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The Situation Room
Temporary Layoffs at Auto Plants; Dollar Weakens as Recession Fears Grip Wall Street; Deadly Tornado Outbreak in South and Midwest; Rubio Meets with NATO Allies. Aired 10:30-11a ET
Aired April 03, 2025 - 10:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[10:30:00]
WOLF BLITZER, CNN ANCHOR: -- think American consumers will first start to feel these price hikes?
NATASHA SARIN, FORMER COUNSELOR TO TREASURY SECRETARY YELLEN AND PROFESSOR, YALE LAW SCHOOL: I think they've already started to feel them, because what you're seeing is you're seeing, for example, automobile makers and you're seeing, for example, at the grocery store as a result of understanding that prices are going to rise, you have not just exports that are seeing price hikes, you also have the fact that companies who compete with those that produce exported goods understand that prices are rising and their prices are rising too. And as a result of that, Yale Budget Lab has done some estimates, inflation is going to go up by about 2.5 percent just this year as a result of all of these actions.
BLITZER: Natasha Sarin, thanks as usual for joining us. And we'll be right back.
SARIN: Thanks so much for having me.
(COMMERCIAL BREAK)
[10:35:00]
PAMELA BROWN, CNN ANCHOR: Right now, the Dow is plunging about 3.5 percent, you see it right here on the screen, rattling investors. They are showing their concerns right here over President Trump's tariffs on almost all goods entering the U.S. For Americans already reeling from inflation, that can mean painfully higher prices. And Republican lawmakers have been setting that expectation.
(BEGIN VIDEO CLIP)
SEN. TOMMY TUBERVILLE (R-AL): There's going to be some slow pain, but I think there's going to be a lot of gain from it. What else are we going to do? We got a $37 trillion deficit.
SEN. RON JOHNSON (R-WI): As the president has admitted, tariffs will create pain for some businesses, and I think Wisconsin will be particularly hard hit with all the manufacturing and agricultural interests. TIM SHEEHY (R-MT), COMMERCE, SCIENCE AND TRANSPORTATION COMMITTEE: There's absolutely going to be short-term pain. The president's been cleared about that. Everyone has. I mean, if you're going to remodel your house to make it better in the end, it's going to be really annoying in the short-term when your house is getting remodeled.
(END VIDEO CLIP)
BROWN: Joining me now is that last Republican lawmaker you just heard from, Senator Tim Sheehy of Montana. Thank you for joining us. First of all, what are you hearing from your constituents right now about this?
SHEEHY: Well, listen, you know, there's concern across the board as we see in the markets today, uncertainty. I mean, the market doesn't like uncertainty. They want things to be the way they've modeled them for the last 30 years. And the last 30 years have seen a hollowing out of America's middle class or manufacturing jobs of American industry, really across the board. And we've centralized our economy around a knowledge-based, finance-based economy.
And that's fine, but especially since the last four years we've been on a sugar high. Unprecedented government printing of money, public sector investment. The government has become one of the largest employers in the nation by constantly growing our government agencies and printing money, pumping it into the economy. That can't last forever. The long-term impacts of that, even the short-term impacts during the Biden administration we saw was record inflation, record interest rate rise, record cost of living increase.
So, we need to detox the economy and get back to free market fundamentals. And this is the first step in that direction.
BROWN: Right. And under Biden, the inflation hit a 40-year high. But just to go back to the central question about your constituents, you know, they are going to be hit by the impact of these tariffs, including higher prices and economists really across the border saying, yes, they could go up. We just had an economist on saying, up to thousands of dollars for American consumers. What are you hearing from them? Is there a concern? Because, as you know, they, so many of them put Trump in office to lower prices?
SHEEHY: Yes. Well, we heard from them on November 5th that they were feeling record inflation year after year after year. So, there's not an inflation switch that you turn off and inflation stops. That's not how inflation works. Inflation is an insidious process that is the result of years and years of economic mismanagement.
So, printing trillions of dollars and pumping them into the economy totally distorts markets. I mean, many say the private -- the public markets were overvalued as it was because there was nowhere else, you know, to get the yield they wanted as those markets went to record highs.
So, the reality is detoxing from a record inflationary, a generationally high inflation isn't a switch that Donald Trump can walk over and say, I'm going to turn inflation off.
BROWN: Right. But the policies he just put in place economists say -- I'm not saying, that economists say, will actually add to that inflation. And I'm wondering, as a Republican, are you concerned this could backfire on Republicans for the midterms?
SHEEHY: I mean, I think everybody's concerned about how we're going to stop inflation. And like I said, there's not something you simply do to stop inflation. That's why it's so challenging. That's why the Federal Reserve spends years trying to ease or loosen monetary policy to affect inflation. The fact that this may cause short-term inflation, may cause short-term inflation, that's certainly a possibility.
But the point is, long-term, making life affordable for working class families again, making sure the blue-collar jobs that are manufacturing that bring industry back. I mean, look at our egg sector, for example. Our egg sector gets decimated by other countries tariffing our beef, imports our shrimp, you know, our catfish. I mean, you have Asian nations dumping millions of pounds of shrimp, catfish, shellfish. Australia dumps beef into our market, they tariff us at up to 50 percent of our exported AG products and then dump mass produced AG products into our market, severely harming our farmers and our ranchers.
So, it's about time we have a level playing field for our business. For businesses, for a generation now, we've let the rest of the world take advantage of that. That has inflationary impacts as well.
BROWN: Why do you think then, that the U.S. has been this global economic superpower for so long, and do you have concern that that could change as a result of this tariff policy?
SHEEHY: We've been a global economic super power since obviously the end of World War II. We've seen many changes throughout the years to our economic complexion. There's going to be many more changes to come. The only constant is change. But we cannot continue to hollow out American industries and send everything overseas.
Everybody seems to decry the fact we don't make cars here anymore. There wasn't some force field that dropped down, it wasn't a magical, you know, wand that waved, that sent manufacturing overseas, it was government policy incentivized those industries to leave our country and incentivized them to go to other countries and sell products back in.
[10:40:00]
BROWN: Yes. Certainly, you know, globalization has hurt a lot of Americans. I mean, there are some Democrats who agree with you on that, but I think when you look at the playing field now and the practicalities, you know, that means companies have to change everything, move back to the U.S., which could take years. There's the issue of finding workers. There's the issue of higher labor here, and there's the issue of a new president could be in office by the time they do all of that. So, will they actually follow through with that? In terms of the short-term pain, how much are you willing to tolerate for your constituents?
SHEEHY: The reality is we need prices to come down for working families, and that's not going to happen overnight. That's not going to happen -- like I said, inflation's not going to be a switch that we flip on the wall and it's going to stop. It's going to have to be a multi-year process to reorient our economy to bring back middle-class jobs, to bring back our heavy industries in this country.
We can't build ships anymore. China builds ships at 230 times the rate that we build. And every day we hear from Democrats and Republicans about how China's a threat, Russia's a threat. Russia's lost 4,000 tanks in the Russia-Ukraine War. That's more than our entire inventory in the U.S. military today. We can't build things anymore. And when the next war that everyone's concerned is coming, we don't have industry to build it anymore.
So, we need to start rebuilding American companies, incentivizing companies to invest in America. This is why trade unions have largely shifted their allegiance from a century of Democrat allegiance saying, you know what, globalization policies championed by the Democrats have hollowed out the jobs that the people who have made up the base of our constituency have supported us, those jobs are gone. And we need policies to start bringing them back.
This is what this is going to do. It's going to take time. It's not going to happen in a week or two weeks or a quarter. There's going to be a reorientation of our economy. It's not going to happen quickly, but it's something we have to do. It's what the American people voted for.
I mean, people that say Trump's doing things crazy, he's coming out of left field. This is exactly what he said he was going to do. Everything he's done in office is exactly what he said he was going to do. And now, he's doing it. And the pearl clutching is kind of laughable to say, he's been telling us for years this was his intent. Now, he's doing it. And the intent of these policies will be to revive sectors of the American economy that globalization has killed off in the last generation.
BROWN: Just very quickly, how long are you willing to tolerate some short-term pain with higher prices?
SHEEHY: I mean, it's probably going to be a couple of quarters as this happens. I think as we see companies reorient to the new economic reality. In the end, we're going to have a stronger domestic economy.
BROWN: All right. Thank you so much. Senator Sheehy, we appreciate you coming on. We'll be right back.
(COMMERCIAL BREAK)
[10:45:00]
BLITZER: Happening now, millions of people in the south and the Midwest are under threat of potentially catastrophic flooding. Days of pounding rain are expected after a deadly tornado outbreak. (BEGIN VIDEO CLIP)
(END VIDEO CLIP)
BLITZER: That was the terrifying site last night just outside Indianapolis. And lightning flashes illuminated a massive funnel cloud in West Tennessee. The storms left at least three people dead in Tennessee and one in Missouri, and caused very widespread damage.
Let's go to CNN's Ryan Young. He's joining us right now in the town of Lake City in Arkansas. Ryan, what are you seeing where you are?
RYAN YOUNG, CNN SENIOR NATIONAL CORRESPONDENT: Hey, Wolf, we have actually lost some communication signals with you. So, I'm just going to walk you through this and what we can show you right now. Look behind us. You can see the damage that's been left behind. Those two men back there works for a gas company. They are checking this area to make sure -- man's holding a gas sniffer to make sure there's no issues with the gas in this area.
But look at the damage left behind. These cars tossed like toys. This truck here, this SUV left behind. And we've been talking to some of the families who've actually shown up here to dig through this rubble. I will tell you, as you look back this way, that's a house that a man lived at. He was able to escape, get to his neighbors, and get into a tornado shelter.
If you come back this direction. We've been watching for over a half hour as this one family here, a family of four, was digging through this rubble to try to figure out if they could find any of their personal belongings -- knocked over by this powerful storm.
The good news here though, is even though there are six homes were messed up here, destroyed, no one was injured, just bumps and scrapes. So, that's the good news. Now, they're going through here, try to put back the power through this area. You can see the lines that are strewn -- look at the power of the storm. It's cut through all this. And we know for a fact that they're trying to make sure that all these lines are put back up safely. They're working it out.
As we walk through here, we're just trying to see how they put things back together. But it's going to be a long time to get this families made whole again.
BLITZER: All right. Ryan Young, stay safe over there. Thank you very, very much. Pamela.
BROWN: And coming up, Secretary of State Marco Rubio meets with NATO allies in Brussels just hours after his boss slapped tariffs on global trade partners. We are live at NATO headquarters just ahead.
(COMMERCIAL BREAK)
[10:50:00]
BROWN: Happening now, Secretary of State Marco Rubio is in Brussels meeting with NATO officials and looking to ease Europe's concerns about President Trump's agenda. Rubio stood alongside NATO secretary general and reaffirmed America's commitment to the Alliance.
(BEGIN VIDEO CLIP)
MARCO RUBIO, SECRETARY OF STATE: As we speak right now, the United States is as active in NATO as it has ever been. And some of this hysteria and hyperbole that I see in the global media and some domestic media in the United States about NATO is unwarranted. The United States -- President Trump's made clear, he supports NATO. We're going to remain in NATO. He's made clear --
(END VIDEO CLIP)
BROWN: CNN. Chief National Security Correspondent Alex Marquardt is in Brussels. Alex, this visit comes after Trump levied these tariffs against every NATO member. What are U.S. allies saying?
ALEX MARQUARDT, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Yes, Pamela Secretary Rubio already had a tough task coming here to this NATO meeting. That's why he was being defensive there about insisting that the U.S. will stay in NATO. Here he comes where so many of the NATO members are also members of the European Union, which President Trump yesterday said was ripping off the United States and was pathetic. So, no question, Pam, that this tariffs news isn't quite overshadowing, but is playing a quite a big role in these talks here.
I spoke with one western official just moments ago who said that as a result, it's tough to do normal business. But most of the officials I've spoken with have put a pretty positive spin on it. I spoke with the Finnish foreign minister just moments ago, for example, who said that, of course, the tariffs aren't the best news. That's quite an understatement, but said that they are all trying to approach it from a constructive perspective, that the mood generally is quite positive, which is something that we are also seeing in the public meetings.
[10:55:00]
The NATO allies who are affected are certainly trying to put the best spin on this in terms of setting up good negotiations for the future to try to reduce trade barriers in the future. They know that there's no point right now in fighting what was announced just yesterday.
That Finnish foreign minister also praising Secretary Rubio for his insistence that Europe and other NATO members step up their defense and deterrence efforts. And that is the big thing that Secretary Rubio says he wants to see out of this meeting, increased spending from all NATO allies. Pamela.
BROWN: All right. Alex in Brussels, thank you so much. Wolf.
BLITZER: Pamela. Coming up, we'll ask the commerce secretary, Howard Lutnick, about President Trump's new across the board tariffs and the impact that they're already having. Stay with us. You're in the Situation Room.
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[11:00:00]
