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CNN International: Global Stocks Fall After Trump Imposes Tariffs; Trump: Reaction To Tariffs Is "Going Very Well"; U.S. Markets Plunge Tariff Announcement; Pentagon Watchdog Opens Probe Into Defense Secretary Hegseth's Use Of Signal App For Yemen Attack Plans; Tornadoes Hit Central And Southern U.S. Aired 3-4p ET
Aired April 03, 2025 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:33]
LYNDA KINKADE, CNN HOST: Hello and welcome to all our viewers around the world. I'm Lynda Kinkade and this is CNN NEWSROOM.
We begin with breaking news from Washington, U.S. Defense Secretary Pete Hegseth is being placed under review by the Pentagon's inspector general over the Signal chat, where he plans to bomb Yemen, were accidentally shared with a journalist. We will bring you more on this story as it develops throughout this hour.
Well, right now I want to turn to the markets which are tumbling. The U.S. dollar is falling. Global recession fears are rising all after President Donald Trump lit the match on a global trade war, sweeping new tariffs hitting more than 180 countries, allies and adversaries alike.
At this hour, we're looking at a sharp drop in U.S. stocks. You can see, they're all in the red. The Dow, the Nasdaq and the S&P 500.
Well, leaders across Europe, Asia and beyond are striking a defiant tone, promising to respond with tariffs of their own.
Earlier, the U.S. commerce secretary told CNN that the president will not back down on tariffs.
(BEGIN VIDEO CLIP)
HOWARD LUTNICK, U.S. COMMERCE SECRETARY: If you're angry and you fight back to the greatest customer in the world, you're going to lose. We are the sumo wrestler of this world. We are the biggest economy, the biggest customer. You can't fight back against your customer.
(END VIDEO CLIP)
KINKADE: A few moments ago, we heard from President Trump's first reaction to the market moves. He compared the situation to having major surgery.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think it's going very well. It was an operation, like when a patient gets operated on and it's a big thing. I said this would exactly be the way it is. We have $6 trillion or $7 trillion coming into our country, and we've never seen anything like it.
The markets are going to boom. The stock is going to boom. The country is going to boom. And the rest of the world wants to see is there any way they can make a deal? They've taken advantage of us for many, many years. For many years, we've been at the wrong side of the ball. And I'll tell you what, I think it's going to be unbelievable.
(END VIDEO CLIP)
KINKADE: Let's turn now to our business editor at large, Richard Quest, the anchor of "QUEST MEANS BUSINESS".
Good to see you, Richard.
So, it's been called worse than the worst-case scenario. And we just heard President Trump there comparing it to having major surgery. The entire world feeling the pain right now.
RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: Yeah. And as with all things with President Trump, there is a certain element of truth in what he's just said. Yes, the world has taken advantage of the United States. And yes, the U.S. has been treated badly. And yes, this is major surgery.
The issue is whether this is the right surgery done in the right way that's going to restore the patient to full health. And that's what the market -- look at the markets now. You've got basically the markets are telling us that they are worried about inflation. They're worried about slowdowns as a result of U.S. exports becoming more expensive because of tit for tat. They're worried about consumer confidence. People are just going to be worried and they're not going to spend. And all of that is priced in.
Also listening to Howard Lutnick, the new commerce secretary, just talking a second ago, he talks about you can't fight your biggest customer. You can't fight the United States.
He is also -- again, he's right on that. But where he's I think misguidedly not giving priority. What will happen is countries will just avoid the U.S. They will adapt and they will do deals and they will get over it.
But the loss of confidence here means that countries will now start to find other trading partners south, south, north, south, China, ASEAN. The U.S. is now only about 15 percent of world trade. It's not what it was and people are going to try to avoid it.
KINKADE: So, Richard, how does this compare to other times of disruption like the COVID pandemic, 9/11, the global 2008 recession? How does it -- how does this compare this time?
QUEST: Each of those had unique factors about it. So, 9/11 was highly contained in a very short period of time. And it was very quick in a sense, to get things back to normal, because the actual damage was horrific, horrific, but geographically limited.
The great recession of the 2008 was more serious because the rot was in the financial sector. So what that exposed, once you pulled away the facade, the actual foundations of the of the industries was rotten to the core, and that's why it was so serious.
The pandemic, that was more serious in a sense, because it was both systemic. It was cyclical. There was no obvious end in sight. There was all sorts of -- it was much larger in nature.
So long way -- forgive me, Lynda -- a long way of getting to the point of where does this sit? This is all of these and none of it because this has got tentacles. This is reaching out much further, much deeper, much more into the heart of the global economy. This is going to have longstanding shifts. People are going to change behaviors. They're going to change patterns of doing trade, who they trade with, how they trade with. Do they have confidence in the U.S.?
So, I put this in a league of its own, having to rewrite the trade rules of the last 80 years.
KINKADE: Yeah, certainly, the largest shop has turned to protectionism since the 1930s.
QUEST: Oh, yeah. Oh.
KINKADE: Richard Quest, as always. Great to have you on. Thanks.
QUEST: Thank you.
KINKADE: We will be tuning in next hour for Richard Quest, and he'll be joining us at the end of this hour.
Well, right now, the U.S. tariffs target most countries around the world to varying levels. Global leaders say the Trump administrations changes won't go unanswered. From Germany to the UK, France and Belgium, many officials are vowing counter-tariffs against the U.S., and it is a move that could set the stage for a global tit for tat.
(BEGIN VIDEO CLIP)
BERND LANGE, CHAIR OF EUROPEAN PARLIAMENT'S INTERNATIONAL TRADE COMMITTEE: President Trump called it liberation day and I will call it inflation day.
OLAF SCHOLZ, GERMAN CHANCELLOR (through translator): I believe the latest decision on tariffs by the U.S. president are fundamentally wrong. And this is an attack on a trade order that has created prosperity all over the world. A trade order that is essentially the result of American endeavor. The entire global economy will suffer from these ill-considered decisions.
ANTHONY ALBANESE, AUSTRALIAN PRIME MINISTER: President Trump referred to reciprocal tariffs, a reciprocal tariff would be zero. Not 10 percent. The administrations 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.
(END VIDEO CLIP)
KINKADE: Well, joining us is Art Hogan, the chief market strategist at B. Riley Financial.
Thanks for joining us.
ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY FINANCIAL: Thanks so much for having me.
KINKADE: So emerging markets, especially nations in Africa and Asia, were among the hardest hit in this trade war, some being slapped with 50 percent tariffs. We saw Madagascar vanilla at 47 percent, Sri Lanka's textiles at 44 percent.
How damaging could this be for the development prospects of those nations?
HOGAN: Well, I'll tell you this -- I think Richard brought up a really good point. I think that if you want Africa, for example, as a continent to take your assistance and help them develop with all their natural resources and everything that you would like to help them along with, you're pushing them into the arms of countries like China, right? So, to the extent that you look at the calculations that were done and released yesterday to the -- this isn't reciprocal because the formulation that they use to come up with what would be a reciprocal was a calculation of what our trade imbalance is. So, it's not as though any of these countries have those types of tariffs on us, and were just matching that or matching half of that.
So ill-conceived released in a haphazard fashion and not well thought out. Now, one can hope that what this derives is people coming to negotiate a better deal, right? And perhaps well have a new USMCA negotiated with Mexico and Canada. Perhaps we'll have a bilateral trade deal with India. But that doesn't -- you don't get the feeling that that was what was delivered yesterday. Yesterday seemed to be a sledgehammer and not a -- not a scalpel.
KINKADE: I want to ask you more about the reaction that we could anticipate. China, of course, was hit very hard. It already had a 20 percent tariff. Then it got 34 percent. In addition, making it 54 percent. China called the U.S. a bully.
The question is, how are all these different countries going to react? Because we saw Mexico play it pretty cool, try to appease Donald Trump. What do you think we'll see?
HOGAN: Oh, it's certainly being a bully in the process for sure. I mean, just listening to the -- the head of commerce, Howard Lutnick, talking about you can't wrestle, you know, with a sumo wrestler or the sumo wrestler or this -- or you can't, you know, go after your -- you can't pick a fight with the largest customer. Thats the wrong way to think about this.
And at the end of the day, what we need to find out is what is the goal of this administration?
[15:10:00]
Is it actually a revenue increase? Is it to protect our borders from immigration and fentanyl? Or is this actually trying to balance off trade, which we can't do.
And we can't do that because the United States is a service-driven, technology-driven economy. So, we're going to buy more manufactured goods. We've moved beyond that. We've actually evolved beyond just being a manufacturer to actually creating some of the best technology, the best medicines, and certainly the best services in the world.
And if we want to take a step back to the '50s, which might be romantic, to think about and manufacture everything that we're going to consume, that is going to, cause a major economic slowdown in this country. It's going to -- it's going to tear apart our productivity, and it's likely to cost a lot of jobs and certainly be inflationary in the short run.
KINKADE: It was interesting listening to some Trump supporters and Republicans say, don't be surprised by this. Donald Trump has been talking about tariffs for years. I just want to play some sound from Donald Trump from the last couple of decades.
(BEGIN VIDEO CLIP)
TRUMP: The most beautiful word in the dictionary to me is tariff. I love tariffs. I love tariffs. So, I love tariffs. And I say the most beautiful word in the entire dictionary of words is the word tariff. I love tariff.
(END VIDEO CLIP)
KINKADE: I mean, certainly, in interviews, we've done -- he's done much earlier than that. He was talking about tariffs and having a trade war and making things right by the U.S.
How sensitive, though, is President Trump to markets? If markets continue to slide, is he likely to course-correct?
HOGAN: Well, I would tell you this, there's a couple of things that could happen in that framework. This is his second term. So he's a lame duck here. So, he probably doesn't care as much about using the market as a scorecard for himself. This is something he's been talking about going back to the '80s with Japan. So, it's a long-held belief that he has.
But I think there's also an opportunity, and we're starting to see that with some of the Senate Republicans to push back on some of this, especially with countries like Canada and Mexico. So there, whether it's a Trump put or the Senate actually saying, okay, we've gone too far here and were not accomplishing the goals that you set out for or announced. And I think that's where the pressure comes from.
I think Senate Republicans are going to start to push back on some of this and saying, this doesn't make any sense to have a 25 percent tariff on 1 or 2 of our best trade partners for logistical reasons. It just makes no sense.
KINKADE: Yeah. Hogan, great to get your perspective. Appreciate your time. Thank you.
HOGAN: Thank you.
Well, Mexico and Canada are exempt from the Trump administration's reciprocal tariffs announced Wednesday, but both countries are still subject to the previously announced tariffs.
Canadian Prime Minister Mark Carney says he'll match them and direct the money raised from the tariffs to auto workers and other Canadians impacted.
(BEGIN VIDEO CLIP)
MARK CARNEY, CANADIAN PRIME MINISTER: As I told President Trump during our call last week, Canada will respond to the U.S. auto tariffs. And today, I'm announcing that the government of Canada will be responding by matching the U.S. approach, by matching the U.S. approach with 25 percent tariffs on all vehicles imported from the United States that are not compliant with USMCA, our North American free trade agreement.
(END VIDEO CLIP)
KINKADE: Well, for more, CNN's Paula Newton explains.
(BEGIN VIDEOTAPE)
PAULA NEWTON, CNN CORRESPONDENT: Well, Lynda, Mark Carney was pretty blunt about what he thought about these actions from the Trump administration, saying, look, these tariffs are completely unjustified. He said that Canada got the best of what was a bad deal. But more than that, he basically said 60 years of the United States being a global leader on trade have now come to an end. And he has a warning, really, for what comes next for Canada. Listen.
CARNEY: Our trade becoming closer and closer together. That is over. I mean, we saw that that was ending a while ago. It's now emphatic. I think the world is learning that that is over.
That creates real challenges for us. We're not sugarcoating it. We're absolutely clear about that. It also, though, creates an enormous opportunity for a country like Canada, which has virtually everything that the world wants, has a lot of things that the U.S. wants, and they're going to find out how much they want it.
NEWTON: You heard him there, Lynda. That was really a warning for the United States. If Mark Carney becomes prime minister on April 28th, and again, that is still in doubt. He still has to go through the rest of the election. He is saying that he wants to renegotiate the relationship with the United States, and he wants to come to it from an economic position of strength. At the same time, he concedes, the Canadian economy will suffer. Many
Canadians will suffer. Weve already seen layoffs here in Canada. And this may get worse before it gets better.
But Mark Carney making it very clear the relationship that Canada had with the United States is now over -- Lynda.
(END VIDEOTAPE)
KINKADE: Our thanks to Paula Newton there in Toronto. I want to go back to our breaking news. U.S. Defense Secretary Pete Hegseth is being placed under review by the Pentagon's inspector general. He will investigate the Signal chat incident when plans to bomb Yemen were accidentally shared with a journalist.
CNN's Natasha Bertrand is at the Pentagon.
Good to have you there for us, Natasha.
So, what exactly is part of this probe into Pete Hegseth?
NATASHA BERTRAND, CNN NATIONAL SECURITY CORRESPONDENT: Well, the acting DOD inspector general announced today that they are going to be launching this review of essentially whether classified information was improperly disclosed on this messaging app on Signal as well as whether records retention laws were violated.
And in order to do that, of course, they're going to be speaking to folks here at the Pentagon, including the secretary of defense and his staff. And also, they're going to be interviewing U.S. Central Command personnel down in Tampa, Florida. Now, it's unclear what kind of timeline this inspector general probe is going to be on, but it does, mark, one of the first kind of consequences that we have seen out of this Signalgate fiasco. And one of the real independent investigations that we have seen of the entire episode.
Of course, the National Security Council said last week that it would be conducting its own review of what happened here. But again, the National Security Council includes, of course, National Security Advisor Mike Waltz, who was actually on that chat. And so, for the DOD inspector general to now launch an independent review of what exactly happened here, that is the first step we've seen in order to get some measure of accountability here and determine what exactly happened.
Now, if you'll remember, the secretary of defense, he has repeatedly said that he did not share classified information on this Signal chat. But according to "The Atlantic", the messages that he did disclose involved the exact timings as well as the type of aircraft that would be involved in these strikes. These U.S. military strikes against the Houthis in Yemen. And we were told last week that this was classified information at the time that Hegseth disclosed it on Signal.
So, obviously, that has raised a lot of questions here about why they used that app, which is encrypted, but still not the most secure place, of course, to be talking about such sensitive and classified topics. And of course, whether the disappearing messages feature which was turned on again, according to the messages released by "The Atlantic", implies that certain records retention rules were broken because those messages, some of them were deleted after several weeks. So, this is something that the inspector general is now going to be reviewing.
And I should note that its actually an acting inspector general, because the inspector general that was here previously was fired by President Trump early on in his term.
KINKADE: Wow. Okay. Certainly a lot to review there. Good to have you on the story for us, Natasha Bertrand at the Pentagon.
Well, still to come, with President Trump's new tariffs, oil prices are dropping. But why paying less at the pump might not be such a good thing. We'll have that next.
(COMMERCIAL BREAK)
[15:20:50]
KINKADE: Let's take another look at those markers. You can see there now. Plunge really over 3.5 percent. Thats close now to the lows of the day for the Dow.
And let's look at the others. The S&P 500 is down almost 5 percent. The Nasdaq over 5-1/2 percent. And the Dow Industrials, another drop there, 3.64 percent a steep decline.
We will get back to those markets in just a moment. As we look to the closing bell. But right now, I want to go back to President Trump's tariff escalation, which, of course, has many concerned about the effect on the world's economy, especially when it comes to oil. U.S. oil futures dropped today in the biggest one day fall during -- since July 2022.
Well, following all these developments is Matt Egan.
Good to have you with us, Matt.
So, honestly, we've seen the oil price drop not only as a result of this tariff escalation, but also at the surprise announcement by OPEC. What more can you tell us.
MATT EGAN, CNN REPORTER: Yeah, Lynda, this really was a one-two punch for the oil market. We're seeing very steep losses. You see U.S. oil prices down almost 7 percent, as you mentioned. They settled with their steepest one day drop in nearly three years.
First, this is about the trade war, right? Theres concerns that this historic escalation in tariffs will slow the world economy down. And history shows when the economy slows down, there's less need for oil, right, because people drive less, they take fewer vacations, they buy less stuff. So there's not as many diesel guzzling trucks that are needed on the road.
I talked to Bob Yawger over at Mizuho Securities, and he told me if this is a demand destruction event and it's going to disrupt the supply chain, he said the market is concerned about the threat of recession, inflation and unemployment. But as you mentioned, that's not the whole story here. This is also being driven by that surprise announcement this morning from OPEC Plus, the producer group. Despite these trade war fears and recession concerns, they are ramping up production by more than anticipated. They had previously announced they were going to increase supply in May. They're now doing more than triple the previous amount that they planned to increase. So that's raising concerns in the marketplace that they might be overdoing it, right, that they might be ramping up production into a weakening market.
Look, the silver lining, I think, for consumers is, yes, tariffs could increase costs, but energy costs might be coming down, right, especially at the gas pump. And that is obviously something that consumers, especially here in the United States, care a lot about. Of course, Lynda, this is not how you want to get there. Right. Ideally you would not be getting cheaper gas prices because investors are worried about a recession.
Back to you.
KINKADE: Exactly. Matt Egan, good to have you with us. Thanks so much.
EGAN: Thanks.
KINKADE: Well, the Norwegian foreign minister says president Trump's tariffs could violate the NATO treaty mandating economic collaboration.
Well, his comments come amid a trip by the U.S. secretary of state to Brussels to reassure weary members of America's commitment to that alliance.
Well, Marco Rubio is dismissing what he calls hysteria over the future of U.S. involvement. He's also urging allies to spend more on defense, even as Mr. Trump's tariffs delivered shockwaves right around the globe.
Well, CNN's Alex Marquardt is covering that NATO meeting in brussels and joins us now live.
Good to have you there for us, Alex.
So, Marco Rubio was there to basically say the U.S. still wants to be a part of NATO. But I imagine on the minds of many was this global trade war.
ALEXANDER MARQUARDT, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Absolutely, Lynda. It was hanging over this first of, of two-day meetings. Theres a very spelled out official agenda that the NATO foreign ministers have been planning to address. They wanted to talk about NATO unity.
And, of course, Marco Rubio wanted to emphasize the U.S.'s role in NATO. They want to talk about security assistance for Ukraine and the negotiations with the Russians. They want to talk about defense spending. That's something that that the U.S. has been pushing.
But coming the day after this massive news about tariffs put on so many countries around the world, it was to a large extent overshadowing many of the conversations not in the official fora, but in the side conversations in the side rooms.
[15:25:17]
One Western official telling me that it was taking away from -- from -- from the business at hand, and I actually spoke with the Canadian foreign minister, who said they are trying to be constructive, but they also wanted to send a message to the United States that it is taking away from what is happening here in brussels. Take a listen.
(BEGIN VIDEO CLIP)
MELANIE JOLY, CANADIAN FOREIGN MINISTER: So this is what we're doing, but clearly, we're passing that message to our American counterparts that, you know, it's -- it's difficult to have these conversations in the context of a trade war. And at the end of the day, it is those who are watching us right now, Alex, that will be suffering from these tariffs and that -- that -- that issue of trust amongst allies. And we want to be constructive.
(END VIDEO CLIP)
MARQUARDT: Melanie Joly going on to tell me that they are putting what she called maximum pressure on the White House so that President Trump backs off of these tariffs. And as distracting as -- as distracted as these conversations are, she said. The goal here at NATO is to emerge from these two days of meetings with a real show of unity. It does not appear that Joly or any of the other foreign ministers are taking this out on Rubio. Everything seems to be going actually quite well and everyone's being friendly towards him. There was the potential for another awkward moment earlier today when Rubio sat down with his Danish counterpart.
Of course, the Trump administration has made no secret of their desire to annex Greenland, which is Danish territory. According to the State Department, that didn't even come up in the meeting. They are staying focused. They are trying to stay focused on the issues that NATO really does need to talk about. But there are a lot of different subjects that that Rubio has had to grapple with here in brussels and will continue tomorrow in the second day of meetings -- Lynda.
KINKADE: All right. Alex Marquardt, good to have you there for us in Brussels. Thank you.
Well, still to come, a new tariffs on auto imports is already impacting assembly plants both in Canada and Mexico. And, of course, here the U.S. auto workers.
We're going to have a live report from Detroit when we return.
(COMMERCIAL BREAK)
[15:30:40]
KINKADE: Welcome back. I'm Lynda Kinkade.
Half an hour left to trade on Wall Street on a day of dramatic losses for stock markets worldwide. All three U.S. indices are lower. Donald Trump has compared the situation to having major surgery. You can see there, the S&P 500 down 4.6 percent. The Nasdaq almost down 6 percent, and the Dow Industrials down 3.7 percent, close to pretty much the low of the day.
Well, posting in all caps on Truth Social, Donald Trump said the operation, the surgery, the tariff trade war is over. The patient lived and is healing.
Well, the U.S. commerce secretary says it's time to, quote, let Donald Trump run the global economy.
Speaking to CNN's Pamela Brown earlier, Howard Lutnick says global trade is being reordered to suit American interests.
(BEGIN VIDEO CLIP)
LUTNICK: Let Donald Trump run the global economy. He knows what he's doing. He's been talking about it for 35 years.
You got to trust Donald Trump in the White House. That's why they put him there. Let him fix it, okay?
PAMELA BROWN, CNN HOST: Right, I understand --
LUTNICK: It's broken. Let him fix it. Our $36 trillion deficit, right, is going to ruin our children's lives and our grandchildren's lives. Let Donald Trump fix the American economy.
BROWN: Just a follow-up with you. When the first time he did tariffs, we did see prices rise on products that were tariffed. Thats according to Goldman Sachs, compared to non-tariff products.
LUTNICK: The lowest inflation ever.
BROWN: The manufacturing sector went into a mild recession in the fall of 2019. What gives you so much certainty? And by the way, this is more aggressive in the economy, is in a different place with inflation and consumer sentiment, what gives you so much certainty that this is going to work, and that this isn't going to hurt the everyday American?
LUTNICK: The largest tariff and trade barrier country in the world is China. And they have -- they don't have inflation. So, these things don't occur the way people suggest they do. This is a reordering of global trade for the benefit of America.
We have been -- these people have all been living in our house. They've been driving our car. They come by and visit, open our fridge and eat our food whenever they want. They've taken advantage of us.
Today was the day of the beginning of saying, I'm sorry, you can't just live for free off of us. You have to pay.
And what's going to happen is the United States of America will get stronger. Our economy will grow much, much faster than the rest of the world.
(END VIDEO CLIP)
KINKADE: Senior White House reporter Kevin Liptak joining us now.
As we just heard there from the commerce secretary, he claims that this this trade war is in the interest of Americans, certainly not the reaction we're seeing on the markets. How many Republicans are defending Trump's tariff war?
KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Well, I think they're walking kind of a delicate line here. And you heard from the Senate majority leader, John Thune, who is an ally of Donald Trump, but also represents a state where agriculture is a big deal, North Dakota. He said that we will have that the Republicans are essentially waiting to see what Trump does next and to see how the administration responds to what the markets have been doing. And I think that's notable because when you listen to the administration, they are very much entrenched in this idea of the tariffs. It does not sound as if Trump will back down at all.
And in fact, Howard Lutnick said that exactly, that the president would not bend in this tariff plan. And so, when you listen to Republicans sort of who are on the side of Trump, for the most part, who defend him in most other things, you have not heard sort of the fully voiced defense of these tariffs that you often do hear. Among some of them you do.
But the Republicans, for whom this will have the most effect in their states, I think, are still trying to balance how exactly this will move going forward. And in fact, we saw one of those Republicans, Chuck Grassley, who represents Iowa, another state where agriculture is very important, introduce a bill on Capitol Hill today with one of his Democratic colleagues essentially trying to give Congress more power over these tariffs.
It's not clear that this would have much effect on the tariffs that the president has already announced, but it -- clearly, Congress wanting to take back control of some of these issues that the President seems to have used his unilateral powers so broadly going forward. And so, I think as this takes more effect, as this has an effect on the markets, you will hear more from Republicans, particularly as they hear from their own constituents.
But as of now, it doesn't appear as if there's much that they can really do to prevent this new tariff regime from taking hold.
KINKADE: Yeah, certainly not at this case, not at this point in time. Kevin Liptak outside the White House, good to have you with us. Thank you.
LIPTAK: Sure. KINKADE: Well, President Trump's tariffs are already driving temporary
layoffs as automakers navigate their way through the 25 percent hike. Automaker Stellantis says its paused production at some of its Canadian and Mexican auto assembly plants. And as a result, Stellantis reports some U.S. workers will also be temporarily laid off.
Goldman Sachs says the cost of foreign made cars will increase by at least $5,000 and up to $15,000 due to tariffs.
Here's what the U.S. Treasury told CNN's Kaitlan Collins.
(BEGIN VIDEO CLIP)
KAITLAN COLLINS, CNN CHIEF WHITE HOUSE CORRESPONDENT: Yeah, and obviously, with the cars, all foreign made cars imports are getting a 25 percent tariff starting at midnight. If half the cars coming into the United States are Ford made, that's hard to turn around overnight, as you know. So, what would you say to people in the auto industry who are worried about that timeline and how quickly that could shift.
SCOTT BESSENT, TREASURY SECRETARY: Buy American.
(END VIDEO CLIP)
KINKADE: So CNN's Omar Jimenez is in Detroit, Michigan, standing in the midst of cars. So today, tariffs on auto imports come into effect, and then no later than May 3rd, will the tariffs on imported parts take place. So, tell us what people there, people selling cars, buying cars are telling you.
OMAR JIMENEZ, CNN CORRESPONDENT: Yeah. So those selling cars are just trying to figure out what is the road ahead going to look like for when they sell vehicles like these, or all of these that are in this particular lot at a dealership here? And what's interesting is it's broken up into a few different categories. So, one, you have new cars. So outside of the ones that are on supply right now, new cars that are bought after these tariffs are into place, those are the ones that then could be susceptible to these.
These are actually used cars. And what's interesting is those higher prices on new cars may actually drive more people to the used car market. But what will that do? Increase demand, could also drive up prices in the used car market.
So those are the variables that a lot of the dealers are now trying to wrestle with and trying to time when customers, including ones that we spoke to just yesterday, said that they were coming in to buy or lease cars specifically because they were worried about some of these price increases.
I want you to listen to the president of this particular auto dealership here in Michigan on what he told me, on how they are trying to navigate the path forward.
(BEGIN VIDEO CLIP) GEORGE GLASSMAN, PRESIDENT, GLASSMAN AUTOMOTIVE GROUP: A couple of weeks ago is when it really started to hit. And here's what we're finding. The person that comes in wants to buy that white car, it has to be white because they love white, they're buying the gray car because that's what's available.
JIMENEZ: Is it the tariffs themselves or is it the uncertainty over what the tariffs will bring?
GLASSMAN: It's both. You've got high interest rates, historically high interest rates right now. And so, you've got customers that are feeling the pain with their household bills. Youve got food costs that are high. And now, their second largest purchase next to a home is also in play.
(END VDEO CLIP)
JIMENEZ: And, you know, one of the things he also said is that, you know, this particular dealership started by his father in the late 1960s. He's been working here for decades, and they've, of course, navigated a lot of issues. As you can imagine, COVID most recently, but also chip shortages, certain brands going out of business, things of that nature. But the way he described it is he says this potentially has the ability to create the deepest forming disruptions to the industry in a way that even in his decades experience, he has never dealt with.
And so the big unknown for them right now is how much of these tariffs will the manufacturers and automakers absorb because they are expecting to absorb part of this? And how much of it is actually going to be passed down to these dealers? How much will they have to raise prices to adapt? And then, of course, how much will that end up falling on the consumer?
KINKADE: All right. Omar Jimenez, good to have you there. Breaking it down for us. Thanks so much.
Well, from French champagne to Italian cheeses, the impact of U.S. tariffs is already being felt across Europe. For more, here's CNNs Frederik Pleitgen.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: As shiny German cars roll onto massive cargo ships for export, fear is spreading here that the seas could soon get a lot rougher after President Trump hit auto imports to the U.S. with a 25 percent tariff. European exporters hoping Americans love German cars more than the U.S. leader loves tariffs.
For the American market, this port handles mostly higher priced vehicles, the port CEO says.
[15:40:02]
We hope the buyers who purchase these rather expensive cars are not so price sensitive that they would refrain from buying them simply because they're subject to high tariffs. But the German auto industry is already in a major crisis, with massive sales and revenue drops, leading to job cuts and restructuring programs.
And it's not only the German auto industry that's in trouble. This country is in the midst of a protracted and worsening recession, and the last thing Berlin needs now is a trade war with one of Germany's most important trading partners.
In Berlin, people lashing out at the U.S. president for potentially exacerbating the woes. We in Europe really need to concentrate on ourselves at the moment, this man says. The strengths are there in Europe in terms of industry development and technology, and this man says nobody will actually gain anything except perhaps Donald Trump's ego.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This is one of the most important days, in my opinion, in American history. It's our declaration of economic independence.
PLEITGEN: From fine Italian cheese and delicious Parma ham to French champagne and cognac. The Trump administration is slapping a 20 percent tariff on goods from the European union, citing the E.U.'s trade surplus with the U.S., a move the Europeans say is deeply unfair. While they acknowledge that Europe runs a trade surplus of about $173 billion with the U.S., when it comes to goods for services, there's a trade deficit with the U.S. of about $120 billion. Brussels says largely evening things out. And the blocs leadership vows they will strike back at Trump.
URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: We are already finalizing the first package of countermeasures in response to tariffs on steel. And we are now preparing for further countermeasures to protect our interests and our businesses if negotiations fail.
PLEITGEN: And if those negotiations do fail, small businesses are set to suffer. The small Greek Kalavryta Cooperative for feta cheese had its sights set on entering the U.S. market this year, but Trump's tariffs could drastically change that equation.
The tariffs certainly add a cost to the product, the CEO says. And what share of that will go to the final consumer, where the roulette ball will land remains to be seen.
Like for so many on both sides of the Atlantic, for those working here, the Trump administrations trade policy first and foremost means one thing uncertainty about who our friends and who our foes in international trade.
Fred Pleitgen, CNN, Berlin.
(END VIDEOTAPE)
KINKADE: Well, still to come, extreme weather across the U.S., from deadly tornadoes to what could be historic flooding.
Meteorologist Allison Chinchar has the latest when we return.
(COMMERCIAL BREAK)
[15:46:13]
KINKADE: Hello, I'm Lynda Kinkade. You are watching CNN NEWSROOM.
And this is a shot of the Dow, that sea of red. It has plunged over 3.85 percent. And all the other indices are also down. You can see the S&P 500 down almost 5 percent. The Nasdaq has plunged nearing 6 percent. And the Dow, of course, as I mentioned, down almost 4 percent right now. Quite the low of the day.
Well, we are nearing the close of Wall Street and we will have an update as that close happens. It of course, comes after Donald Trump announced those sweeping global tariffs.
We want to turn now to the situation of weather here in the U.S. in the past 24 hours. Dozens of deadly tornadoes have broke out in the central and southern part of the country. The extreme weather could stretch into this weekend. At least seven weather related deaths have been reported across three different states.
And you can see some of the damage there caused by the wind in Tennessee. Well, forecasters warn some of those same regions could be hit again with the possibility of life-threatening flooding.
CNN meteorologist Allison Chinchar is following the developments.
Good to see you, Allison. So, this has been a very busy start to the tornado season. And already 300 warnings since Wednesday morning.
What more can you tell us?
ALLISON CHINCHAR, CNN METEOROLOGIST: I think that it's not over yet. We still have several more days to go in terms of this severe weather potential. This video behind me shows three separate tornadoes in three separate states. You're looking at Arkansas, Missouri, as well as Indiana.
And again, they were just some of the tornado warnings that we ended up seeing just in the last couple of days. All of the orange boxes you see here, those were severe thunderstorm warnings. And then the pinkish purple color, those are every single individual tornado warning.
Now, I want to emphasize that doesn't mean every single one of them turned into a tornado. In fact, in many of these cases, it's one tornado that just goes for a very long time. But again, it just kind of goes to show you the scope of how many states were really impacted by this system.
You still have tornado watches in effect right now. Some of these go for just about another hour or two. Others extend into the evening hours tonight because this system is not moving very fast as it progresses eastward. Weve got several severe thunderstorm warnings in effect right now, not just in portions of Tennessee and Kentucky, but we've also had them off and on across portions of Texas as well.
The bigger concern here, and the more concern as we go into the evening hours, is going to be these red boxes. These indicate the flash flood warnings, some of them because these areas have had several inches of rain already, and they are expected to get so much more in the next 48 to 72 hours. This is a look at the high risk of excessive rainfall just for the day to day.
So, portions of Tennessee, Kentucky, and areas of Arkansas all looking at that extremely high potential for very large volumes of water. This is what we are expecting. Widespread totals of six inches, some of these areas could exceed over a foot of rain before this system finally exits these areas.
And again, it's going to take time. It's going to take time. This is the high risk for today. Then we have a high risk on Friday. And we have yet again another high risk on Saturday.
So, it's a multi-day event. And you'll notice some of these cities are listed in every single one of them. So, it's not even the benefit of maybe spreading it out over different states. Some of these areas take Little Rock, Arkansas, for example. In every single one of those high risks for the next three days.
KINKADE: Wow. I hope everyone stays safe. Allison Chinchar, thanks so much.
Much more news in just a moment. Stay with us. You're watching CNN.
(COMMERCIAL BREAK)
[15:52:16]
KINKADE: Welcome back.
The tariffs from the Trump administration seem to be impacting every part of the globe. Even deserted islands. Take a look at this, Heard and McDonald Islands in the southern Indian Ocean. They're controlled by Australia, but they're home to penguins, not people. And yet, despite having no economic activity since the 19th century, the White House still saw fit to impose a 10 percent tariff.
Well, we are just minutes away from the closing bell. Let's take a look on Wall Street, where investors are running for cover after President Trump's new tariffs, the Dow sharply lower. You can see down almost 4 percent. The Nasdaq there certainly has plunged down almost 6 percent 5.9 right now. And the S&P 500 is -- has taken a dive, too, down almost 5 percent.
Well, Richard Quest is standing by. So, this is a reaction Richard 24 hours after Trump announced the most consequential trade war in more than 100 years, it doesn't seem many people are happy with it.
QUEST: No. And just to talk you through what's happening now. So, the busiest time of the market day is the open and the close. And that's where you get the most volatility. It's people taking positions in the morning. And it's what you want to be the position you want to leave yourself in overnight.
And so I'm not at all surprised that we've seen an uptick in volatility in these final half hour or so of trade.
Now in terms of today, that would mean selling off because what you don't want is to be in a position, a stock position that you can't defend overnight. And so many people or many investors, many book squaring hedge funds are going to be both, manually and automatically getting rid of. In other words, how do I want to end the day?
And that's -- so you see, the Dow I think now is at its lowest point of the session. The Nasdaq has continued to fall. This is almost again at the low point of the session. And I think the next five minutes are going to be crucial about whether or not the market falls and tumbles. I would expect it wouldn't surprise me if we did see it tumble quite a bit more before in the last five minutes.
KINKADE: So, as it stands, Richard, what is the risk of a recession in 2025?
QUEST: You've got two risks. You have the risk from the actual tariff. Well, you've got the risk from the tariff themselves. The slowdown in growth as a result of consumers not shopping of uncertainty and worries and higher inflation.
[15:55:05]
So, you have that risk, but you also have the now, if you will, ancillary risk. This, this carnage that's happening. The more people see this ancillary collateral damage, if you will, the more people say, look, I haven't even looked at my pension fund today or my investments or anything like that. I haven't even checked anything because it's just too horrifying and frightening to know what it might be.
KINKADE: Yeah, exactly. And I mean, that's the thing, right? A lot of the Trump Republicans are coming out to defend this move as saying, oh, of course you're going to expect some short-term pain, but there will be long term gain. I mean, this promise of long-term gain.
I've got to leave it there for now, because we are going to join you for the closing bell in just a moment.
QUEST: Oh, yes, yes, yes.
KINKADE: We'll be watching Richard Quest.
I'm Lynda Kinkade. Thanks for joining us here on CNN NEWSROOM. Stay with us. Richard Quest is next.
