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Early Start with Rahel Solomon

Trump Tariffs Overhaul Century Of American Trade Policy; U.S. Stock Futures Plunge Following Trump's New Tariffs; World Leader "Brace For Impact"; Tornado Outbreak Sweeps Through Midwest. Aired 5- 5:30a ET

Aired April 03, 2025 - 05:00   ET

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

[05:00:21]

RAHEL SOLOMON, CNN ANCHOR: Good morning and welcome to our viewers joining us from the U.S. and all around the world. I'm Rahel Solomon. It is Thursday, April 3rd, 5:00 a.m. exactly here in New York.

And straight ahead on EARLY START.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It's our declaration of economic independence.

RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: The new trade policy of the United States is the biggest shift in trade policy since the Second World War.

JOHN VAUSE, CNN ANCHOR: Economists and world leaders are all warning this escalation of Trump's trade war will have devastating consequences.

URSULA VON DER LEYEN, PRESIDENT OF THE EUROPEAN COMMISSION: We must brace for the impact that this will inevitably have.

UNIDENTIFIED FEMALE: This is like, oh, my gosh, it's happening. This is happening. That's all I could think. And I just held on.

ROSEMARY CHURCH, CNN ANCHOR: A line of severe thunderstorms, was seen tracking through parts of the Midwest.

(END VIDEO CLIP)

(MUSIC)

SOLOMON: President Trump overhauling a century of global American trade policy as he announces sweeping new tariffs on all imports to the U.S. It's a move which threatens to escalate his trade war with countries around the world.

(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)

SOLOMON: On Wednesday, the president used national emergency powers to impose tariffs of at least 10 percent on most countries, and there are even higher rates for dozens of nations that he called the, quote, worst offenders. It's a historic move that economists say will likely cause consumer prices to skyrocket and hurt growth.

JPMorgan warning that the tariffs will probably plunge both the U.S. and global economies into a recession this year. Now, the reciprocal tariffs are aimed at some of America's top trade partners. That includes 35 percent additional levies on imports from China, on top of existing tariffs, and 25 -- 20 percent tariffs for the E.U.

Now, the baseline 10 percent rate, that will take effect on Saturday, with the customized higher rates starting a week from now.

The White House claims that the tariffs are meant to bring back jobs and manufacturing to the U.S.

The treasury secretary also warning other countries not to retaliate.

(BEGIN VIDEO CLIP)

SCOTT BESSENT, U.S. TREASURY SECRETARY: 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.

(END VIDEO CLIP)

SOLOMON: Wall Street now bracing for a steep decline on Thursday, with U.S. futures tumbling overnight, pretty much as soon as we got the announcement.

Let's take a look at where U.S. futures stand this morning. All off between 2.3 to 3.3 percent in early morning pre-trade. Nasdaq, the worst among them, which is a continuation of what we've seen with some of the tech players being especially hard.

Tech analyst Dan Ives saying in a note yesterday that this is the worst case scenario.

Meanwhile, let's take a look at markets in Asia, which are also, perhaps unsurprisingly, lower, although not as much. The Nikkei, the worst among them here off about 2.7 percent.

And governments around the world are deciding how to respond as the new Trump tariffs have triggered global shockwaves. Japan's chief cabinet secretary calls them extremely regrettable and is asking for a review.

European Commission President Ursula von der Leyen says that the tariffs are a major blow to the world economy. She wants the bloc to negotiate with the U.S., but also says that they're prepared to retaliate to safeguard European interests. Take a listen. (BEGIN VIDEO CLIP)

VON DER LEYEN: 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 on one of us, you take on all of us.

(END VIDEO CLIP)

SOLOMON: We have team reaction for you. Let's get more now from CNN's Hanako Montgomery in Tokyo, and senior international correspondent Melissa Bell in Paris.

Great to have you both.

Hanako, let me start with you. Weve obviously seen the reaction in the markets, but how are leaders in the region responding this morning? What are you hearing?

HANAKO MONTGOMERY, CNN CORRESPONDENT: Hi, Rahel.

I mean, leaders in the Asia-Pacific region have expressed a lot of shock, frustration and surprise about the U.S. President Donald Trump's recent tariff hikes. We've heard from the Japanese prime minister, for instance, Shigeru Ishiba, who's expressed regret and said it was very unfortunate that the U.S. has imposed tariffs on the country, even though Japan has been a longstanding ally of the U.S. and has maintained very good economic relations with the country for decades now.

[05:05:00]

Japan specifically has seen 24 percent tariffs imposed on the country, and that is separate from the 25 percent tariffs that Trump has imposed on the automobile industry, which will surely hit Japan and neighboring South Korea very, very hard. These two countries, of course, export a lot of cars to the United States and have developed relations with the U.S., specifically in the automobile industry for many, many years now.

Japan, specifically, the Japanese prime minister, has mentioned how Japan created about 2.3 million jobs in the U.S., specifically in this automobile industry, and also, 3 percent of Japan's GDO actually comes from sales in this sector. So, again, lots and lots of potential economic damage here in East Asia.

But interestingly, Rahel, no Asian country so far has announced any reciprocal tariffs or any countermeasures specifically. They've all said that they're going to mull their responses and reciprocal tariffs may come down the line. But so far, nothing as of yet.

Here's what the Australian prime minister, Anthony Albanese, had to say about Australia's response.

(BEGIN VIDEO CLIP)

ANTHONY ALBANESE, AUSTRALIAN PRIME MINISTER: This is why our government will not be seeking to impose reciprocal tariffs. We will not join a race to the bottom that leads to higher prices and slower growth. We will stand up for Australia. We will continue to make the strongest case for these unjustified tariffs to be removed from our exporters.

(END VIDEO CLIP)

MONTGOMERY: Now, China, which has seen a 54 percent tariff levied on the country, will, of course, suffer damage because of that very high and significant tariff increase, but also because Donald Trump has imposed tariffs on Cambodia and Vietnam, two countries in Southeast Asia that many Chinese and international companies have recently moved to, to really make production cheaper, and also to avoid existing levies.

But clearly, as we've seen Trump impose tariffs on these friends and foes, no one can really escape Trump's tariff wrath -- Rahel.

SOLOMON: Yeah. Melissa. It's interesting because we just heard Ursula von der Leyen there essentially saying we would like to negotiate, but at the same time, an attack on one is essentially an attack on all of us. Talk to us a little bit more about the reaction we've heard from Europe.

MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT: A great deal of anger, a sense of betrayal being expressed by many of these European leaders who had always seen the united --

SOLOMON: All right. It looks like we lost Melissa Bell.

But, Melissa Bell in Paris, thank you. Hanako Montgomery live in Tokyo, thank you as well.

All right. Turning to severe weather now, 5 million Americans are still under tornado watches this hour after storms pummeled the U.S. on Wednesday, especially in the Midwest.

CNN affiliate WISH reports the tornado knocked over a large radio tower and ripped off the front of a building in Indiana. That twister, just one of 19 reports of tornadoes scattered across Arkansas, Illinois, Kentucky and Missouri, and one city in Arkansas. At least five homes were destroyed, and power lines were brought down. Officials in Kentucky say that four people were injured after they tried to take shelter in a vehicle near a church that was destroyed by a tornado.

Officials in Missouri say that one person is confirmed dead following the storms, although the circumstances here are still unclear. One woman, describing the moment that the storm passed over her home.

(BEGIN VIDEO CLIP)

RACHELLE WOLF, STORM SURVIVOR: I was actually in the bathtub. And as you can see, the whole -- everything in the bathtub -- everything is coming down into the bathtub. It was just like, oh, my gosh, it's happening. This is happening. Thats all I could think. And I just held on.

(END VIDEO CLIP)

SOLOMON: Across Indiana, Michigan, Ohio, Kentucky and Arkansas, more than 400,000 energy customers have been left without electricity following the severe weather.

And forecasters are urging people to be on high alert as the threat of historic flooding looms for parts of the Mississippi and Ohio Valleys. Flood watches are in effect for the region, as well as southern Illinois and parts of Indiana and Kentucky. National Weather Service says that there is a danger of what it calls generational flooding, which could be, quote, catastrophic. Up to 15 more inches 15 more inches of rain are expected over parts of the U.S. south and into western parts of the Ohio Valley through Sunday.

All right. Trump's new tariff plan may target foreign producers, but plenty of businesses in the U.S. are now worrying what effect it will have on them.

Coming up, we will speak with the founder of one company, live straight ahead.

Plus, Marco Rubio will spend the next two days meeting NATO foreign ministers in Brussels. Why the U.S. secretary of state will likely find himself taking heat from fellow diplomats.

And the impact of U.S. tariffs on Canada. What they are saying in the hometown of Canadian hockey legend Wayne Gretzky. We'll be right back.

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[05:14:15]

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: If the cost of producing something goes up, that will pass on to us and, you know, eventually pass on to the consumer.

UNIDENTIFIED MALE: It is going to impact not only the businesses, but also the clients. You know, the environment since COVID has changed. Prices of cars have gone up as everyone knows, and this is not something that is going to help, not only the auto industry, but clients to be able to competitively shop and to get deals. You know, it's really going to hurt everyone, unfortunately.

(END VIDEO CLIP)

SOLOMON: You just heard there, businesses in the U.S. are bracing for the fallout from President Trump's sweeping tariffs. In just hours after the U.S. president rolled out his plans, a group of America's leading CEOs warned that this could all backfire on the U.S., hurting manufacturers, workers and families.

[05:15:04] Joining me now is Anjali Bhargava. She founded the company Anjali's Cup, providing sustainably sourced drink mixes and spice blends aimed at health and wellness.

Anjali, great to have you this morning. Explain for us the impact that these tariffs will have for your business. From raw materials on the front end all the way through to packaging.

ANJALI BHARGAVA, FOUNDER OF ANJALI'S CUP: Yeah. Good morning.

It's -- my turmeric and chai blends use incredible single origin spices from around the globe. I have assam tea from India. I have turmeric from Thailand. I have ginger from Vietnam. Just for starters. And you know, these aren't luxury sourcing choices. They're a big part of what make my products really special.

I also have a really beautiful tins that I use for my retail packaging that I do sourced from China to really give me a competitive advantage on the shelf and to make my products stand out. And -- and this news is really making me really nervous about if my sourcing options are going to be viable.

SOLOMON: Yeah. I mean, have you -- have you been able to do the sort of back of the envelope calculations about how much this changes your margins, how much this changes the potential prices? I mean, what will this mean in dollars and cents if you know.

BHARGAVA: I'm -- my margins are already super thin. So there just isn't a lot of buffer for small businesses like mine using these premium ingredients that are already at a premium price point. Consumers are already spending less. So, the -- the thought that I can just bump up my prices and absorb that cost increase is, is difficult.

And the numbers are hard to calculate because we don't really know what's happening, with sourcing from so many different countries. I don't know how freight is going to be impacted. I don't know how timelines are going to be impacted.

I just know that I can't personally keep the business going by absorbing those costs. And I know that it's not fair to pass those increased costs on to consumers. So, I am looking -- I mean, it could be a 20 to 30 percent increase just to maintain my margins. It could be even higher than that. I don't actually know that final number at the moment.

SOLOMON: So, Anjali, talk to me a little bit about. And look, I'm -- I'm a daughter of small business owners. You know, they're small business owners are a resilient bunch, tough as nails, resourceful, creative, innovative. How are you planning to respond to this? I mean, what's the plan for Anjali's Cup?

BHARGAVA: So, I'm contemplating several things. One of the answers may be that I have to rethink my whole retail strategy. Food service is a big part of my -- my business, so I sell to coffee shops like Joe Coffee Company and Cafe Grumpy, and working with more coffee shops could be a way to bridge some of the gap. If I have to let go of -- of this retail packaging.

But it's really after -- after having spent 11 years building the relationships with my suppliers and farmers, after getting my business into Whole Foods and other stores to -- to let go of that is -- is difficult.

So, it's not something I'm going to take lightly. But it is something that I definitely have to -- have to contemplate. It may mean that I get rid of certain skews. I have -- I have a lot of different options.

And I think all of us are sort of trying to make the best decisions we can in real time in a sort of economic fog. We're -- we're trying to use our instincts and our knowledge. But the pivots of the past have not had these kinds of big numbers at stake.

SOLOMON: Yeah. Yeah. It's interesting, as I hear you talk about your relationships and the business acumen and all of the experience and obviously, hard work that goes into to running a business.

You know, it's also sometimes I think, really a source of passion, a source of pride for small business owners. And I'm curious, as I listen to you emotionally what this has been like for you.

BHARGAVA: I'll say that I am an optimist at the end of the day. I feel really passionate about how special my products are, how special the ingredients that I use are.

[05:20:05]

I use a turmeric that we get from a farmer in Thailand who, incidentally, used to be on the big island of Hawaii but moved to Thailand because he could not make that domestically grown product viable. And he's growing incredible turmeric root in Thailand now.

And I have -- I have seen my own resilience. I've seen the resilience of passion-driven businesses. And I think especially in food, we know that food brings us all together. It is about building cultural connections. And that is something that I think is -- is something we can't remove from the fabric of America. It's -- it's so important. And so, I am committed to finding the solutions that I need to, and, you know, maybe stepping back from certain things in the short run, but finding a way to keep the business going.

I've been doing it for 11 years, and so I'm not going to let this take me down if I don't have to. But I also know that life is long and -- and things will look different down the road.

SOLOMON: Yeah, certainly. Certainly an optimistic way of viewing it. Anjali, we certainly -- would hope for the best for you and your business. We appreciate you being on this morning. Thank you. That's Anjali Bhargava.

BHARGAVA: Thank you.

SOLOMON: All right. Well, for 75 years, NATO has been anchored by U.S. leadership. Now, European allies worry that Donald Trump may change all of that. And the future of the alliance could be at risk as NATO foreign ministers gather in Brussels. We'll have the details, straight ahead.

(COMMERCIAL BREAK)

[05:26:16]

SOLOMON: Welcome back.

NATO foreign ministers are gathered in Brussels this hour. Let's take a live look if we might. Kicking off a two-day meeting there that will undoubtedly focus intensely on the war in Ukraine.

Among those in attendance, U.S. Secretary of State Marco Rubio, who is likely to face questions about Donald Trump's willingness to move closer to Russia in an effort to broker a ceasefire. Rubio can also expect to feel tensions over Trump's recent insults against NATO allies, Canada and Denmark.

Let's go to Clare Sebastian now, who's watching all of this.

Clare, the speech, these comments from Rubio coming at a time when a lot of Americas allies have deep concerns about the administrations foreign policy agenda, what are you watching? What can we expect to come out of this summit?

CLARE SEBASTIAN, CNN CORRESPONDENT: Yeah, the foreign policy agenda. And then most recently, of course, the tariff announcement, which came overnight, Europe time and those coming in have already faced questions about that because of course, while you can argue that this isn't directly about this, it is related.

Take a listen to how the secretary general, Mark Rutte, responded to a question on the tariffs.

(BEGIN VIDEO CLIP)

MARK RUTTE, NATO SECRETARY GENERAL: I think the reception will be very positive. This is not a meeting about, of course, the economic issues and subjects. It will be -- we are really focused, the focus here of all 32 is how to defend NATO territory against the Russians, our long-term threat, which will be there even after -- I hope there will be a deal on Ukraine. The Russian threat will be there for many years to come.

(END VIDEO CLIP)

SEBASTIAN: But, of course, Europe now engaged in what the secretary general called multiple times the biggest increase in defense spending since the Cold War is facing another economic headwind in doing that with these tariffs. And this was voiced by the Belgian foreign minister this morning, who said in a statement before arriving at the summit, Belgium's growth could be affected and this at a time, he said, when the United States itself is asking us to increase our defense investment spending. So, this is where I think we see the economic policy colliding with

the geopolitical goals of the Trump administration, but also, of course, Ukraine is going to be extremely high on the agenda. And I think Marco Rubio will face questions from allies in the hope that he can clarify some of the mixed messaging coming out of Washington.

President Trump, for example, souring recently on Putin, saying in the last few days that he was very angry that they didn't have a deal yet. Well, of course, ring fencing Russia from this latest round of tariffs and allowing a top Russian official Kirill Dmitriev a top aide to Putin to come to Washington, reportedly having to lift sanctions on him to do that, in keeping up this dialogue, which is, of course, emboldened Russia.

So, I think he will face questions on that. He's seen as one of the most NATO-friendly in the top tier of the Trump administration. So, they will be looking for next steps. And I think one thing that we really don't have clarity on yet is this issue of how the U.S. is willing to be involved in post war security guarantees for Ukraine, the so-called backstop, and how they will help get to the whole idea of a lasting and enduring peace, which is something that we've heard repeatedly as ministers and the NATO secretary general himself have arrived at the summit this morning, Rahel.

SOLOMON: Clare Sebastian, reporting for us in London -- Clare, thank you.

And we are following new developments out of Hungary, where the government has announced this morning that it will withdraw from the International Criminal Court. That news comes as Prime Minister Viktor Orban welcomed Israeli Prime Minister Benjamin Netanyahu to Budapest for a four-day visit.

Now, the trip is seen as a direct challenge to the authority of the ICC, which issued a warrant for Netanyahu's arrest last year over allegations of possible war crimes in Gaza. Since then, the Israeli leader has not visited a country under the court's jurisdiction.

Now, ahead of that visit, Netanyahu delivered a video speech announcing a military escalation in Gaza, vowing to ramp up pressure until all of 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.