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is GPS, the global public square.

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Welcome to all of you in the United States and around

0:59

the world. I'm Fareed Zakaria coming to

1:01

you live from New York. We'll

1:05

start today's program with Iran striking

1:07

back against Israel with a barrage

1:09

of drones and missiles. What is

1:12

next in this highly dangerous tit

1:14

for tat? I talked to

1:16

Vali Nasser and David Sanger. Plus

1:19

treasury secretary Janet Yellen on her

1:22

trip to China and ambassador

1:25

Rahm Emanuel on the Japanese

1:27

prime minister state visit to

1:29

Washington DC. I'll

1:33

give you my take in a moment, but first

1:35

the breaking news. The world

1:37

has wondered for two weeks how

1:39

Iran would respond to the attack

1:41

that destroyed its consulate in Damascus

1:43

and killed a handful of top

1:46

military officials. Now we know.

1:48

Last night's retaliation was a show

1:50

of force with several hundred missiles

1:53

and drones sent to attack Israel.

1:55

It was also the first time that

1:58

Iran has attacked Israel. from

2:00

Iranian soil. But 99% of

2:03

the drones and missiles were intercepted

2:06

before they reached Israeli territory. Indeed,

2:09

Israel says there was little damage

2:11

and only one known casualty. The

2:14

big question is how is Prime Minister

2:16

Netanyahu thinking about this? Joining

2:19

me now from Tel Aviv is

2:21

CNN's Chief International Correspondent, Clarissa Ward.

2:25

Clarissa, welcome. What are you

2:27

hearing about what Israel and

2:29

Prime Minister Netanyahu are

2:32

thinking about what the situation

2:34

is now and what do they do? So,

2:40

Farid, the War Cabinet has now been

2:42

in session for just over an hour.

2:44

We expect to hear a

2:46

televised statement from Prime Minister Benjamin Netanyahu

2:48

once that wraps up. We

2:51

have also heard a statement from the

2:53

centrist War Cabinet Minister Benny Gantz who

2:55

describes putting together a regional

2:58

coalition and acting

3:01

to exact a price from Iran

3:03

at the time of Israel's choosing.

3:05

Now, we also know, of course,

3:07

that President Biden has told Prime

3:09

Minister Netanyahu that the U.S. will not

3:11

be involved in any kind of a retaliation.

3:15

He has urged Israel not to

3:17

escalate this situation further, saying, take the

3:19

win. And for many here,

3:21

Farid, this is being seen as a

3:24

gift or a lifeline to Prime Minister

3:26

Benjamin Netanyahu because it deflects away from

3:28

the situation in Gaza. Israel

3:31

increasingly isolated on the world

3:33

stage. And it

3:35

also deflects from these protests that

3:37

we have seen every single week.

3:39

Israel has been gathering hate, demands

3:41

for Prime Minister Benjamin Netanyahu to

3:44

step down. On the other hand,

3:46

you have these sort of hardliners

3:48

in his coalition. They are pushing

3:50

very hard for a good response.

3:52

They say it's desperately important to

3:54

re-establish deterrence, but important for our

3:57

viewers to remember that they are

3:59

not terrified. of that war cabinet.

4:01

And ultimately it will be the three

4:03

members of that war cabinet, the three

4:05

observers who determine what the response will

4:07

be and we will likely learn more

4:09

about that in the coming hours. Thanks

4:13

Clarissa. As always, terrific reporting. Now let

4:16

me bring in today's panel. David Sanger

4:18

covers the White House and National Security

4:20

for the New York Times and is

4:22

a CNN political and national security analyst.

4:25

He also has an excellent new book

4:27

out Tuesday, which you should all read.

4:29

It is called New Cold

4:31

Wars, China's Rise, Russia's Invasion,

4:34

and America's Struggle to Defend

4:36

the West. Vali

4:38

Nasser is a professor of international affairs

4:40

and Middle East Studies at Johns Hopkins

4:42

School of Advanced International Studies.

4:45

Vali, let me begin with you. This

4:48

in some senses begins on

4:50

April 1st when Israel

4:52

attacks that Iranian embassy in

4:55

Damascus, the consular building in

4:57

the Iranian embassy. Iran

5:00

and Israel have been having a shadow

5:02

war in a sense. They're each hitting

5:05

various things of

5:07

the others we run through Hezbollah

5:09

and other militias. This was

5:12

the break. Israel decided to actually

5:14

attack what would technically under

5:16

international law be considered Iranian

5:18

territory. Why do you think that

5:20

happened? I

5:23

think the Iranian understanding, which is

5:25

important here, was that this was

5:27

a deliberate, calculated step taken by

5:29

Israel, not in response to anything

5:31

in particular, to divert attention

5:34

from what was happening in Gaza, to

5:36

help fix the rift between

5:38

the United States and Israel over the

5:40

Gaza war, and essentially to even draw

5:43

the United States into the war in

5:45

the Middle East by baiting Iran into

5:47

a major reaction. Do

5:50

you think, Vali, the Iranian reaction

5:52

was major? It seems like they

5:54

almost signaled, you know,

5:56

this is what we're going to do Almost roughly

5:58

when we're going to do it. In and

6:00

they've just announced, that's it. We're We're not. This

6:02

is the end of our response. When

6:06

he did create a dilemma for

6:08

Iran, Iran could not just roll

6:10

over and and and be seen

6:12

within vice on population. any the

6:14

regents essentially taking such a provocative

6:16

or escalation from Israel's without responding. On

6:18

the other hand, they did not

6:20

wanna throw Prime Minister Netanyahu a

6:22

lifeline of basic sustained the attention from

6:24

Gaza to Iran and Syria and

6:26

even drawing the United States into

6:28

a war with Iran. So they had

6:31

to react about the how to

6:33

react in a way where the

6:35

emphasis. Was not really on retaliate

6:37

sense, but on the terrorists and

6:39

I see the deterrents was achieved

6:41

not just by the military actually

6:43

carried out yesterday by that might

6:45

essentially by the very effective psychological

6:47

campaign that they managed through this

6:49

escalate sense both in Israel and

6:52

also in western capitals. I'm

6:55

David. Do you think that

6:57

the Israeli government is willing

6:59

to. Take What when

7:01

they have a me the the air

7:03

defenses were extraordinarily effective. It's worth pausing

7:06

for a moment. Just think about this

7:08

has got to be the most successful

7:10

air defense. And ninety nine percent of

7:13

these missiles or intercepted or three layers

7:15

of defense or you know the i

7:17

don't being the core of it on

7:20

some of it is really odd technology.

7:22

much of it American technologies will is

7:24

will you think take the win? or

7:27

does Bb need to? Does Bibi Netanyahu

7:29

need to do something? In

7:31

return. for

7:33

my suspicion is for read that

7:36

he will feel great pressure to

7:38

do something in return and the

7:40

question is can calibrate that to

7:42

be modest enough that we don't

7:44

get into a cycle as you

7:46

suggested on the one hand the

7:48

iranians when the territory here they've

7:50

never gone into before i doing

7:52

a direct attack they have basically

7:55

gonna last step and no one

7:57

will ever be able to stuff

7:59

said back the bottle. If

8:01

the Israelis debate in the future

8:03

whether they could attack Iran directly,

8:06

they would probably cite this as the

8:08

precedent. On the other hand, it

8:10

is the greatest ad for missile defense that

8:12

we've ever seen in battle. I

8:15

mean, here they were able to discriminate among

8:17

200 to 300 drones,

8:20

ballistic missiles, cruise

8:23

missiles, and have a 99 percent

8:25

success rate, at least

8:27

from the early reports.

8:30

That's remarkable, and 10 years ago would

8:32

not have been the case. And

8:35

so the question is, could the

8:37

Israelis basically argue they have established

8:39

deterrence? They've established the deterrence that

8:42

comes from making it clear to

8:44

an adversary that they could not

8:46

successfully attack even with an overwhelming

8:48

number of missiles. Wale,

8:51

what about this idea that

8:53

in a way the Clarissa

8:55

pointed out that this has

8:57

thrown a lifeline to Benjamin

8:59

Netanyahu. Nobody's talking about Gaza

9:01

and nobody's talking about the

9:03

famine, which Samantha Power, the

9:05

director of USAID says, has

9:07

already begun in Gaza. The

9:11

Western world certainly has coalesced around Israel

9:13

to support it. I mean,

9:16

isn't this at some level a kind

9:19

of Iranian miscalculation? Well,

9:23

if it continues, but it does

9:25

come at a huge cost. In other words, a tit-tat

9:27

for tat

9:30

process does put enormous amount

9:32

of psychological pressure on Israeli

9:34

public, which were in

9:36

a high state of anxiety the

9:38

past week. It does tax Israel's

9:40

economy every time it goes into

9:42

high alert. And we saw that

9:45

it also got the international community,

9:47

European capitals, Washington extremely worried about

9:49

an uncontrolled escalation in the region.

9:52

So it's not as if keep

9:54

going down the path of escalation with Iran

9:56

is cost free for Israel. Last

10:00

week we had a lot of diplomatic

10:02

engagement with Iran to persuade them

10:04

to calibrate their response.

10:06

And now Israel is also going

10:09

to face similar kind of pressure

10:11

from the international community to calibrate

10:13

its response, because nobody wants an

10:15

unchecked escalation between Iran and Israel.

10:18

And I think all the international pressure is

10:20

going to be on Iran and Israel to

10:22

observe certain red lines, which then

10:25

will take us back, essentially, to the Gaza

10:27

War, because I

10:29

would expect that in a week's time, if we

10:31

don't see a major escalation, that this

10:34

will be tamped down. All

10:37

right. Stay with us. We're going

10:39

to come back. When we come back, I will ask David

10:41

Sanger and Vali Nasser where

10:44

this Gaza War will go and where

10:47

the rift between

10:49

Joe Biden and Benjamin Netanyahu stands,

10:51

and will it get exacerbated

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code POD. And

12:32

we are back with David Sanger and Vali

12:34

Nasser. David, ever

12:38

since the start of this

12:40

Israeli war with Hamas in

12:42

Gaza, President

12:45

Biden has faced a tough challenge,

12:47

which is he wants to show

12:49

unwavering, unqualified support for Israel. And

12:51

yet he has had deep reservations

12:54

about Bibi Netanyahu's war

12:56

strategy, urging him to

12:58

be more restrained, more targeted, to

13:00

be careful not to escalate. My

13:03

understanding, and there's some reporting on

13:05

this, that they counseled the Israelis

13:08

against the kind of escalation that

13:10

involved the attack on Iran's consular

13:12

facilities in Damascus. Where

13:17

does that relationship stand, and will

13:19

Biden, you think, be able to

13:23

have any influence on Israeli policy?

13:25

Which so far, he seems

13:27

to have had limited influence. That's

13:31

right, Farid. I mean, I would

13:33

say that Biden has been extraordinarily

13:35

frustrated in his dealings with

13:38

Bibi Netanyahu, in part because

13:41

every time that he has gone to

13:43

counsel some form of advice

13:45

that Israel was not acting on its

13:47

long term interests, that it needed to

13:49

allow in more aid, that it needed

13:52

to put off a certain military

13:54

strike, that it needed to stop

13:57

using 2,000 pound bombs. crowded

14:00

urban areas, he was

14:02

basically ignored. And

14:04

just before this incident unfolded, of

14:07

course, you saw Biden hit a

14:09

breaking point, one in which he

14:12

said, if you don't follow our

14:14

advice, including on not attacking in

14:17

in Rafa, this could require

14:19

a broad rethinking of the

14:21

relationship. So the breach was

14:23

pretty open. The question now

14:25

is, does it remain that

14:28

way? Or can he use this as

14:31

a turning point since it was the

14:33

US that was there helping intercept missiles

14:35

last night? One

14:37

of the big questions is, who

14:40

else can he bring into this? He's meeting

14:42

the G7 today, but missing in that Farid

14:45

are the two countries that have

14:47

the most influence with Iran, Russia

14:50

and China. And, you

14:52

know, I argue in new Cold

14:54

Wars, but we've also

14:56

discussed at other other moments that

14:58

the defining moment, the

15:01

defining issue in this particular

15:03

moment is that at

15:06

this point, the allies who sat or

15:08

the countries that sat with the US

15:10

to try to restrain Iran and its

15:13

nuclear program seven, eight, nine years ago,

15:15

have now flipped over to the other

15:17

side and Iran and Russia are part

15:19

of the so called axis

15:22

of resistance. Valli,

15:25

I noticed that the Washington asked

15:28

China to restrain Iran. Washington

15:31

has no influence with Russia, but

15:33

do China and Russia, they do

15:35

seem to act broadly speaking in

15:38

concert in the sense that as David

15:40

says, they are all opposed to the

15:42

kind of American led world order

15:44

and Middle Eastern balance of power.

15:46

But does Russia or

15:48

China, do Russia or China have

15:51

influence with Iran? I

15:54

mean, the short answer is yes, they have much

15:57

more influence with Iran now that say Europeans or

15:59

the United States. But as

16:01

David points out in his excellent

16:03

book, you know, this brewing

16:06

Cold War between U.S., China

16:10

and Russia now becomes much more

16:13

complicated when you actually need their

16:15

help in something with Iran. They

16:17

may have their own interests why they don't want

16:19

a war with the Middle East, but they're not

16:22

just going to be letter carriers for Washington without

16:24

sort of being engaged on also issues that

16:26

matters to them. And also the

16:29

difference between with Gaza and what's

16:31

happening with Iran is that

16:33

there the U.S. influence with

16:35

Israel was about how

16:38

Israel handled the war and what it

16:40

meant for global public opinion or domestic

16:42

public opinion. But the

16:44

escalation with Iran could potentially actually

16:46

get the United States into a

16:48

war. And that really

16:50

does feature on China and Russia's own

16:53

calculations when they themselves are at odds

16:55

with the United States. So the U.S.

16:57

has to have a much more comprehensive

16:59

view of these sets of global

17:02

relations and think in terms of the Middle

17:04

East as part of

17:06

that global rivalry with Russia and China.

17:09

David, as you point out

17:11

in your book, it really is a sea change

17:14

from 10 years ago. Obama

17:16

administration, Russia and China were effectively

17:19

allied with the United States in

17:23

putting sanctions on Iran, then the

17:25

Iran nuclear deal in which

17:28

all the Security Council major powers

17:30

joined together. And now here you

17:32

have Russia and China as part of

17:34

the axis of resistance. You

17:36

touch on this in your book. Henry Kissinger

17:38

always felt that one of the core

17:41

goals of American foreign policy should be

17:43

to avoid Russia and China forming

17:46

an alliance to kind of heighten

17:48

the divisions between Russia and

17:50

China. Do you think that is still

17:52

a strategy left for the U.S.? I mean, is there a

17:54

way, and it would really be to win China's China,

18:00

you know, to have a better working

18:02

relationship with China and wean it off

18:04

its unqualified support for Russia. It's

18:08

the sort of defining question of this

18:10

time for Reid, and I'm glad you

18:13

raised it because Kissinger's idea

18:15

by doing the opening to China

18:18

and Nixon's, of course, was

18:20

to create that division and it worked

18:23

for 60 or more years. What's

18:26

happened now is that we missed, to

18:28

some degree, Russia's

18:30

move toward authoritarianism and we

18:33

failed to understand that it would be taking

18:36

over territory. We made a parallel mistake

18:38

with China and then we were

18:40

pretty slow to recognize the degree

18:43

to which they were coming together. Putin

18:46

and Xi have met more than 40 times. President

18:50

Biden has met Putin one

18:52

time in his time in

18:55

office and that will probably be the

18:57

last one. So we're

18:59

at a moment right now where

19:01

the strategy we need to look

19:03

at is how do you contain

19:06

the worst aspects of their behavior

19:08

but also prevent them

19:10

from working together. And

19:12

that's the new mission in Washington. And so

19:14

far, I would have to say, we

19:17

are not very far down that

19:19

road in developing that strategy. Valli,

19:22

very quickly before we go, I've got

19:24

to ask you, Iran is also in

19:26

the midst of a kind of leadership

19:29

change, right? I mean, there's talk about

19:31

what happens after the Supreme Leader, who

19:33

is the longest-serving, I think, leader

19:35

in the world right now, what happens after he goes. Unfortunately,

19:39

you have 30 seconds, but give us a

19:41

quick preview of what's happening. Well,

19:44

it's going to be definitely a big change for Iran.

19:46

Any time a leader of that long

19:49

duration leaves, there's going to be change.

19:51

But more key is that all Iranians,

19:54

including the Supreme Leader, are aware of it.

19:56

And I think at this point in time,

19:58

he prefers stability. rather

20:00

than tumult in regional issues domestic issues because

20:02

the succession goes much better if Iran is

20:05

not at war with Israel or the United

20:07

States and is in a much better position

20:09

that does give an opening to the West

20:11

if you would to try to manage relations

20:14

with Iran. Vali

20:16

Nasser, David Sanger, very

20:18

smart analysis thank you so much. I

20:21

will be back with my take next.

20:26

Here's my take. For

20:28

a third straight month inflation has

20:30

been higher than expected suggesting

20:32

that the Federal Reserve will find it

20:34

difficult to lower interest rates which could

20:37

slow down the economy and

20:39

that endangers President Biden's reelection

20:41

prospects. Economists are unsure

20:43

as to why inflation has persisted some

20:45

of it is surely a persistent hangover

20:47

from the pandemic but some

20:50

of it could well be that

20:52

a feature of recent economic policy

20:54

of both the Trump and Biden

20:56

administrations has been to ask

20:58

consumers to pay more for goods

21:00

and services. Both

21:02

administrations goose the economy with large

21:04

pandemic relief packages which without question

21:07

added to inflationary pressures but

21:09

beyond those bills which have

21:11

by now probably worked their way through the

21:14

system there is another possible

21:16

cause. Donald Trump had

21:18

few tangible achievements in office but

21:21

he can credibly point to breaking

21:23

with decades of bipartisan economic policy

21:26

on tariffs. Trump raised

21:28

tariffs on China as well as

21:30

on many of America's closest allies

21:32

in the West. While candidate Biden

21:35

criticized those tariffs President Biden has

21:37

kept most in place. In

21:40

addition the Biden administration has imposed

21:42

tight Buy America provisions in large

21:44

spending bills such as the Inflation

21:47

Reduction Act and the Infrastructure Act.

21:50

All of these policies ask Americans

21:52

to pay more to achieve

21:55

certain political goals. Less

21:57

dependence on China, greater resilience.

22:00

subsidizing green energy, boosting

22:02

domestic manufacturing. Even

22:04

the IRA, as three economists have

22:07

persuasively shown, is about five times

22:09

more expensive as a way to

22:11

cut carbon emissions compared to a

22:13

simple carbon tax. All

22:16

of the political goals Biden is promoting

22:19

might well be worthwhile, but they

22:21

do come at a cost. And

22:23

one wonders if the cost will

22:25

be permanently higher inflation. The

22:29

tariffs are the most egregious of all these

22:31

policies. Despite Trump's rhetoric

22:33

to the contrary, they are

22:35

a tax on American consumers.

22:37

US Customs and Border Protection estimates

22:39

that so far Americans have paid

22:41

more than $230 billion in these

22:43

taxes. In

22:47

addition, tens of billions of dollars

22:49

have been handed out to farmers

22:52

to compensate for their losses in

22:54

agricultural exports as a consequence of

22:56

China's retaliatory tariffs. It's

22:59

hard to find anyone who believes that tariffs have

23:01

been effective. They have not

23:03

altered China's policies one iota, and

23:05

they have cost the American economy

23:07

in money and lost jobs. According

23:10

to the Tax Foundation, each year the tariffs cost

23:12

the US economy nearly 200,000 jobs and 0.25% of

23:15

its GDP, or

23:19

roughly $70 billion in annual

23:21

output. Or to put it

23:23

another way, enacting a modest set of

23:26

liberalization policies proposed by the Peterson Institute

23:28

in 2022 would

23:30

reduce inflation by about 1.3 percentage

23:32

points, which

23:34

works out to almost $800 of savings per

23:37

American household. The

23:40

Office of the US Trade Representative promised

23:42

to review the tariffs to determine whether

23:44

they have been effective or not. It

23:47

has been working on this review now for

23:49

over two years with no end in

23:52

sight, despite apparently having little on its

23:54

agenda these days since it has abandoned

23:56

its core business of promoting trade. A

23:59

senior- administration official confessed to me

24:01

that the reason is that if

24:04

the USTR admits that the tariffs

24:06

have failed, it will also

24:08

have to recommend that they be lifted, which

24:10

the Biden team does not want to do. There

24:14

is also a foreign policy cost to this

24:16

rising protectionism in America. President

24:19

Biden met with his Japanese counterpart this

24:21

week in a bid to strengthen the

24:23

alliance between America and one of its

24:25

longest and closest allies. And

24:28

yet his administration has announced

24:30

its staunch opposition to a

24:32

Japanese company buying US Steel,

24:34

a company that has been foundering for

24:36

years and is a shadow of the

24:38

behemoth it once was. Nippon

24:41

Steel, the Japanese company, promises to

24:43

invest in US Steel, honor

24:45

its labor contracts, and retain all

24:47

its workers into 2026. In

24:51

short, it would rescue an

24:53

underperforming American company. But

24:56

for the Biden administration, it seems the

24:58

optics are more important than the substance.

25:02

The conventional wisdom of the last

25:04

several years has been that America

25:06

hollowed out its manufacturing by embracing

25:09

globalization and efficiency, which in turn

25:11

led to the rise of right-wing

25:13

populism. That argument

25:15

doesn't stand scrutiny since countries

25:17

like Germany and France, which

25:19

protected workers and invested massively

25:21

in retraining, have also seen

25:23

right-wing populism boom. Declines

25:26

in manufacturing are part of the economic

25:28

rise of countries. Notice

25:30

that even China, which has prized its

25:32

factories above all else, has seen manufacturing

25:34

decline as a share of its economy

25:36

from 32% in 2011 down to 28%

25:38

in 2022. People

25:45

around the world, especially in America, have

25:47

gotten used to the dramatic declines in

25:49

costs that globalization has brought them over

25:51

the past three decades. The

25:54

cost of clothes, appliances, telecommunications, and

25:56

air travel have all plummeted in

25:58

that period. It's been

26:00

easy to pocket these gains and complain

26:02

about the ills of trade. But

26:05

inflation hits everyone, not just

26:07

the small percentage of unemployed.

26:10

And when people are forced to bear the

26:12

costs of higher prices, they tend

26:14

to lash out at those in power. What

26:17

an irony it would be if policies

26:20

designed to keep populists at bay end

26:23

up punishing mainstream politicians instead.

26:27

Go to cnn.com/free for a link to

26:29

my Washington Post column this week. Next

26:33

on GPS, Treasury Secretary Janet

26:36

Yellen is fresh back from China,

26:38

and I ask her about her

26:40

trip and whether anything important was

26:43

accomplished. This

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shopify.com/ System. This

27:48

week, Treasury Secretary Janet Yellen was

27:50

in China to stress that Washington

27:53

doesn't seek to decouple from Beijing,

27:56

but she also went to press China

27:58

on what she calls its unfavorable... trade

28:00

practices such as flooding the

28:02

global market with cheap subsidized

28:04

products like electric vehicles and

28:06

solar panels. So what did

28:09

she achieve on her trip and where

28:11

does it leave US-China relations? Secretary

28:13

Yellen joins me now. Welcome

28:16

Madam Secretary. Let

28:18

me ask you when you talk to the

28:20

Chinese do you

28:22

have much leverage because in a sense

28:26

you have all the Trump tariffs still in

28:28

place there are additional ones you

28:30

have export restrictions you have the chip

28:33

ban but there are already

28:36

American tariffs on Chinese EVs

28:38

electric vehicles so

28:41

are you threatening more tariffs when you

28:43

tell them you know we want you

28:45

to change your behavior or else? Well

28:50

look we're concerned

28:52

about the possibility of

28:55

surges in Chinese

28:58

exports to our markets in

29:00

areas where they have a great

29:03

deal of over capacity and

29:06

so I wouldn't take anything off the

29:08

table as a potential

29:10

response but we really want

29:13

to responsibly manage

29:15

this relationship and

29:17

I think that entails being

29:20

very clear at the most senior

29:22

levels with the concerns

29:25

we have and trying

29:28

to engage in joint

29:31

discussion that helps

29:35

us avoid misunderstanding. In

29:37

the case of over

29:39

capacity in certain areas

29:42

of manufacturing we

29:44

agreed to launch an intensive

29:47

exchange on balance

29:49

growth in the domestic and global

29:52

economies. I've been very clear in

29:54

my discussions with them that this

29:56

is a concern not only to

29:59

us but also to

30:01

other countries, to Europe, to Japan,

30:04

and even to emerging markets,

30:06

India, Mexico, Brazil.

30:09

So we want

30:11

to talk about our concerns honestly. We

30:13

have a complex relationship. You

30:19

also spoke about their relationship with

30:21

Russia. And I think it's

30:23

pretty clear that one of the reasons the Russian

30:25

economy has been able to survive fairly

30:28

intense Western sanctions has been China.

30:30

They've been able to trade with

30:33

the Indians, the Turks, and such.

30:35

But the Chinese, particularly in the

30:37

technology area, have been

30:39

the crucial supplier. Do you

30:41

get the sense that the Chinese government

30:44

listened to you? Do you

30:46

imagine there will be any change

30:48

in Chinese policy toward Russia? Well,

30:52

we've been extremely clear, and I

30:55

was clear at

30:57

the highest levels in my meetings,

31:00

that the United States will not tolerate

31:04

violations of our sanctions

31:07

by Chinese banks or firms that

31:11

are aiding Russia in

31:14

its war against Ukraine, and that

31:16

if that's done, that there will

31:19

be consequences. But did

31:21

the Chinese seem responsive? Do

31:23

you expect Chinese policy to

31:25

change? I

31:28

think they clearly hurt our concerns and

31:31

will consider them very

31:33

carefully. Let

31:36

me ask you about what I talked about

31:38

in my opening commentary. It does seem the

31:40

Biden administration is acting

31:42

across purposes. It wants to bring inflation

31:44

down, and yet when you look

31:46

at the Buy America provisions, you look at the

31:49

tariffs, you look at so many of

31:51

the requirements. I think I'm quoting President

31:53

Biden correctly when he said, it used

31:56

to be we looked for the cheapest possible place

31:58

to get goods. Now we want

32:00

to all made in America. What he doesn't

32:02

say is often that means at a

32:05

significantly higher price. Aren't

32:07

you pursuing policies that inevitably

32:10

will lead to some structural

32:12

inflation? Well,

32:15

it may push up prices a little

32:17

bit, but I think when

32:19

you take a hard look at

32:21

the numbers, it's a very modest

32:24

influence on inflation. And I

32:26

think it's critically important that

32:29

we create jobs in

32:31

the United States, good

32:33

manufacturing jobs in

32:36

an industry that is going

32:38

to be increasingly important. We've

32:41

had parts of the United States that

32:44

have industrial production

32:46

is hollowed out

32:49

and partly as a consequence

32:51

of surging imports

32:53

from China in the early

32:56

2000s after China joined

32:59

the WTO. And

33:01

we want to engage

33:03

in trade that's mutually

33:05

beneficial. There needs to be

33:08

a level playing field. And China's

33:10

agreed with us on that.

33:13

And we're concerned about

33:15

areas where the playing field

33:17

clearly is not level. China

33:20

is directing massive

33:24

subsidies through

33:26

their industrial policy on an

33:29

ongoing basis. And when

33:31

the demand isn't there, the

33:33

Chinese firms do not go

33:36

bankrupt as American firms do.

33:39

They stay in the market

33:41

and that can succeed in

33:43

depressing prices to the

33:45

point where very competitive

33:50

American firms can be driven

33:52

out of business. And Europe,

33:54

Japan and other countries feel

33:56

the same. Always

34:00

a pleasure to have you on. Thank you. Thank

34:02

you, Fred. Next on

34:05

GPS, America's other most important

34:07

relationship in Asia, Japan. I

34:10

will talk to Ambassador to Tokyo,

34:12

Rahm Emanuel, when we come back. Ukraine

34:17

today may be East Asia tomorrow.

34:20

Those were the words delivered by

34:22

Japan's Prime Minister, Fumio Kishida, at

34:25

a news conference this week at the White

34:27

House during his state visit to the US.

34:30

Kishida's words underscore increasing tensions between

34:32

China and its neighbors and escalating

34:34

fears of a military confrontation either

34:37

in the South China Sea or

34:39

Taiwan. That was the context of

34:41

a trilateral meeting at the White

34:43

House this week between Kishida Biden

34:46

and Ferdinand Marcos Jr., the president

34:48

of the Philippines. Joining

34:50

me now to discuss the visit and

34:52

the US's relationship with Japan is

34:55

Rahm Emanuel, currently the US Ambassador

34:57

to Japan. Welcome, Mr.

34:59

Ambassador. First, can I

35:01

begin? Pleasure. First, can I begin

35:03

by asking you a broader question,

35:06

which is Japan

35:08

seems to be back. Thirty

35:11

years ago, we thought this was the Asian

35:13

behemoth that was going to take over the

35:16

world economy. Then went into

35:18

a 30-year stagnation. But things

35:20

seem to have turned around in a big way.

35:22

The stock market is finally where it was at

35:25

its peak in 1989. Do

35:28

you do is that palpable when you are

35:30

in Japan? Yes

35:33

and no. I think it's equally not

35:35

only is the stock market up, its

35:38

major companies are investing across the globe,

35:40

which we're doing today, highlighting the investments

35:42

here in North Carolina, 13.9 billion

35:45

dollar investment by Toyota in

35:47

the EV factory. So technologically,

35:49

it's making major advances. Economically,

35:51

it's making major advances. And

35:53

then something important for us

35:56

as America and re-emphasizing.

36:00

our permanent Pacific power and presence.

36:03

Our partner in this and our major partner is

36:05

Japan. They're the most trusted

36:07

country in the region among the population.

36:09

They've doubled their defense budget to become

36:11

the third largest vendor. They're

36:13

acquiring very important 400 Tomahawk

36:16

counter-strike capability. They're

36:18

going to invest in a new joint operation

36:21

center. And then the week, just think of

36:23

it this week. We

36:25

started with a naval exercise in

36:27

the Philippines, South China Sea with

36:29

the United States, Australia, Japan, the

36:31

Philippines. We had a

36:33

major diplomatic first ever trilateral meeting

36:35

between the United States and the

36:37

Philippines led by President Biden. And

36:39

we're closing out the week with

36:41

a historic military exercise between the

36:43

United States, Japan, and South Korea.

36:45

That tells you what this lattice

36:47

architecture looks like. And the constant

36:49

for the United States and the

36:51

Asia is Japan. And they

36:54

don't want to just be regional. They're going to

36:56

be a global partner for us in the preservation

36:58

of democracy and the rule of law. Do

37:01

the governments you talk to worry that

37:03

come November, you may have a very different president

37:05

who has a very different view of America's role

37:07

in the world? Yeah,

37:10

yes and no. I mean, the one thing

37:12

is we're putting our roots down very

37:15

strongly in the investments in the diplomatic

37:17

area, the development area, and the defense

37:19

area. But make no doubt, the

37:22

president has a view of allies and

37:24

alliances that's different than

37:26

Donald Trump. And there's

37:28

a concern. Now, Japan

37:30

is doing things betting on the United

37:32

States as that partner. And

37:35

you have to have a view. And I will tell you this, having

37:37

been in the region now two years,

37:40

that's a home game for China. It's

37:42

a distinct game for the United States.

37:44

It's an away game. You need our

37:47

friends in the region to make it

37:49

a home game. So the idea that

37:51

you're going to confront China alone from

37:54

just a spatial point makes no sense. And

37:56

the geostrategic sense, it makes a place, it

37:58

makes no sense. So I would

38:00

just say we're betting on

38:03

our allies, and our allies are betting on us.

38:05

It's not a one-way bet. And it's

38:08

going to be important for the United States

38:10

to credibility our effectiveness to backing up our

38:13

claims of being a permanent Pacific power and

38:15

presence, is betting on the

38:17

fact that we have allies in the region who

38:19

want the United States to be a counter anchor

38:22

to China's aggression there, and a conflict with India,

38:24

a conflict with the Philippines, a conflict with China,

38:26

and a conflict with us when we try to

38:28

make sure the rule

38:30

of law is the policy when

38:33

it goes to normal international exercises

38:36

and operations in waters. So I

38:38

would just tell you, we

38:41

actually benefit from our allies,

38:43

and our allies benefit from us. So

38:46

let me ask you about on the

38:48

strategic side. If China would use military

38:50

force in Taiwan, are you

38:53

confident that Japan would militarily

38:55

respond in a significant way?

39:00

There's not a clear answer on that, and Japan

39:02

said that, I think, in

39:04

a sense of ambiguity. I do think what

39:06

there's two lessons to be learned. One is

39:08

before you even get there, credible

39:10

deterrence. And that's what

39:13

China is getting frosty about, and the

39:16

rhetoric is getting hot, because they see

39:18

all the allies working together in this

39:21

lattice structure that the United States is

39:23

assembling and replacing the hubs and spokes.

39:26

Second, Japan's investment in

39:28

its counter-strike capability brings the level of

39:30

deterrence China had not seen or calculated

39:32

on as recently as a year ago.

39:35

And third, the type of exercises we're

39:37

doing, not just in the

39:40

southern tip islands of Okinawa, but

39:42

also in the Philippine area, makes

39:44

a strategic challenge on Taiwan.

39:46

Deterrence is the most important. On

39:48

the other hand, it's not lost on

39:51

Japan that post-Speaker Pelosi's

39:53

visit to Taiwan, when there was

39:55

those major exercises by the PRC,

39:58

that they fired five. missiles into

40:00

the Japanese EZ right off

40:02

of Taiwan. Not just

40:05

an exercise around Taiwan, but

40:07

they did something into Japan's EZ. So

40:10

Japan took note of that, and that was

40:13

an aggressive step by China. And

40:15

so we understand the consequences

40:17

of the Taiwan Strait to Japan's

40:19

own economic security. So Japan

40:21

has a value vested interest and

40:24

a strategic interest in the rule

40:26

of law and abiding by international

40:29

standards being adhered to by

40:31

China, which is why the credibility

40:33

of our collective deterrence, not

40:35

singular collective, is so

40:38

essential to America's security and the security of our

40:40

allies. My

40:42

thanks to Rahm Emanuel for joining me, and thanks

40:44

to all of you for being part of my

40:46

program this week. I will see you

40:48

next week. You

40:53

can now watch CNN's Five Things on

40:55

Max. Each weekday, Kate Baldwin breaks down

40:57

the five essential news stories in five

40:59

minutes or less. She'll get you up

41:01

to speed and on with your day.

41:03

CNN's Five Things with Kate Baldwin, streaming

41:05

weekdays exclusively on Max.