Larry Kudlow on rising trade tensions with China

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Larry Kudlow on rising trade tensions with China

President Trump's new top economic adviser talks tariff threats and trade war fears on 'Fox News Sunday.'

This is a rush transcript from "Fox News Sunday," April 8, 2018. This copy may not be in its final form and may be updated.

CHRIS WALLACE, FOX NEWS HOST: I'm Chris Wallace.

The U.S. and China exchange escalating tariff threats, increasing chances for a trade war and rattling markets.

(BEGIN VIDEOTAPE)

WALLACE: Will the world's two biggest economies hit each other's exports with stiff taxes or make a deal?

LARRY KUDLOW, WHITE HOUSE CHIEF ECONOMIC ADVISER: He intended to take tough stand. To blame China, not Trump.

WALLACE: We'll ask Larry Kudlow, the president's new top economic advisor live, only on "Fox News Sunday."

Then, Democrats look to take back the House in November. We'll look at prospects for a blue wave and the economic plan they are offering voters for Democratic Caucus Chair Joe Crowley. Plus --

REPORTER: Scott Pruitt, sir? Do you support Scott Pruitt?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I hope he's going to be great.

WALLACE: We'll ask our Sunday panel whether the president will fire his EPA chief over ethics violations.

And our "Power Player of the Week," a member of the Obama cabinet goes back to school.

SYLVIA BURWELL, FORMER HHS SECRETARY: There were two themes in the Mathews Council (ph). One was education and the other was public service.

WALLACE: All right now on "Fox News Sunday."

(END VIDEOTAPE)

WALLACE: And hello again from Fox News in Washington.

We begin with breaking news. The State Department is monitoring reports of a poison gas attack in a rebel-held town near Syria's capital of Damascus. Video from Syrian activists claims to show victims, including children, getting hosed down. A human's rights group says dozens have been killed in the attack. And we'll stay on top of this story.

Now to the face-off for trade between the U.S. and China, which has sent tension soaring and market stumbling. In the latest move, President Trump threatened to impose tariffs on another $100 billion in Chinese exports, something that nation has vowed to fight. A trade war without serious consequences for consumers and businesses and investors.

Joining me now, President Trump's new top White House economic adviser, Larry Kudlow.

Larry, welcome to "Fox News Sunday."

LARRY KUDLOW, WHITE HOUSE CHIEF ECONOMIC ADVISER: Thank you, Chris. Thanks a lot.

WALLACE: You keep saying that there is no trade war, that this is part of negotiations between the U.S. and China. But the Chinese history says there are any talks and says, quote, China is fully prepared to hit back forcefully and without hesitation.

And here was Treasury Secretary Mnuchin on Friday.

(BEGIN VIDEO CLIP)

STEVEN MNUCHIN, TREASURY SECRETARY: We will continue to have discussions. But there is the potential of a trade war.

(END VIDEO CLIP)

WALLACE: Now, you're a market guy. The markets dropped 572 points on Friday. Clearly, there are a lot of serious investors who think there's a real chance of a trade war.

KUDLOW: I suppose so. I mean, I know there are some jitters out there. I don't think there's any trade or insight. Just technically, we have taken no actions, you understand that. And even the Thursday announcement for President Trump, he asked Ambassador Lighthizer to consider additional actions.

It's a long process. Several months here. We put our papers, we take public comments. We then review the public comments and then decisions will be made.

So far, no tariffs and no action has been enacted. Point number two. I believe China's response to the U.S. actions, which is a complaint against stealing intellectual property against forced technology transfers, I think that's a legitimate complaint, so does the rest of the world.

But China's response was highly unsatisfactory and I think that's unfortunate. We do have constant communication with them, to be sure. I hope their side picks up on this. But so far, stonewalling us is not the answer. Listen --

WALLACE: And that's what they're doing is stonewalling?

KUDLOW: Basically. I mean, lots of rhetoric out there, like, you know, old communist party type stuff. The whole world, please, the whole world knows China has been violating trade laws for many years and President Trump is the guy calling them on it and he's right to do so.

WALLACE: Is the president -- you say he's calling them on it. Is he bluffing or will he impose tariffs if China doesn't change its trade practice?

KUDLOW: Look, I -- he's not bluffing. I mean, there are a number of tools at his disposal.

Just one thing there -- people are saying Trump, Trump, Trump. This is a problem caused by China, not a problem caused by President Trump, and I would go so far as to say, Trump is there to fix the problem.

If you talk to the president as I have, he regards himself as a free trader, all right? As do I. But his argument, and it's a good one, you can't have free trade, which is pro-growth around the world unless China brings down its barriers, opens up its markets --

WALLACE: But, Larry --

KUDLOW: -- and stop this technology steal that they're doing.

WALLACE: Nobody is saying that China isn't to blame here. The question is, the president's response. As you point out, you are a tree trader.

Here is what you said just last month when President Trump announced his first round of tariffs. And this wasn't an announcement. This was real imposition of tariffs on aluminum and steel. Here you are.

(BEGIN VIDEO CLIP)

KUDLOW: Tariff hikes are prosperity killers. They always have been and they always will be. Tariffs are taxes and the ones who suffer most are the users.

(END VIDEO CLIP)

WALLACE: So who should we believe, that Larry Kudlow or this one?

KUDLOW: I thought you might run that. I'm opposed to blanket tariffs and that's where it first started.

WALLACE: But that's what the president is talking about?

KUDLOW: No, he has changed his view, even on the national security action. We've got a lot of exceptions and a lot of carve-outs.

WALLACE: But you're not talking about carve-outs or exceptions for China.

KUDLOW: Well, hang on. So, I oppose the blanket tariffs, I always do.

Now, with respect to China, I've always been a hard-liner on China, and while I don't like tariffs, sometimes there is no substitution for putting tariffs into the discussion, into the process. That is part of the quiver of arrows that the president has.

Look, he's a great negotiator. He has a whole history of that. But in this process, tariffs have to be part of it. There's no two ways about it. Then, hopefully, there will be discussions and hopefully, in just the next two months, the Chinese will come seriously back to the table.

President Trump has told me, we were together a long time on Thursday and Friday. He likes President Xi. They get along. He respects President Xi as a negotiator, but they have not played by the rules, Chris. This has been going on.

Technology is everything to this country, everything -- our entrepreneurship, our innovation, our future growth, our productivity. We cut corporate tax rates precisely to unlock the animal spirits around technology.

We cannot let China willy-nilly steal our technology.

WALLACE: OK. You said on Friday that you were going to announce a trade coalition of the willing today, other countries that were going to join us in taking on China. Who are they?

KUDLOW: Well, I don't (ph) -- I didn't make this announcement. I'm just observing.

WALLACE: No, no, you set on Friday, between 24 and 48 hours I'm going to announce the trade coalition of the willing. Do you have them?

KUDLOW: They are coming to us.

WALLACE: Who are they?

KUDLOW: Japan, Europe, Australia, Canada. They have come to us. The president actually --

WALLACE: They are not talking about tariffs.

KUDLOW: Sure they are.

WALLACE: No, they're not.

KUDLOW: Sure they are.

WALLACE: Japan said that they were going to join us in taking this issue to the world trade organization and to object to Chinese trade practices just as free traders have done for years.

KUDLOW: But if China maintains its third world status, as they have in the WTO, then other countries are free to take whatever actions they want.

WALLACE: But -- if I just depress this, has any other country joined us in threatening tariffs if China doesn't clean up its act?

KUDLOW: I can't answer that. I don't even want to answer that.

All I'm saying is my trade coalition of the willing will put the whole world behind the United States' actions against China, and this is going to have a big effect on China. China does not want to lose face, but China does not want to be regarded as the enemy in trade for the entire world.

The WTO, by the way, is one of the processes. Ambassador Lighthizer has that in his releases. So, we'll work there. We'll work directly with the Chinese.

But I want to make this clear: President Trump is a great negotiator. The tariffs, which none of us particularly want, may -- I say may -- have to be part of this discussion and argument.

WALLACE: OK, I want to pick up on that because ever since I first met we go back a ways. And ever since I first met you in the Reagan White House, you have been an apostle of growth.

KUDLOW: Yes.

WALLACE: You say that growth cures income inequality. Growth cures budget deficits. But if China and if -- let me just finish, if China and the U.S. slapped tariffs on each other, even President Trump said that could hurt the economy. Here he is.

(BEGIN AUDIO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: So, we may take a hit, and, you know what, ultimately, we're going to be much stronger for it. But it's something we had to do.

(END AUDIO CLIP)

WALLACE: And here's a line from an article: Trump should also examine the historical record on tariffs because they have almost never worked as intended and almost always delivered an unhappy ending.

Larry, I assume you agree with that because you wrote it.

KUDLOW: I do. I wrote it. I agree with it. It's still my position. The president knows that. We had lots of conversations.

But around this action, I'm going to stay with us -- the path to free-trade has to include China acting in concert with first world nations, with (INAUDIBLE) nations.

(CROSSTALK)

WALLACE: Even if we end up in trade were?

KUDLOW: We're not going to end up in a trade war.

WALLACE: Well, they aren't backing off.

KUDLOW: Look, we haven't even enacted anything yet.

WALLACE: I understand.

KUDLOW: So, let's go easy on the trade war. We got several months here.

WALLACE: But you say the president isn't bluffing. You say tariffs have to be part of the discussion.

KUDLOW: I do.

WALLACE: So, if they don't back off --

KUDLOW: We will see. We will see.

Remember this: the U.S. economy is doing very well now. By the way, at the time, you learned your lesson as well when we first spoke back in 1980.

WALLACE: I listened.

KUDLOW: You've been very good on that, I'm proud of you.

Now, having said all that, we are growing at over 3 percent annual rate for the last three quarters. This is investment spending, equipment spending is booming. Jobs are rising. Consumer confidence is high. Small business confidence is high.

All I'm saying is forget trade wars. Why don't you just look at the progress of the American economy?

WALLACE: I --

KUDLOW: We can take --

WALLACE: That's the concern though that people have is this is going to put a brake on that --

KUDLOW: It cant -- it can't possibly. It can't possibly. The sums here are too small. But the principals are very strong. Do you see what I'm saying?

WALLACE: I understand that but as you well know trade war sometime escalate.

KUDLOW: Well, I haven't seen a trade war since Smoot Hawley, of 1930s. And even I was --

WALLACE: All right. I have to ask you to other questions and we've got three other minutes to get them in.

One of the drags on the market right now is the concern that Washington is going to regulate big tech. Mark Zuckerberg, the head of Facebook, is going to testify before Congress this week.

Does the president want to see Washington regulate how Facebook uses its users' data, what it does with its users' data and also how it screens ads?

KUDLOW: Look, I think the president right now will be intently watching the congressional hearings. I think that's going to be step number one. I think he has his doubts whether Facebook has violated protocols, I don't know. We will see.

I wish Mr. Zuckerberg -- I hope he comes to Congress wearing a nice business suit and shirt and tie, so he will be taking more seriously.

WALLACE: Not a t-shirt?

KUDLOW: Right, I'm tired of that t-shirt, hoody stuff. He does run one of the largest corporations of the world, for heaven's sakes.

(CROSSTALK)

WALLACE: But we (INAUDIBLE) agree to regulate --

KUDLOW: We are waiting on Congress. Let's see what comes out of that before the administration takes any particular action.

WALLACE: All right. Amazon -- the president keeps hitting the company for failing to pay taxes, for its deal with the Post Office.

Here he was on Air Force One.

(BEGIN AUDIO CLIP)

TRUMP: Well, Amazon is just not on an even playing field. You know, they have a tremendous lobbying effort in addition to having The Washington Post, which is, as far as I'm concerned, another lobbyist.

(END AUDIO CLIP)

WALLACE: In fact, the Post Office makes money off Amazon. It doesn't lose money. And Amazon collects taxes in all 45 states.

So, is this just talk or is the president seriously considering taking action against Amazon?

KUDLOW: The president is asking that Amazon and all the Internet retailers have a level playing field with respect to tax. And while it's true --

WALLACE: But Amazon is one of the companies that does have a level playing field.

KUDLOW: In recent years, they've done much better in collecting state taxes, sales taxes. However, they don't always connect local sales taxes, and we've had too much protection in this area. They are not a fledgling industry anymore.

So, what the president is saying is raising this issue for discussion. I don't think it's aimed at anybody. We just need a level playing field and you're going to have a court decision very soon, Chris, that's going to make this more explicit.

WALLACE: OK, I've got a minute left. There is talk this morning that the president may ask Congress to undo part of the $1.3 trillion spending bill to cut back some of the expenditures that were made. Is that true and how far along are you on that?

KUDLOW: It's playing in the White House. My friend, OMB Director Mick Mulvaney, he and I are on -- I'm an ex-OMB guy. I feel his pain.

We are looking at an enhanced rescission package. I'm not going to use numbers. This is all around town.

I think the Republican Party on the Hill has finally figured out. It's really not a bad idea to trim some spending because, after all, spending can lead to deficits and spending interferes with the economy. And President Trump is a deregulator and a tax cutter. So, we want and much more modest government role.

WALLACE: Larry, thank you.

KUDLOW: Thank you.

WALLACE: Thanks for your time. Always good to talk with you, and I keep listening and learning.

KUDLOW: You've been great. You've been absolutely one of the best people down through the years.

(LAUGHTER)

WALLACE: That's where I blew all of my credibility. Thank you, Larry. Always a pleasure.

KUDLOW: That was a joke and a compliment.

WALLACE: Thank you.

Up next, reaction from one of the top Democrats in the House, Congressman Joe Crowley on his party's message for the 2018 midterms and talk he might replace Nancy Pelosi as the next speaker of the House.

(COMMERCIAL BREAK)

WALLACE: A look at the cherry blossoms along the tidal basin here in D.C., which have peak bloom this week and were just beautiful.

Washington always has its eye on the next election and as we get closer to the 2018 midterms, many are predicting a blue wave with Democrats taking back the House and possibly the Senate.

Joining us now, New York Congressman Joe Crowley, chair of the House Democratic Caucus and the subject of growing chatter among Democrats as a possible replacement for Nancy Pelosi after the election. He's not going to like me saying that.

Congressman, welcome back to "Fox News Sunday."

REP. JOE CROWLEY, D-NY, HOUSE DEMOCRATIC CAUCUS CHAIRMAN: Thanks, Chris. Good to be with you.

WALLACE: You just heard Larry Kudlow. What do you think of his arguments for potentially, potentially using tariffs against China? And if not that, how do you propose we stop their unfair trading practice?

CROWLEY: Well, Chris, I'm also a member of the Ways and Means Committee and so I do recognize there's a role for tariffs in the economy. But I think what really it has created is a great deal more chaos. People really don't know what the president's plans are or what Mr. Kudlow's plan is as it relates to China, and the trade war that has now begun, or at least the initial start of that has begun.

I think that's left a lot of Americans with uncertainty about what this --

(CROSSTALK)

WALLACE: What should they do? If you are not going to use tariffs, how do you stop behind the unfair trade practices, the theft of intellectual property?

CROWLEY: Well, first of all, let me just say for the record that when it came to the issue of China, I did not vote for normal trade with China. I believe they were not economically nor politically mature enough to be dealing with us on the same par. And having said, I think that's panned out to be true.

But I do think we have to do this in a much more calculated way, and I -- with more of a plan. Let's have an understanding of what the ultimate goal is here. Is the goal to raise the price of products here in the United States or to lower the price of agricultural products in the United States? That is the overall goal, because that's what some of the effect may very well be if China retaliates in this war. Where is ultimately going? That's what we don't understand about this.

WALLACE: Donald Trump won the presidency because he convinced a lot of voters, including a lot of Democratic voters in the industrial heartland that he had a better idea for how to build the economy, how to get them jobs than Hillary Clinton did. Now, Democrats are going into the 2018 midterms with what they call a better deal.

Here is Nancy Pelosi on that.

(BEGN VIDEO CLIP)

REP. NANCY PELOSI, D-CALI., HOUSE MINORITY LEADER: Democrats are offering a better deal, better jobs, better wages, a better future. A better deal is founded on strong values that we share. Strong values fueled by fresh ideas.

(END VIDEO CLIP)

WALLACE: Forgive me, Congressman, but that sounds like standard Democratic boilerplate. So, give me one fresh idea that Democrats are offering voters for November.

CROWLEY: Fresh idea? First of all, Chris, Donald Trump did not win by a lot of Democratic votes in the Midwest. It was fractions of a vote that actually are responsible for him being president of the United States today.

But what I think one great fresh idea is a real infrastructure package for the American people. What the president has offered a 20-80 plan, 20 percent from the federal, 80 percent from local governments is not going to wash. It's not going to work. What Democrats are proposing is really an 80-20 or 75-25 plan where the federal government comes up with the resources for 80 percent and works with local governments to put America back to work and invest in American infrastructure and invest in America.

That's jobs. That's a bridge to the new economy. That's giving people the opportunity to put their kids through college, to afford health care with a real job. That's the kind of message the Democrats are talking about.

WALLACE: But let's look at the Trump record on the economy, which obviously you agree is going to be the key issue in November.

Employers are adding an average of 202,000 jobs a month this year. The unemployment rate has been 4.1 percent for six straight months. That's the lowest level in 17 years. And wages are up 2.7 percent, the highest rate of almost nine years.

Congressman, a solid majority of Americans, according to the polls, feel good about the Trump economy.

CROWLEY: Show me how any of those statistics the difference of any month that President Obama was president of United States --

(CROSSTALK)

WALLACE: Well, I just said that the 4.1 percent is the lowest level in 17 years.

CROWLEY: It's moving on a downward trend.

WALLACE: But it wasn't 4.1 percent. Wage growth wasn't up.

CROWLEY: Where was it when President Bush left office?

WALLACE: President Bush or President Obama?

CROWLEY: President Bush, when he left office, and President Obama came from --

WALLACE: Well, I understand, the world is in recession.

CROWLEY: Right. And so, we -- Democrats really moved us towards this job growth through the sustained economy.

WALLACE: Are you saying the president deserves no --

CROWLEY: I didn't say that.

WALLACE: I'm asking.

CROWLEY: What I'm suggesting is that I believe what this is based on is a false premise. The notion of the tax cut is going to lead to somehow help the American people along (ph) I think is a scam. I think what they've done is the desperate need to pass anything by the end of the year. They rammed through a bill without fully really understanding what was in the bill.

It was done in a very, very highly partisan way, and I think in the end, it's the average worker, the middle class, in this going to suffer because the result of the tax cut bill.

WALLACE: Let's turn to another subject, immigration. The president has ordered the deployment of up to 4,000 members of the National Guard to the southern border and the fact is more people are attempting to cross the border illegally. Just take a look at these statistics.

In March of 2017, 16,000 people were caught at the border. That number tripled last month, March of 2018, to more than 50,000.

Don't we need to stop the surge?

CROWLEY: I think what we need is comprehensive immigration reform. We've been talking about this for decades and we just haven't seen it happen, not since 1986. What I think is interesting to go back to 1986 where you saw a comprehensive immigration reform and comprehensive tax reform done in a bipartisan way. It was long-lasting because it was done both -- Democrats and Republicans came together.

Here we have a very partisan approach to this. The president talks about building a wall, but Mexico is going to pay for it. Now, he's putting troops down at the border, a very provocative move. But at the same time, it's not really solving the problem.

WALLACE: Wait a minute. You say it's a very provocative move. Barack Obama put 1,800 at the border.

CROWLEY: It was to some degree provocative, not in the same breath that this president has done. What the verbiage, the language that our president has used towards immigrants in this nation is really -- it's abhorrent to me, quite frankly. It's not representative of who we are as a nation.

So, this president, making this move is different from any other president doing it quite frankly.

WALLACE: Let's turn to the midterms. President Trump says that your party is vulnerable in November. Here he is.

(BEGIN VIDEO CLIP)

TRUMP: Democrats haven't learned -- they still think the loyal citizens who care about jobs and borders and security are deplorable.

(END VIDEO CLIP)

WALLACE: How confident are you the Democrats will win in November and take back control of the House?

CROWLEY: We're a long way from November. Let's be clear about that.

But I'm confident that the American people want to bring balance back to the United States government. What they see right now is Republicans in charge of the presidency, the Senate, the House and some would argue the Supreme Court.

Every branch of government seems to be controlled in some way or facet (ph) by Republicans.

WALLACE: Forgive me. That was what voters decided.

CROWLEY: Well, look, they have an opportunity here to change course and correction, that's the beauty of our democracy. The House of Representatives, every member of the House of Representatives is up for election this year and a third of the Senate. So, people have the opportunity to bring that balance back.

We know that the first midterm election of an incumbent president on average sees 40 seats swing in the opposite direction. It's not going to happen on its own. Democrats are not going to win that back just simply be up against President Trump. We need to be for, as I mentioned before, our economic policies, our better deal and is a deal are become very clear to the American people.

WALLACE: All right. In more than a third of House races, Republicans running for those seats have run ads that go after Nancy Pelosi. Here's an example from the recent special election in Pennsylvania '18.

(BEGIN VIDEO CLIP)

AD ANNOUNCER: Conor Lamb is a Pelosi liberal. His values aren't our values.

(END VIDEO CLIP)

WALLACE: Now, that Democrat, Conor Lamb, won, but one of the ways in which he won was that he promised not to support Nancy Pelosi if Democrats take the House and she's up for speaker again.

Is Nancy Pelosi a liability for Democrats in this campaign?

CROWLEY: I think it was more reflective of the fact that Republicans are bankrupt on the ideas. They don't have anything else to offer except to go after Nancy Pelosi to win elections. That's -- if they think, that's a winning strategy, they're completely mistaken and wrong. It's not a winning strategy.

(CROSSTALK)

WALLACE: I mean, forgive me, but Conor Lamb apparently thought it was an issue because he dumped Nancy Pelosi.

CROWLEY: Conor Lamb won because he ran a local election. He talked about that the cuts that the Republicans were attempting to make and to privatize Social Security. He talked about what affect local -- what affect the federal government has on local politics, on people's lives. And that's why he won that election, not because of Nancy Pelosi.

WALLACE: If Democrats win the House in November, will you run either to replace Nancy Pelosi if she steps down or against her if she doesn't?

CROWLEY: Well, on the first portion of that, I would wait and see just what happened in terms of Nancy Pelosi deciding not to run. But if Nancy Pelosi stays, I don't -- I don't see a scenario by which I would challenge her for that position.

WALLACE: Do you want to be speaker?

CROWLEY: Look, I'm focused right now on winning back the House of Representatives, to be in the majority, to be the chair of the Democratic Caucus in the majority. I'm doing that job right now. I want to be the best chair of the Democratic Caucus I possibly can be, help my colleagues get reelected and help when back seats for the House Democratic Caucus.

That's my focus and goal. That's the focus and goal of the entire Democratic leadership. We are one mind, Chris, and that is we want to win back the house. That's goal one and the only goal right now.

WALLACE: One last question in this. On top Democrat was quoted as saying that at age 56, which you are now, that you are a spring chicken by congressional standards.

CROWLEY: Well, I've had others say that I'm not such a spring chicken after all. Look, at the end of the day, we have a very vibrant Democratic Caucus. We have some incredibly talented young people.

I think people running today like Mikie Sherrill. She was a Navy grad. She is running for office in New Jersey.

I think of Joe Neguse who's running in Colorado. I think of Brendan Kelly. Some great people are running all around this country and we are becoming more vibrant as a Democratic Caucus.

So, I think we have nothing to look forward to but good days ahead of us.

WALLACE: Congressman Crowley, thank you. Thanks for coming in today. Please come back, sir.

CROWLEY: I'm happy to come back. Thank you.

WALLACE: Up next, we'll bring in our Sunday group to discuss the escalating tariff threats between the U.S. and China.

Plus, we'll discuss the president's Pruitt problem and growing ethical concerns about the EPA chief.

(COMMERCIAL BREAK)

WALLACE: Coming up, President Trump sends the National Guard to the border.

(BEGIN VIDEO CLIP)

TRUMP: We have very bad laws for our border. We're going to be doing things militarily until we can have a wall and proper security.

(END VIDEO CLIP)

WALLACE: We'll ask our Sunday panel what the deployment means, next on "Fox News Sunday."

(COMMERCIAL BREAK)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: But I think we're going to have a fantastic relationship long-term with China, but we have to get this straightened out. We have to have some balance.

(END VIDEO CLIP)

WALLACE: President Trump taking a hard line on China, saying it's time to stop Beijing from taking advantage of the U.S. on trade.

And it's time now for our Sunday group.

GOP strategist Karl Rove. Columnist for "The Hill," Juan Williams. Former Democratic Congresswoman Donna Edwards. And the head of Heritage Action for America, Michael Needham.

Well, Karl, there's no question that we have a problem with Chinese trade practices, but is it the best solution to threaten them with tariffs?

KARL ROVE, FOX NEWS CONTRIBUTOR: I don't think so. We have two problems with them. The biggest problem is, they're stealing our intellectual property. And in all this kerfuffle over tariffs, we've missed the fact that on March 23rd the administration filed what it should have done, which is an action with the WTO challenging from top to bottom the Chinese on their intellectual property rights. That's where we can win and win big for the American companies, the American consumer and for the concept of free trade.

But tariffs, really problematic. The president said we're going to levy $60 billion in tariffs on the Chinese. Peter Navarro, his trade expert, came out and said, and the Chinese are not going to retaliate. The Chinese said, we're going to respond with $50 billion of tariffs. The president says, this is unfair, I'm going to come with $100 billion worth of tariffs. $160 billion worth of tariffs would be paid by American taxpayers. This year the value of the tax cut, as estimated by the Joint Committee on Taxation, is $135 billion to American taxpayers. Next year, $280 billion. Economic growth is happening because of pro-growth -- in part because of the pro-growth policies of the tax code. What happens if you take that away by tariffs?

He's attacking a problem we don't need to really be worried about. We by $500 billion from them. They buy $130 billion from us. Let's focus on selling more to them and we're not going to get there by putting tariffs on Chinese products.

WALLACE: Michael, are you as negative about the idea of tariffs and what impact could it conceivably have on economic growth, which at this point may be the best argument Republicans have going for them going into the midterms?

MICHAEL NEEDHAM, CEO, HERITAGE ACTION FOR AMERICA: Yes, look, large, broad tariffs aren't the right way to go. Nobody wants a trade war. I agree with what Larry Kudlow said, I don't think we're going to have a trade war.

At the same time, I think the strongest fact the president has going for him is he's always been looking about for American interests, he's always been looking out for American security. And for 20 years liberal elites have promised us that if we just integrate China into the global trade network, they will start acting like a responsible stakeholder in the international community. They haven't. And it's been a lie.

And the president is right to take seriously the threat of China, their irresponsibility on intellectual property, their requirements that American companies when they come into China give up their intellectual property and the vast irresponsibility of the Chinese government around the world, integrating them into a trade framework had not worked. We need to be tough. We just need to be smart about how we're being tough. We need to be targeted. And I think some of what the president has laid out has not been targeted and smart.

WALLACE: Congresswoman Edwards, look, I understand the concern about tariffs. On the other hand, as Michael points out, China has continued with unfair trade practices, stealing or threatening, pressuring to get our intellectual property. I have to say, I asked Congressman Crowley that and didn't get much of an answer. Do you have a specific idea of how we get them to clean up their act?

DONNA EDWARDS, D-FORMER MARYLAND CONGRESSWOMAN: Well, first of all, I don't think tariffs are a trade policy. And one of the things that's missing here I think in the Pacific region is a trade policy. We had an opportunity, I think, under the Obama administration of a TPP that was fairly negotiated. I mean I didn't support that because I thought that it was missing in terms of protections for American workers, which would have had a direct impact on our relationship -- our trade relationship with China. And I think that what is happening now is this sort of ad hoc imposition of tariffs that's really throwing the markets around.

Now, do I care about that for wealthy people? No, but I do care about that for American workers and for retirements and for -- for farmers. And so --

WALLACE: So what should we do?

EDWARDS: You know, and so I think that, you know, what we should do is we should actually have a trade policy for the region that allows us, with our neighbors and our allies, to stack up against China. And right now we don't have that.

WALLACE: If you go to the WTO and, as Michael has pointed out, it hasn't worked. There was a ruling I just read this weekend that the WTO made about certain Chinese trade practices. They have spent six years, and they still are mulling how to comply.

EDWARDS: Well, I'm not really sure the WTO is necessarily the framework. It may be -- it's one avenue. But the real framework is our European allies, which are facing exactly the same problem with China, but we've done nothing to coordinate a strategy with -- with Europe and with the Pacific region in terms of dealing with China, particularly on intellectual property.

WALLACE: All right, I want to switch to another big story this week, and that is immigration and President Trump's decision to send up to 4,000 members of the National Guard to the southern border to guard that border. He talked at one point about a caravan of about 1,000 people coming up through Mexico to the United States. Here he is.

(BEGIN VIDEO CLIP)

TRUMP: Yesterday it came out where this journey coming up, women are raped at levels that nobody's ever seen before. They don't want to mention that. So we have to change our laws. And the Democrats, what they're doing is just -- it's insanity.

(END VIDEO CLIP)

WALLACE: Juan, now under questioning, the white House ended up having to cite reports of incidents of rate with another caravan back in 2014. But what about the larger issue and what about the president's decision to send border -- rather, National Guard to the border?

JUAN WILLIAMS, FOX NEWS POLITICAL ANALYST: Well, this is political theater for a man who promised to build a wall that would be paid for by Mexico. That hasn't happened and you've had some people in his base say, hey, what happened to your pledge to build a wall?

The reality is, the border crossings are -- I think it's a 45 plus year low.

WALLACE: Well, no, no, no, we --

WILLIAMS: No, we saw the tick up that you illustrated earlier in the show in the month of March. That's not representative of the long term here. And the long term is in fact that in terms of border crossings from Mexico, they too are at net zero migration. This is the reality. But what you have is most illegals in this country have overstayed visas. They haven't run through any wall or snuck under a wall or jumped over a wall.

WALLACE: Well, there's no wall.

WILLIAMS: There's a -- well, that are -- there are walls in places that we think. I mean it's not as if we haven't done anything about border security. But the caravan, the caravan's been coming up as an Easter ritual for the last five plus years, Chris. And I think what you have here is an attempt to trigger fear and hysteria over, oh, there's a horde coming at the southern border and they're coming and they're going to invade America.

But I think it's all about this president trying to say to his base, hey, I am putting a wall up, or if I'm not putting a wall up, I'm going to put soldiers there. Soldiers who, by the way, have no authority to detain anyone, arrest anyone, no bullets in their guns. I mean it's -- it's a joke.

WALLACE: I -- I can see both Michael and Karl with -- ready to come out of their seats. Karl, I'll --

ROVE: I want to briefly agree with one -- the only thing that Juan said that was correct, which is the caravan has been going on for a long while and the Mexicans were fully capable of taking care of them. But the rest of what Juan said, bologna.

Look, we -- we have a problem on the border. If you look at -- if you look at the crossings compared to a year ago, they have doubled. And we are facing a surge. And the president was right to say to the states -- it was on an impulse, but that doesn't make it a bad impulse, that the states need help.

You noticed -- did you see with the first National Guard unit was from Texas to be sent to the border immediately after the president's order, an aviation unit because, what was the first unit to go from Arizona? A construction unit. There are things along the border that the National Guard can do in a moment like this when additional resources are needed that is justified and ample. And I trust the secretary of Homeland Security to arrive at it and so do the governors of most of the border states.

We have Jerry Brown wringing his hands in Sacramento as to what he ought to do, but otherwise this is a useful thing. President Obama did it. President Bush did it in a similar moment. It's not because of the caravan, but it's because of a more secular trend that's troubling. The number of illegal border crossings has doubled this year verses last year.

WALLACE: All right. I know we're not going to settle this. You can argue during the commercial.

WILLIAMS: It's a deal.

WALLACE: All right, we have to take a break here.

When we come back, the Trump administration imposes new sanctions on Russian oligarchs and businesses to punish the Kremlin for alleged meddling in the 2016 election.

Plus, the fate of Scott Pruitt. What would you like to ask the panel about whether the president should stand by or fire his EPA chief? Just go to Facebook or Twitter, at Fox News Sunday, and we may use your question on the air.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ED HENRY, FOX NEWS: Is draining the swamp renting an apartment from the wife of a Washington lobbyist?

SCOTT PRUITT, EPA ADMINISTRATOR: I don't think that that's even remotely fair to ask that question.

(END VIDEO CLIP)

WALLACE: Embattled EPA Administrator Scott Pruitt pushing back on ethics allegations against him, including renting a room in a Capitol Hill condo for $50 a night.

And we're back now with the panel.

Well, Michael, you're one of 10 leading conservatives who sent a letter to President Trump yesterday urging him to keep Pruitt at EPA. And Saturday night the president tweeted this, rent for this condo was about market rate, travel expenses OK. Scott is doing a great job.

Are you not troubled by the growing list of ethical concerns about Scott Pruitt?

NEEDHAM: Yes, look, Scott Pruitt is taking on one of the sacred cows of the extreme progressive left, which is that in the debate between job growth and job creation and environmentalism there is no room for any belief in terms of anything other than always siding with environmentalists. And anyone who takes that side should be attacked in a mean-spirited manner. And that's what's going on towards EPA administrator Pruitt right now.

In that environment, all of us who take on the left for some these things should be squeaking clean because you give them fuel to create issues. And I think Scott Pruitt should not have done many of the things that he's done, which has allowed the left to sidetrack the discussion from policy and take it towards the personnel -- the personal and the ad hominem.

If you compare what Scott Pruitt is going through, to what Obama -- President Obama's EPA administrators went through, Gina McCarthy deleted 5,000 tweets because she wanted to get around FOIA requirements. Gina McCarthy spent hundreds of thousands of dollars per year on foreign travel. Lisa Jackson, the administrator before Gina McCarthy, had a fake e-mail account to get around FOIA requests. She spent $155,000 on a single trip to China. And so there's a gigantic double standard. The reason the double standard exists is because of the policies that Scott Pruitt is pursuing, and he should be lauded for the -- for his noble efforts on those policies.

WALLACE: We asked you for questions for the panel and on the issue of Scott Pruitt's behavior we got this tweet from 6152Tom. Is there any truth to it that he is a target, as he is getting the most done? Has made some bad expense decisions but his value-added seems to be the best of any cabinet person.

Juan, how do you answer Tom?

WILLIAMS: Well, I think there's a real situation here in terms of have -- President Trump having promised to drain the swamp and then you have Scott Pruitt -- and let's just put aside the policy arguments because I think for Michael --

NEEDHAM: Shouldn't that be what matters, policy --

WILLIAMS: No, not at the moment.

NEEDHAM: You don't think policy matters?

WILLIAMS: Let's just -- let's separated it for a second, Michael, because I think conservative activists and conservative donors and people in businesses that are affected by environmental regulations just say, well, he's doing what we want, so let's leave it alone. But can you imagine if this was any other president and you had a cabinet secretary who was engaged in this kind of behavior, can't even answer a question from Ed Henry of Fox News. I don't think he's a -- Fox News is not some liberal organization out here trying to undercut a conservative. No.

But what you have is someone who has taken advantage of not only what is a sweetheart deal, pennies for dollars in terms of that condo, but the condo being rented from a lobbyist whose clients have business in front of the EPA. That, on the face of it, Michael, is disqualifying. So we can talk about policy and we can have arguments about --

WALLACE: All right.

(CROSS TALK)

NEEDHAM: I am -- I am going to look forward to going back and finding Juan Williams speaking out about Gina McCarthy deleting 5,000 text messages to get around FOIA. I am sure Juan was outraged at the $150,000 --

WILLIAMS: No, I don't think that's good behavior. But I'm just telling you, I'm just -- it's shocking to me that you will make excuses for what is inexcusable.

NEEDHAM: But you said they were disqualifying. Was Lisa Jackson's $155,000 trip to China disqualifying?

WILLIAMS: That's -- look, she spent, by the way, on security, much less. Scott Pruitt spent three times as much. He has alarms and red flashing things and added -- asking for more people just to get through D.C. traffic.

WALLACE: All right.

WILLIAMS: It's ridiculous.

WALLACE: I --

WILLIAMS: For a drain the swamp administration?

WALLACE: OK.

I want to -- we were going to talk about Russia. We may still get to it.

But I want to focus now on the breaking story today, and that is this -- what appears to be a poison gas attack on a rebel-held suburb outside of Damascus. There are reports that dozens of people may have been killed and even more were hit by this.

The president has begun to tweet on this subject today and I hope we'll put up one tweet. Many dead including women and children in mindless chemical attack in Syria. Area of atrocity is in lockdown and encircled by Syrian army, making it completely inaccessible to outside world. President Putin, Russia and Iran are responsible for backing animal Assad. Big price.

It's interesting, Karl. There has not been outside confirmation that this was a poison attack, but it's interesting, one, the president is saying it, and, two, not only condemning it, but also in maybe the strongest terms I've never heard him, condemning President Putin's support for Assad.

ROVE: Yes. The president -- the president is not obligated to act. So confirm if this was a poison gas attack, which it looks like it was. The estimates now are at least 70 dead, maybe as many as 150, a number of them children, all of them civilians. But now the United States will have to act as the president acted in the aftermath of the sarin gas attack in early 2017. Otherwise, our credibility in the region is going to be greatly diminished.

WALLACE: Yes, let me just pick up on that with you because in one of his earlier tweets he said the reason that this has fallen apart is because President Obama did not enforce the redline when he was president on -- when it came to gas attacks by Assad. He -- and when the president did launch that attack, those -- I think it was 59 missiles -- back in the spring of 2017, he said, if it happens again, I'll strike again. How much is he on the line now (INAUDIBLE)?

ROVE: Well, he's on the line. And, look, I think there's some -- I think there is some -- you know, there's some reason why he said -- some evidence that he was correct when he said President Obama should have acted. It's unseemly for the president, however, to be reflecting on that, in my opinion.

He ought to -- he ought to act. It was one of the most important moments in the definition of his foreign policy last year that when this attack did occur he reacted in 25 percent of the air capacity of the Syrian air force disappeared in a matter of moments. He has to exact another price in order to send a second signal that just because a year has passed, doesn't mean you can engage in this behavior again.

WALLACE: Congresswoman Edwards, your reaction to what appears -- and we need to say it's not confirmed yet -- what appears to be an attack, and, if so, what action President Trump is going to need to take?

EDWARDS: Well, the president is the president today. And I think that the American people and the Congress actually have to engage in a discussion about Syria that is a moral discussion when it comes to the use, if this is true, of poison gas. I mean this is a human rights crisis and the president has an obligation to act.

That said, over this last year and a half, our policy has actually allowed Assad, with Russia's help, to consolidate his power. And that leaves open the door to do these kinds -- to engage in these kind of atrocities because we think we've rolled back the Islamic States. In fact, what we've done is we've actually created an environment where it goes underground, it's not consolidating land, but continues to engage in terrorist behavior and activity.

WALLACE: Would you agree that President Obama is much more responsible for the disaster and the humanitarian slaughter in Syria than President Trump is?

EDWARDS: Well, let me just say, I -- at the time when I was in Congress, I called on the president and supported the idea --

WALLACE: President Obama.

EDWARDS: President Obama, and support of the idea that we should actually be on the side of the Syrian people who were facing exactly the same kinds of atrocities. And it's come to this point.

But the fact is that today in April 2018, President Trump is the president and it's his obligation to act and not just reflect on what a bad job he thinks that President Obama did.

WALLACE: We have less than a minute left.

Michael.

NEEDHAM: Yes, look, I think that -- that President Trump should act, as Karl said. I think that President Trump needs to see things through in Syria. And I think that we should give President Trump credit for having a very muscular and strong American policy towards Syria. And, more importantly, towards Russia, which is backing Syria in terms of getting anti-tank missiles to Ukraine, the action he took earlier this year in Syria, pushing forward to put small, tactical nuclear weapons into our arsenal. And so I think President Trump has had a very strong foreign policy and he needs to make sure that he continues that, following through with Syria.

WILLIAMS: Well, John Bolton comes on board tomorrow and we'll see what happens. But I think Trump has been trying to pull troops out of Syria without Pentagon approval.

WALLACE: Thanks, panel. See you next Sunday.

Up next our "Power Player of the Week." How the president of a major university here in Washington works the campus like a big city mayor.

(COMMERCIAL BREAK)

WALLACE: Hang around Washington long enough and you see plenty of turnover. Cabinet secretaries come and go and administrations, and -- and, as we've seen recently, when presidents change their mind. So what happens to those former big shots? Here is our "Power Player of the week."

(BEGIN VIDEOTAPE)

SYLVIA BURWELL, PRESIDENT OF AMERICAN UNIVERSITY: I think the role is a little more like a mayor than a CEO.

Hi.

WALLACE (voice over): Sylvia Matthews Burwell is president of American University here in Washington. And she works the campus like a mayor.

BURWELL: Very nice to meet you both. Thank you both.

Right now we're passing the library.

WALLACE: Here was a video in her new job when the school year started last summer.

BURWELL: Great to see some students on campus.

Oh, wait a minute, there's Claude (ph), the AU legend, out for a morning run.

WALLACE (on camera): So I understand you insist everyone calls you Sylvia.

BURWELL: That's right.

WALLACE: Why?

BURWELL: Because I think it's part of being a part of the university and having people feel like they can engage.

WALLACE (voice over): If Burwell looks familiar, she was a member of President Obama's cabinet. First his budget director, then secretary of Health and Human Services, trying to fix ObamaCare after the disastrous rollout, and then dealing with the Ebola crisis.

BURWELL: So having very large critical issues made it a pretty challenging time.

WALLACE: But running a university with 13,000 students and a tradition of public service is also challenging.

WALLACE (on camera): How much does it cost, tuition, room and board, to go to AU for a year?

BURWELL: About $60,000.

WALLACE (voice over): Burwell says she's trying to cut cost and find new ways to help students who can't afford it.

Then, there were several racist incidents last fall, including confederate flag posters on bulletin boards. Burwell held a town hall.

BURWELL: We want to make sure that you know we're taking our steps. We need your help and support too.

UNIDENTIFIED FEMALE: I don't feel safe here. I don't feel happy here. I don't feel nicer. I feel worse.

WALLACE (on camera): Was that a tough meeting for you?

BURWELL: You know, it -- it was a tough meeting most of all because of the pain that the incidents cause.

WALLACE (voice over): One reform, every student must now take a course that includes diversity training.

BURWELL: It is about learning to listen from others differing points of view and differing experiences.

WALLACE: Burwell grew up in Hinton, West Virginia. Her grandparents, Greek immigrants.

BURWELL: There were two themes in the Matthews household. One was education and the other was public service.

WALLACE: She followed both paths, going to Harvard and becoming a Rhodes Scholar. Then interspersing government work with 11 years helping run the Gates and Walmart Foundations.

WALLACE (on camera): How does it feel to see so much of the Obama legacy, including ObamaCare, being rolled back by President Trump?

BURWELL: There will be people who don't receive treatment and actually die because they can't afford the care, the preventative care, or the care along the way. And so this has real-world consequences for individuals in their lives.

WALLACE (voice over): But Burwell embraces her new role as college president, including one game as guest coach of the women's basketball team.

BURWELL: I'm undefeated. It was terrific. It was wonderful. I loved it.

WALLACE: It's all part of seeing AU as a town, and she's the mayor.

BURWELL: Meeting these students who have so much energy, excitement and passion, and that is an incredible gift every day.

But I hope I'll see you around campus.

Bye.

(END VIDEOTAPE)

WALLACE: Burwell had no experience in academia as either a professor or school administrator, but she's taken to being a university president like a natural.

And that's it for today. Have a great week and we'll see you next "Fox News Sunday."

END

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