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Here's the Scoop
Inside Trump & Xi’s Two-Hour Meeting and Will Fed Chair Warsh Raise Interest Rates?
00:23:46
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- [00:01]
A
China clearly feels that it has increased leverage or at least has chosen to make this summit to take this moment and really press its case on Taiwan, because the Chinese perhaps see the US Coming into this in a weaker state than they were even six months ago.
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B
Hey, everybody. Welcome to here's the scoop from NBC News. I'm Yasmin Desugin. So today on the show, the first full day of the US China summit just wrapped amid the pageantry and the politics, what was actually accomplished when President Trump and President Xi came face to face. Plus, we have Kevin Warsh, President Trump's pick to lead the Federal Reserve, telling Congress he will not do the president's bidding. But could that change now that he's actually been confirmed? Up first, though, there was the pomp and there was the circumstance at the start of the highly anticipated two day summit between President Trump and Chinese President Xi Jinping. But there were also a number of highly contentious issues on the table when the two leaders met for two hours and 15 minutes, including the war in Iran and warnings over military action in Taiwan. And this is only day one. So have the US And China made any forward progress at this summit? And what is left on the agenda for that, I'm going to bring in NBC News senior White House correspondent Gabe Gutierrez, who is in Beijing for us with the President. Hi, Gabe.
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A
Hey there, Yasmin. Good to be here.
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B
Great to have you and thank you for staying up for us in that. I know it's the middle of the night there in Beijing. The Chinese President Xi Jinping literally rolled out the red carpet for the president. There was a military honor guard as well, a lavish state dinner. Walk us through kind of the pomp and the circumstance of this welcome for President Trump.
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A
It was really remarkable to watch. It was the Great hall of the people, the president arriving there and greeted by President Xi. There was a crowd of young people waving flags, cheering on the two leaders. It was really incredible. And then this historic site, the Temple of Heaven, very central to Chinese culture here. The president toured that for a short time. And in between that, they had this two hour, more than two hour meeting, as you mentioned, behind closed doors, this bilateral meeting. And Yasmin, what was incredibly interesting about that was it was the Chinese, the Chinese Foreign Ministry, while the meeting was ongoing, put out its first readout. Its description of what was being said behind closed doors, widely interpreted as a pretty aggressive move to get out in front of the messaging here and signaling that its most important issue in this summit was the issue of Taiwan. Now, after the president had that two hour long meeting and after he toured the temple of heaven, and you're right, he went to that lavish state dinner where President xi congratulated the US on its 250th birthday. But at the same time, we couldn't help but throw in the thousands of years, the 5,000 year history of China. You know, it was a very cooperative state dinner. President Trump even appeared to take a sip of champagne during a toast, which is something that President Trump, of course, known for not drinking. He did appear to take a small, small sip, which is rarely done before.
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B
You mentioned the bilateral meeting that happened between President Trump and President Xi lasting for more than two hours and the readouts which were vastly different. The readout from the Chinese was they spoke about Taiwan. Right. And their focus was going to be and on Taiwan. The readout from the president and from his administration was they spoke about the Strait of Hormuz and then there was some trade, tariff, economic talk in both of their readouts as well. Give us more of the details of what we learned from what took place in that two hour plus meeting between the two leaders and how they ended in such different places.
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A
Well, look, readouts are basically a description of what was said. And each delegation can choose what to highlight as their initial readout. Certainly, yes, in the Chinese telling of it, Taiwan was front and center. But, and it made the Chinese readout made no direct reference to Iran. But when it comes to Iran, it is so interesting, Yasmin, because the president actually we just started to get a part of an interview that he did with Fox News shortly after this meeting. And the president and coming back and saying that he spoke with Xi about Iran, that President Xi agreed that the Strait of Hormuz needed to be reopened. And Secretary of State Rubio said as much during his interview with our colleague Tom Yamas, saying that Iran agrees that the strait should not be militarized, that there should not be any tolls charged. And so the Trump administration very eager to highlight any point of agreement between the two. The question will be now, will China actually do anything, step in and help reopen the Strait of Hormuz or to lean on Iran perhaps, in order to come to the negotiating table and strike a deal to end this war. Now, the president telling Fox News that another assurance that President Xi gave him was that China would no longer provide any weapons to Iran. But it's an open question of whether that's actually going to happen. So we have those issues. We have Taiwan, we have Iran. There's several other topics looming over this summit, which again is still not over yet. There's the issue of AI trade tariffs. And especially with all of these CEOs that have accompanied President Trump to China, including Elon Musk and Apple's Tim Cook, the CEOs of Visa and Nvidia. What will the US announce when it comes to any investment deals regarding any economic development? The Treasury Secretary hinted that there could be a deal announced to buy more Boeing jets, that China would buy more Boeing jets. But at the same time, we have no specifics of that just yet.
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B
I want to drill down on Taiwan as well because we talked about how the readout from the Chinese was in fact focused primarily on Taiwan. China has warned the United States needs to handle the Taiwan question, quote, unquote, properly, otherwise it would cause, quote, clashes and even conflicts, putting the entire relationship in great jeopardy. That is according to Beijing's foreign minister. Secretary of State Marco Rubio was asked about this by Tom Yamas in an exclusive interview.
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A
We always respond by saying anything that would compel or force a change in what we have now would be problematic. And we would certainly our policies on that have not changed.
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B
They also talked about the Strait of Hormuz. We just got some new reporting that munitions are hitting dangerously low levels because of the war with Iran, and the Pentagon has no new contracts to replenish those supplies. That's according to U.S. officials and two people familiar with the matter. How much does US Military capability factor factor into these talks with China, especially in discussing potentially defending Taiwan if Beijing decided to go for Taiwan to attack Taiwan?
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A
Well, look, it's a central question looming over these talks entirely and raises the question of just how much leverage the US has heading into these talks as opposed to it did before the conflict in Iran. You mentioned the reporting about depleted munitions regarding the Iran war. And can could the US Support any sort of actual defense of Taiwan if China were to invade? And to give you an idea, Yasmin, of just how remarkable it is that we're in this position, just the fact that President Trump earlier this week in the Oval Office said that he would discuss with President Xi the issue of arms sales to Taiwan, that actually violates long standing US Policy right there. The fact that he's even having this discussion with President Xi certainly raised a lot of eyebrows in Taiwan. But yes, you're absolutely right. With the depleted munitions coming off of the Iran war, China clearly feels that it has increased leverage or at least has chosen to make this summit to take this moment and really press its case on Taiwan because The Chinese perhaps see the US Coming into this in a weaker state than they were even been six months ago.
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B
President Trump has another day left in China. What is on the docket? Is there any expectation that real progress, concrete progress is going to be made between the two nations?
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A
Well, look, at this point, we're expecting some sort of investment announcement, unclear what the details of that will be. But the Trump administration has been very eager to talk about how it wants to rebalance the trade relationship between the US And China. There was, you know, previous agreements for China to buy more soybeans, which is a huge issue for American farmers. That's something that we're watching out for as well. But, yes, the president is scheduled to have tea and another bilateral meeting with President Xi later on today, Friday morning, I believe, before he heads back to Washington. It's all blurring together at this point as we as this summit stretches into multiple days. But, yes, we do expect some sort of economic announcement from the president with these CEOs in tow. But at this point, it's unclear what the specifics will be. It could be that the Trump administration views any projection of stability, any of these images with President Trump and President Xi on the world stage coming to some sort of an agreement, no matter how small it may be, the Trump administration could consider that a win.
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Gabe Gutierrez, I hope you get some sleep. Eventually, at one point, eventually, maybe when you make it back to the States.
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A
That's. Thank you, Yasmine. It's been great to be here. Thank you.
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B
All right. We're going to take a very quick break. And when we're back, why rising inflation could spell trouble for incoming Fed chair Kevin Warsh. And hey, so while you're waiting, why not hit the subscribe button? And if you already do, be sure to rate and review us. It's really going to help us with other listeners to find us as well. All right. We'll be right back.
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B
And we are back with here's the scoop from NBC News. So the Federal Reserve is changing leadership for the first time in eight years. On Wednesday, the Senate confirmed Kevin Warsh as the next Fed chair. In a mostly party line vote, he's going to replace current chair Jerome Powell, whose term officially ends tomorrow. Now, normally Fed chairs, they walk off into the sunset, but Powell has made the unusual choice to remain on the Fed board as a governor. Now it's going to be up to war whether to push for interest rate cuts amidst this rising inflation or risk angering the president. So the question is, is Warsh going to follow the economic indicators or the president's will? And what does Jerome Powell's continued presence on the board actually mean for Warsh's tenure? For this, I want to bring in Brian Chung, business and data correspondent for NBC News. Hey, Brian. Hey. Yes, so this kind of got lost amidst all the news yesterday. War being confirmed as the next Fed chair in a 54 to 45 vote.
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Pretty narrow.
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B
Pretty narrow. North Carolina Republican Thom Tillis, he had delayed Warsh's confirmation because he had said he was waiting until the Justice Department agreed to drop an investigation into the Fed's building renovation plans. Beyond the hold up from Tillis, what have Republicans said about their support for Warsh's confirmation in general?
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E
Well, that's the funny part where Thom Tillis had said throughout this entire process that he supported Kevin Warsh's nomination but that he would not advance him. While there was that Department of Justice investigation into what they alleged were building cost overruns at the Federal Reserve under Jerome Powell. Even during the Senate Banking Committee nomination hearing for Kevin Warsh, Tillis basically in his opening remarks said, I support you and I will vote for you, but only when this investigation is out of the way, because he thought it was dubious. He thought it was completely irrelevant. And he felt that it was an unfair shakedown of Jerome Powell, which is part of the president wanting lower interest rates. And so when it came to the story of how that came to pass, the Department of Justice decided basically right after the nomination hearing for War that, hey, we're going to allow the Federal Reserve's inspector general, their independent investigator, to kind of take a look at the building cost overruns and the Department of Justice will essentially hand off that investigation to them. That was seemingly enough for Thom Tillis. And now you have Kevin Warsh that had that clear path and is slated to be the next Federal Reserve Chair.
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B
But Jeanine Pierre also said at one point that she's not against resuming a possible investigation.
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E
Right. And that is the reason for why Jerome Powell is going to stay at the Federal Reserve. Because as a reminder, we talk about the Fed Chair all the time. That's kind of top dog on this seven member Board of Governors at the Federal Reserve. But there are two terms that Jerome Powell technically had. He had a chair term that ends this week, and he also has a governor term that. That allows him to stay well past that. And now, historically, when a Fed chair is done with their term as chair, they've usually left. That has been the case for previous Fed chairs.
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B
They retired.
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But Jerome Powell is saying, I'm gonna stay because I don't want it to be the case that if they reopen the investigation, I'm no longer at the Fed. I want to be here to see the investigation through if they do end up reopening it.
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B
Okay, I wanna dig into that more. But I. But I do first wanna talk a little bit more about Warsh, because one of the reasons why we know that he was nominated by President Trump was he was advocating for interest rate cuts. And it's something that President Trump has wanted for a long time, and it's one of the reasons why he went after Jerome Powell so consistently over his term and his second time at the White House. The president that is now Warsh is staring down the barrel of a 3.8% inflation rate that just came out. This is not necessarily an economy that would support interest rate cuts even if the President still wants them. How are we expecting Warsh to handle interest rates come June?
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Yeah. And even if we cut the personalities out of it, if you are in an economy where inflation is a concern, that is not the type of economy where you tend to cut interest rates, because a side effect of cutting interest rates tends to be a nudging up of inflation. And so if you have a Fed chair that's coming in and looking at what's going on right now, you have the impact of tariffs, which there's a lagged impact from President Trump's policies last year. That has many in the business industry saying, actually, we haven't even started to see the full impact of those tariffs yet. At the same time as, guess what, oil prices spiking as a result of the war with Iran. Everyone's been feeling that at the pump. And so you have this combination of these two things that are happening essentially at the same time, I think a lot of central bankers would tell you to be very cautious about cutting interest rates in that environment. But you have Kevin Warsh, who has kind of changed his tone as of the last few months. And I should point out some of that commentary, to be fair, was before this war with Iran began. But I think a lot of people are scratching their heads going, okay, is this guy really going to try to cut interest rates into an environment that very few central bankers would say is a good idea to do? So how does that play out? But again, he's just one member of this board.
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B
So the unprecedented nature of Jerome Powell now staying on the board, what is that going to do? What is his continued presence at the Fed going to mean in making decisions going forward?
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Well, we don't know what that looks like. And even he doesn't appear to know what that looks like. In his press conference there was this hilarious phrase that he used where he said, I intend to remain essentially as a Fed governor, but I want to keep a low profile. And a reporter asked him directly what does the low profile mean? And he seemed to say like, I'm going to try to figure it out. Like, we don't know what that means, cuz this hasn't really happened before before. Presumably that means that even though Jerome Powell, who has led this Federal Reserve through Covid, through two Trump administrations, through several tariff wars, through an actual war with Iran, he's gonna be on the other side of this table looking at his successor directly in the eyes. That's gonna create some really fascinating dynamics. But when he says low profile, it basically means that even though he'll be present at those meetings, it's not like he's gonna be looming over and serving as like a shadow Fed chair telling everyone behind closed doors, like, oh, don't listen to Kevin, do this instead.
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B
But he will have a lot of influence.
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But he will have a lot of influence. And again, with the way that the central bank works, I mean, we get transcripts of what is said in those meetings, but not until five years after the fact. So we might not know the real contours of what those conversations are like until five, six, seven years from now.
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B
So with that being said, I want to talk a little bit about kind of economic indicators. The 3.8% inflation. You have the producer price index, which indicates how much sellers pay for goods and services. That was up 1.4% in April of just one month. Yeah, up 6% over the past year. Based on some of the recent economic indicators. That we've been looking at. Where are we headed right now?
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E
I mean, when I hear that retailers are paying more, I mean, that was a substantial jump. I mean, 6%. That was the highest yearly rate that we've seen in about three years. And so when you think about your retailers having to pay more, that suggests to me that is a leading indicator that not long from now those retailers are going to pass those costs on to us. And we've already seen the consumer facing price index, what they call the CPI, rising as well, 3.8% on a yearly basis. I think that the Alphabet soup of all these inflation indicators, it gets lost on Americans. I think the most important data set that we got this week was in tandem with that 3.8%. You take a look at last week's jobs report which showed average hourly earnings, wages growing at a yearly pace of 3.8, 3.6%. 3.8% is how much price tags are increasing. 3.6% is how much your wallets are increasing because of pay increases.
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Not keeping up.
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It's not keeping up. That is the first time we have seen wages not keeping up with inflation in I believe three years. That's problematic because that means that Americans are tapping into their savings. And this is an indicator that's probably lagging. This has probably already been happening to the average American for a little bit while longer than that. That is of immense concern because that means the affordability crisis is getting worse.
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B
Brian Chung, on that note, thank you.
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Thanks, Yaz.
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B
All right, coming up, a battle for the prime minister's office could be around the corner in the UK And Elmo has a major announcement about the World Cup. Yes, I said Elmo. Stay with us for the headlines.
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C
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- [21:52]
B
And we are back with here's the scoop from NBC News. Let's get to some headlines. Embattled British Prime Minister Keir Starmer is under mounting pressure to resign after a top Labour Party official resigned. In his resignation letter, Health Secretary West Streeting cited devastating results for their Labor Party in last week's national election. He said Starmer lacked the vision to lead the party forward, adding his voice to the 100 lawmakers and government ministers who have already called for Starmer to step down. But Streeting stopped short of triggering the actual contest to oust Starmer. The prime minister has said that he plans to stay in office. Vice President J.D. vance, now also the fraud czar, says he's suspending $1.3 billion of Medicaid payments to California, claiming the state is not aggressively prosecuting fraud in their Medicaid program. He's also threatening to suspend Medicaid funding to other states for doing the same. Dr. Mehmet Oz, administrator for the Centers for Medicare and Medicaid Services, said California needs to clarify $630 million in billing, 500 million in home and health services and 200 million in, quote, questionable expenditures, which he claimed was linked to coverage for undocumented immigrants. They are not eligible for Medicaid, by the way. California governor Gavin Newsom's office criticized Vanzanas. In a series of posts following the announcement, state Attorney General Rob Bonta said that California is being targeted for political reasons. In addition to seeking comment from Newsom and Bonta's office, NBC News reached out to California's Department of Public Health. Former Spirit Airlines employees are suing the defunct airline, claiming they were not given advance warning when Spirit abruptly shut down back on May 2nd. 17,000 workers lost their jobs that day in the proposed class action lawsuit. The workers are demanding 60 days unpaid wages and compensation for benefits, including the continuation of medical coverage, retirement contributions, unused vacation and sick time. The lawsuit also takes issue with the fact that Spirit sought approval of $10.7 million in retention bonuses for senior executives and others during the wind down of the airline's operations. NBC has reached out to Spirit Airlines for comment, but has not yet heard back. In letters attached to the lawsuit, Spirit said that the negotiations with the government for financial help prevented it from giving notice and finally move over Super Bowl Halftime Show Here comes the FIFA World Cup Halftime Show Coldplay lead singer Chris Martin announced that he's curating the show, its first ever with Elmo and the rest of the Sesame street gang for some reason.
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A halftime show?
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A
Yeah, halftime show.
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E
A halftime show.
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A halftime show.
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What's a halftime show? So who exactly did Chris Martin and Sesame street actually pick? Well, turns out Elmo likes Madonna, so she's in the K pop supergroup. BTS is coming as well. And of course it would not be the World cup without Shakira, who's got the official song this year. Good thing, by the way, Elmo's got her on speed dial. Shakira's in and she's bringing cookies. Shakira, Madonna, BTS and Shakira are going to take the Stage at New Jersey's MetLife Stadium on July 19, TBD if Elmo's coming as well. But I think if he does, he will be the star of the show that is going to do it for us. Here's the scoop from NBC News. I'm Yasmin Desugan. We'll be back tomorrow with whatever the day may bring. And if you like what you heard, subscribe wherever you get your podcasts. And you can also subscribe to our daily newsletter, the Inside Scoop. It is a deeper dive on the main stories of the day that comes out every weeknight straight to your inbox. You can sign up for the Inside Scoop as part of our paid subscription@nbcnews.com we'll see you tomorrow.
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