tariff Announcement; Central U.S. Hit by Destructive Tornadoes. Aired 3-4a ET
Aired April 03, 2025 - 03:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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ROSEMARY CHURCH, CNN ANCHOR: Hello and welcome to our viewers joining us from all around the world and everyone streaming us on CNN Max. I'm Rosemary Church.
Just ahead, Donald Trump shatters decades of global trade policy, imposing sweeping new tariffs on U.S. imports, but economists warn Americans will pay the price.
Markets are already seeing sharp drops as concerns grow that the global economy will go into a recession. And --
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-- some 15 million people across the U.S. are under tornado watches at this hour.
UNKNOWN (voice-over): Live from Atlanta, this is "CNN Newsroom" with Rosemary Church.
CHURCH: I appreciate you joining us.
Donald Trump has overhauled a century of global American trade policy, announcing sweeping new tariffs on all imports to the U.S., a move which threatens to greatly escalate his trade war with countries around the world. On Wednesday, the President used national emergency powers to impose tariffs of at least 10 percent on most countries, with even higher rates for dozens of nations he called the worst offenders.
It's an historic move that economists say will likely cause consumer prices to skyrocket and hurt growth. J.P. Morgan warns the tariffs will probably plunge both the U.S. and global economies into a recession this year.
The reciprocal tariffs are aimed at some of America's top trade partners. That includes 34 percent additional levies on imports from China, on top of existing tariffs, and 20 percent tariffs for the E.U. The baseline 10 percent rate will take effect on Saturday, with the customized higher rates starting a week from now.
President Trump claims his economic strategy will bring jobs and factories roaring back to the U.S.
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DONALD TRUMP, U.S. PRESIDENT: This is one of the most important days in my opinion in American history. It's our declaration of economic independence.
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CHURCH: Wall Street now bracing for a steep decline on Thursday, with U.S. futures tumbling overnight, all in negative territory there. The Nasdaq losing 3.62 percent there, which has changed.
So markets across Asia are down right now as well. You can see Nikkei is down nearly 3 percent.
So CNN's Jeff Zeleny has the latest from Washington.
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JEFF ZELENY, CNN CHIEF U.S. NATIONAL AFFAIRS CORRESPONDENT: Moments after the closing bell on Wall Street Wednesday, President Trump declares a national emergency in the Rose Garden, finally announcing his reciprocal tariffs 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 our 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. When you look at these country by country, 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. Think how many imports come into the United States. And a tariff, of course, is a tax on a good.
[03:05:03]
So American consumers already bracing in this jittery economy. The question now, there's certainly a big gamble for the president. Is it one that will pay off?
Jeff Zeleny, CNN, the White House.
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CHURCH: Governments around the world are deciding how to respond as the new Trump tariffs have triggered a global shockwave. Some are hoping to minimize the impact through negotiations. Others are planning retaliation.
European Commission President Ursula von der Leyen, on a visit to Uzbekistan, said the bloc wants to negotiate with the U.S., but is ready to respond to safeguard its interests.
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URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: President Trump's announcement of universal tariffs on the whole world, including the European Union, is a major blow to the world economy. The global economy will massively suffer. Uncertainty will spiral and trigger the rise of further protectionism.
The consequences will be dire for millions of people around the globe, also for the most vulnerable countries, which are now subject to some of the highest U.S. tariffs, the opposite of what we wanted to achieve.
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CHURCH: Australian Prime Minister Anthony Albanese has ruled out retaliatory tariffs on U.S. goods. He says the existing trade agreement with the U.S. contains mechanisms to resolve any 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 nations partnership. This is not the act of a friend.
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CHURCH: U.S. Treasury Secretary Scott Bessent is downplaying the significance of the stock market's reaction to the tariffs. He also says companies don't have to pass on the cost of tariffs to consumers. Here's more of his conversation with CNN's Kaitlan Collins.
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KAITLAN COLLINS, CNN CHIEF WHITE HOUSE CORRESPONDENT: And if countries retaliate, which some have said that they would, some have said they wanted to wait and see, what is the White House's response going to be to those countries?
SCOTT BESSENT, U.S. TREASURY SECRETARY: Well, Kaitlan, one of the messages that I'd like to get out tonight is everybody sit back, take a deep breath, don't immediately retaliate. Let's see where this goes, because if you retaliate, that's how we get escalation.
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CHURCH: Let's get more now from CNN's Hanako Montgomery in Tokyo, and senior international correspondent Melissa Bell in Paris. Welcome to you both.
Melissa, let's start with you. How are Europe markets responding to Trump's sweeping reciprocal tariffs? And what more are you hearing about E.U. concerns?
MELISSA BELL, CNN CR. INTERNATIONAL CORRESPONDENT: Well, those markets had, of course, been bracing for this. And so far this morning, having just opened, as you can see, FTSE down 1.6 in the sixth, CAC 40 as well, XETRA DAX down, all those markets reacting very badly to what they're now digesting, the facts of these tariffs and the impacts they're going to have on European markets.
Remember, the European Union as a bloc, Rosemary, is the U.S.' largest trading partner. And they've been preparing their measures that they plan to roll out in response for some time. And they're looking at seeking to not escalate and yet to answer even as they continue and hope that negotiations will bear some fruit.
Now, the nature of those measures we understand from senior E.U. officials who've been preparing them have been first and foremost to protect European consumers. So, that's their number one priority.
But they are looking at a number of measures, not simply, for instance, targeted measures that might seek to harm or make it difficult for certain American industries, but fairly broad measures, for instance, tightening the Digital Services Act that would make fines paid by the American tech giants all the greater for having tougher regulations placed on them.
Some measures that might make it more expensive for American banks to do business in the European Union. There are a lot of measures being prepared that we're going to hear more about.
Ursula von der Leyen will be herself in Samarkand. We've been hearing from her just a moment there. European ambassadors will be meeting in Brussels today to hammer out the details of this.
But as we heard from her, they are hoping to roll them out very quickly. We know that on the 12th of April coming to effect European countermeasures on steel and aluminum.
And we understand that Europeans are hoping that a whole bunch of the other measures will come in at the same time, making the 12th of April a sort of European liberal liberation day of its own. But in the meantime, of course, great deal of hope here in Europe that negotiations, even as they prepare those measures, can make some progress. Rosemary.
CHURCH: Right. And Hanako, what's been the market reaction in Japan and China and what more is being said in the region about Trump's tariff hikes?
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HANAKO MONTGOMERY, CNN CORRESPONDENT: Hi, Rosemary. It's good to see you again. So, we know that the Tokyo Stock Exchange and other stock exchanges across Asia have opened much lower as we've seen throughout the year because of Trump's, of course, tariff hikes.
And in Japan specifically, I mean, there's been a lot of shock about Trump's latest moves. These are very aggressive tariff moves. And Japan thought that because the U.S. and Japan share very good economic ties, that it could somehow be spared.
In fact, in February, we saw during the U.S.-Japan summit, the Japanese Prime Minister Shigeru Ishiba pointing out that Japan is the biggest foreign investor in the United States. And during the summit also, the Prime Minister vowed to spend about a trillion U.S. dollars in the United States also to simply further their economic ties. But clearly, as we've seen here, Rosemary, no friend or foe is really exempt from Trump's tariff wrath.
In fact, here's what the Japanese Prime Minister Shigeru Ishiba said earlier today about Trump's latest moves.
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SHIGERU ISHIBA, JAPANESE PRIME MINISTER (through translator): We had been requesting the U.S. government to review its unilateral tariff measures at various levels. And we are extremely disappointed and regret that such measures have been implemented nonetheless.
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MONTGOMERY: Now, South Korea, another U.S. ally is going to face a very similar wrath. Japan and, of course, South Korea have very large automobile industries and have worked with the United States for decades. But now we're going to see a 25 percent tariff hike on these industries, which will deliver a significant blow to these two East Asian countries.
And for South Korea in particular, which is facing a political crisis right now as its president is being voted to be impeached, these responses to these tariff measures could come at a much later date.
Now, also just to mention about the automobile industry in Japan specifically, the Japanese Prime Minister also mentioned how Japan had created 2.3 million jobs in the United States for the automobile industry specifically. So, again, just a huge, huge blow to Japan and to these bilateral ties.
Now, just as a last note, Rosemary, China, of course, has vowed to respond in some way, shape or form and called the United States' actions a form of bullying. In a statement released by the country's commerce ministry earlier today, the statement reads, quote, "There are no winners in a trade war and there is 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."
So, again, just a lot of shock and frustration here, Rosemary, about the United States' latest tariff hikes, of course, which China is seeing 54 percent imposed on its imports to the U.S. Rosemary.
CHURCH: All right, Hanako Montgomery in Tokyo, Melissa Bell in Paris, many thanks to you both. I appreciate it.
Joining us now is Justin Wolfers, Professor of Economics and Public Policy at the University of Michigan. Good to have you with us.
JUSTIN WOLFERS, PROF. OF ECONOMICS AND PUBLIC POLICY, UNIVERSITY OF MICHIGAN: Pleasure, Rosemary.
CHURCH: So, stock futures plummeted in after-hours trade in response to President Trump's announcement of the sweeping reciprocal tariffs on 185 nations. What will be the likely impact and how much extra cost will these tariffs have for the average American family, do you think?
WOLFERS: So, it looks like the average tariff for imported goods is going to be around about 40 percent. We import about a sixth of all goods.
So, you multiply those two numbers and that will tell you how big the shock is going to be to prices. So, what is that? 40 percent times 16 percent. That's about 6 percent.
So, the American cost of living just went up 6 percent. Your paycheck will get you 6 percent less than it used to.
That's going to turn up in prices pretty much as soon as tomorrow because businesses, when their costs go up, they tend to pass those costs along. And that's going to really hurt a lot of Americans. We can actually think about this as a tax hike.
If you measure how much money Trump thinks he's going to get out of this tax, it's about $5,000 per American household per year. So, this is really going to hurt.
CHURCH: That is shocking. And how likely is it that Trump's tariffs will eventually trigger a recession perhaps in the next 12 months?
WOLFERS: I think the odds of that have risen dramatically. He was already talking about a very bad, very damaging, very painful, very costly trade war.
And today's announcement says, you know what, we're going to double down. It's going to be worse than you thought it was.
There's a betting site where people bet on whether the U.S. is going to enter a recession in 2025. The odds had already risen over the past few weeks as details of this plan came to light, and people were willing to bet that it was a 42 percent chance of a recession. That's now up to 52 percent.
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And all of this amidst an economy that is otherwise performing spectacularly in a world that is also, if not for Trump, a pretty calm world and a pretty good world to be doing business in.
CHURCH: And President Trump is targeting some of the hardest hit countries in the world, including some of the poorest nations, some even in the midst of war. But how do you expect some of the richer countries will respond in terms of retaliatory tariffs, with Japan, China and South Korea joining forces in a stunning move to pull together joint retaliatory action against America?
WOLFERS: Look, let's just pause on the poor countries for a moment. Poor countries like Papua New Guinea, like Fiji, developing countries where they're only just starting to get off the ground. And the idea that there are any threat to Americans is just absurd.
And just think about a punishing blow to those economies coming from Washington, D.C. and just let your humanity take the pulse of that for a moment and realize that this is really a powerfully evil set of tariffs and will have very big damaging effects for relatively poor countries that can't really afford this.
Now, it turns out the rich countries are banding together, the rich countries say this isn't OK, the rich countries are going to retaliate. We've already seen that.
And so even if you thought, and I don't, but if you thought that tariffs from America on the rest of the world were a good idea, if they're also matched by tariffs from the rest of the world on America, all that President Trump has managed to do is isolate Americans from the rest of the global economy.
If you think about it, when a nation misbehaves, we want to punish it, say we want to punish the Russians for entering Ukraine. We impose sanctions on them to separate or isolate them from the rest of the world. Well, President Trump has just done that unilaterally to America as well.
CHURCH: And President Trump says that these tariffs are about fairness and bringing manufacturing back to this country. What's your reaction to those claims?
WOLFERS: That's nonsense. Trump is using the term reciprocal tariffs. He's imposing tariffs on some countries of 20 percent, 30 percent, 40 percent and so on.
It turns out that every industrialized country around the world, in fact, levies on average very, very low tariffs. So this plan will make the United States by far the most tariff heavy industrialized nation in the world.
And it's only above a couple of the very poor tin pot dictatorships in terms of its level of tariffs. So the idea that this is in retaliation for what they're doing is simply completely at odds with the evidence.
CHURCH: And is this the biggest gamble of Trump's presidency? Will it likely backfire on him big time?
WOLFERS: It's not just the biggest gamble of his presidency. It's the biggest tax hike on Americans since at least 1993 and further back.
This is also a tax hike because it's a tax on imports, on spending. Poor people tend to spend more of their income than do rich people.
So this is a tax hike of, as I said before, $5000 per household. But it's one that will particularly hurt working and middle class Americans. And so we are going to see pain starting very soon.
And yes, I think this is going to politically backfire on the president.
CHURCH: Justin Wolfers, thank you so much for joining us. I appreciate your analysis.
WOLFERS: And I wish I had happier years.
CHURCH: Russia sends a top Putin adviser to Washington for high level meetings with Trump envoy Steve Whitkoff. What's at stake and why a top Kremlin critic says the visit is shameful? That's next on CNN.
Plus, millions are impacted as tornadoes, thunderstorms and hail pummel the Midwest United States. Details coming up later this hour.
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CHURCH: Six days after a powerful earthquake devastated Myanmar, authorities say more than 3000 people are now confirmed dead. Hundreds more are missing, meaning the death toll is expected to keep rising.
Meanwhile, Myanmar's ruling military government has declared a three- week ceasefire in its battle against armed opposition groups.
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UNKNOWN (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.
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CHURCH: Relief efforts have been hampered by Myanmar's civil war, with the Red Cross warning access to health care and clean water is now severely limited. More than 500 buildings have totally collapsed, according to Medecins Sans Frontieres, or Doctors Without Borders.
As the Trump administration pushes Russia and Ukraine to agree to a ceasefire, a senior Russian negotiator is in Washington for meetings with top U.S. officials, including U.S. envoy Steve Witkoff. Kirill Dmitriev is a close advisor to Vladimir Putin, who worked with Witkoff on the prisoner exchange that freed teacher Mark Fogel in February.
This is the first time a senior Russian official has been to Washington since Moscow invaded Ukraine in 2022.
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The U.S. reportedly had to temporarily lift sanctions imposed against Dmitriev in order for the State Department to grant him a visa.
U.S. Secretary of State Marco Rubio has arrived in Brussels, where he will spend the next two days meeting with foreign ministers from NATO countries. Rubio will undoubtedly feel the tension created by Donald Trump's willingness to move closer to Vladimir Putin in an effort to broker a ceasefire with Ukraine. And he will likely face questions about Trump's insults against NATO allies Canada and Denmark.
Rubio is expected to push President Trump's demand for NATO countries to commit to spending 5 percent of GDP on defense. But his visit comes as the U.S. is implementing harsh new tariffs against U.S. allies and opponents, another topic sure to come up at the meetings.
Still to come, we will break down the numbers on Donald Trump's new tariffs and explain which countries could be hit the hardest.
And the impact of U.S. tariffs on Canada, what they're saying in the hometown of Canadian hockey legend Wayne Gretzky.
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CHURCH: Welcome back to "CNN Newsroom." I'm Rosemary Church. I want to check today's top stories for you.
Sweeping new tariffs announced by Donald Trump threatened to greatly escalate a global trade war. He's imposing levies of at least 10 percent on almost all U.S. trade partners with even higher rates for dozens of countries. Economists warn it could throw the U.S. and global economies into recession.
Israeli Prime Minister Benjamin Netanyahu has announced a military escalation in Gaza as he vows to increase pressure until all the hostages are released. His comments follow an announcement from Israel's Defense Minister that an expansion of the military's operation in Gaza would involve seizing large areas of land and ordering residents to leave combat zones.
Myanmar's military rulers have declared a three-week ceasefire in the country's civil war following Friday's earthquake which has now killed more than 3,000 people. According to state media, the temporary truce with rebel groups is meant to give people time to mourn the dead and to improve rescue and recovery efforts.
President Trump's tariffs have already prompted reaction from some countries while others are weighing how best to respond to this massive upheaval in global trade.
CNN's Richard Quest breaks down the numbers.
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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 being 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.
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.
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CHURCH: And financial markets around the world are taking a hit from President Trump's tariff announcement.
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U.S. futures plunged overnight. You see there the Dow down nearly 2.5 percent, the Nasdaq off more than 3 percent. And trading is just getting underway this hour across Europe, all in negative territory there, a loss of more than 1 percent.
Canada was notably left out of President Trump's newest tariffs. However, Canadian imports remain under the 25 percent levies his administration imposed weeks ago, which is why this is how Canadians now react when they hear the U.S. national anthem.
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Those boos echoed through a Vancouver hockey arena several hours ago ahead of the Canucks-Kraken game. CNN's Paula Newton reports on how tariffs are affecting the hometown of hockey's great one, Wayne Gretzky.
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PAULA NEWTON, CNN ANCHOR AND CORRESPONDENT (voice-over): 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 it's been selling product and trading with the United States since before Canada was a country.
NEWTON (voice-over): 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, HOST, "LARRY KING LIVE": Where did you grow up?
WAYNE GRETZKY, CANADIAN HOCKEY LEGEND: I grew up in a town called Brantford, Ontario.
NEWTON (voice-over): Wayne Gretzky.
ROUSTAN: These are all signed by Wayne Gretzky.
NEWTON (voice-over): With tariffs looming, owner Graeme Roustan says business is already down about 10 percent.
ROUSTAN: Well, for us, it's a disaster day.
NEWTON (voice-over): U.S. customers want their orders before tariffs hit.
ROUSTAN: All these are going to the Miracle on Ice, Team USA, 45th anniversary.
NEWTON (voice-over): 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 (voice-over): In Brantford and across Canada, buying American now seems like an act of treason.
INES KOWAL, 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 (voice-over): Brantford's mayor is incredulous about how the U.S.-Canada bond so frayed in the last few weeks.
KEVIN DAVIS, MAYOR OF BRANTFORD, CANADA: It's a mutually beneficial relationship.
NEWTON: Until it wasn't.
DAVIS: Until it wasn't. We're nice until we're not.
And yes, if you want a war, then it's a war. But it's a totally meaningless war from my perspective. I just, like, I really frankly don't understand it.
Until it wasn't. 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. Sorry, I'm getting a little bit emotional.
NEWTON: There are people that want to take his name off the buildings here.
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 (voice-over): Wayne Gretzky declined comment to CNN.
At the local community center, 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 wanted to speak up for Canada.
RICK MANNEN, BRANTFORD, CANADA RESIDENT: I do. He's kind of a voice of Canada. He hasn't 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 mine.
NEWTON: Do you think he could put in a word?
KAREN ROBB, BRANTFORD, CANADA RESIDENT: Love it if he would. You know, we don't want anybody to get hurt. We want businesses to flourish and 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.
[03:40:00]
NEWTON (voice-over): How long that anger lingers here will depend on what happens with tariffs and the taunts. And while Gretzky has a solid reserve of goodwill here after decades of donations and devotion to his hometown, Bramford, like Canada, has found its limit.
Paula Newton, CNN, Bramford, Ontario.
(END VIDEOTAPE)
CHURCH: It's no surprise, of course, that the Trump tariffs are unpopular with Democrats in Congress, but four Senate Republicans joined them in adopting a resolution aimed at blocking the duties on Canadian imports.
The vote is seen as largely symbolic since the House isn't expected to take any similar action. Republican Rand Paul of Kentucky co-sponsored the Senate resolution.
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SEN. RAND PAUL (R-KY): 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.
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CHURCH: And we want to find out how small businesses are dealing with all of this. I asked the CEO and co-founder of Astrohaus, a company that makes writing productivity tools, how these tariffs will impact his business.
(BEGIN VIDEO CLIP) ADAM LEEB, CEO AND CO-FOUNDER, ASTROHAUS: No doubt they're going to have a huge impact. We have to make up the cost somewhere. And we're all operating in competitive markets.
So for businesses like mine and many other businesses in the States here, we're going to have to raise prices. There's really no way around it.
CHURCH: President Trump is saying that he's doing this to bring back manufacturing to America. How does that work for small businesses?
LEEB: Well, I think that there's a kernel of truth to that. But the unfortunate reality is that there's a lot of industries that have simply disappeared or just don't, they never existed in the United States. And so when we talk about some of these reciprocal tariffs that are being imposed, it doesn't quite add up.
What we've seen today in the press briefing is that the tariffs are supposedly trying to make up for a trade deficit. But when you look back at the other reasons why these tariffs were put into place, it was first it was fentanyl trafficking, then it was immigration, illegal immigration. Now it's to fix a trade imbalance.
You know, I think that there's just so many different factors here. And it's a lot of change all at once. And unfortunately, we're just going to be bearing the brunt of this storm here as small companies in the United States that can't really do anything other than deal with it.
CHURCH: Right. And what do you expect the landscape for small businesses will look like, say a year from now, if these tariffs are not renegotiated in some way? Because some maybe.
LEEB: I think we're in for some tough times here, both as producers and consumers. I think we need to expect that prices are going to go up as consumers. I mean, look, these tariffs are a tax that are placed on businesses and that are importers that are then going to get passed down to consumers.
And so while those taxes and those tariffs may not immediately hit prices, the margin compression eventually will have to release itself. And those the prices are going to come up and consumers are going to feel it.
We already felt a long period of inflation previously, and we're just now starting to come out of that. And so, you know, to have this all kick start again so abruptly, I think it's going to be a huge challenge in the upcoming year.
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CHURCH: Business owner Adam Leeb there, warning that smaller companies like his will bear the brunt of these tariffs.
A major military expansion in Gaza. Israel is vowing to increase pressure on Hamas and plans to seize large areas of land. Ahead, what Prime Minister Netanyahu is saying about the escalation.
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[03:45:00]
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CHURCH: Israeli Prime Minister Benjamin Netanyahu has kicked off a four-day visit to Hungary, where he was first greeted by the country's Defense Minister. The trip is a direct challenge to the authority of the International Criminal Court, which issued a warrant for Netanyahu's arrest in November over allegations of possible war crimes in Gaza. Since then, the Israeli leader hasn't visited a country under the court's jurisdiction.
But Budapest is safe ground. And Prime Minister Viktor Orban is one of Netanyahu's biggest international supporters.
Ahead of that visit, Netanyahu delivered a video speech announcing a military escalation in Gaza, vowing to ramp up pressure until all the hostages are released. Israel's Defense Minister was the first to announce a major expansion of the operation, which would involve the seizure of large areas of land in the enclave.
The announcements come as Israel continues its aerial bombardment of Gaza. At least 17 people were killed in strikes in southern Gaza overnight. On Wednesday, Netanyahu said this about the renewed offensive.
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BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER (through translator): Last night in the Gaza Strip, we switched gears. The IDF is seizing territory, striking the terrorists and destroying the infrastructure.
[03:50:02]
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)
CHURCH: There are 59 Israeli hostages held in Gaza, 24 are believed to still be alive. In his statement, Israel's Defense Minister said the expanded operation would also involve a large-scale evacuation of Gaza's population from combat zones without providing specific details.
The escalation of strikes has sparked fresh anger among Palestinians who are calling for an end to the war and lashing out at Hamas. We've seen 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.
CNN's Jeremy Diamond has the story. But a warning, his report contains graphic images.
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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 Rabi, 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.
Rabi'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.
Rabi'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.
Rabi 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.
Rabi was killed a week after he and thousands of other Palestinians took to the streets in Gaza's largest anti-Hamas demonstration since the war began. Rabi 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)
CHURCH: We want to take a minute now to remember someone very special to all of us here at CNN. Our beloved senior writer and copy editor Diane Dexter passed away on Tuesday after a long and courageous battle with cancer.
Through all her health struggles, Diane was a beacon of light and positivity. She offered words of encouragement to everyone here, along with a seemingly endless supply of home-baked cookies and pastries. And she did it with a smile that lit up the Atlanta newsroom even on the toughest days.
Diane was a true CNN legend, working at various networks here for decades, always bringing her best each and every day and making sure she got the story right every time.
Our thoughts go out to her husband Jim, who she met at CNN more than 30 years ago, and to her family and her friends, of which there are many. She will be missed tremendously by all of us.
We'll be right back.
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[03:55:00]
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CHURCH: An understandable reaction there from someone who spotted a tornado in Indiana Wednesday. CNN affiliate WISH reports the tornado knocked over a large radio tower and ripped off the front of a building. That twister was just one of 19 reports of tornadoes scattered across Arkansas, Illinois, Kentucky and Missouri.
15 million Americans from Ohio to Mississippi remain under tornado watches this hour. In one city in Arkansas, at least five houses were destroyed and power lines brought down.
And you can see some of the destruction in this drone video. Officials in Kentucky say four people were injured after they tried to take shelter in a vehicle near a church that was hit by a tornado.
A line of severe thunderstorms was also seen tracking through parts of the Midwest. Officials in Missouri say one person is confirmed dead following the storms, although the circumstances are unclear. Across Indiana, Michigan, Ohio, Kentucky and Arkansas, more than 400,000 energy customers have been left without electricity following the severe weather.
I want to thank you so much for your company. I'm Rosemary Church. Have yourselves a wonderful day.
"Early Start" with Rahel Solomon is next.
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