THE TRADE WAR WITH CHINA,

LEARNING THEY WILL RAISE TARIFFS

ON $75 BILLION OF U.S. PRODUCTS.

JOINING US NOW IS WHITE HOUSE

TRADE ADVISOR PETER NAVARRO.

THANK YOU FOR COMING ON THE

PROGRAM THIS MORNING.

OBVIOUSLY THE WHITE HOUSE WANTS

TO PUT OUT A MESSAGE RESPONDING

TO THE TARIFFS, WHAT IS THAT?

>> THE PRESIDENT HAS DONE A

REMARKABLE JOB PUTTING THIS

COUNTRY BEHIND HIM ON THE CHINA

ISSUE THE LAST FEW YEARS BY

EDUCATING THE PEOPLE ABOUT

CHINA'S ACTS OF AGGRESSION, THE

FORCE TECHNOLOGY TRANSFER,

KILLING AMERICANS WITH CHINA

MADE FENTANYL.

CHINA CONTINUES ACTIONS LIKE

TODAY SIMPLY REINFORCES THE

TOUGH STAND THAT THIS PRESIDENT

TAKES.

FROM A MARKET POINT OF VIEW,

IT'S NOTHING THAT THEY ARE WELL

SIGNALING, REALLY IMPORTANT

TODAY AND TOMORROW, IF

JAY POWELL AND THE

FEDERAL RESERVE ASSURES AMERICA

THAT HE HAS THEIR BACK, IT WILL

FINISH UP THREE OR 400 POINTS.

THE EUROPEAN CENTRAL BANK

FOLLOWS THROUGH ON THE PROMISE

TO LOWER INTEREST RATES AND

ENGAGE IN EASING AND THAT'S

GREAT FOR AMERICA BECAUSE A

STRONGER EUROPE WILL MEAN MORE

EXPORTS SOLD TO EUROPE AND MORE

GROWTH FOR AMERICA, THERE ARE

SOME THINGS THAT ARE GOING TO BE

REALLY IMPORTANT.

>> Sandra: TWO BIG THINGS I

WANT TO BRING YOUR AUDIENCE

ALONG WITH YOU.

WE ARE 14 MINUTES INTO TRADING,

THE DOW IS OFF 91 POINTS, NOT A

HUGE LAUGH.

NOT A HUGE REACTION TO THE NEWS

BUT I WANTED TO POINT OUT AND

GET SOME CLARITY ON THIS BECAUSE

THEY UNDERSTAND THAT YOU LEARNED

OF THIS SLAP BACK FROM CHINA

THIS MORNING ABOUT THE SAME TIME

THAT WE ALL DID ALTHOUGH YOU

WERE ANTICIPATING IT, IS THAT

FAIR?

>> THE CHINESE SITE HAD CLEARLY

SIGNALED TO US THAT THEY WOULD

RETALIATE IN SOME WAY.

THE PROBLEM THAT THEY HAVE IS WE

HAVE A FAR MORE BULLETS IN

ARGONNE THAN THEY DO.

THEY TELL US CLOSE TO $6 BILLION

IN EXPORTS AND OURS IS A LITTLE

OVER 100.

>> Sandra: WHAT DOES THAT SAY

ABOUT HOW FAR THIS BATTLE, THIS

TRADE WAR COULD GO?

>> THIS IS NOT A TRADE WAR.

IT'S WHEN TWO COUNTRIES ARE

FIGHTING OVER LOWERING THEIR

TARIFFS.

BUT WHAT WE ARE FIGHTING ABOUT

IS TO HAVE THEM STOP STEALING

YOUR INTELLECTUAL, TAKING OUR

TECH TECHNOLOGY, MANIPULATING

CURRENCY AND HAVING THEIR STATE

OWNED ENTERPRISES RAMPANT AND

AROUND THE WORLD.

>> Sandra: THAT IS COMPLETELY

FAIR AND YOU'RE GETTING CREDIT

FROM BOTH SIDES OF THE AISLE FOR

THAT.

REPUBLICANS, DEMOCRATS, A TOUGH

STANCE ON CHINA, MANY SAYING IT

IS TIME BUT EVEN THE FARMERS WHO

SAY WE BACK THE PRESIDENT ON

THIS PUSH ON CHINA ARE TALKING

ABOUT THE PAYMENT THEY ARE

FEELING AND IN THIS NEWS, THIS

ANNOUNCEMENT FROM CHINA, IT'S AN

EXTRA 5% ON SOYBEAN IMPORTS,

IT'S AN EXTRA 10% TAX ON THE

IMPORTS OF U.S. PORK.

THEY MET PRESIDENT HAS THE BACKS

OF THE AMERICAN FARMERS, THEY

WILL NOT BE HURT.

WE HAVE A LARGE PROGRAM TO MAKE

FARMERS HOLE, AND WE ARE USING

SOME OF THE MONEY COLLECTING THE

TARIFFS AND IT GOES RIGHT TO THE

FARM BELT.

THE BIG PICTURE HERE IN TERMS OF

MACROECONOMIC EFFECTS IT IS

WE'VE HAD TARIFFS IN PLACE FOR

OVER A YEAR, WE KNOW THAT CHINA

IS BEARING THE BURDEN OF THOSE

TARIFFS BY HAVING TO CUT THEIR

PRICES, CUT THE VALUE OF THE

CURRENCY, SEEING THEIR SUPPLY

CHAIN HEMORRHAGE OUT OF CHINA

COMING BACK HERE GOING TO

VIETNAM OTHER PLACES AND WE HAVE

SEEN NO IMPACT ON CONSUMERS.

SO THE PEOPLE IN THIS COUNTRY

ARE BEHIND

PRESIDENT DONALD TRUMP WITH HIS

TOUGH STAND ON CHINA.

>> Sandra: NOW HE MAKES HIS

WAY TO FRANCE TONIGHT, THE G7

MEETING WITH THE PRESIDENT'S

MESSAGE THERE.

>> THE MESSAGE IS SIMPLY THAT

THE TRUMP ECONOMY IS BASED ON A

GREAT MODEL.

TAX CUTS, DEREGULATION,

UNLEASHING THE ENERGY SECTOR AND

HAVING FAIR AND RECIPROCAL TRADE

AND THE PRESIDENT WANTS TO SHOW

SOME LEADERSHIP THERE IN TERMS

OF MOVING EUROPE TOWARDS THAT

PARADIGM AFTER THE G7 WAS

CREATED TO BRING TOGETHER THE

LARGE ECONOMY TO TALK ABOUT HOW

TO GROW.

SOME OF THE INDIVIDUAL THINGS

AND I LOVE WATCHING THIS

PRESIDENT INTERACT WITH THESE

LEADERS, BORIS JOHNSON, GOING TO

BE IMPORTANT BY OCTOBER 30TH

THAT WE HAVE A RESOLUTION OF

BREXIT.

THAT MEANS WE'LL BE ABLE TO MOVE

SWIFTLY TOWARDS TRYING TO GET A

GOOD TRADE DEAL WITH THE U.K.

THE GERMAN ECONOMY, IT'LL BE

INTERESTING TO HEAR WHAT THE

GERMANS HAVE TO SAY ABOUT THAT.

>> Sandra: LET ME FIRE OFF A

COUPLE OF THINGS, WILL THERE BE

A TAX CUT BEFORE THE ELECTION,

LARRY KUDLOW SEEMED TO HINT THAT

ONE.

>> FROM THE MOMENT THE FIRST TAX

CUT WAS DONE, WE'VE ALWAYS

ENVISIONED TAX CUT YOU POINT OUT

NOT AS A MANEUVER WORRIED ABOUT

SLOWDOWNS, BUT SIMPLY TO GET THE

TAX CODE RIGHT, THE CORPORATE

TAX STILL HIGHER THAN WE LIKE,

SO I DON'T KNOW WHETHER WE WILL

HAVE A TAX CUT BEFORE THEN.

IT WILL BE VERY DIFFICULT WITH

THIS CONGRESS.

>> Sandra: IT'S BEING

CONSIDERED THOUGH.

>> MY POINT IS THERE'S NOTHING

NEW ABOUT THAT.

WE HAVE ALWAYS TALKED ABOUT 2.0

BUT IT SHOULDN'T BE INTERPRETED

AS A SIGN THAT THE ECONOMY IS

STRUGGLING.

WE HAVE A VERY STRONG ECONOMY.

I HAVE FIVE SECONDS LEFT.

>> FED CHAIRMAN DOES THE RIGHT

THING INSTEAD OF DRAGGING US

DOWN 2% LIKE THE FED IS DOING SO

LET'S GET IT DONE, JAY POWELL,

HAVE AMERICANS BACK AND IT WILL

ALL BE GOOD.

>> Sandra: WE WILL HEAR FROM