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INSIDE POLITICS

Trade War Begins; June Jobs Report; Reunification Deadline for Children. Aired 12-12:30p ET

Aired July 6, 2018 - 12:00   ET

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


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DANA BASH, CNN ANCHOR: And tune in this weekend, 9:00 p.m., for the premiere of "The 2000s."

Thank you so much for joining me. "INSIDE POLITICS" with John King starts right now.

JOHN KING, CNN ANCHOR: Thank you, Dana.

And welcome to INSIDE POLITICS. I'm John King. Thank you for sharing your day with us.

The United States and China ratchet up a trade war. President Trump says the economy is strong enough to handle the turbulence. And a new jobs report gives him some new ammunition.

Plus, new court challenges as the Trump administration struggles now to meet existing deadlines, deadlines to reunite families separated at the U.S. Mexico border.

And mocking the Me Too movement. The president's latest rally reminds us of his unique style and the GOP's deepening troubles with women.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We're in the Me Too generation, so I have to be very gentle. And we will very gently take that kit and we will slowly toss it, hoping it doesn't hit her and injure her arm, even though it only weighs probably two ounces.

(END VIDEO CLIP)

KING: Back to that story.

But we begin the hour with a trade war that became very, very real today and a new economic report the president believes proves he has the stronger hand if the tariffs war is a long one. The first billion volley came while most of America slept. President Trump officially slapping tariffs on $34 billion worth of Chinese goods. As promised, China responded immediately with equal tariffs aimed at the U.S. auto industry and major agricultural goods, like soybeans and meat.

The state newspaper, "The China Daily," writing that the Trump administration is, quote, behaving like a gang of hoodlums. This morning, Americans living in farming states woke up to headlines like these, Hoosier farms brace for Chinese soybean tariffs, North Carolina farmers caught in the crossfire, Minnesota farmers fear the worst, Wisconsin cheese industry hopes Trump has a strategy.

In a moment, the new jobs report and the strong numbers the White House says prove the U.S. economy more than strong enough to handle a trade war.

First, though, to Wall Street, where the markets are holding steady despite fears a lengthy trade war could -- could smother global economic routes (ph).

CNN's Alison Kosik is on the floor of the markets.

Alison, what are the numbers telling us today?

ALISON KOSIK, CNN CORRESPONDENT: Well, we are seeing strong green arrow, John. The Dow up 133 points. And part of the reason you're seeing less worry here on Wall Street is because today is what Wall Street has really been ramping up for over the past few months. Trade war fears have been simmering. Investors have literally been selling stock, repricing stock based on companies that had the most exposure to China. So that was already done before reality hit overnight when the trade war really took action.

So what you're really seeing is Wall Street in a wait-and-see mode. And the thinking is that a compromise may actually come out of this between China and the U.S. Meantime, though, we've got this game of chicken that we're watching and waiting to see what will happen. And as we wait and see what happens, there is a real economic impact that can happen right here in the U.S. with China placing those retaliatory tariffs on high-value American exports, like crude oil, cars, cash crops, like soybeans, and poultry, because if demand drops for those American products that are sold in China, that means corporate profits here, companies here in the U.S., will feel the pinch. They'll feel it in jobs. They may not hire as much. And they'll certainly feel it in their revenue, in their sales, in their bottom line.

That eventually could filter through to the greater economy. That is the ultimate worry. But, today, those worries are sort of put to the side as we wait and see how this game of chicken could play out.

John.

KING: Yes, we'll keep track of the markets and the rest of the numbers as this game -- game, as some call it, does play out.

Alison, appreciate the reporting there.

Team Trump insist this fight is necessary and the president says long overdue. And the White House says the new June jobs report is proof the American economy is strong enough to handle trade turbulence.

CNN's Christine Romans has the new numbers. CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: John, the jobs

report, another very strong month for employment here. 213,000 net new jobs. And you can see that April and May was a little bit stronger than expected. So the last three months averaging more than 200,000 jobs each month. That is strong. And that means employers are hiring. They need workers.

Now, the unemployment rate rose just slightly, John, to 4 percent. Why did it rise? About 600,000 people came off the sidelines and started looking for work. So maybe encouraged by these headlines, hearing from friends and family that there are plentiful jobs in this country. And 600,000 people coming, trying to get a job. That's why statistically it nudges up the unemployment rate. Still, though, historically low here.

Where is the hiring? Business and information services, manufacturing. Almost 300,000 manufacturing jobs created over the past year. That is a bit of a renaissance for manufacturing in the United States, high- skilled manufacturing.

Health care another 25,000 jobs there. That has consistently been a very, very strong part of this economy.

[12:05:04] Wages, though, John, only 2.7 percent. It's not the fire you'd expect to see in employers having to, you know, pay people more money to get workers. That is still a real riddle here.

John.

KING: Christine Romans, thank you.

Let's dig deeper into these numbers, the jobs report and the trade war.

With me to share their reporting and their insights, Damian Paletta of "The Washington Post." He covers White House economic policy. Neil Irwin is the senior economic correspondent for "The New York Times."

Let's start with the president. He has been consistent on this issue. On other issues, he's all over the place sometimes. But even private citizen Donald Trump used to say the Americans are getting screwed in this. Now, as president, he says he's going to stand up.

Listen to him last night in Montana saying politicians, business groups call all the time and say, Mr. President, stop, stop, don't do this. He says, no.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Please, just leave it the way it is. Leave it the way it is. I said, no, no, we have all the cards. We're the bank that everybody's stealing from. The war was lost, but now we're going to win it and because we have all the cards.

(END VIDEO CLIP) KING: He says we have all the cards. The White House would say, look at the jobs report today. Yes, next week, next month, next six months might be turbulent. The U.S. economy is strong enough for this fight with China and with the European Union and with Canada and with Mexico. Is he right?

NEIL IRWIN, SENIOR ECONOMIC CORRESPONDENT, "THE NEW YORK TIMES": Look, the economy is strong. The economy is looking pretty good. And these Chinese tariffs in and of themselves, they're not going to cause a recession. They're not going to cause that much damage. $34 billion of goods taxed in a $20 trillion economy doesn't move the dial.

The problem is we're launching all these trade wars with all of these trading partners at the same time. So this could escalate into something that involves, you know, a trillion more dollars of tariffs. And then you really are talking about a real risk to the -- you know, the economic underpinnings of business in America.

KING: And the president's economic team says, you know, he's the art of the deal president. He's going to sort all this out.

Here's Kevin Hassett of the White House economic team just this morning saying worry not, the short-term might be rocky, but the president will fix it.

(BEGIN VIDEO CLIP)

KEVIN HASSETT, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: I don't know about short-term pain, but I do know that the president promised the American people that he would fight for them, that he would fight to make the trade deals fair and reciprocal. And we're moving in that direction.

President Trump wrote "The Art of the Deal." He's committed to making better deals. He's going to deliver better deals.

(END VIDEO CLIP)

KING: We're 17 months in. They keep saying we're moving in the right direction. He's going to negotiate better deals. He's going to make better deals. They have a framework with South Korea but no details even on that one.

Does it take this? Does it take actually starting the war to negotiate the peace?

DAMIAN PALETTA, WHITE HOUSE ECONOMIC POLICY REPORTER, "THE WASHINGTON POST": Well, it's interesting, Kevin Hassett was just talking about the book "The Art of the Deal." I was just through it yesterday for a story that's publishing today at "The Washington Post" and there's a big element of that that says use your leverage. And the president's trying to create leverage with all these threats.

You know, China, I'm going to impose tariffs on your aluminum and steel. I'm going to impose tariffs on -- now he's saying $200 billion in additional exports from China. He's trying to create leverage with the European Union on this whole auto issue that could be coming in the weeks to come.

So the problem for the president is that everyone's calling his bluff. Even Harley-Davidson, you know, they refused to back down from their plan to move some jobs overseas in order to escape some of these European tariffs. So when you have all these countries simultaneously calling the president's bluff, it makes his position look weaker. And we know that he takes that very personally when someone makes him look weak and then he could escalate things even more.

KING: He could escalate things even more.

China saying they're behaving like a gang of hoodlums. It doesn't look like President Xi is prepared to blink.

What's the -- what's the off-ramp, if you will? Is it Canada and Mexico? Is it the European Union? Do you have to start with China because that's the biggest one?

IRWIN: Look, the Chinese have a very clear strategy. And it's true of all of these countries involved. They tried to have retaliatory tariffs that are maximizing the political pain for the president, minimizing the cost for their own consumers. Right now that means soybean farmers, other American agricultural producers who are facing big, new tariffs in the Chinese market. They're trying to put the screws to the president, cause problems with his domestic politics.

And, you know, it's a tried and true strategy. And the question is, how much pain is the president willing to take? How much blowback from his own constituents, his own voters to, you know, prove this point and try and make progress.

KING: It's a great point. And we can show you this. Moody's Analytics and "The Wall Street Journal" started this map. I think we -- CNN has a version of its own map. The Chinese and the other countries as well are being very political in their economic retaliation, if you will. These are the China tariffs disproportionately hitting counties where President Trump did well. Now, President Trump did well in farm states, he did well in rural America. So if you're looking at agriculture products, some of that is logical. But we've seen the very same thing, whether it's whisky, you know, from Canada and the European Union. It's economics. But, boy, there's some pretty raw politics in this.

PALETTA: Absolutely. And I think as we head into the midterm elections, if we keep having strong jobs reports numbers and we see strong quarterly growth numbers, the president is going to kind of stick to his approach. But as soon as things start to slip, if there's evidence that companies are cutting back, they're not investing, hiring starts to go down, maybe wages flatten, and some of these companies -- maybe some American companies go belly up or some farmers really start to panic, the White House is going to have to re-evaluate this because as you get closer to November, especially in some of these red -- you know, red/blue states, they're going to have to recalibrate.

IRWIN: And -- KING: Walk through -- please.

[12:10:01] IRWIN: Yes, I'd also add, this first round of tariffs, this $34 billion, this is mostly industrial goods. It's ball bearings. It's all these industrial products. It doesn't really hit the pocket books of people in a direct way.

If this escalates further, which shows all the signs of escalating, then it will start to hit consumer goods. And more of the goods that you buy at the store are going to -- you're going to see price increases if -- if this keeps escalating.

PALETTA: And cars potentially too, which, you know, that could add up to a lot of money.

KING: Right, things that Americans go to buy. We saw the other day Toyota saying $1,800 to the price of a Camry, for example.

PALETTA: Right. That's real money.

KING: That is real money.

And so one of the questions is, is the president -- will he hold fast? You know, the Chamber of Commerce is yelling. Republicans in Congress, especially Republicans in farm states up for election this year, are screaming. You mentioned the long-term economic impact.

This is from a piece you wrote about the tools available. The president, obviously, can negotiate his way out of this or he can just back down. But the other -- what else is available? You write in your piece for the -- about the Fed. For the past 11 years, the Fed's tools were reasonably well suited to the challenges that presented themselves. The central bank became even more central than usual to every economic discussion. But this time, the economic risks are different, and if the conflict over trade practices starts to cause damage to the broader economy, we shouldn't count on the Fed to bail us out.

Because the Fed's tools are not trade war tools, right?

IRWIN: This is -- this is going to cause both inflation and a hit to growth if this keeps escalating. And so that means that the -- if Jay Powell, the chairman of the Federal Reserve, tries to turn the dial one direction, causes worse problems in the other direction. You know, this is an issue for the president to solve one way or the other.

I think the challenge, and you've kind of alluded to this earlier, is not having off-ramps. It's not clear what exactly the Chinese can do that's within the realm of possibility that would actually end this. Their asks are very large. It essentially involves restructuring the entire Chinese economy. It's hard to see President Xi and China doing that.

The question is, what is the off-ramp? Where does this end? And it's not clear at all at this point. KING: And because it's global. It's not just China. It's the United

States versus China. It's the United States versus Canada and Mexico in the neighborhood here. A very important economic neighborhood. The United States versus the European Union. Again, a very big economic piece there.

There are some people who say, if this continues, they worry that European growth was already starting to slow down, that you could -- you could end up smothering growth to the point of a global recession.

This is from a Reuters story. Rob Carnell, the chief economist for ING saying, this is not economic Armageddon. We will not have to hunt our food with pointy sticks. But it is applying the brakes to a global economy that has less durable momentum than appears to be the case.

Is that -- is that just, you know, the sky is falling, henny penny rhetoric, or is it real, the risks of a global recession?

PALETTA: I think it's real. I mean if this continues and continues for months and months, the chances of that get higher and higher.

Listen, we are -- the United States is the largest economy in the world. It's in no other country's interest to be in a trade war with the United States. So I'm sure they're looking at ways that they can try to appease President Trump, make it look like he got a victory so that they can make this all go away.

The problem is, they don't know how much he wants. Is he just -- is he asking for the moon and he just wants something small, a token thing for heading into the midterm elections, or does he really want China to restructure its economy? That's very difficult to do. And until they know exactly what he wants, I think it's going to be harder to resolve this.

KING: Let me ask lastly, how strong is the U.S. economy in the sense that the president says we've never had anything like this. And the economy is certainly booming right now. There's no question about that.

But let's just look. If you look at the final 17 months of the Obama administration, that includes January 2017, the average monthly job gains were 203,000 a month. At the end of the Obama administration, the economy was coming back.

The first 17 months of the Trump presidency, average monthly gains, 189,000. So the final 17 months of Obama actually were a little stronger than the first 17 months of Trump. But the last six months, since the tax cut kicked in, job growth is averaging 214,000 a month. So the president can certainly make the case, and Republicans can, since the tax cut, they're getting even more juice. How much of this is Trump and how much of this was the economy was on a pretty good ramp that he inherited?

PALETTA: I think the economy is doing very well. I also know that the last time the economy was doing this well was right before the great recession. So things can change very quickly. And when you have external shocks, you know, they're really hard to predict. But when there's internal shocks that precede them, I think it can make things even worse.

KING: Interesting question (ph).

Gentlemen, I appreciate you both coming in. You're a lot smarter than I am to go through all these numbers. We'll see as it goes. We'll bring you back as we go through this trade war just beginning.

Up next for us here, the Trump administration faces its first family reunification deadline today. How it's dealing with that process in court.

(COMMERCIAL BREAK)

[12:18:21] KING: The Trump administration now facing its first big deadline in the court-ordered process of reuniting families separated at the U.S./Mexico border. Today officials have to make sure all separated parents have a way to contact their children. By Tuesday, the government is supposed to reunite parents with their children if those kids are under the age of five. And by the 26th of this month, a judge says all children should be back with their parents.

CNN's Nick Valencia is live in San Antonio tracking this for us.

A big deadline for the administration, Nick, how are they doing?

NICK VALENCIA, CNN CORRESPONDENT: John, we just don't know, if only because the Trump administration refuses to give us a breakdown in those numbers. About nine days ago it was last when we heard that they had 2,047 children still in government custody. It was yesterday in a phone call, though, with the Health and Human Services secretary that he put that number at less than 3,000, saying that he was dealing with a more comprehensive set of data.

The reunification process has been painstakingly slow, and there's been a lot of confusion here on the ground, but there are plenty of organizations that are trying to do work to make those reunifications happen.

We're here in San Antonio at an organization that RAICES. It's an advocacy group where today they have created a phone bank here, inputting data, trying to get detainees verified or trying to get a track of detainees, as well as trying to connect parents and their children.

Just a short time ago that I spoke with the executive direct who talked to me about that process.

(BEGIN VIDEO CLIP)

JONATHAN RYAN, RAICES EXECUTIVE DIRECTOR: When we get information about people who are being searched for, we have to call out to detention centers, all of which have different protocols as to whether they'll confirm or deny. There are detention centers that at this point are just hanging up on us once we call them. And then even when we have been able to connect with people and be able to pay their bonds -- yesterday I went to immigration to try to pay five bonds. There are five women who should be free right now. But we were essentially rejected at the front desk because we didn't have bus tickets and airplane tickets.

(END VIDEO CLIP)

[12:20:10] VALENCIA: And today is the deadline that the Trump administration must have children connected with their parents through phone contact, some sort of communication. We're hearing in some cases, though, that's not happening.

John.

KING: Nick Valencia live for us in San Antonio. Nick, keep in touch as the day progresses. Appreciate the update there.

And as Nick noted, with those reunification deadlines looming, there are still a lot of questions about just how many children are actually still in government custody. Back on June 20th, the Department of Health and Human Services said it had 2,053 migrant children in its care. Those are children who were separated from their parents. Six days later, it was 2,047. But now HHS says it has just fewer than 3,000 kids in its facilities. The government won't give exact numbers or day-to-day updates. Officials have 20 days now -- 20 days unless they ask for an extension -- to reunite all families. Families like this one reunited just yesterday after being away from each other for two months.

(VIDEO CLIP)

KING: An emotional reunion there. Again, deadlines to facilitate the rest of the reunions looming on the administration.

With us in studio here to share their reporting and their insights, Julie Hirschfeld Davis with "The New York Times," Molly Ball with "Time," Carl Hulse also with "The New York Times," and CNN's Nia- Malika Henderson.

You watch the emotions of that. You see the government not being willing to say what are the numbers, what exactly do they have in place. And word is the Justice Department might ask that judge today for a little bit more time because this is difficult. It's a giant policy challenge, and it is. Give the government a bit of grace. You know, they're the ones who separated these families. But now reuniting them is hard. Politically, this has become a giant headache for the administration and the Republican Party.

JULIE HIRSCHFELD DAVIS, WHITE HOUSE CORRESPONDENT, "THE NEW YORK TIMES": Well, absolutely, because now you have the president having sort of gone back on what he originally said was a no holds barred policy, a zero tolerance policy. He signed that executive order to try to get this problem under control. He didn't want to do it and his base didn't like that he had to do it, but he did it because it had become a problem that politically was just -- it was not sustainable for them. But, instead of turning it around, that has -- there's no real sign

yet that they've gotten a handle on this reunification process, which is very complex. But my -- our colleagues at "The New York Times" have also reported that they made some -- what sounds like some huge errors in the processing when these separations happened. When these kids were sent away from their parent, when they became unaccompanied because of the Trump administration policy, they destroyed, in some cases, the records of which kids go with which parents. And so now they have to sort of re-create all of that. And that's why you're hearing them talk about DNA tests and the like. And it's just -- it's a giant mess. And the fact that they won't give the numbers I think really tells you that there is not a good story to be told here, at least not yet, in terms of getting these families back together.

KING: And so they have to go to court, most likely, and ask for more time.

And so if you're these interest groups involved, these humanitarian groups involved, you have every right to ask, give us the accounting. If you're an American taxpayer, whatever your views on illegal immigration, you have every right to ask how much money is being spent, where are these people are being kept, what are the numbers. What does it tell us that the administration simply either can't or won't give them to us?

MOLLY BALL, NATIONAL POLITICAL CORRESPONDENT, "TIME": I think that's the point, is that they either can't or won't. And there -- it's been a really fine line throughout this story of what is it that they just messed up and what is it that they're sort of intentionally doing.

And, you know, as Julie was saying, it's a policy problem on both ends. It's a policy problem with the original policy and the way it was implemented because there are three different government agencies here that were not coordinating well and, in many cases, just -- well, overall, did not have a procedure in place. The idea was just that the policy was separation and then after that, who knows.

And then now -- going forward, it is also very unclear the executive order that the president signed was very vague and they're still trying to figure out what exactly it called for, what exactly it means. Are they going to erect these giant tent cities on military bases, what advocates are calling family internment camps? How are they going to handle this problem going forward? Congress, unsurprisingly, not having passed a solution to the problem, how does the administration tend to handle this? And we actually -- that's really unclear too.

KING: Right. And the health, the safety, the reunification of the children should come first and foremost, again, whatever your views on the immigration issue. That's the policy challenge.

The political challenge for the Republican Party and the administration, a new "Washington Post"/Schar School poll out today, do you support or oppose the policy that separated immigrant children from their parents? Twenty-nine percent of Americans support, 69 percent oppose. That's a lot of Republicans too. That's not just Democrats. That's not just independents. Seven in ten Americans say bad idea. It's a bad idea.

And, again, this other number shows you that the zero tolerance policy, which led to these separations, the president would have been on much safer ground politically had he just challenged the so-called Flores ruling out of the box, instead of now through the executive order.

[12:25:07] Going forward, what would you prefer happen to the families accused of crossing the border illegally until their case is solved? Hold families together in a detention facility, 58 percent, temporarily release the families until a deportation hearing, 39 percent.

So the president would have had support for zero tolerance if you held the families together. Now, they say they couldn't do that because of the law. Now they're trying to challenge or change that law. They should have done that on the front end, right, if they were going to do this?

NIA-MALIKA HENDERSON, CNN SENIOR POLITICS REPORTER: Yes, I mean, they should have done a lot of things on the front end, right? I mean including keeping these records of where the kid is and who the parent is and where each of them are going to be separated.

But there -- it's so disheartening, I mean, to look at that child who's been away from her mom for two months and then they, of course, get reunited. And the reason they're reunited is not even the government, right? There are all of these non-profits and pro bono lawyers who are really trying to make these matches happen. And it's going to be painstaking, and it's still not clear who -- where the leadership is.

You do, obviously, see the HHS secretary on the call yesterday. He's sort of the face of this. The president seems to be kind of persona non grata on this, not really talking about it. Ivanka Trump, who tweeted about it a couple of days ago saying, oh, you know, now it's time to get these families back together. Well, you know what, you're right, it is time to get the families back together.

KING: You make a very key point because the president, look, he won the Republican primaries. He thinks he's president in part because of his views on immigration. He likes to talk tough on immigration. But when it comes to this, an administration retreat, it's sort of the Pontius Pilot school of leadership. He washes his hands of it, lets his cabinet agencies deal with it. And, instead, publicly, he won't say, hey, we got this one wrong, hey, we're going to fix this, he says things like this.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We want tough, strong, powerful borders, and we want no crime. And we're going to protect ICE. We protect ICE. They protect us, and we protect them.

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: At a time when some people are actually calling for the abolition of ICE, in this White House, let me be clear, we are with you 100 percent. As the president said last night, we will always stand proudly with the brave heroes of ICE and our Border Patrol.

(END VIDEO CLIP)

KING: Now, the Democrats may have given the administration a gift, some Democrats, by coming forward at this moment and talking about abolishing ICE. But you would -- what -- am I just naive to think that in the middle of a crisis like this and the government trying to reunite these families, the government being ordered to reunite these families and the president changing his policy because of the political blowback, that the president and the vice president might actually take the lead in trying to help explain the process to the American people? Naive of me?

DAVIS: This is a -- would be a core thing that you'd expect a president to do is, look, there's a huge crisis in the country. It's affecting children. You have all of these horrible images. And I'm going to take responsibility for it. We're going to get this fixed.

That's all he would actually have to say. But I think that he feels so much to blame, obviously, in this situation because it is because of this policy.

CARL HULSE, CHIEF WASHINGTON CORRESPONDENT, "THE NEW YORK TIMES": I think -- I think the problem for Republicans is going to be, there's obviously going to be some horror stories that are going to come out of this. The administration is no way prepared. HHS is calling on volunteers to go through DNA records and do that. This is going to probably be a disaster. There's going to be some kids who are with the wrong parents or something like this.

The president, as usual, has decided hard line on immigration is the best political stance for them. Midterm elections, there's a lot of sympathy for these families.

KING: This one is a mess of their own making.

Up next for us, the secretary of state in North Korea. A very tough project ahead.

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