This is a rush transcript from "Special Report with Bret Baier," February 1, 2018. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT DONALD TRUMP: Steel is steel. You don't have steel, you don't have a country. We want to build our ships, we want to build our planes, we want to build our military equipment with steel, with aluminum from our country.

You don't want to pay tax? Bring your plant to the USA. There is no tax.

We are negotiating now with China. We are in the midst of a big negotiation. I don't know that anything is going to come of it. They have been very helpful. President Xi, I have great respect for, a lot of respect. But I don't know that anything is going to come of that. But we are going to cut down the deficits one way or the other.

(END VIDEO CLIP)

BRET BAIER, ANCHOR: President Trump today pulling the trigger on what he's talked about for a long time, and that is tariffs on imported steel and aluminum, despite some pushback from people in his own party about this.

That said, there could be a lot of wiggle room when push comes to shove on what exactly happens with allies, key allies, who export steel into the U.S. We are going to start there as we wait for the breaking news out of the White House on South Korea and North Korea.

Let's bring in our panel: Jonathan Swan, national politics reporter for Axios; Katie Pavlich, news editor at Townhall.com, and Charles Lane, opinion writer for The Washington Post.

OK, Katie, it wasn't a surprise. It may be was a surprise how it was rolled out, but the president has talked about wanting to do this for quite some time. And the question is whether it is going to be as big as they say it is.

KATIE PAVLICH, TOWNHALL.COM: Big as they say it is in terms of the consequences which Republicans in the Chamber of Commerce are warning about, or whether the president is going to water down some of the things that he put on the table initially, and if you look at the way he's negotiated, he tends to do that.

But the language that he used today in his initial opening line at the White House during his event with the steelworkers behind him when he talked about this being about flexibility in cooperation with our true friends, both in terms of national security, trade, and our military bases, that says to me that he is not going to negotiate these tariffs on a trade issue. He's going to negotiate this with the respect of our NATO allies still going to contribute more money as he's talked about in the past.

But for Republicans who have criticized this, it's not just that they on principle oppose these tariffs, which they do based on the history of how tariffs have affected the economy in this country. They are also doing this politically because if the tariffs do take away all of the gains from tax reform that Republicans have been able to go back to the districts in an election year and tout, they can say that they were against it from the beginning, and it's not necessarily their fault because they had the distance from the president on the issue.

BAIER: But Jonathan, think about this. If it is, as it's starting to unfold here, that each ally, each country involved is going to individually negotiate in some way to avoid these tariffs on their exports, you can foresee that some of these countries are going to take that ball and run with it, and maybe it doesn't affect those big countries who are exporting steel into the U.S.

JONATHAN SWAN, AXIOS: Yes, that is from their perspective the most optimistic scenario. But just to get you inside Trump's thinking here, one of the big breakthroughs in his own mind -- because he didn't want to do any exceptions. All along, for 30 months he was saying if I give Canada an exception, then I get a call from Japan, so he didn't want to do anything. He wanted to do blanket global tariffs.

But he had a conversation with Justin Trudeau, the Canadian leader, and he became convinced that he could get a better deal on NAFTA because Canada sells so much steel and so much aluminum to the U.S.

BAIER: And Mexico.

SWAN: Mexico much less actually. It's really about Canada much more than Mexico, even though they are exempt. Canada is the big one who sells steel and aluminum.

And so Trump believes he is going to get a better deal. What if he doesn't? He could easily go and flip back in the other direction. So I know we are all saying he is going to go in this nice, kind, gentle direction, but I think we have to consider the other possibility, as well.

PAVLICH: That's only if he gets something in return.

SWAN: That's exactly my point.

BAIER: Politically the image of the president with those steelworkers telling their stories about companies that are slowing down, shutting down, losing work, that politically works for this president.

CHARLES LANE, THE WASHINGTON POST: Certainly in western Pennsylvania where they are about to have a special election --

BAIER: Pennsylvania 18.

LANE: -- this coming Tuesday, and there's a lot of steel mills. Of course economically this is kind of an unsquarable circle. This thing can either have its effect and save those steel jobs you are talking about, or it can be unacceptable to our allies. It can't really be both.

And so what I think the president has set up here is this funny kind of lobby-orama in Washington where everybody and their paid hired guns here in Washington are going to suddenly bombard the bureaucracy, Bob Lighthizer in particular, with their plea for some kind of a carve out in this thing.

And then if any of them get it, the question will be, is there anything left of the protection that he's talking about that is so important? So it's actually, when you really think about it, it's -- what he has in mind. And the criteria, Bret, he was offering these countries were very vaguely stated. Well, if they do a little more on military, if they treat us fairly. So if there will be carve out, if this thing is going to be turned into Swiss cheese as John Roberts said the Bush tariffs were, it will be after a long, drawn-out process that has a lot of politics involved in it.

BAIER: All right, here is the president essentially saying goodbye to his adviser, Gary Cohn, today.

(BEGIN VIDEO CLIP)

TRUMP: He's going to go out and make another couple hundred million, and then he's going to maybe come back. He might come back, right? We'll be here another seven years hopefully. That's a long time. But I have a feeling you'll be back. I don't know if I could put him in the same position, though. He's not quite as strong on those tariffs as we want him.

(LAUGHTER)

(END VIDEO CLIP)

BAIER: He went on to call him a globalist a couple of times, as well.

PAVLICH: It was a nice, lighthearted moment. I'm glad to see that Gary Cohn is leaving the White House on good terms. He's certainly not getting the Steve Bannon treatment. And the intrigue about what he will do if he comes back it is interesting. "The New York Times" reported maybe he is going to be the next chief of staff.

BAIER: Inside skinny on who is up for that position?

SWAN: You mean the chief of staff position or the NEC?

BAIER: NEC?

SWAN: Shahira Knight is a name that is being thrown around a lot. She's a senior official on the National Economic Council. Gary Cohn is advocating for her, but so are senior people on Capitol Hill. She's definitely in the mix.

But there's others as well. We've reported Kevin Walsh who is in the running for Fed chair, he's a name that Trump is talking about. But he is still spent falling.

BAIER: Larry Kudlow?

SWAN: I haven't heard his name as much. It's been in the media ether, but I haven't actually heard from people inside that he's really at the top of that.

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