Trump Wrongly Claims U.S. Will Make Billions on Tariffs; Four Ships Targeted Near Strait of Hormuz; Subpoenas Loom Large for Trump Administration
NATALIE ALLEN, CNN ANCHOR (voice-over): Preparing to strike back: U.S. president doubles down on the trade war with China as we wait for Beijing to retaliate against new tariffs. Also, Trump's critical week ahead: a scandal for Congress as the White House stonewalls dozens of subpoenas that could threaten his presidency. Venezuelans are desperately fighting hunger. Testimonies from the streets of Caracas, where eating three meals a day is a luxury. Hello, everyone, thank you so much for joining us, these stories are ahead. I'm Natalie Allen in Atlanta and this is CNN NEWSROOM.</s>ALLEN: Our top story: U.S.-China trade talks still at a standstill. And Beijing could retaliate against new U.S. tariffs in the coming hours. The lack of a trade deal has Asian markets nervous. You can see right there. All numbers in the red, pointing down. The Nikkei, the Shanghai Composite and the Seoul KOSPI. U.S. market features are pointing to a down day on Wall Street as well. There, you see the Dow futures down, just under 1 point. The Nasdaq as well. The S&P 500 just under a point the same. Even so, President Trump is projecting calm, with a tweet, saying the U.S. is, quote, "right where we want to be with China." Though Mr. Trump claimed the U.S. would collect tens of billions of dollars and tariffs from China, his top economic adviser admitted that is not the case.</s>CHRIS WALLACE, FOX NEWS ANCHOR: It's not China that pays tariffs, it's the American importers, the American companies that pay what in effect is a tax increase and oftentimes passes it on to U.S. consumers.</s>LARRY KUDLOW, WHITE HOUSE ECONOMIC ADVISER: Fair enough. In fact, both sides will pay. Both sides will pay in these things.</s>ALLEN: Let's turn now to CNN's Steven Jiang, he is in Beijing for us. Hello to you, Steven. Any idea what China's retaliation will take, what form? How far could it go?</s>STEVEN JIANG, CNN SENIOR PRODUCER, BEIJING BUREAU: The government still has said not much in terms of details of their counter measures against the U.S. They could obviously impose counter tariffs but not dollar for dollar. Remember, China imports a lot less from the U.S. than the other way around. So they are literally running around of a marathon products to tax on. But they could cancel major purchases from the U.S., especially agricultural and energy products that could really hurt the political base of Mr. Trump in the U.S. They could also favor non-U.S. companies when granting market access here or launching unofficial retaliations by making life very difficult for American companies here. They could delay the issuance of licenses or customs clearance or even sending fire inspectors.</s>ALLEN: Also, Mr. Trump's top economic adviser reiterated Sunday about how this breakdown happened between the two countries. He said talks were going well and then China backtracked. So the U.S. continuing to put this stalemate all on China, Steven. How is that being played there in Beijing?</s>JIANG: Well, not very well, as you can imagine. The Chinese government in the past few days has been pushing back on these U.S. claims through the state media. Their point being there's never been a formalized agreement between the two sides because negotiations still are ongoing. So how could China walk away from something that was never formalized to begin with? They're also trying to paint the Americans for being unreasonable when it comes to raising the amount of American goods Washington expected China to buy at the very last minute and also trying to describe the American side being intransigent on a number of key issues from the removal of these tariffs in the event of a trade deal to the final text in any document both sides would sign. One interesting to note is that, you played that sound bite by Larry Kudlow, basically admitting Trump has been misleading the American public in terms of who is paying these U.S. tariffs. The Chinese state media has picked up these remarks and now using that to highlight how Mr. Trump's tariffs are only hurting the American people and that there are no winners in this trade war -- Natalie.</s>ALLEN: All right, Steven Jiang for us, we will speak with you again. Now let's talk about this on how this could play out.</s>ALLEN: Andrew Sullivan joins us from Hong Kong, the former head of sales trading for Haitong International Securities. We appreciate your time and weighing in on this as well. We were talking about China retaliating over these U.S. tariffs. What are you expecting from Beijing? How severe could it be?</s>ANDREW SULLIVAN, HAITONG INTERNATIONAL SECURITIES: As your previous bite said there, they are running out of things to actually put tariffs on. So some of the measures they are likely to take will come down more to sentiment from the public. And we saw this when the Patriot missiles went to South Korea, a number of the public just generally boycotting Korean goods. And this is something we have seen over the weekend, the nationalist flavor in China has been welling up there. And it's likely you will see people start to boycott American goods because they feel that America is being unfair against China. And that allows the government a little more wriggle when it comes to actually looking at tariffs, to be more measured. And that gives up the upper hand to show that they are not being the aggressive ones. And I think that's something they certainly want to show to the world stage, that they are not being protectionist, that they want free markets and they want this thing to work well for the whole economy.</s>ALLEN: You mentioned the world stage. This is not just about China and the United States. This could have a trickle effect and affect other economies.</s>SULLIVAN: That's it. We've seen over the weekend, you have the South Korean government lobbying Washington not to put tariffs on the autos there. We have negotiations coming up with Europe, which are at a rather testy state. And then we'll have the agreement with Japan coming through later. So this is really probably been seen as a benchmark by everybody as to where they are going to set the standard for the other agreements coming through.</s>ALLEN: Right, and President Trump maintains that tariffs "will hurt China mostly," a quote from him on Sunday. Remember, he said, they broke the deal, they did, China, with us, and try to renegotiate. We will take in tens of billions of dollars in tariffs from China. But that is not exactly accurate. The impact will be fairly severe on U.S. businesses and consumers. Can you talk about that?</s>SULLIVAN: Yes. We have not seen the Chinese exporters lowering their prices to take on the part of the tariff cost. So at the moment, it's being wholly passed on to the American consumer or the American importers are absorbing some of the costs, which will hurt their earnings going forward. But remember, until Friday, a lot of consumer goods were not actually covered by the tariffs. So this is going to be the change. Now it's not going to happen overnight. It's going to take a few weeks for these costs to start coming through. But then you'll see it on things like smartphones, laptops, things that really affect the general public in America. And they will see the impact of it. And that could backfire against Trump. And we've had a couple of brokers coming out with reports just highlighting the fact that it was going to be the American consumer that pays this money.</s>ALLEN: And then there's the market. Let's talk about the economic impact there. The Asian markets lower in early trading Monday; the Dow is set to fall sharply again when trading opens in a few hours. President Trump says we are right where we need to be on China. But if markets falter, could the president's tone change?</s>SULLIVAN: He always made that very much a success sign of how what he is doing as a president is how well the markets are doing. So it hit the global markets and especially the American markets take a nosedive, then, yes, he will certainly have to rethink his strategy there. Again, I think he is feeling that the American economy is doing well and it's quite buoyant. But the I think the earnings going forward, we've just got through one earnings season and it was not as bad as people expected. But looking to the second half of the year, if this dispute continues, I think we will see a number of those American earnings starting to suffer and that will hurt.</s>ALLEN: Andrew Sullivan, thank you for joining us, we appreciate your insight.</s>SULLIVAN: You're welcome.</s>ALLEN: Now we want to turn to a neither issue that we are following closely and it does involve the United States. Tensions appear to be rising in an already sensitive part of the Middle East. An alliance of Middle Eastern nations is calling for calm after four commercial ships were targeted near the United Arab Emirates. The Gulf Cooperation Council said Sunday's incidents risk maritime safety. As CNN's Nic Robertson reports, it comes amid a standoff between Iran and the U.S. in the area.</s>NIC ROBERTSON, CNN  INTERNATIONAL DIPLOMATIC EDITOR: What we've learned --</s>ROBERTSON: -- is what they described as a dangerous development. Four commercial vessels were targeted in their territorial waters, off the port city of Fujairah. That is an important oil facility in the Emirates and right next to the Strait of Hormuz. And this comes at a time when the U.S. intelligence assessments have been that there is a growing Iranian threat to shipping in the region, that the Pentagon had been concerned that there was a threat to U.S. shipping, commercial and military, in the region and also the shipping of U.S. partners in the region. What the Emiratis are describing, these attacks, are sabotage operations, subversive operations, that's how they describe it. We don't have much details yet about the type of vessels that were targeted or how they were targeted. But this came late Sunday evening in the Emirates, information from the Emirati authorities. However, earlier in the day, pro Iranian TV in the region and in Iran have been broadcasting a story saying seven oil tankers in this point city of Fujairah were on fire. And when we contacted Emirati authorities earlier Sunday to ask about that, they said they had no information about it. For the Emiratis, this is, in their words, a dangerous development, coming at a time of heightened tensions in this region. The U.S. is sending more of its naval forces and Patriot missile batteries and B-52 bombers into the region, the tension growing. And this incident, whatever it turns out to be, will add to those tensions -- Nic Robertson, CNN, Abu Dhabi.</s>ALLEN: And in a related development, we are getting word that the U.S. secretary of state is canceling a trip to Moscow on Monday. He will instead meet with European officials in Brussels to discuss pressing matters, including Iran. Mike Pompeo departed to Brussels just a few moments ago from Maryland. Before leaving, he reiterated, the U.S. does not want war with Iran.</s>MIKE POMPEO, U.S. SECRETARY OF STATE: We are not going to miscalculate. Our aim is not war. Our aim is a change in the behavior of the Iranian leadership. We hope the Iranian people to get what they finally want and what they so richly deserve. The forces that we are putting in place, the forces we have had in the region before, you know, we have often had carriers in the Persian Gulf. But the president wanted to make sure that in the event that something took place, we were prepared to respond to it in an appropriate way. And as secretary of state, I wanted to make sure that we had all the political and diplomatic tools in the right place. And we want to make sure that we can provide the president with an option set, in the event that the Iranians make a bad decision.</s>ALLEN: The U.S. secretary of state will head to Sochi on Tuesday as planned for meetings there with Russian officials. Next here on NEWSROOM, the week ahead for President Trump includes his ongoing battle over subpoenas. Is the U.S. in a constitutional crisis? Also:</s>ELLIE TAYLOR, HARVARD STUDENT: Some have voiced concerns about you getting Hillary-ed in the election, meaning that you get held to a higher standard than your opponent for potentially arbitrary or maybe even sexist reasons.</s>ALLEN (voice-over): Is sexism undermining support for women running for U.S. president? We will look into that, right after this.