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This is a rush transcript from "Your World with Neil Cavuto," August 2, 2019. This copy may not be in its final form and may be updated.

NEIL CAVUTO, ANCHOR: Well, the economy and jobs still looking other, but will the president's escalating trade spat with China take it all down?

Welcome, everybody. I'm Neil Cavuto.

And the good news is, well, it's Friday. But the bad news is, it caps and not-so-great week for stocks. In fact, this just could end up being the worst week for stocks this year, and all because this China mess with China, that whole mess that we're having back and forth, well, it's getting worse by the day.

Beijing promising that it will retaliate for those added tariffs the president announced just yesterday. But we still have no idea just what the response will be or how soon it will come.

What we do know is, this latest round of tariffs is coming September 1, just in time for the back-to-school shopping season and, for retailers, the game get-ready-for-Christmas-stockpiling season.

Now, that doesn't mean there still won't be a deal, but increasing signs it might not be happening any time soon. Let's just say that things are getting nasty.

So time for us to get going.

We will have FOX Business Grady Trimble outside the New York Stock Exchange, where they're feeling the heat. And we will also have other experts on both the political and ramifications from that heat.

But, as I said, first to Grady -- hey, Grady.

GRADY TRIMBLE, FOX NEWS CORRESPONDENT: Hey, Neil, happy Friday.

Not such a good day here or a good week, in fact, possibly one of the worst weeks in the market this year. The market dipped after the Fed announcer rate cut earlier this week. It dropped even more when President Trump tweeted about new tariffs on China yesterday.

And then that continued with today's sell-off. White House economic adviser Larry Kudlow explaining this morning the president's decision to impose those tariffs, right after the U.S. team met with Chinese trade officials.

(BEGIN VIDEO CLIP)

LARRY KUDLOW, DIRECTOR, NATIONAL ECONOMIC COUNCIL: We're looking forward to meeting with the Chinese team in early September and continuing the negotiations.

The issue here was, when the team came back, Ambassador Lighthizer, Secretary Mnuchin, they reported to POTUS. We had a meeting on it. And the president not satisfied with the progress on the trade deal.

(END VIDEO CLIP)

TRIMBLE: The tariffs set to start in about a month on $300 billion worth of goods from China, basically everything that is not already subject to a tariff.

They're things we buy all the time this time around, like iPhones, laptops, game counsels, and TVs, and then things you get at the grocery store, like alcohol, condiments, coffee and spices.

The markets, Neil, as you know, like predictability. Well, we did get that in today's jobs report, U.S. companies adding 164,000 jobs in July. Job growth seems to be slightly slowing, and hourly wages only increased by a little bit, but unemployment still near a 50-year low at 3.7 percent.

But none of that mattered here inside those walls, where traders only had the tariffs on their mind. It will be interesting to see what happens when the markets open on Monday -- Neil.

CAVUTO: We have given you a very busy week, my friend. Welcome aboard. All right, thank you very, very much.

All right, well, today's job report for the month of July just could give the president the upper hand. As Grady was just reporting, it is slowing from June's blistering pace, but the economy still churned out that 164,000 jobs he mentioned, and the unemployment rate itself, well, that's at 3.7 percent.

So more proof that president can wait this out?

Let's ask market watchers Heather Zumarraga, John Layfield, Larry Glazer.

Heather, what do you think?

HEATHER ZUMARRAGA, FINANCIAL ANALYST: I think that this jobs report this morning was a healthy number. Look, 164,000 jobs added is not a blowout number. But unemployment holds steady at 3.7 percent, the lowest in 50 years right now.

And what's more important is that wages for blue-collar workers are rising. Lower-income Americans are rising. That's what matters the most and the fact that the participation rate is going up. That means that more people are confident that they can get a job. They're coming off the sidelines, and they're finding a job that they're happy with.

CAVUTO: That's the argument behind, we can wait this out, the Chinese not so much.

John Layfield, do you buy that?

JOHN LAYFIELD, FOX NEWS CONTRIBUTOR: I don't, no.

And I think the Chinese are playing chess and President Trump's playing golf.

(LAUGHTER)

LAYFIELD: I mean, I don't think it's even the same game.

And I think the Chinese are specifically killing the clock. I don't think we're any close than we were last September. We hear the same thing every single month. We hear that we're having -- trade deals is imminent, and that the Chinese have to make this trade deal.

And I don't think we're any closer than we were a year ago. I think the Chinese are preparing for a very long, long fight with this.

Our economy is good. Heather is right. Our economy is good. We can wait it out as well, which doesn't portend to an easy decision or an off-ramp for this trade war.

CAVUTO: Larry, I'm just wondering, with the Chinese promising to retaliate, what are they going to do? What do you think?

Larry, can you hear me?

ZUMARRAGA: Well, Neil, I will jump in.

CAVUTO: Feel free.

ZUMARRAGA: I think that the Chinese are going to keep stimulating the economy.

I mean, they already have. They're manipulating their currencies. They're cutting taxes. They're propping up their economy, making our dollar extremely strong. And that's causing our exports to be very expensive.

I mean, if they're -- they're cheapening, they're manipulating their currency. Here in the U.S., we don't do that. And we shouldn't.

CAVUTO: You know, John Layfield, one of things too -- because I think we have lost Larry, but I hope to get him back.

But, John, one of the things that has come up here is, be careful what you wish for, because the president plays tough -- and he's been playing tough on this. You're going to get into the fall, where these latest waves of tariffs are going to affect mostly consumer items. There won't be any of the industrial pass-through you had with the other tariffs that took a little bit longer to sort of gel.

Then you're doing it at a tough time a year, the start of the fall, fall buying season, getting ready the holidays. What do you think?

LAYFIELD: I completely agree.

And I think the president's tough talk -- I think, look, China has to be dealt with. I'm just not sure this is the right way. And his tough talk, I think, has backed President Xi into a corner which he cannot come out of. I don't think there's an easy off-ramp for President Xi.

And while we have gotten about $20 billion this year in tariffs, we have bailed out our farmers to the tune of $28 billion. And contracts we're losing to Brazil, we're losing for the foreseeable future. We're not going to get those back anytime soon.

Farmers in the Midwest, which elected President Trump, are going to start to have a slow -- their patiences are going to start to ebb on this. And that's when the political problem is going to manifest itself to the president. And I think that's what China is hoping will happen and why they're killing the clock.

CAVUTO: Larry, I apologize for some of the technical problems, but John Layfield had pulled the cord. I don't know why he did that.

(LAUGHTER)

CAVUTO: But -- I'm kidding. I'm kidding.

LAYFIELD: Sorry, Larry.

CAVUTO: But let me ask you, Larry.

A lot of people think that the Federal Reserve comes to the rescue. And maybe the interest rate cut that we had this week is a sign of more to come, all the more so because of this. What do you think?

LARRY GLAZER, MAYFLOWER ADVISORS: Look, Neil, the rate cuts help the economy. They help the consumer.

The consumer has been the strongest part of GDP here. But with the latest round of tariffs, we enter a whole new category of risk, not just for the market, but also for the economy as a whole.

Neil, before, it was, hey, it's not in my backyard. If I'm not a soybean exporter to China, I don't care about the trade war. If I'm not an aircraft exporter, I don't care about the trade war.

Neil, now it is in my backyard. I'm here in New England. And I got to tell you, it's on Main Street. Look, from footwear to lobsters, it is everywhere right now. It is showing up. Lobster sales to China are going to be down 70 percent because of this trade issue; 70 percent of footwear that we wear back-to-school season is coming from China.

This is going to affect families, it's going to affect the economy, it's going to affect the consumer, which is what's driving the U.S. economy.

So I'm not buying it. I think this is a real issue. It needs to get resolved, so we can get back to the real economy, which is doing great.

CAVUTO: All right, guys, I want to thank you all very, very much.

And, again, Larry, I apologize for the technical snafu.

GLAZER: No problem.

CAVUTO: In the meantime, we're going to go to Mark Meredith in New Jersey.

The president will be spending the weekend there, maybe plotting his strategy, what to do next -- Mark.

MARK MEREDITH, FOX NEWS CORRESPONDENT: And good afternoon to you, Neil.

As you mentioned, the president will be making his way here to New Jersey shortly for the weekend. But it's what he was doing earlier today in Washington that's getting a lot of attention, and the president announcing this new deal that will allow U.S. beef producers to sell more of their products to European consumers.

The president was making this announcement within the last couple of hours. He was there with his trade adviser, as well as North Dakota Senator John Hoeven, at his side.

The president says the deal will -- with the E.U. will grant American farmers and ranchers access to more markets. And the president also claims, Neil, that this deal will increase duty-free U.S. beef exports to the E.U. by 46 percent in one year alone.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The agreement we signed today will lower trade barriers in Europe and expand access for American farmers and ranchers. We love our farmers and ranchers.

And with this announcement, we take one more step in giving them the level playing field that they have looking -- they have really been looking forward to this for many, many years. You folks know that.

They want a level playing field. That's all they want. And nobody can beat them.

(END VIDEO CLIP)

MEREDITH: Today's deal with Europe comes one day after the president announced he plans to impose additional tariffs on China.

The president tweeting on Thursday he plans to impose an additional 10 percent on about $300 billion worth of Chinese imports starting September 1, so a little less than a month from now.

Today, China threatened to retaliate if the tariffs do go into effect. A Foreign Ministry spokesperson said that China doesn't want to fight, but isn't afraid to either.

The spokesperson went on to say that, if the tariffs do go through -- quote -- "China will have to take necessary countermeasures to resolutely defend its core interests."

Now, the White House doesn't appear to be afraid of any possible retaliation. We heard from the president's economic adviser earlier today speaking with reporters, saying the U.S. economy remains strong, and that he believes that U.S. consumers will only see a minuscule impact if these tariffs continue to go back and forth between the U.S. and China -- Neil.

CAVUTO: All right, Mark, thank you very, very much, Mark with the president this weekend.

Now, we should stipulate here that a lot of retailers were feeling the heat, in that consumers would feel that heat, and they would too. That was hurting all the major big names, not surprisingly, Walmart and Target and, by extension, even Amazon, and Dollar Store, you name it. They were all feeling that.

The president was addressing that just a few minutes ago at the White House.

Let's take a look at the tape that's just coming in.

(BEGIN VIDEO CLIP)

QUESTION: Mr. President, why did you throw the towel in on Ratcliffe? Why didn't you want to wait a little bit longer and see how that process went?

TRUMP: Which process are you talking about?

QUESTION: The confirmation process. The confirmation process with Congressman Ratcliffe.

TRUMP: Because I felt that Congressman Ratcliffe was being treated very unfairly. I was reading the press. And I think I am a student of the press. And I could see that the press was treating him, I thought, very unfairly. He's an outstanding man.

And I asked him -- I said, "Do you want to go through this for two or three months or would you want me to, maybe, do something else?"

And he thought about it. I said, "It's going to be rough."

I could see exactly where the press was going and fake news. He's a fine man. He's a fine man. And so we hadn't started the process, and I thought it's easier before we start.

But I read things that were just unfair. And he's just too good. He doesn't deserve it.

QUESTION: Mr. President, what issue do you have with Sue Gordon in the Acting role?

TRUMP: A little louder. What?

QUESTION: Sue Gordon, as acting DNI, what issue do you have with her?

TRUMP: Well, that might be -- I like Sue Gordon. And Sue Gordon is there now, and I like her very much. I have always liked Sue Gordon.

QUESTION: Would you name her acting?

TRUMP: Could be. Yes. It could be. We'll make another choice. And Sue will be -- she's there now, and certainly she will be considered for the acting, and that could happen. We'll probably be talking about it either later today or next week.

Do you like Sue Gordon?

QUESTION: Did Ratcliffe get cold feet, Mr. President?

TRUMP: No, I think he was just treated very badly, very harshly by the press. And he really had a decision to make. "Do you want to go through this for -- it could be months." And I said, "I think I see exactly what they're trying to do."

Nobody understands the press, but I think I understand them as well as anybody. And I didn't think it was fair.

QUESTION: Did Republican lawmakers reach out to you to express concern about Ratcliffe?

TRUMP: No, they didn't. I think he would have had support. But again, we were very early in the process. We hadn't even started. So we were very early in the process. And I think he would have had good support, certainly from the Republicans.

QUESTION: They were pretty chilly.

TRUMP: What?

QUESTION: They were pretty chilly at first.

TRUMP: I haven't seen that. I could tell you, the Democrats were chilly. That's for sure.

QUESTION: Chairman Burr, Mitch McConnell...

TRUMP: But the Republicans, I think, would have been very good. But a lot of the Republicans didn't know John. But I think he would have had good receptivity, and he was getting that. But I believe he made the right decision.

QUESTION: Thank you, Mr. President. U.N. security (OFF-MIKE) resolution and the North Koreans' missile launch is in violation of U.N. (OFF-MIKE). How did you (OFF-MIKE) this?

TRUMP: I don't -- do you understand?

QUESTION: I'm sorry. I did not.

QUESTION: U.N. security...

QUESTION: Mr. President, what does this say about the White House's vetting? What does it say about the White House's vetting process? This is the second nominee...

TRUMP: Well, no. You vet for me. I like when you vet. No, no, you vet.

QUESTION: This is the second time a head of an agency has had to withdraw.

TRUMP: I think the White House has a great vetting process. You vet for me. When I give a name, I give it out to the press and you vet for me. A lot of times, you do a very good job, not always.

QUESTION: What does that say about the White House's process of vetting?

TRUMP: I think that the White -- well, if you look at it, I mean, if you take a look at it, the vetting process for the White House is very good. But you're part of the vetting process, you know? I give out a name to the press, and they vet for me. We save a lot of money that way.

But, in the case of John, I really believe that he was being treated very harshly and very unfairly.

QUESTION: President Trump, Republicans did express concern about Ratcliffe's experience. Was that a deciding factor?

TRUMP: No. I tell you what: I think he would've had very good support. Republicans love John Ratcliffe, and I think he would've had very good support.

Now, he wasn't in that world that much. I think he would've picked it up very quickly. But I think he would've had great Republican support. Probably would've had no Democrat support, which would've been nice to get some. But I think he would've done fine. But it would've been a long -- it would've been a long, hard slog.

QUESTION: Another question, if you don't mind, sir. The tweet that you put out about Elijah Cummings and that attempted burglary on his home, Nikki Haley is saying it was so unnecessary. What do you say to Nikki Haley?

TRUMP: Well, that's OK. I don't mind that. The tweet itself was just, really, a repeat of what I heard over the news. I know his house was robbed, and I thought that was too bad. That was really just -- that was really not meant as a wise guy tweet.

I mean, his house was robbed and it came over the news at a certain moment last night. And I had just mentioned it.

QUESTION: What does China need to do to avoid those tariffs going into force on September 1?

TRUMP: Well, I think China -- number one, you have to understand, we are so far behind. We have been treated so badly. And I don't blame China; I blame our past leaders, our past presidents, our past trade representatives. They've done a terrible job.

China -- we can't just go and make an even deal with China. We have to make a much better deal with China. Because, right now, they have a very unfair playing field, and I'm turning it around. So we're getting 25 percent of $250 billion, and now we'll be getting 10 percent of probably close to $350 billion. It's a lot of money.

China has to do a lot of things to turn it around. But you'll be seeing. They've got to do a lot of things. It goes on, on September 1. And, frankly, if they don't do them, I can always increase it very substantially. In other words, I could increase it -- if I wanted to, I could increase it to a very much higher number.

QUESTION: On Eric Garner, sir. On Eric Garner -- the judge apparently recommended today the officer involved in that choke hold should be fired. Do you agree with that decision?

TRUMP: Well, it's in a process right now. I know the case very well. It's a very sad situation. It really -- it's heartbreaking. But that's in a process right now, so I'm not going to get involved in the process.

As you know, they're going to be making a final decision, I guess, over the next 10 days. So I won't interfere with the process.

QUESTION: Mr. President, sir, are you withdrawing the troops from Afghanistan? And how many troops are you withdrawing from Afghanistan?

TRUMP: Say it?

QUESTION: How many troops are you withdrawing from Afghanistan?

TRUMP: Well, we've been moving it down. We've been moving it down from Syria. We defeated the ISIS caliphate, and we have now 100 percent of that.

We have 2,500 prisoners, and Europe is going to have to take them, or somebody is going to have to take them. But we have 2,500 ISIS prisoners. And we've told Europe, hey, some come from France. Some come from Germany. They're going to have to take them. So we'll see what happens.

But we've pretty much reduced. We've taken it way down in Syria. Ultimately, it'll be down to a very few people, if any.

With respect to Afghanistan, we've made a lot of progress. We're talking, but we've also made a lot of progress. We're reducing it. We've been there for 19 years. We're really serving as policemen. We could win Afghanistan in two days or three days or four days, if we wanted. But I'm not looking to kill 10 million people.

QUESTION: Can you trust the Taliban?

TRUMP: What about it?

QUESTION: Mr. President, can you trust the Taliban in these negotiations?

TRUMP: We could win that war very easily. I could win that war in a week, if I wanted to.

But I'm not looking to kill 10 million people, OK? Many of them would be innocent people. I'm not looking to do. And I'm not talking nuclear, by the way. I'm talking totally conventional. But I'm not looking to kill millions of people in Afghanistan.

QUESTION: But on the trust factor, can you actually come to an agreement with them?

TRUMP: That, I can't tell you. I mean, you know, we'll find out.

QUESTION: Mr. President, Republican Congressman Will Hurd announced he's not running for reelection -- the eighth Republican to say that. (OFF- MIKE) critical of you and your tweets about the Squad. What's your reaction to him not going to run again?

TRUMP: Well, I hear he's done a good job. I don't know Congressman Hurd, but I have heard he's done a good job. We differ on certain subjects, but I have heard he's actually done a good job. It's too bad he's leaving. But I really don't know him.

QUESTION: Mr. President, who's on your short list to replace Coats?

TRUMP: So I do have a short list. I have a list of a few people we're looking at -- very well-known people. People where the vetting would go very easily because that's what they've been doing; they're in the intelligence world.

So we do. I have a list of three people that I'm going to be working on over the weekend. We're going to Bedminster. I will be working on that over the weekend. And probably, on Monday, I will give you an answer.

And I do like Sue Gordon very much as acting, as your -- as per your question.

QUESTION: Who are the other two, Mr. President?

QUESTION: Who would you like us to vet?

TRUMP: Say it again.

QUESTION: Who would you like us to vet? You said you relied on us to vet.

TRUMP: Well, I think we really -- I think we have a lot of good people. We have three people, specifically -- I mean, I could tell you.

QUESTION: Yes, tell us the names.

TRUMP: They're -- I could tell you. They're right here.

QUESTION: Who are they?

TRUMP: Right there. But it's too -- it's too early. Do you want a piece of the list?

Go ahead.

QUESTION: As far as peace negotiations with the Taliban, can the Taliban be trusted? Do you trust the Taliban?

TRUMP: Well, I don't want to say if they can be trusted or not. Look, history, I would say, is not so good, but they don't like us much either.

But we've brought them down. We've brought the number of soldiers down very substantially. They're coming down. We are talking to them. We have a lot of advantages making a deal with us.

We're doing very well, as you know, with Pakistan. I met a gentleman who I liked a lot -- as you know -- last week, from Pakistan. I have a lot of respect for him. We have a good friendship -- a good feeling, good chemistry. And I think Pakistan will help us, and I think others will get involved.

But we've been there 19 years. We're not really -- let's put it this way: We're more police than anything else, and that's not for our soldiers.

And I have said -- I have said it a lot: We could win the war in Pak -- we could win the war, if you look at it -- and you can look at it any way you want -- we can win the war in Afghanistan in less than a week. But I'm not looking to kill 10 million people. And I'm not talking nuclear. I'm not talking nuclear.

But we'd win that war in less than a week, and I have that as an option, always. But that's what we're not looking to do.

QUESTION: Mr. President, how do you avoid a nuclear arms race now that you've decided to withdraw from the INF nuclear treaty?

TRUMP: So, Russia -- we have been speaking to Russia about that -- about a pact for nuclear -- so that they get rid of some, we get rid of some. We'd probably have to put China in there.

But right now, we're number one, Russia is number two, and China is number three. But China is quite a bit down, in terms of nuclear. China is much lower. But we would certainly want to include China at some point.

But I would think that the relationship is good. We're trying to have a good relationship. It's very hard, in light of the phony witch hunt, which is now dead.

But I will say this. With Russia, if we could get a pact where they reduce and we reduce nuclear, that would be a great thing for the world.

And I do believe -- I do believe that will happen. We've -- we have discussed it. I have also discussed it with China. I have discussed it with President Putin. I have also discussed it with China. And I will tell you, China was very, very excited about talking about it, and so is Russia. So I think we'll have a deal at some point.

QUESTION: When?

TRUMP: But the particular pact you're talking about that expired as of today, they weren't living up to their commitment. And I said, if they're not going to live up to their commitment, then we have to -- we always have to be in the lead.

You know, I have redone our nuclear. We have new nuclear coming. I hate to tell that to people. I hate to say it because it's devastating, but we've always got to be in the lead.

Hopefully -- and hope to God -- you never have to use it.

QUESTION: But you're now going to test the new cruise missiles? You're now going to test the new cruise missiles, correct?

TRUMP: Say it.

QUESTION: You're now going to test new cruise missiles that were previously banned under this agreement?

TRUMP: We have new everything.

QUESTION: Would that be provocative?

TRUMP: We have the -- we have the finest military in the world. We make the finest equipment in the world by far, whether it's fighters, whether it's -- whether it's missiles, whether it's the ships, whether it's submarines.

There's nobody to compete with us. But if we could hold off spending by getting a pact with Russia and with China, that would be very good for...

QUESTION: Do you believe that would provocative?

TRUMP: ... that would be very good for all three countries.

QUESTION: On the trade deal that you signed today -- that was signed today between the U.S. and E.U...

TRUMP: You're talking about the trade with the -- on beef?

QUESTION: Yes, exactly. Can you now resolve, quickly, all of the trade disputes with the E.U.?

TRUMP: E.U. is very tough to deal with. They're -- you know, they're very difficult. They have barriers. They had barriers on beef. We broke that barrier today. I appreciate it. It's a group of countries, as you know. We love those countries, but, for dealing with them, they're very, very difficult.

But we did a very big deal today -- beef. And we're going to be selling them a big percentage of their beef. And that's great for our ranchers and farmers, so we were happy to do it.

QUESTION: Are auto tariffs off the table? Or do you still think it's (OFF-MIKE)

TRUMP: Auto -- auto tariffs are never off the table. If they would not treat us fairly -- which they're not. I mean, you know, it's, right now...

Look, the E.U. has tremendous barriers to us, but we just broke the first barrier. And maybe we broke it because of the fact that if I don't get what we want, I will put auto tariffs. Because it's all about the automobile, and it's all about the tariffs. If I don't get what I want, I will have no choice but maybe to do that. But so far, they've been very good.

And I want to thank Mexico. The numbers are way, way down -- apprehensions. The numbers are way down. Mexico -- they have about 21,000. They actually now have maybe more than that on our border. They have another 6,000 on their northern border. OK?

If you view it that way -- their northern border, near Guatemala. And, I will tell you, Mexico is doing a great job.

QUESTION: Speaking, Mr. President, of the southern border, any progress on a permanent DHS Secretary?

TRUMP: Well, I would love to see -- before we talk about Secretary, I will tell you, I would love to see the Democrats sit down and work out the loopholes in 20 minutes -- because that's what it would take -- and work out asylum. But we're moving along with an asylum fix and asylum bill. Lindsey Graham is heading it up very capably, and we'll see what happens.

QUESTION: Mr. President, do you anticipate that if the trade war with China continues that there will be further bailouts for farmers in the U.S.?

TRUMP: I will always help our farmers. Our farmers were targeted by China. And our farmers -- frankly, these are great patriots. I will always help our farmers.

There'll be a time when the biggest beneficiary of what I'm doing, with respect to China and trade, generally -- you're seeing it with the E.U. They couldn't do the cattle thing at all -- beef. They couldn't do it at all. And now, all of a sudden, this came out of nowhere. Our farmers will ultimately be the biggest beneficiaries, and they know that. But our farmers are great patriots.

QUESTION: Mr. President, can you assure Americans they won't pay more for their Christmas presents this year due to new tariffs on Chinese products?

TRUMP: No, what happens is China devalues their currency and China also is pouring money out, and that will pay for the tariffs. It's a total misnomer.

Now, I don't say that with all countries, but with China, they're very highly sophisticated, but so are we -- more than anybody would understand. All you have to do is ask China. All you have to do is ask China.

But let me just explain. So, China is devaluing their currency and they're also pouring money in. Their currency is going to hell, but they're also pouring money in. And that will totally pay for the tariffs. The tariffs are not being paid for by our people; it's being paid for by China because of devaluation and because they're pumping money in.

Thank you. Thank you, everybody.

QUESTION: (OFF-MIKE) I had talked with a farmer last night, a soy bean farmer. And he said tariffs are causing crisis after crisis for him, and this will kill him even more.

TRUMP: Well, you interviewed the wrong farmer, number one.

Number two, any amount that China sucks out, we're making up out of the billions of dollars that we're taking in.

Remember this. Our country is taking in billions and billions of dollars from China. We never took in 10 cents from China.

And out of that many billions of dollars, we're taking a part of it, and we're giving it to the farmers because they've been targeted by China.

The farmers, they come out totally whole. So, you interviewed the wrong farmer.

(END VIDEO CLIP)

CAVUTO: All right, I don't know where to begin here, but just to be clarifying here, China isn't paying these tariffs. You are indirectly and sometimes directly.

It's passed along to you through American distributors and their counterparts in the United States who buy this stuff from the Chinese and then have to pay the surcharges, not the Chinese government or China in particular.

I didn't quite understand what he was saying about the devaluation and how that is costing China.

Be that as it may, this latest round of tariffs that kick in on September 1 on $300 billion worth of goods at 10 percent, that will most directly be felt by consumers directly, because that happens on almost entirely consumer items, rather than industrial-related items.

But just wanted to clarify that. Governments don't pay these things. You do, one way or another.

All right, Rich Edson is at the White House on all of this -- Rich.

RICH EDSON, FOX NEWS CORRESPONDENT: Good afternoon, Neil.

And the president also saying that China has a lot to do before the United States would consider avoiding those tariffs the president's forecasting or said he's going to put on $300 billion worth of Chinese imports on September 1.

He also says he's willing to go even higher on those tariff rates if China doesn't reverse its policies as these negotiations are ongoing.

More on trade here at the White House today. Earlier today, the president announced that E.U. beef deals for American farmers to sell more beef to the European Union. But the president says that's just the first barrier. The E.U. has huge trade barriers, he says, and that auto tariffs for E.U. auto manufacturers are never off the table.

Much of the conversation the president just had on the South Lawn of the White House there focused on John Ratcliffe, the congressman who is now going to be staying in Congress.

The president and the congressman announced that he was withdrawing his name from consideration to be the director of national intelligence. The president says that Ratcliffe received unfair treatment from critics and he said it was a good idea just to avoid the entire process altogether.

He said that he could have gotten Republicans on board, especially those in the Senate who would have been voting on his confirmation, because Congressman Ratcliffe is out on the House side. He says he's got to have a decision possibly by Monday. The list is down to three people for director of national intelligence -- Neil.

CAVUTO: All right, Rich, thank you very, very much.

Well, Democrats are already making hay of this trade thing. It started with Kamala Harris, who said that it is going to slow things down a lot.

But the real issue has been total dissatisfaction on the part of some Democrats with the pool of choice they have, the two dozen candidates, and not one impressing them, depending on who you talk to, except one name that's being mentioned who's not among that bunch.

I will give you a hint. She's a former first lady.

(COMMERCIAL BREAK)

CAVUTO: All right, we will know on September 1 whether people who are just heading back to school and shopping are going to be hit by tariffs that could be substantial.

Imagine if you're young and you're restless and you're Gen Hexed, cheap as it is. What are they doing now?

(COMMERCIAL BREAK)

CAVUTO: All right, you are looking at Sin City, Las Vegas, Nevada.

The 2020 Democratic hopefuls will all be gathering there this weekend, or many of them, to nab union support or try to.

One Democrat who will not be there? Apparently, the former first lady of the United States Michelle Obama, but that is not stopping some on the left, some, to get her into the race because they really don't like the two dozen or so candidates in the race as things stand now.

But what is that saying about the 2020 field, if her name is even coming up?

GOP strategist Lauren Claffey, Democratic strategist Kevin Chavous, and The Washington Examiner's Brad Polumbo.

Brad, it's nothing new in prior election cycles. No matter how many people have been in the race, there's always a yearning for someone who's not in the race. In 1992, when Bill Clinton was running, everyone wanted Mario Cuomo to run. He didn't and all.

So, this is not a new thing.

BRAD POLUMBO, THE WASHINGTON EXAMINER: No.

CAVUTO: But what do you make of this?

POLUMBO: Well, I think it's a slap in the face to Joe Biden, Neil, because if Joe Biden was doing well in this campaign, you wouldn't have people on the left out there like Michael Moore saying, no, we need someone else who represents going back to the Obama era.

But Joe Biden has appeared weak. He's seemed frail. He struggled on the debates with attacks from left and right. So the fact that people are trying to tap Michelle Obama tells you they're not too happy with Joe Biden.

CAVUTO: Still, Kevin, I don't see a lot of people pushing for this. They might want to wait this process out. I understand that someone not in the race looks good from afar, once in the race, far from good. I get that.

But I am wondering what this says about a party kind of wondering about the good things of the Barack Obama administration and the controversial things about the administration. Joe Biden dealt with that direction. How do you feel this sorts out?

KEVIN CHAVOUS, DEMOCRATIC STRATEGIST: Well, look, people have been asking for Michelle Obama to run for a long time. Even when Hillary ran in 2016, there were people that liked the idea of Michelle running, so she would immediately succeed Barack Obama.

So she's very admired. We know she's, I think, the most admired woman in America. But the fact is, yes, she could beat Donald Trump, but we have other candidates that have the ability to beat Donald Trump as well.

Kamala Harris can beat Donald Trump. Joe Biden can beat Donald Trump, Elizabeth Warren. Some polls suggest that they all would be competitive, if not ahead of him. So we really want to focus on winnowing the field down and getting past this huge primary.

So this is what happens when you have so many candidates. They're all taking shots at the ones who are leading, and it does sort of drag down their popularity.

But recent polling has shown that -- the Morning Consult poll, that is, shows that there wasn't that much of a difference in support among the candidates from the last two debates. So it looks like Joe Biden still has his lead, despite not really knocking it out of the park.

CAVUTO: You know, Lauren Claffey, if I'm Donald Trump, I'm probably loving this, right?

I have got a good economy, you know, a little bumpy concerns about trade, good markets, a little bumpy week, to put it mildly, but, all in all, the kind of stuff that shows, I have got unprecedented Republican support, a very loyal base, and I have got a lot of independents who might be looking at the economy, as Democrats are desperately looking for a nominee.

What do you think?

LAUREN CLAFFEY, REPUBLICAN STRATEGIST: Yes, absolutely.

And independents and the swing state is where this election is going to be won. And what's happening is, the Democrats are fighting a Twitter primary, where they're just going after each other based on whatever the far left, their farthest left voters are going to be wanting at that moment.

And it's really leaving out people like Joe Biden or potentially Michelle Obama from even entering into the conversation, because that moderate voice in the Democratic Party is getting drowned out. So if you're Donald Trump, you love this, because that is exactly what you want to happen.

You want them to be so far to the left that they do not resonate with the average American voter and independents pull over to the Republican side.

CAVUTO: All right guys, I want to thank you.

I apologize for the truncated segment here. With the president speaking, we just had to cover a lot. And you have covered a lot here. Much appreciate it.

We mentioned the president. He rips up an arms accord with Russia, and the whole world suddenly going nuclear.

(COMMERCIAL BREAK)

CAVUTO: Well, it was just a matter of time, if you think about it.

The U.S. formally withdrawing from that Reagan era arms control treaty, claiming that Russia made no efforts to comply with the agreement. In fact, during the Obama administration, there was a great concern about whether Russia was ever going to even answer our calls about not even doing.

The former Assistant Secretary of State Robert Charles on all of these developments.

Secretary, I guess not a big surprise. But now we wonder, what next? What do you think?

ROBERT CHARLES, FORMER U.S. ASSISTANT SECRETARY OF STATE: Well, this is one of those events which was both very significant and not very significant, because it really simply confirms the reality we're in right now.

The INF Treaty eliminated nuclear and conventional ground-launched ballistic and cruise missiles with a range from about 300 miles to 3,400 miles. So it was really about protecting Europe.

And the history was quite interesting. And it leads us to where we are today. The Soviets introduced one of these missiles, the SS-20, in 1977. In '79, we introduced the Pershing II. By '83, the president, President Reagan, was able to introduce a suggestion of a zero-zero trade-off.

Reykjavik happened in '86. In '87, we got the agreement. And in '88, we signed it. It was very significant, in that it eliminated -- I'm trying to remember -- it eliminated about 2,692 weapons, 846 on the U.S. side, 1,846 on the Soviet side. So it was significant in its time.

But then, in 2001, we stopped inspections. In 2008, the Soviets -- really now the Russians -- broke out. And we're in a position now where both are modernizing.

The real question today is, does this open the door to some sort of a new race? Or is it really about a new agreement? And the answer is, it's really about a new agreement, and China has to be in that agreement. So what I see happening is, in the next maybe five years, you see an agreement of the same kind evolving, with both Russia and China signing with the United States, and that would be a good thing.

CAVUTO: You know, the China one raises -- we think we have issues of trust with Russia.

CHARLES: Yes.

CAVUTO: China, this trade deal is -- or lack of -- is a problem, a conundrum the president faces, because the Chinese keep cheating, keep lying, keep switching positions and all that.

So how -- if they do that on trade, how can we deal with them on military issues?

CHARLES: Well, you raise a really interesting question, Neil, because they have been doing the same thing on the security side with these islands in the South China Sea, rapid modernization.

CAVUTO: Right. You're right.

CHARLES: One of the things this president's doing which is very clever is that he has crossed the two electric currents of trade policy and security policy.

I could see a number of things, from North Korea to a new INF-style treaty, coming after a trade accord, because he's really linking them, and saying, look, we're going to keep you honest on the trade side. And, by the way, we're going to try to keep you honest on the security side too.

CAVUTO: Do you think that we will ultimately get a three-way deal? I mean, that's a pretty ambitious undertaking.

CHARLES: Well, it was ambitious in 1979 to initiate a two-track way of thinking and to introduce the Pershing II missiles. And it didn't -- it took more than a decade before we actually had something that we could act on and was being implemented, even though it was signed in '88.

So we're not talking about a near-term record. But this is the natural trajectory. Unless you want nuclear war, ultimately, intermediate-range missiles have to be eventually limited again.

And, really, the United States and Russia can get there, I think. They are modernizing. China's trying to catch up on a rapid beeline. And that's why we have got to put them in this accord and, eventually, in five or six or seven years have something. Could be sooner than that.

CAVUTO: All right.

CHARLES: But, I mean, this president's breaking all the norms. Maybe it happens faster, but they have got to be brought into the next INF accord.

CAVUTO: We shall watch closely.

Secretary, great seeing you again. Have a good weekend.

CHARLES: Yes, sir. You too.

CAVUTO: All right, well, the president is taking aim at blue cities. That has some Democrats seeing red. We will explain.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TRUMP: People living in the street.

(END VIDEO CLIP)

CAVUTO: Hi there.

The president blasting big cities run by Democrats. Could enough voters rebel and flip those seats, or will they just flip out?

Because the president now is aiming for some of those blue cities, either to make a statement or, I don't know, finish a vendetta.

The New York Post's Brooke Rogers joins me now to discuss.

Brooke, we were talking briefly in the break. What is he doing? What's the strategy?

BROOKE ROGERS, THE NEW YORK POST: I don't know there is a strategy.

I think that, in his mind, someone took a punch at him. And now his first instinct is to punch back.

I think that if you look at his M.O. over the last couple of years, he -- when a politician comes after him, he goes for the throat. And that's what this is about. I don't think that he's necessarily trying to appeal to voters in those cities, as much as he's just trying to get back at Representative Cummings.

CAVUTO: Could he tip any elections in those cities? He certainly couldn't tip a blue state, make it a red state. Maybe could. He did that in a number of key states that got him elected president.

But -- or is this about just putting pressure?

ROGERS: I don't think that he has the chance of winning cities like Baltimore or San Francisco or any of the other cities that he has taken shots at.

I think this is much more about changing the rhetoric around this issue. And it's a classic political tactic to say, when you're being attacked, look at your own -- look at your own district, look at your own neighborhood. What are you doing?

CAVUTO: And you're forcing the other side to spend time and money in areas that they would normally deem safe, and they didn't have to. Right?

ROGERS: And when you're -- you're forcing, you're pushing the ball back to them. So then they have to come and say -- and defend their own record and defend themselves.

And if you look at the rhetoric since then, people have been coming to Baltimore's defense. And it's changed from Representative Cummings' criticism of the border -- the border situation, to now he's on defense. And I think that was the whole -- the whole point of Trump's comments.

CAVUTO: Do you think it also could be -- help him run up a little more of the popular vote? I know this is always about the electoral vote, but that this -- if he's got a better lock on the electoral vote, this could help him with the popular vote.

ROGERS: I actually think that most of the rhetoric -- rhetoric he's using will be more divisive than anything.

If you look at what he said, he's talking about these cities, that they're rodent-infested, they're disgusting, no human being would want to live there.

CAVUTO: Right.

ROGERS: And I think that people -- people in those cities, they may acknowledge, as I think most serious people would, that there is crime problems.

CAVUTO: Yes.

ROGERS: But they don't want to hear their city being talked about like that.

I think that that's -- so, I think that will actually backfire.

CAVUTO: Could cut both ways, yes.

ROGERS: Yes.

CAVUTO: Brooke Rogers, thank you, of The New York Post, a very good read on what's going on right now.

ROGERS: Thank you.

CAVUTO: Who knows, it could flip around.

All right, meanwhile, the next time you order food for delivery, you might want to check if there's a bite missing.

Gen Hexed is next.

(LAUGHTER)

(COMMERCIAL BREAK)

CAVUTO: Charlie Gasparino tells me that millennials are notoriously cheap.

So will these new batch of tariffs that kick in on Chinese goods on September 1 make them just revolt and just not buy anything at all? That's a big issue, a big concern. Well, it is on some days.

Internet radio host sensation Mike Gunzelman. We have got "Your World" audio technician, bestselling author Dion Baia, FOX News contributor, host of "Sincerely Kat" -- I get the best mail on Kat -- I love to have her -- Kat Timpf.

(LAUGHTER)

CAVUTO: So, Kat, does that mean, with the price hikes to come, because these will be fairly immediate, if they go into effect, would you be less inclined to buy stuff? Do you watch your pennies? What do you do?

KATHERINE TIMPF, FOX NEWS CONTRIBUTOR: No, I wouldn't be less inclined.

But this is speaking as someone who's terrible with her money. I once spent $20 on Postmates to get a single Slurpee delivered to my house. And I didn't even feel bad about it.

I felt kind of bad for the delivery guy. But then I didn't when I saw that he was judging me.

(LAUGHTER)

TIMPF: But, you know, he -- I'm just -- I...

CAVUTO: There's a network called FOX Business that maybe you could...

(CROSSTALK)

DION BAIA, FOX NEWS AUDIO TECHNICIAN: You should demand it.

TIMPF: I should probably watch a little bit more.

CAVUTO: A little bit.

TIMPF: But, no -- but I wonder how the narrative is going to change around this, because Trump keeps coming out and saying China's paying for these, China's paying for these, when the reality is the amount that we have gotten from China isn't even enough to cover the agricultural bailout, let alone all the price hikes and all the other industries that are struggling because of it.

BAIA: I don't think it's on anybody's -- especially young people. I don't think it's on their mind.

I mean, if it's not in their purview of social media...

(CROSSTALK)

BAIA: Because you don't watch news, right.

BAIA: Well, no, not just me. But I think a lot of younger people don't really.

They get their news from Facebook or Google.

CAVUTO: But if you saw suddenly that the price of an item was just 10 percent more?

MIKE GUNZELMAN, INTERNET RADIO HOST: You would immediately go...

CAVUTO: Not that all that is passed along. But if a good chunk of it is?

GUNZELMAN: You would question and be like, what's happening? How do we fix it?

BAIA: But they're not going to be like...

(CROSSTALK)

GUNZELMAN: But you never actually get to the answer of that. You know what I mean? This is such on a higher level than what we can deal with. In the end, we're just stuck.

CAVUTO: Now, the reason why I wanted to ask you guys this, there's another survey out you might have heard that millennials just are having a problem with dating because it's so expensive.

GUNZELMAN: Yes. Yes.

CAVUTO: Thirty percent say they can't afford dating.

TIMPF: Oh, come on.

BAIA: It's expensive.

GUNZELMAN: Story of my life.

CAVUTO: You're married.

(CROSSTALK)

GUNZELMAN: It is true.

(CROSSTALK)

GUNZELMAN: Story of my life, all right?

It's like 100 bucks to take somebody out on a date. It usually ends up going terrible. So, like, why invest on this? Why invest in that?

(CROSSTALK)

BAIA: If you itemize it, it's -- what is it, like 20 bucks for a movie ticket, another $20 for candies, whatever for yourself.

You go to a restaurant that's not a food chain. Uber there or whatever. No. Drinks.

TIMPF: Get creative. Get creative.

Go to a museum. Drink 40s in the park. Do something that is maybe more...

(CROSSTALK)

CAVUTO: Well, do you split the cost? Do you go Dutch, or no?

TIMPF: No.

BAIA: I let her pay.

GUNZELMAN: No, it's always up to us. That's why I'm stuck.

CAVUTO: It's always up to you.

All right, let me switch gears, because you have anger issues as well.

(LAUGHTER)

CAVUTO: This is another one that's interesting.

Food delivery drivers apparently admit to eating some of your food before dropping it off. So not only are you overpaying for stuff, but now they're eating the stuff that you're paying for.

GUNZELMAN: This is -- as someone who doesn't cook, this is literally my nightmare.

I spend -- instead of going out on dates, I order on Postmates and Delivery.com.

(CROSSTALK)

CAVUTO: You live in the city?

GUNZELMAN: Yes.

CAVUTO: OK.

(CROSSTALK)

CAVUTO: We don't want the whole world to know.

GUNZELMAN: Right. But now this explains why...

CAVUTO: Here is his address, ladies.

Go ahead.

GUNZELMAN: Why there was a thumbprint in my mashed potatoes, because of people doing this.

(CROSSTALK)

TIMPF: Eating mashed potatoes with your bare hands is a new low, I have got to say. I have never done that.

CAVUTO: Having mashed potatoes delivered.

(CROSSTALK)

TIMPF: I have done it. I have every meal I have eaten delivered for the past -- since 2015, every single meal.

So I'm a little disgusted by this. But, also, I feel like I owe -- I'm owed a tax break, because I have all these dependents that I didn't even know I had. I have been feeding people out here for years.

CAVUTO: Are you a generous tipper?

TIMPF: Yes.

CAVUTO: Good. I bet you were.

BAIA: They say that it's 28 percent admitted to this. Can you imagine what the real number is of actual people who are actually digging in and grabbing a ravioli or grabbing a fry?

TIMPF: Yes.

GUNZELMAN: That's so terrible.

CAVUTO: A pizza would be too obvious, right?

BAIA: Not if you're taking the topping off. I do it all the time.

CAVUTO: Really?

BAIA: Yes.

GUNZELMAN: No, it's probably like fries or something like that.

(CROSSTALK)

CAVUTO: Yes, fries or a chicken wing.

(CROSSTALK)

TIMPF: Apparently, mashed potatoes.

GUNZELMAN: Yes, or my mashed potatoes.

BAIA: From like Popeyes.

CAVUTO: This is why you're having the dating issues.

GUNZELMAN: This is my nightmare.

Where do we begin?

CAVUTO: I wish we had more time, because we had another great subject we could have done.

TIMPF: I know.

CAVUTO: But time is -- I'm sorry. Can we get you back next week maybe?

TIMPF: Oh, yes, please.

CAVUTO: Good.

BAIA: I might not be available.

CAVUTO: Well, good. Well, that will destroy that.

All right, let's take a real quick peek, guys, at the corner of Wall and Broad, how we finished up the week. It was the worst week for stocks this year, the Dow not so much, but it was a tough week in a lot of markets, getting ready for the possibility here that we're going to -- extended trade war.

These poor young people aren't going to be able to afford it. They don't invest. They don't know what's going on. Kat is not even watching FOX Business to help her out.

(LAUGHTER)

CAVUTO: It's OK.

We're going to sort it out for you tomorrow live with our show, the Congressman John Delaney on what he wants to do to save the world.

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