This is a rush transcript from "Your World," June 6, 2018. This copy may not be in its final form and may be updated.
(BEGIN VIDEO CLIP)
NEIL CAVUTO, 'YOUR WORLD' HOST: Will the trade war have a -- have an impact, effect on the security relationship?
JAMES MATTIS, U.S. SECRETARY OF DEFENSE: Right now, I don't see that. We're looking for reciprocal trade. So, along the path going there, certainly, it will be a little rocky, a little bumpy at times. But, so far, I do not anticipate any effect in the security arena.
(END VIDEO CLIP)
NEIL CAVUTO, 'YOUR WORLD' HOST: All right. That's the read from the defense secretary. Is that something Kay Bailey Hutchison agrees with, our U.S. ambassador to NATO? Ambassador, thank you for taking the time. Is it your sense too that this will not boomerang on us, the trade tensions between a lot of our allies hurting our security relations?
KAY BAILEY HUTCHISON, U.S. AMBASSADOR TO NATO: You know, Neil, in a group of 29 countries, there are a lot of disagreements on a bilateral basis. There are disagreements within NATO on how we do things. But there's no disagreement on our goal, our common goal of a security umbrella for all 29 of us.
And I think the professional diplomats here are very good. And they do not bring up bilateral disputes or disagreements that they may have. We have good relationships with all of the other ambassadors, and we're able to talk through things. So, I feel very good about NATO staying very united and together. Unity is the most important thing that we have. And we do have it.
NEIL CAVUTO, 'YOUR WORLD' HOST: So, there aren't any of the concerns, or as many as there were about everyone footing the bill or putting up at least the 2 percent toward NATO and defenses that was in doubt a little more than-and-a-half years ago?
HUTCHISON: You know, I think that what President Trump has done is really made a big point and he's made it publicly. And countries are coming through. Every NATO ally really in 2016 did not increase spending, but, as of today, every NATO ally is increasing their own defense spending. And, in 2018, when the numbers are finished, we will have the largest increase in defense spending by our NATO countries outside of the United States since the Cold War. So, I think that we are going in the right direction. Everyone is trying hard. There are differences.
I mean, look at Italy. They have had trouble forming a government. Germany took several months to form a government after elections. So, you have delays and then you don't get budgets. So I think we're going in the right direction. Do we have more to do? You bet. We do, because we want the 2 percent to represent not just a number out there, but the amount that we need to have a significant deterrence against a real enemy. And that is what -- it came up in the Wales summit. The number was 2 percent. Two percent is not too much to pay for the security and freedom of your people. And that's what NATO believes and that's what we're going to achieve. And we're going to do it in good order.
NEIL CAVUTO, 'YOUR WORLD' HOST: Back to this trade tiff, whatever you want to call it, Ambassador. Some are worried that it could escalate. Nothing is in place now, and Americans certainly don't see anything yet, and nor do foreigners, that this could come to fruition. But if it does, the president has long argued that these are as much about our national security efforts as they are economic desires, that they intertwine. Do you believe that?
HUTCHISON: I do think that the tariffs are certainly an issue. I'm not going to say it's not something that people are concerned about. What we want is to solve the problem. We want fair and level playing fields. We're talking now about E.U. cooperation.
NEIL CAVUTO, 'YOUR WORLD' HOST: Right.
HUTCHISON: And they're forming a new defense initiative, PESCO. We want to make sure that there's access to outside E.U. countries to be able to bid on defense projects in NATO, just like we allow from the United States. Let me just tell you that, last year, the Department of Defense spent over a billion dollars with foreign allies buying their products for our defense purposes. So, we want that same level playing field with E.U. countries when they're going out for procurement. We want to do things together. We can compete. But we also want the best products for our overall security. And that is what we're trying to get.
NEIL CAVUTO, 'YOUR WORLD' HOST: Are you concerned, Ambassador? -- I know you have to play this diplomatically, given what you have to do as our liaison certainly with NATO -- but that this is coming at a time and this dust-up with some of our allies and our friends when we have to deal with the Chinese, and have to deal with the North Koreans, and that we could be alienating them at a time we really need them? Do you worry about that?
HUTCHISON: You know, I think every relationship has so many facets, and there are things that we have. For instance, we talked about Germany not meeting the 2 percent. But we have 300,000 troops in Germany. Well, it may not be 300,000. I think I misspoke. It's 35,000. But it's -- that's something that is very important in our bilateral relationship. And we want Germany to do more, but we respect that they're doing a lot in Afghanistan. They're one of the framework nations in Afghanistan. So we want them to meet the 2 percent, but there are other factors. All of these relationships are intertwined. So, yes, there is certainly some disagreement about the tariffs.
There's no question about that. But what I think is the purpose here is to try to get a more even trade relationship, and have a true alliance at NATO that does have some of our allies who haven't put up as much as they could, while they are giving in other areas to be helpful. So we have to balance all of this. We cannot step back on the 2 percent. That is what we need for the overall big picture security. But we know that many allies are also putting troops on the ground, advising in Afghanistan. And we're working with the Iraqis, as well, for advising them on how to get ISIS out of their country and stabilize their country. So we're doing many things in different areas, and we have to factor all of that in.
NEIL CAVUTO, 'YOUR WORLD' HOST: Indeed. Ambassador, thank you very much for taking the time. I appreciate it.
HUTCHISON: Hey, thank you, Neil.
NEIL CAVUTO, 'YOUR WORLD' HOST: All right.
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