0:00 China is digging in.
0:02 Americans are waking up
0:03 to a whole new escalation
0:05 in the global trade war.
0:07 Beijing is hiking its retaliatory
0:09 tariffs on U.S.
0:10 goods today from 84% to 125%.
0:14 And for the first time
0:14 since this all started
0:16 actually
0:16 hearing from the Chinese
0:17 president XI Jinping himself,
0:19 he's saying that
0:20 his nation is quote unquote, not afraid.
0:23 And also warning, well,
0:24 there are no winners in a trade war,
0:26 and going against the world
0:28 will only lead to self-isolation.
0:31 This after President Trump
0:32 raised tariffs on Chinese goods
0:34 even higher, 145%.
0:37 Now, as we're all trying to keep track,
0:39 the white House says
0:41 they're waiting for China
0:42 to pick up the phone.
0:43 China says essentially the same thing
0:45 about the United States.
0:47 This very clearly showing
0:48 what a tit for tat
0:49 looks like sending markets
0:51 tumbling Thursday.
0:53 But President Trump,
0:54 still optimistic
0:55 when meeting with his cabinet.
0:59 We think we're in very good shape.
1:00 We think we're doing very well.
1:02 Again, there'll be a transition cost
1:05 and a transition in problems.
1:08 But in the end it's going to be
1:10 it's going to be a beautiful thing.
1:12 Stock futures are right now
1:15 up across the board.
1:16 Let's see if they stay
1:17 a beautiful thing today.
1:18 But what is concerning investors
1:20 a lot right at the moment.
1:21 The U.S.
1:21 dollar falling to its weakest level
1:24 against the euro in three years.
1:26 CNN's Linda Green at the white House.
1:28 For us once again, CNN's Mark Stewart.
1:30 We're not letting him go.
1:31 He's in Beijing for his mark.
1:32 Tell us more about China's counterpunch
1:35 and what it's going to mean.
1:37 1.3. Okay.
1:39 Good morning.
1:40 Look, none of this is a surprise.
1:42 These latest tariffs are very much
1:44 in the Chinese playbook.
1:46 But what's very attention
1:47 getting to me is the fact
1:48 that China is now saying
1:49 it's not going to raise tariffs
1:51 any higher, saying it has other weapons
1:54 almost making fun of the United States
1:56 for raising the stakes,
1:58 raising the number so high.
2:00 Let me share with you some remarks.
2:01 We got late today from a government
2:03 official here in Beijing
2:04 who said that the United States
2:06 is engaging in
2:08 nothing more
2:08 than a numbers game
2:10 with no real economic significance,
2:13 going on to say the United States
2:15 is exposing itself
2:16 as a participant in weaponizing tariffs
2:20 as a tool of bullying and coercion,
2:22 turning itself into a joke.
2:25 So that is the latest,
2:27 where China stands in this back
2:29 and forth, tit for tat.
2:30 The other big headline of the day
2:32 is that we are hearing from Chinese
2:35 President XI Jinping,
2:36 really the first time
2:37 since this whole trade war
2:39 escalated to such a high level.
2:41 The big headline is that he is saying
2:44 China is not afraid.
2:45 These are remarks that were made
2:47 with the Spanish
2:48 prime minister here in Beijing.
2:51 And according to state media,
2:53 he said that China is going to continue
2:56 to remain confident,
2:57 it's going to remain
2:58 focused,
2:59 saying there are no real winners
3:00 in the trade war.
3:01 Kate, the language
3:03 that we're hearing from XI
3:04 Jinping is very consistent
3:06 with what we've heard
3:07 from other government
3:08 officials over the last few days.
3:10 And as you mentioned,
3:11 as far as the possibility
3:12 of a phone call
3:13 between XI Jinping and President Trump,
3:16 not in the near future.
3:18 That's the messaging
3:18 that we're feeling
3:19 from Beijing, at least.
3:20 And that is quite a statement
3:22 that you got from
3:22 that government official
3:23 just to be there.
3:24 I mean, the gloves are off
3:26 now in terms of
3:27 how the two sides
3:27 are going to be talking about it.
3:29 we will need to stand by
3:30 and see how Donald Trump
3:31 response to that,
3:32 but also stand by with me.
3:33 Mark, I want to get to the white House
3:34 and get related to here.
3:36 Are you getting any reaction yet
3:38 this morning to
3:39 this escalation from China?
3:42 So, so far, the white
3:43 House has not responded
3:44 to the latest remarks,
3:46 from China or from President XI.
3:49 But what I will say
3:49 is that the white House
3:50 has been very dug in on its position
3:53 as itrillionelates to China.
3:54 They are acting very defiant.
3:56 in this kind of trade, tit for tat
3:59 that we are seeing.
3:59 But I think what's been very clear
4:01 so far, Kate, is that this position
4:04 is not going to be tenable
4:05 for much longer at some point to the both
4:07 the two sides are going to need
4:10 to really open lines of communication.
4:12 Now we actually have
4:13 a story out this morning kind of breaking
4:15 all of this down.
4:16 But at the crux of it, Kate,
4:17 is this two white House officials
4:19 tell me that the president, and the U.S.
4:22 will not reach out to China. First.
4:25 The president has made it
4:26 clear to his team
4:27 and to his advisors
4:28 that he wants China to come to them.
4:31 And really,
4:31 he wants to have a high level
4:33 meeting directly between him
4:35 and President XI himself.
4:37 Now, this has been
4:37 what the white House
4:38 has been communicating
4:39 to Beijing for several months now.
4:41 But on the other side,
4:42 we also know
4:44 that Beijing does
4:45 not really
4:45 want to have that high level meeting.
4:47 What they've been trying to do is open
4:48 communications at a lower level.
4:50 And so
4:51 really there's been this stalemate
4:52 and no talks at all going on right now
4:55 between the Trump administration
4:57 and that of President XI.
4:59 Now, one hurdle of what
5:01 we're hearing behind
5:02 the scenes here at the white House
5:03 is that the president believes
5:04 that President XI
5:06 does not want to be seen as weak.
5:08 and that's really as well
5:09 kind of what's coming into this refusal
5:11 and waiting to see who blinks first here.
5:13 Now, we've also heard,
5:15 President Donald Trump
5:16 say that he is confident
5:18 that he can reach a deal at some point.
5:20 He said that he believes
5:21 China will come around.
5:22 He said China wants to make a deal.
5:23 They just don't know how to go about it.
5:25 They're proud people.
5:26 We've heard similar rhetoric
5:28 from some of his top
5:29 economic advisers,
5:30 saying that the ball is now in
5:31 China's court.
5:32 It's clear
5:33 that's not how China sees this.
5:35 But I think the key question now
5:36 moving forward
5:37 is that really how this all is
5:40 decided is going to be on
5:41 how much pain are they willing to take?
5:44 How much more pain
5:45 are they willing to see
5:46 in this escalation of these tariffs
5:48 without any real communications
5:50 to ensure there's an off ramp?
5:52 Yeah. Exactly.
5:53 How much pain is the Trump
5:54 administration willing to endure
5:56 and also the American people,
5:57 how much pain is China
5:59 willing to endure as well?
6:01 Stick with me, Mark. In this moment.
6:03 This has been going
6:04 this tit for tat has been going on.
6:06 Now, you know, for more
6:07 for quite some time.
6:09 Why do you think
6:10 and what are you hearing about?
6:11 Why is he
6:11 Jinping is speaking out in this moment.
6:16 I think really two reasons, Kate.
6:17 Number one, simply being it's time
6:20 the Chinese economy,
6:21 in addition to what's happening
6:23 now, is already dealing.
6:27 For XI Jinping to continue
6:28 to build national unity,
6:30 to build national pride
6:31 as it deals with yet
6:33 another economic headwind.
6:34 And then the other reason
6:35 if we look at the calendar, XI
6:36 Jinping is about to embark on a trip
6:40 to Cambodia, to Vietnam and Malaysia.
6:43 These are key trading partners.
6:44 These are relationships
6:45 that he has been
6:46 strengthening over the years.
6:48 So as he builds bridges
6:49 to these other nations,
6:51 it's a way to also project some stability
6:54 and to let the world
6:55 know where China stands
6:57 and that it is a strong,
6:58 formidable player.
7:00 That's Vietnam, one of the nations
7:01 also that
7:02 the Trump administration
7:03 is trying to prioritize
7:04 in renegotiating a trade deal.
7:05 Now, all of it related. Likely.
7:08 None of it is coincidence in this moment.
7:10 Mark, thank you so much.
7:11 Elena at the white House
7:12 for us, as always.
7:13 Thank you guys very, very much
7:15 while I have you.
7:15 And this is,
7:16 actually some information
7:17 that we just received right now
7:19 from the State Council Tariff
7:20 Commission, saying in a statement
7:22 a short while ago
7:23 that China will be raising
7:24 retaliatory tariffs on
7:26 US imports to 125%.
7:30 This is information
7:30 that's just coming in to CNN right
7:32 now, again, citing the state
7:34 Council Tariff Commission.
7:35 I'm curious
7:36 what your immediate reaction
7:37 is with your expertise,
7:39 this, counterstrike,
7:41 shall we call it from China directed at,
7:44 at the US business market?
7:47 It's not
7:48 so surprising, you
7:49 know, in the sense that they'll do
7:51 Delta dissent.
7:52 The key,
7:52 of course, is that
7:54 the US is the big importer.
7:56 the Chinese don't import
7:57 anything like as much
7:58 from the United States
8:00 as the United States imports from China.
8:01 So, other countries
8:03 come back with the tariff response,
8:05 but the whole starting point from this
8:06 in the United States
8:07 was we're running a massive
8:08 trade deficit.
8:10 and we don't run big surpluses
8:12 with anybody.
8:13 So, we can raise tariffs on you.
8:15 And if you retaliate,
8:16 it has less impact on us. net.
8:18 So I'm not massively surprised.
8:20 It just keeps the whole thing
8:21 the that the chance of quick resolution
8:24 and of us
8:24 getting back to a world of free trade,
8:27 seem to be fading.
8:28 And there will be a negative
8:30 growth effect around the world,
8:31 but we're not.
8:31 It's going to be hard to avoid. Yeah.
8:33 Fascinating.
8:34 And finally, kid,
8:35 I'm curious,
8:35 what are some of those factors
8:37 in speaking of foreign investment?
8:39 What are some of those factors
8:40 that can tend
8:41 to scare foreign investors away from U.S.
8:44 assets? Is it this this, talk of tariffs?
8:49 no, I
8:50 think it's it's
8:51 it's if the tariffs reduce
8:52 the profitability of U.S.
8:53 companies, do I need to own
8:55 so many of my US equities?
8:56 They've done fantastically.
8:58 am I worried that if the Chinese decide
9:00 they no longer want to hold U.S.
9:01 treasuries to the size that they used to,
9:04 that I'm
9:04 going to cause, a loss of the US
9:06 Treasury markets
9:08 really important status
9:09 as the safest asset in the world.
9:12 and the rising US yields,
9:13 some of it reflects weaker demand.
9:16 So people are going
9:16 to pay much more attention
9:17 to Treasury, auctions
9:19 going forwards from here.
9:21 but but you know,
9:22 another part of it, quite simply, is we,
9:25 you know,
9:25 foreigners have accumulated $65 trillion
9:28 worth of U.S assets.
9:29 That's a lot of your money
9:31 to have parked in one place.
9:32 And if you're worried that the US
9:34 is withdrawing
9:35 into itself a little bit more now,
9:38 you know,
9:38 maybe you want to lighten up
9:39 and put some of it
9:40 somewhere else if you can.
9:43 We gotta leave it there.
9:44 Dukes,
9:44 thank you so much for your expertise.
9:46 We're really glad that
9:47 we have that insight. Appreciate you.
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