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The Situation Room

Interview With U.S. Commerce Secretary Howard Lutnick; Three National Security Council Staffers Fired; Stocks Nosedive. Aired 11- 11:30a ET

Aired April 03, 2025 - 11:00   ET

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

[11:00:29]

PAMELA BROWN, CNN HOST: I'm Pamela Brown.

Happening now, breaking news: Stocks are plunging, as the global fallout grows over President Trump's historic tariffs.

WOLF BLITZER, CNN HOST: And welcome to our viewers here in the United States and around the world. I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: And we begin this hour with the global aftershocks of President Trump's truly historic new tariffs on nearly all goods entering the United States.

It almost certainly will mean higher prices for Americans already bruised and battered by inflation. The concerns have rattled Wall Street already in markets around the world have been rattled as well. Many economists warn that this escalating trade war could push the U.S. and indeed much of the world into recession.

BROWN: Let's go straight now to CNN's Matt Egan in New York.

Matt, U.S. markets have been open for just over an hour now. Where do they stand right now?

MATT EGAN, CNN REPORTER: Well, Pamela, we're looking at a full-blown market plunge.

The president's trade plan has shocked and alarmed investors around the world. We're seeing the Dow plunging almost 1,600 points, a little less than 4 percent, the S&P down 4 percent,the Nasdaq plunging more than 5 percent, on track for its worst one-day decline since March of 2020.

And investors are really punishing some of those global companies with intricate supply chains, Apple losing 9 percent on the day, almost $300 billion in value, getting wiped out, some other household names like Nike, Ralph Lauren, Best Buy, Wayfair, all of them falling sharply because they source goods from China, Asia, and other nations that now face high tariffs. Look, investors were bracing forward the president to increase

tariffs, but not by this much, not this fast, not this broad. That chart shows the year-over-year change in the tariff rate charged by the United States. And you can see that because of these new moves announced by the president, the tariff rate would go straight up.

Now, this would break, shatter really decades of relative stability. I mean, that chart goes back many years, almost 100 years. And investors are increasingly worried about the economic damage from this trade war. J.P. Morgan warned clients in a note last night that these policies, if sustained, would likely push the U.S. and global economy into recession this year.

It's not just J.P. Morgan. Hearing similar warnings from economists and trade experts I'm in touch with. Now, there's still some questions here, right? We have to see whether or not the tariffs kick in, how long they stay in place, and how other nations will retaliate.

But this is clearly a gamble with so much at stake. And the question is whether or not it pays off by leveling the playing field in a way that helps Americans or if it backfires and causes a recession. Wall Street is clearly worried about how this is going to end -- Pamela.

BROWN: All right, Matt Egan, thank you so much -- Wolf.

BLITZER: And these sweeping tariffs come on top of previously announced levies on steel, aluminum, and car imports.

They went into effect at midnight. The president promises they will spark more investments here in the United States and jobs for Americans.

Let's go live to CNN senior White House reporter Kevin Liptak. He's over there at the White House.

Kevin, what is the Trump administration saying this morning?

KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Yes, the message from the White House today is one of patience, essentially saying that their goals in these new tariffs are so big, the reordering of the American economy, the return of manufacturing to the United States, that some short-term pain will be necessary going forward.

To be clear, this market turmoil this morning is not necessarily a surprise. And perhaps the best indication that they were expecting this kind of reaction was when they moved this announcement after the markets closed yesterday.

But the message that we have been hearing from officials this morning is essentially that these long-term goals are worth the short-term pain. So, for example, we heard from the vice president, J.D. Vance, who said that we are not going to fix things overnight.

We heard from the commerce secretary, Howard Lutnick, who said that the markets would do extremely well in the medium to long term. And we heard this from the White House press secretary: (BEGIN VIDEO CLIP)

KAROLINE LEAVITT, WHITE HOUSE PRESS SECRETARY: To anyone on Wall Street this morning, I would say trust in President Trump. This is a president who is doubling down on his proven economic formula from his first term.

[11:05:04]

We saw wages increase. We saw inflation come down. We had a Trump energy boom. We had the largest tax cuts in history. And that's exactly what the president intends to do, following his historic announcement yesterday for reciprocal tariffs.

(END VIDEO CLIP)

LIPTAK: Of course, the comparison to the tariffs in the first term doesn't necessarily take into account just how sweeping these levies are. It's a much broader and deeper application than the first time around, in many ways a more riskier application for the American economy.

And certainly the question that the administration will have to answer for is just how long this pain will last for American consumers. It's a question that they will have to answer for going forward, Wolf.

BLITZER: All right, Kevin Liptak over at the White House for us, thank you very, very much -- Pamela.

BROWN: And analysts are predicting that President Trump's historic tariffs are likely to send the global economy into recession this year.

Joining us now is former U.S. Trade Representative for the Biden Administration Katherine Tai.

Ambassador, what is your take? Are we headed for a recession?

KATHERINE TAI, FORMER U.S. TRADE REPRESENTATIVE: Well, I think that in this moment, which is quite unprecedented, it's important to take a step back and look at the Trump administration's posture.

Now, you hear a defiant president. You have heard him say that there's going to be pain, but that he is working towards something bigger. What I think America needs is a trade policy that is truly pro-worker, as opposed to performatively pro-worker or theatrically pro-worker.

And if you watched the Rose Garden ceremony yesterday, you will have seen that President Trump flanked himself with some union workers, called out other union workers, and talked about the unfair playing field that American workers have faced in competing with foreign workers often exploited or working at slave wages.

So let's take that at its face value. Is that worth some pain? Well, that would be a question we could debate if we weren't seeing other policies from this administration directly undermining that particular goal. Right now, DOGE is inside the Department of Labor, gutting all parts of the department, including the bureau that deals with international labor affairs.

Those are the people who monitor working conditions in foreign countries, where there's slave labor, child labor. Those are the people who traditionally work with agencies like USTR to address those problems, to raise those standards to even the playing field.

We also see the Trump administration gutting the National Labor Relations Board and putting new personnel in that do not believe in workers' rights, in a better working America for American workers. And I think that it is really important to look at their stated goals and compare them to what they're doing.

The right hand may be raising tariffs. The left hand is directly undermining what they say the tariffs are for.

BLITZER: Ambassador, you said that this administration is savvy in how it communicates about these tariffs. So how should the U.S. trading partners respond when dealing with this trade war?

TAI: I think a really important reality to know in international trade is that this is where political economy thrives.

Politics and economics come together in trade policy. So, while the Trump administration is moving forward with these unprecedented, deeply disruptive and normatively unorthodox moves, America's trading partners are going to be looking to their own politics and their own economic needs.

And what's going to happen next is going to be very hard to predict.

BROWN: Under President Biden, you touted the trade policy that was about protecting workers, strengthening U.S. manufacturing and growing the middle class. A lot of Americans didn't feel that, right?

The Trump administration says that its tariff policy shared those goals, obviously a very different policy. What is the difference here?

TAI: So, in the Biden administration, you also had an unprecedented embrace and championing of workers' rights here at home through the Department of Labor, through worker safety standards, the raising of rights for workers through the NLRB's work.

And you also had it applied internationally through something we were very proud of, the global labor strategy. And that was infusing into everything that we did in foreign policy with the perspective that helping America's workers is assisted by helping and empowering workers around the world.

You also at the same time saw an influx and a growth in manufacturing and investment confidence unleashed by the Inflation Reduction Act, the CHIPS and Science ACT, the infrastructure bill. Two of those were passed on a bipartisan basis.

[11:10:00] What you have right now, and you're seeing it in the market reactions and in the reactions of investors and manufacturing construction people, that their confidence is softening, that they don't know what to do. It's highly unpredictable. And everything they're seeing is running counter to the signals they need to continue to invest and to grow manufacturing in America.

BLITZER: Extremely sensitive moment right now in American history.

Ambassador Katherine Tai, thanks so much for joining us.

TAI: Thank you very much for having me.

BROWN: Unprecedented, as she said.

BLITZER: Yes.

BROWN: Still ahead, Commerce Secretary Howard Lutnick will join us. He worked on this tariff policy. He was one of the key players. He's joining us as Americans face paying more for things like groceries in a matter of days.

And while Canada...

(CROSSTALK)

BROWN: Go ahead.

BLITZER: And while Canada was spared from these new tariffs, it's still gearing up for a trade war. We will talk with the former premier of Quebec.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

[11:15:41]

BLITZER: All right, there's more breaking news coming into THE SITUATION ROOM right now.

The White House is firing three, three National Security Council staffers. This comes after President Trump met with far right activists and conspiracy theorist Laura Loomer.

Let's go live right now to our White House reporter, Alayna Treene.

Alayna, what are you learning?

ALAYNA TREENE, CNN WHITE HOUSE REPORTER: Well, as you said, the White House has fired at least three members of the National Security Council, all staff of National Security Adviser Michael Waltz.

And it does come after that Oval Office meeting yesterday between President Trump and Laura Loomer, as you mentioned, a far right activist. She's someone who has once claimed that 9/11 was an inside job. I'd note that they have had a close relationship in the past, but there's many people who are also very close to the president who have in the past urged him to distance himself from her.

But, look, Loomer, we are told, went into that Oval Office with a list for the president, essentially arguing that many different members of the National Security Council were not loyal to the president. I was told that these three different firings were a direct result of what Loomer had told the president, what she had divulged to him during that meeting.

The three officials who we know who are fired -- but, again, this is at least three -- include Brian Walsh. He's a director for intelligence. He's also a top staffer or was a top staffer for now Secretary of State Marco Rubio, but for when he was a senator.

Also Thomas Boodry, a senior director for legislative affairs who previously worked in Waltz's congressional office, and then also David Feith, a senior director overseeing technology and national security.

Now, of course, Wolf, we have to note as well that this all comes after there's been a lot of scrutiny of National Security Adviser Michael Waltz following his role in creating that Signal chain, the story that really blew up last week.

We know that behind the scenes there's been a lot of frustrating, including -- frustration, including from President Trump himself, with Waltz and some of the handling of that. So there could be more firings. We know that there's been some tension as well with Waltz's deputy, Alex Wong. We are told, as of now, he is not among -- or we believe he is not among those who were fired.

But more of this could definitely come following that meeting yesterday -- Wolf.

BLITZER: A significant development. We will see the -- what unfolds following this.

Alayna Treene at the White House for us, thank you very, very much -- Pamela.

BROWN: All right, back to the breaking news.

Markets are plunging this morning, as President Trump's long-promised tariffs take effect and fears grip Wall Street.

The chief economist for Moody's Analytics says -- quote -- "Brace for impact" and warns a recession is likely if the tariffs aren't pulled back. And J.P. Morgan is telling investors the president's trade policies will probably cause the U.S. and global economies to fall into recession.

So, let's talk about one of the key people involved with these new trades -- trade policies, and that would be President Trump's commerce secretary, Howard Lutnick

Mr. Secretary, nice to have you on again. Are these economic experts I just cited wrong, in your view, about a

recession?

HOWARD LUTNICK, U.S. COMMERCE SECRETARY: I think they're not counting the factories that are going to be built.

President Trump yesterday announced $5 trillion in domestic commitments to build factories in America, right? Remember, domestic production, GDP. People forget, if you buy a Toyota that's made in Japan, that's not domestic production. Domestic production is factories built here

So, you have got $5 trillion committed to be building factories in America. And that's going to drive growth. If you divide that by our $30 trillion economy, that's a whole lot of growth. And you're going to get that starting in the fourth quarter. And that's going to drive this U.S. economy, because it's American workers who are going to build those factories.

BROWN: So, let's dive a little bit deeper into that, because, in the past, when Trump put in tariffs, there was Foxconn, right? He announced that investment. That didn't come to fruition.

And what you are laying out -- and certainly would be good if there's more investment -- but what you're laying out is a sort of manufacturing renaissance. But, as you well know, business -- for businesses, it's not so simple, right?

They have to find the workers. Labor is more expensive here. There's concern that trade policies could change in the next few years, and then why invest all this money now if it's just going to change down the road? What do you say to those companies?

LUTNICK: Finally changing U.S. policy to protect American workers is what Donald Trump is all about.

[11:20:01]

So what you're going to see is factories going to be built here. Why should U.S. policy basically suggest that you can find the cheapest labor in the world with the worst labor conditions in the whole wide world, the worst pollution, right, no environmental rules at all, let's go build there because it's really cheap, and we will sell it to the great American economy?

How about we build it here? We use robotics here. It's cheaper than cheap labor overseas. You're going to see something completely different. You're going to see the greatest economy in the world. The renaissance will be the greatest factories in the world, high-tech people. What are the jobs Americans are going to have? We are going to have mechanics who fix robotics.

We're going to have engineers and electricians who work on these great high-tech factories. These are high-tech jobs. All you need is a high school education and training, and they're going to have great jobs, great-paying. And this is who Donald Trump is going to build for. BROWN: And I understand this is your selling point, but companies

right now, I mean, they're just not buying it.

They don't want to risk putting all this money into doing what you said, especially when you're looking at a future of A.I. and automation doing a lot of the things you just lay out. How does this concept of bringing back this manufacturing renaissance in the U.S., which might be a noble endeavor, for sure, square with the future of A.I. and really looking at that?

LUTNICK: No, that's the whole point.

So, you imagine what you're talking about is all these companies who have their manufacturing in the cheapest labor market in the world for, right, and the least environmental rules in the world, and they're being celebrated. And the time is to have those great companies, who are great designers of products for America, bring it back to America, use robotics, use factories in America.

And they're all committed. That's what the $5 trillion is. Apple committed.

(CROSSTALK)

LUTNICK: Remember, Apple, last time, they got an exemption and they didn't build, right? This time, there are no exemptions. They're going to build in America.

These high-tech factories are going to come to America.

BROWN: OK, let me...

LUTNICK: Remember, with NAFTA, we lost 90,000 factories. It's time for those factories to come home. It's time for the American workers to get employed. And it's time for Donald Trump to take care of them. Finally, someone is going to take care of the American workers. And his name is Donald Trump.

BROWN: Right.

And, certainly, we're going to be tracking this, and I'm sure the administration will, to make sure that they actually follow through on what they're saying they're going to do. But in the interim, this takes long. Unraveling globalization takes a long time. This isn't just an overnight fix.

And, in the interim, prices will go up. You even hear from the president himself there will be short-term pain. We're going to see in the next few days likely prices going up at the grocery store. What do you say to those Americans who put Donald Trump in office to lower prices, not raise them?

LUTNICK: So, energy prices down, interest rates down, your mortgage costs...

BROWN: Right, but prices at the grocery store? LUTNICK: ... mortgage costs down, right?

These things are energy, the price of the gas pump lower, oil down 6, 7 percent. Why aren't you talking about the fact that oil and the gas pump is going to come smashing down? No tax on tips, no tax on overtime, no tax on Social Security.

BROWN: Right, but that's not even -- that's not even in effect yet, the no tax on tips.

LUTNICK: But these are all coming now. These are all coming now.

BROWN: But, again, I just want to drill down on prices at the -- because, as you well know, Secretary, a lot of Americans put Donald Trump in office because they were unhappy with prices at the grocery store, right? They didn't feel like Biden did enough.

They put Trump in office to fix that. In a few days, we're about to see prices go up at the grocery store. What do you say to those Americans?

LUTNICK: I don't think that's going to happen. The reason it's going to happen...

BROWN: You don't think. Can you guarantee it won't happen?

LUTNICK: Watch -- no one can guarantee anything, but that's very nice. Thank you. I wish I could guarantee whatever you would like.

BROWN: OK. But let me ask you this.

LUTNICK: But the fact is -- wait, let's take one moment.

BROWN: Who pays for the tariffs?

LUTNICK: Wait, wait, wait. You asked me a question.

BROWN: OK.

LUTNICK: Let's go through it, OK?

Our farmers are blocked from selling almost anywhere. We can't -- 1.4 billion people in India, and we can't sell them corn. Europe won't let us sell beef. Australia won't let us sell beef. Why?

BROWN: Because of hormonal chemicals in beef, right.

LUTNICK: Yes. No, no, that's not why. It's because they want to just protect...

BROWN: That's what they say.

LUTNICK: I know. They want to say, oh, what, the seeds are different, right? Other people in the world are using seeds that insects -- come on, this is nonsense. This is all nonsense. What happens is, they block our markets. When we open those markets,

our volumes grow, our farmers will thrive, and the price of groceries will come down. 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 and the White House.

That's why they put him there. Let him fix it.

BROWN: Right. I understand.

LUTNICK: OK? It's broken. Let him fix it.

The -- 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: OK.

But just to follow up with you, when -- the first time he did tariffs, we did see prices rise on products that were tariffed. That's according to Goldman Sachs, compared to non-tariffed products.

LUTNICK: We had the lowest inflation ever.

BROWN: The manufacturing -- 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 and 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?

[11:25:07]

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 have been driving our car. They come by and visit, open our fridge and eat our food whenever they want.

They have 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.

BROWN: Then why aren't...

LUTNICK: 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, right?

BROWN: All right, Secretary, hold on one second. We have to get a break in. LUTNICK: If you were going to say where we're going...

BROWN: You're not going anywhere, because we're going to continue this conversation.

LUTNICK: We're where we're going is, our markets are going to be up. And I understand that it's tough for the global markets, but our market, you should be betting on Donald Trump and the United States market. We are going to do much, much better.

BROWN: OK, so, on that note, we're going to talk about the markets right after this quick break.

Stay with us.

(COMMERCIAL BREAK)