Former McDonald's USA CEO on US-China trade war

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Former McDonald's USA CEO on US-China trade war

Ed Rensi says President Trump is doing what's best for the United States.

This is a rush transcript from "Your World," August 23, 2019. This copy may not be in its final form and may be updated.

CHARLES PAYNE, ANCHOR: Trade tensions escalating, and China retaliating, and stocks plummeting.

And the president is not just taking aim at China, but the Fed, asking, who's the bigger enemy, Jerome Powell or Chairman Xi? The Dow diving more than 600 points after the president's tweets. It did come back a little bit into the close, but stocks like UPS, FedEx and Amazon all caught in the crosshairs, all down big today.

Welcome, everyone. I'm Charles Payne, in for Neil Cavuto. And this is "Your World."

The president on the warpath today, ordering U.S. companies to pull out of China, as he meets with this top trade advisers.

Rich Edson is at the White House, where the fight is on -- Rich.

RICH EDSON, CORRESPONDENT: The president unloaded on China earlier today, as these trade negotiations and trade fight drag on and escalate.

China announced tariffs on $75 billion worth of American imports, including cars, oil and soybeans. The president tweeted -- quote -- "We don't need China and, frankly, we would be far better off without them. The vast amounts of money made and stolen by China from the United States year after year for decades will and must stop. Our greatest American companies are hereby ordered to immediately start looking for an alternative to China."

He wants American companies to bring their manufacturing back to the United States. But the White House has offered nothing further on how he could legally do that.

Those tweets drove the market down further. And the president just tweeted before the market closed -- quote -- "The Dow is down 573 points, perhaps on the news that Republican Representative Seth Moulton, whoever that may be, has dropped out of the 2020 presidential race."

As for these unresolved trade issues, White House adviser, trade adviser, Peter Navarro, says negotiations with China will resume next month. The president then turned to the chairman of the Federal Reserve, asking -- quote -- "Who is our bigger enemy, Jay Powell or Chairman Xi?"

President Trump appointed Jay Powell as the chairman of the Federal Reserve. The president claims Powell and the Fed are constraining economic growth, refusing to lower interest rates further and faster.

In a major speech before a Fed conference in Wyoming, Powell put this one back on the president. He said the Fed can only do so much and that it really is one of the factors pushing and dragging the global economy down and leading to a slower global economic growth are uncertainty around trade policies -- Charles.

PAYNE: Rich, thank you very much.

And, yes, the president ratcheting up the pressure on China and on the Fed.

So what does this mean for the markets? We had a tough one today.

Want to go to our market watchers, Larry Shover and Danielle Shay.

Danielle, obviously, a tough day for the market. Here's an interesting thing, though. It moved on tweets that don't necessarily change the fundamentals that had it up earlier in the session. So how does an individual grapple with these two dynamic forces?

DANIELLE SHAY, SIMPLER TRADING: I completely agree with you, Charles, in the fact that, yes, the market is moving on tweets, and you're absolutely right. I mean, the fundamentals have not changed here.

But the problem is, is that the market doesn't like uncertainty. And this continued turmoil with China makes investors feel like they shouldn't have their money in the stock market. So they're pulling it out and it's falling.

PAYNE: You know, Larry, I agree with Danielle, except one thing.

China announced their retaliation early this morning. And, by the way, most people thought they were retaliating. There's tougher things they could have done. The Fed made its decision. Jay Powell gave a speech -- speech, rather. It was lackluster. It wasn't what Wall Street wanted.

But we were still edging a little bit higher, and it was all derailed because of the tweets. And , listen, I think most of the people watching this show want us to fight China. I don't know, though, that we need to have to do the kind of tweets that send the market down 600 points.

LARRY SHOVER, SOLUTIONS FUNDS GROUP: No, I think you're exactly right.

The tone has been set by Powell. It did disappoint Wall Street. The initial reaction was dovish, but it quickly turned hawkish. And then when you have the China trade tension persisting, it really matters. It matters a lot, because I think investors realize uncertainty is no good.

It's going to end up raising input costs for the U.S. corporations. It lowers output. And keep in mind 40 cents of every dollar right now is being bought by foreigners abroad and to buy back.

At the end of the day, it's going to wind up being backwards, where foreigners will end up hoarding us dollars, and the U.S. household will be -- end up winding -- financing the U.S. deficit. So it's really no good. It's a loser on all fronts.

And I think something that started off as intellectual property defense has wound up escalating into something that nobody bargained for.

PAYNE: Jim, you and I have talked so many times. And I think the idea is that China may have -- could have announced this morning that they were going to block all rare earth materials very vital to the technology industry, or put American companies on some sort of bad actor list.

They opted not to do this. In fact, they said some of these tariffs will go in effect on September 1, some on December 15, echoing what President Trump is doing. So we know the tit for tat was in there. They could have taken a harder stance.

By the same token, you have got two narratives here, Jim, and the American public wants us to defeat China and its unfair trade practice, whereas Wall Street wants something different, certainly these corporations. They want to keep those big bottom-line profits. How do we merge those two?

JIM AWAD, CLEARSTEAD ADVISORS LLC: Well, there is a middle ground. And it involves having a consistent and articulated strategy with specific goals that everybody can understand, and then going after them and measuring your progress against those goals, rather than a little kid in the sandbox throwing out hate messages that only confuses things, alienates people, confuses businesses.

And I think that the investment community and the business community wasn't happy with the way Trump conducted himself this week. There doesn't seem to be a clear style, just a lot of name-calling.

And I think what the market is telling you is that, if it continues, it's going to change the facts on the ground, because businesses are going to pull back, which means hiring will pull back, which means consumers will pull back. So I would implore the administration to be a little bit more disciplined, a little bit more focused, a little bit more clear-sighted as to what they're trying to accomplish.

PAYNE: Danielle, but isn't that sort of what's happening in this country, the idea that the American consumer, that the seven million jobs that have vanished, the manufacturing jobs, that we should always be held at the whim of businesses, that they should be the overlords of us fighting or not fighting back at a foe like China, which is pumping in dangerous fentanyl, millions of Americans hooked, overdoses going through the roof?

I mean, we should be fighting back against that, shouldn't we?

SHAY: Yes.

And, I mean, I agree with what President Trump is trying to do. And it makes a lot of sense when he's saying, OK, guess what, now we're just going to pull our American companies out of China. And I can understand that.

But, at the same time, when you look at the reality of it, it's going to take quite a lot of time and money for those American companies that are in China to create a new supply chain, to complete new manufacturing businesses in the U.S. And that's going to continue to have the stock market in a volatile state.

PAYNE: I agree with you, although I will say, so far, experts have been shocked at how quickly the supply chain has shifted. We see where Mexico is now number one in terms of exports, and China's starting to drift down the list, Vietnam and these other countries doing very well.

But here's the thing, Larry. On one end, what's really helped this market this week, and one thing we learned in the last two weeks, the American consumer is an amazing juggernaut. We saw those retail sales last week, phenomenal, Walmart sales phenomenal, Home Depot sales phenomenal, Lowe's sales phenomenal.

Target was up 21 percent yesterday alone.

SHOVER: Yes. Yes.

PAYNE: So we have got a strong and robust American consumer. Can that change? Do you think that can get us, ride through the storm?

SHOVER: You know, it can change, and it can change quickly.

That's one thing that is really hard to gauge. But keep in mind, the latest University of Michigan consumer survey was the largest monthly drop since 2012. With all these realities in front of us, I mean, something else is afoot.

And I think, right now, the data coming up even this week, we have capital goods, we have consumer confidence, PCE numbers. I think they're going to play a lot more important of a role than they have in the past few weeks, because the consumer has carried the economy. It can continue to do so. But it's also very fickle and could change in a heartbeat.

PAYNE: Real quick then, Jim, I do want to ask, what would you like to see from the administration now? Do we need to hear that the meeting in September is still on? And would you like to see President Trump maybe walk back a little bit of some of the things he tweeted today?

AWAD: I would like him absolutely to walk back to rhetoric and to become more specific and disciplined, and lay out exactly what he wants to accomplish, over what time period, what the markets are, how he's going to measure the Chinese and create a cooperative, disciplined, tough, but cooperative attitude, rather than name-calling that is only going to alienate the other side and scare investors and consumers.

PAYNE: All right, thank you all very much for helping us through that.

Meanwhile, President Trump ordering American companies to get out of China and make more of this stuff in the USA.

So, what does that say about the free market? We're going to ask the guy who used to run McDonald's USA, Ed Rensi. He's coming up.

Also, top economic adviser Larry Kudlow telling our very own David Asman more tax cuts are not off the table. In fact, they could be coming during the 2020 campaign. The question is, will that help or hurt the campaign or the economy?

We will debate it next.

(COMMERCIAL BREAK)

PAYNE: Stocks plunging after President Trump started tweeting about the Fed and ordering American companies to leave China, this amid the ongoing trade war.

Former McDonald's USA CEO and chairman of FAT Brands, Ed Rensi, joins me now.

Ed, it's interesting, because the China news is out there. I think we all kind of knew they were going to retaliate the way they did, because it's been tit for tat like this since last July.

I think the thing that worried the Street, the key word, I think, was when President Trump said he was ordering American companies to do things.

ED RENSI, FORMER MCDONALD'S USA CEO: Well, I think it could be problematic of whether he can do that or not.

But I look at it this way. He's a very strategic guy. He's got great advisers around him in the intelligence department, the military, his economic advisers. He doesn't do things in a rash way, even though it may appear to be that.

You hit him, he's going to hit you with a sledgehammer. And he's not going to back off. He's doing what's best for the United States. I have been to China. Don't forget this for one second. They are Chinese communists. And they took tanks and ran over protesters at Tiananmen Square.

Look at what they're doing in Hong Kong. Make no mistake, these guys are power hungry, and they're going to do what they got to do to bring down the United States. That's why they want to buy Greenland.

(LAUGHTER)

PAYNE: They want to buy Greenland? Oh, you mean the administration.

RENSI: Of course.

PAYNE: OK.

I don't want to...

RENSI: I'm talking about the Chinese.

PAYNE: OK.

RENSI: They want to get a strategic position around the world.

PAYNE: Well, there's no doubt about that. We know that.

And they're spending big money. And they're putting Third World nations into debt. And they de facto own a few countries at this very moment.

But I want to zero back in on the business aspect, because a lot of businesses in this country have been the biggest -- they have screamed the loudest against this so-called trade war. And they seem to be OK when things were just the status quo.

And you're a very successful businessman. I mean, these are your colleagues. Why don't they see this the way that you see it?

RENSI: Well, there's benefit to doing things in China.

You know, the typical industrial worker there makes about $2 an hour. Their living conditions are very difficult. I have traveled through some of those manufacturing facilities. I see what's going on there.

The United States has benefited from low labor costs, while they preach here in the United States we ought to have a minimum $15-an-hour minimum wage. You can't have it both ways. Which way do you want it?

PAYNE: You know, Ed, here's the thing. And I understand. I have met most of the and know most of the people on President Trump's financial team and his economic team. So I don't disagree with you.

But I do worry that the tweets and the ability for the media to hype this up, down 600 points, the American consumer is amazing, but if they stop spending money because they are worried, all of this could fall apart.

So, even though they have got a great job, even though their wages are going through the roof better than they have been well over a decade, if they don't spend that money, rMDNM_if they hoard that money, it changes everything.

RENSI: Oh, absolutely. There's no question about that.

But I think Trump has sent some hints. He started talking about a payroll tax. He started talking about indexing capital gains. The man has got some ideas about what he's going to do, depending on how the chess game is played.

Now, while the rest of the world is playing checkers, he's playing chess. And we better keep that in mind. I think the man is truly -- our president is truly looking out for America. And we ought to find more ways to support him, instead of trying to tear him down.

PAYNE: How does this play out? I mean, if we're playing a game of chess, there's a few pieces off the board now, a lot of pawns, maybe some bigger pieces, a bishop, a rook.

How does -- how do we get to checkmate?

RENSI: Well, I think China is going to have to come to grips with the fact that we're not going to get pushed around anymore, and they're not going to be allowed to steal our intellectual property with impunity.

And they're good negotiators. These people were educated at Harvard and Yale, London School of Economics. They're not stupid people. Once they realize that this country has a resolve to play fair on a level playing field, I think they will come around. They're not stupid people.

PAYNE: No, they're not. But they also have some traditional things, like the saving-face aspect of this.

So how does President Trump craft a resolution that allows them to save face, sort of the art of war?

RENSI: Sure.

PAYNE: Sun Tzu talked about making sure that your enemy has an escape route.

RENSI: Well, clearly, this is going to be the art of negotiation.

When both sides get serious about having discussion, the cultural clash will have to be dealt with, there's no question about it. And I think if there's an opportunity for everybody to avoid embarrassment, they ought to do it.

But they better get to the table and start negotiating seriously, instead of playing games.

PAYNE: I have got less than a minute.

Are you concerned about the political fallout? The media is going to spend all weekend long saying that the market got crushed because of President Trump.

RENSI: Well, I spend my life belly to belly with the consumers in the United States.

And, frankly, they're fed up with the news media in so many ways, I can't even tell you. They're going to watch it. They will listen. Our population is pretty smart and pretty educated and they have got a lot of common sense.

The truth will out.

PAYNE: Ed Rensi, always a pleasure to talk to you. Thank you.

RENSI: Thanks, Charles.

PAYNE: President Trump sparking the sell-off today, though.

Those tweets sent to market lower, and then, of course, now he's off for the G7 meeting. I got to tell you, though, think things are bad here? Take a look over there.

And the Department of Justice reporting a steep rise in non-citizen arrest. What needs to be done to stop this?

Border Deputy Commissioner Robert Perez is on next.

(COMMERCIAL BREAK)

PAYNE: Some dramatic news stats on arrests of non-U.S. citizens.

A Justice Department report showing 64 percent of all federal arrests in fiscal year 2018 were non-citizens. That's up 37 percent from 20 years ago.

Let's get the read on this from Customs and Border Protection Deputy Commissioner Robert Perez.

Commissioner, thanks for joining us.

That is -- that is an astonishing stat that we just -- I just read off to the audience.

ROBERT PEREZ, DEPUTY COMMISSIONER, U.S. CUSTOMS AND BORDER PROTECTION: Thanks for having me, Charles. Good to be with you.

It is. And it really speaks to what we have been saying for months now, Charles, about the dual types of crises that we have been facing on the southwest border of our country.

So, understandably, the humanitarian crisis that we have had, the numbers of apprehensions, the makeup of those apprehensions, the family units and children that we have seen at unprecedented levels, has gotten the adequate and really the due attention that it has, and, really, a lot of people focusing on that.

But it can't be overlooked the border security, the national security aspect of the ongoing border crisis. Every day, we still encounter criminals of all types, drug smugglers, counterfeiters, gang members. We're still seizing tens of thousands of pounds of narcotics along that southwest border.

And so what I think those statistics do is, once again, validate and redirect our attention on that other facet of the ongoing border crisis we have along our southern border. And it's really important to be mindful that that is why we need the resourcing that we have been asking for, the front-line agents, the technology.

And, just as importantly, the wall, the border barrier that we're building now at an unprecedented rate all speaks to how we counteract this criminal element that continues to come through our border.

PAYNE: Yes, we know a deterrent is the first thing when you want to stop criminal -- criminalization or criminal acts is to determine in the first place, so certainly a big physical border does that job.

In the meantime, though, the narrative continues to arch towards this notion where you keep hearing interchanging, instead of illegal immigrants, it's immigrants. Instead of there being some violent actors among the crowd, everyone are innocent victims.

And I got to imagine that that has to frustrate you, because there's a way to be honest about this, and then that's -- if we're all honest about it, maybe approaching it in a smarter way.

PEREZ: Great point, Charles.

And that's why I will tell you that, because it is dual-faceted, right, just as we have been saying, both a border and national security crisis, as well as a humanitarian crisis, to the point you just made, I can't overstate how important it is, the announcement that we made this week regarding the Flores rule that was put out, because that speaks to that deterrent factor.

That speaks to us breaking the back and beginning to make inroads on not allowing these criminal organizations to profit off of vulnerable families, vulnerable children, and bring integrity back into -- and bring integrity - - pardon me -- back into the entirety of the immigration process.

(CROSSTALK)

PEREZ: Go ahead, Charles.

PAYNE: I would like you to expand on that, just for the average person...

PEREZ: Please.

PAYNE: ... who doesn't understand what the Flores decision is, because it's been written up, ironically enough, that even this has been frowned upon by some of the media as another mean-spirited attempt by the administration to harm these families.

PEREZ: Absolutely not, Charles.

So I testified up on Capitol Hill nearly a year ago on this very point. It is unquestionably one of the most important pieces to fix and put integrity back into our system. We're talking about keeping families together through an expedited immigration process to get their cases heard by a judge and a meaningful outcome being presented them.

And so that -- it not only will it, again, break the back of the smuggling organizations who are profiting from these very vulnerable families and children, and moving them through these dangerous journeys through our border, but it also adjudicates the cases, if you will, and in an expedited fashion.

We're estimating, based on our previous experience back in 2015, in about 40 to 60 days. And we're able to, again, either provide people legal status if their claims are valid, or, if the judge rules that their claims are not valid, send them back to their home countries. It really does exactly the opposite.

It brings, again, safety to these vulnerable populations that are being exploited, and, frankly, again, a very important tool to bring integrity back to this entire process. It's critical, Charles.

PAYNE: And speaking of critical, you brought up the wall earlier, the border wall.

Do you think that there's a certain amount of urgency to continue and even maybe speed up the program to build the wall?

PEREZ: Well, we're doing it, Charles. We have just passed another threshold this week. We now have over 60 miles of border wall built. It is new, enduring capability, unlike anything we have built before.

And it is absolutely critical to get operational control of that criminal element we were talking about earlier, of those drug smugglers, of those criminals who are attempting to evade us. We need to be able to control that space as best we can.

The border barrier system that we're putting out there does exactly that. It provides not only for a physical barrier, but the technology and supporting infrastructure that our front-line agents, who are doing an outstanding job on that border every day, absolutely have said they needed.

PAYNE: You know, it's interesting. I would love to see who are the victims of all of those non-citizens that were arrested, because I bet you a lot of them were non-citizens as well, which is another reason we should empower law enforcement to do their job.

Thank you very much. Always a pleasure to talk to you.

PEREZ: Thank you, Charles.

PAYNE: All right folks, so, from stock selling off to Iran shooting off more missiles, will President Trump get any help from our European allies as he takes off for the G7?

(COMMERCIAL BREAK)

PAYNE: Ugly numbers on Wall Street today, but could something top White House economic adviser Larry Kudlow told our David Asman have things turning around?

We will tell you. We will be right back in 60 seconds.

(COMMERCIAL BREAK)

PAYNE: With stocks selling off, President Trump getting ready to head off to France and the G7 summit, and getting ready for some fights on multiple fronts.

To the FOX Business Network's Hillary Vaughn on what could be a tension convention this weekend -- Hillary.

HILLARY VAUGHN, CORRESPONDENT: Charles, the White House is teasing this G7 summit as a chance to talk to key trading partners about global growth and explain how they can both benefit by making business better with the U.S.

A senior administration official on a call with reporters yesterday says Trump's focus will be pushing the same fair trade, pro-job message he pushes here at home. It will also give him a captive audience with many world leaders that have left trade talks with the U.S. in limbo.

The official telling reporters -- quote -- "You will have the president really engaging in honest conversations with European allies and colleagues about what we can do to open up European and Japanese and Canadian markets as well to ensure that U.S. workers and businesses have markets in which they can sell their goods and services."

Trump is also planning to put some leaders in the hot seat, taking a cue from last year's G7 meet-up in Quebec, where he clashed with some of the group. The president plans to call out France over their digital services tax targeting tech companies and also pressure NATO allies to carry their weight in spending.

Trump's foreign policy shakeups will also be at the center of attention, particularly with Iran, including his maximum pressure sanctions on the country. European nations will likely push for the U.S. to rejoin the Iran nuclear deal -- Charles.

PAYNE: Hillary, thank you very much.

And Iran could be getting maximum attention this week, with the Bloomberg Report saying that Europe is digging in against President Trump's maximum pressure campaign against Tehran, this coming with Iran unveiling a new missile defense system this week.

So can the president expect any help from our allies with dealing with Iran?

I want to ask former CIA station chief Dan Hoffman.

Dan, thanks for joining us.

DAN HOFFMAN, FORMER CIA STATION CHIEF: Thanks for having me. PAYNE: From the very beginning, the -- our European allies have pushed back mightily against any kind of us pushing back against Iran, even to the point where we have heard them considering not using the dollar and creating their own sort of economic exchange system with Iran.

HOFFMAN: That's right.

They have -- they have tried to do that. And they have not succeeded at all. Today, President Macron met with Iranian Foreign Minister Zarif. They both said it was a good meeting. Zarif said that Iran thought that France was moving in the right direction.

Iran would clearly like for Europe to induce the United States to change our behavior to return to the very flawed Iran nuclear deal, to eliminate those sanctions that are crippling the Iran economy.

We're, of course, not going to do that. And I think the president will be highlighting to our European allies how it is Iran which has mounted a very aggressive military campaign in the Gulf. They have seized three vessels. They shot down a drone. They have mined merchant vessels.

And then they conducted these latest round of missile tests. And they're building out that missile defense system, as well as supporting proxy militant groups in Lebanon and in Iraq.

So there's a lot to be concerned about Iran. And not even our own -- our Democrat Senator Chuck Schumer would support the Iran nuclear deal. That's why it's not a treaty.

PAYNE: And to that point, the Europeans see this. They have got to know that they're sponsoring terrorism throughout the region, the threat that they are to Israel and the rest of the world, the belligerence put on full display recently with these -- hijacking these ships at sea.

I mean, is the money worth it? Is doing business -- are our European allies that desperate to do business with Iran? Or is there some sort of philosophical divide here?

HOFFMAN: Well, I think our sanctions have really limited Europe's efforts to penetrate the Iranian market.

This is just, in my view at least, a very disturbing lack of unanimity about how to counter a revolutionary power in the Middle East, which is causing great unrest, from Yemen, to Lebanon, Syria, Iraq. They have conducted tariffs operations worldwide, including seeking to assassinate the Saudi ambassador on our territory.

And I just think we need to continue to mount a diplomatic full-court press with the Europeans. It's possible that Iran's own efforts, they're really trying to be as provocative as they can to induce us to come back to the negotiating table on their terms.

And, remember, they have also mounted nuclear brinkmanship. They're stockpiling uranium at low-grade levels, beyond which is allowed by the nuclear deal.

PAYNE: Right.

HOFFMAN: And they're enriching uranium to weapons-grade levels.

PAYNE: Well, what...

HOFFMAN: And so they're really practicing nuclear blackmail and brinkmanship. And, hopefully, we can convince our European allies we need to stand together to counter Iran. That's the best course of action.

PAYNE: And the seized British ship, where they quickly exchanged the flag for their own, what do our allies say about this sort of piracy and, again, this sort of thumbing your nose at the international community?

HOFFMAN: Well, I think our British allies and Australia, they are both joining us to help patrol the Persian Gulf and support the merchant ships there and provide some extra security.

Viewers might recall that Iranian IRGC was spoofing the GPS, the bridge-to- bridge communication, so that merchant ships wouldn't believed that they -- would believe that they were international waters, when, in fact, Iran was inducing them to enter Iranian territory, so Iranian -- Iran could seize those ships.

We exposed that, disseminated that intelligence, which keeps our merchant ships safer. But, again, this is a wickedly difficult challenge for us.

PAYNE: Yes.

HOFFMAN: And we're negotiating with our own European allies that -- it shouldn't be a fair fight. We should be winning this one for Iran. You would think so, at least.

PAYNE: And I keep hearing people saying, you know what, we should have waited for Europe to help us fight back China. They wouldn't -- if they can't help us with this fight, they certainly couldn't take on China.

Dan, thank you very much. Appreciate it.

HOFFMAN: Thank you.

PAYNE: Well, Germany just one of the nation's refusing to help the United States with Iran. Is that about to change? Ambassador Ric Grenell will be joining "Cavuto Live" on that tomorrow.

And did the president really take tax cuts off the table? What the president's top economic adviser just told our David Asman that might just change your mind -- next.

(COMMERCIAL BREAK)

PAYNE: So, are tax cuts off the table?

FOX Business Network's David Asman, host of "Bulls & Bears," may have finally gotten some clarity from the president's economic adviser. Take a listen.

(BEGIN VIDEO CLIP)

LARRY KUDLOW, DIRECTOR, NATIONAL ECONOMIC COUNCIL: There's no reason why we shouldn't be -- and, in fact, we are -- developing, again, tax cuts 2.0. We're touching base with all the key people in the administration and the Hill.

DAVID ASMAN, ANCHOR: But, Larry, it seems that the president took 2.0 off the table yesterday.

KUDLOW: Well, he didn't.

And I spoke to him this afternoon about it. What he was referring to was something immediate or urgent or anti-recession. We just don't buy that scenario. Well, I...

ASMAN: Just forgive me for interrupting, but how soon? I mean, might we see tax cuts, more tax cuts before the election?

KUDLOW: Before the election? Yes.

(END VIDEO CLIP)

PAYNE: So that was last night.

And the question now is, does the president want to seem anxious for a tax cut, and really doesn't even need one to win next year?

I want to ask Spencer Brown with the Young America's Foundation, FOX Business Network's Jackie DeAngelis, and Democratic strategist Spencer Critchley.

Jackie, let me start with you, because I think there's a distinction between want and need. I don't know that we necessarily need one. But maybe it would go a long way toward even making a stronger economy stronger.

JACKIE DEANGELIS, FOX BUSINESS CORRESPONDENT: Hi there, Charles. That's right.

And I think the president's taking a wait-and-see approach here to see specifically what happens with these trade negotiations with China. You saw the market had a very strong reaction today to the retaliation.

And we're not exactly sure where this is going to end. So, potentially holding on to a tax cut, which, by the way, would need congressional approval, is something that could stimulate the economy down the line if things don't necessarily go his way.

I just want to make one point, though. It's this back and forth in terms - - the administration can have its own strategy, and they can have these conversations, but it's making these conversations public that makes the market get excited about it or disappointed when it doesn't happen. And that's part of the problem.

PAYNE: No doubt about that.

Spencer Critchley, Jackie talked about congressional approval. Would Democrats go against the middle class getting a payroll tax cut, the same one similar to what Obama did twice?

SPENCER CRITCHLEY, DEMOCRATIC STRATEGIST: Tax cuts can be beneficial, depending on how they're structured and how they're timed. But the question is, is there going to be any structure or any thought about timing in this case?

The biggest concern here, I think, is not whether to be for or against a particular tax cut. The problem, I think, as Jackie just indicated, is the volatility. There's an actual market price, there's an economic price to uncertainty.

We didn't just see the Dow plunge today. We saw the volatility index go way up.

(CROSSTALK)

PAYNE: I was talking about a tax cut, though.

If President Trump said, hey, we're going to do a payroll tax cut, maybe go from 6.2 to 4.2 percent, would Democrats be on board for that?

CRITCHLEY: We'd have to see.

I mean, we'd like to see something that actually benefits the middle class, unlike tax cut 1.0, which was a gift to corporations and people who are earn dividends from holding stocks, and did almost nothing for people who earn a paycheck.

If it was a question of doing something that actually helped wage earners, we'd like that idea. Of course, we'd like to do it without exploding the deficit the way this president has.

PAYNE: Spencer Brown, on that note, we see blue-collar wages surging over the last year at a pace they haven't done in over a decade, and households have so much strength right now.

We saw that on full display all week long and all of last week. So would this be unwanted stimulus, unneeded stimulus? Or would it be just the right thing to do?

SPENCER BROWN, YOUNG AMERICA'S FOUNDATION: Well, I think -- you mentioned the market moves whenever there's the suggestion that there may be tax cuts coming.

And that's because tax cuts are good for the economy. Look, when American workers, when they have more money in their paycheck, they have more money to spend and reinvest in the economy. And nobody knows better how to invest that money in their local community or in themselves than the individual, as opposed to some bureaucrat here in Washington.

So I think tax cuts are always a good thing, because they help Americans make those choices and give them more freedom to do that.

PAYNE: The CBO came out yesterday, and it's an interesting thing, a split decision. They're saying no recession. They go, from 2020 to 2023, we will grow at 1.8 percent, in fact, better than they thought just a few months ago.

But you just said that tax cuts are good. Many are wondering these days, are these deficits, Spencer, are these debts good?

BROWN: Well, I think it's interesting for the Washington establishment to ever talk about deficits or the debt, when you know they haven't been real concerned about that in recent memory.

And, again, I think it's just up to the American people, when given the opportunity, will invest and better their communities and make that spending choice. But they can't do that if taxes go up or if they are snapped back to where they were before tax cuts 1.0.

PAYNE: Jackie, listen, I think thinking out of the box, rate cuts before we go into recession, these kind of payroll tax cuts, they help the middle class.

I don't see what's wrong with doing something like that, even if it goes against traditional grain.

DEANGELIS: Well, look, this is sort of an unprecedented situation that we're in right now. And I think Jerome Powell indicated that in his comments earlier today at Jackson Hole in terms of how the Fed is going to act.

The Fed has never necessarily responded to a trade war situation by cutting interest rates. And that's what it's struggling with. It's looking at the data.

But, having said that, and having said that it's unprecedented, it may mean that the measures taken to remedy the situation are a little different. Look, I think the stock market would like to see a trade deal, a resolution, a sort of calm and peaceful approach to this whole situation to get back on track.

But if the volatility continues, there are other measures, obviously, that can be implemented to help things along.

PAYNE: All right, thank you all very much.

And, by the way, we're going to have more of David Asman's interview with Larry Kudlow tomorrow on "Cavuto Live." Remember, that's at 10:00 a.m. Eastern.

And I have got some breaking news for you. President Trump is now seeking a full appeals court review of a July decision upholding a ruling that bars him from blocking Twitter users from his account. If we get more details, we will certainly pass them along to you.

And with stocks selling off, do 2020 Democrats risk cheering it on?

We will be right back.

(COMMERCIAL BREAK)

PAYNE: So, as stocks drop, some 2020 Democrats see this as an opening to make President Trump's handling of the economy a central issue in 2020. But do they risk cheering on a possible economic downturn?

Washington Examiner's Joe Simonson joins us.

Joe, this is a very dangerous area for Democrats, because you start talking recession, and sometimes it sounds like you're wishing for a recession, which is really a catastrophe for so many middle- and low-income Americans.

JOE SIMONSON, THE WASHINGTON EXAMINER: Hey, thanks for having me.

Sure. Absolutely. I think you would ask any Democratic candidate one-on- one, they say, of course not, recessions are terrible. It's the most vulnerable who feel the effects of them the most.

But there's obviously real opportunity here as well. Trump's strongest approval numbers are with the economy, his handling of the economy, and the GOP as well, if they want to hold on to the Senate.

So you know, probably behind closed doors, a lot of Democrats are watching these numbers pretty closely.

PAYNE: Yes, they're watching them closely.

What we did learn this week is that the -- and last week -- the American consumer is just strong and just holding up not just America, but the entire planet really. And it's -- if they talk recession, and it doesn't happen, it's November 2020, and it's still going like this, isn't that an instant loser for them?

SIMONSON: Well, it's definitely going to make their message a lot harder.

I mean, Trump is still very vulnerable when it comes to 2020. There are still certain economic issues that Democrats can certainly hit the president on. But, at the same time, even if we do enter a long-term slowdown or a recession, consumer effects usually lag behind a little bit.

It's not obvious that we'd see high or rising unemployment if growth starts to slip. Consumer spending, like you said, is still going very strongly, propelling the economy as is.

The impact of a slowdown probably wouldn't start hitting consumers potentially until after the election.

PAYNE: Yes.

And, again, the latest in -- the National Association of Business Economists don't see a recession next year. The CBO doesn't see one for the next three or four, three years minimum.

Real quick, the alternative. Even if the -- even if the economy is somewhat wobbly, if the alternative is, hey, a $16 trillion Green New Deal that would pay for itself in 20 years, what do you think?

SIMONSON: Well, again, who knows what Democrats are really going to be running on in 2020?

I doubt whoever the nominee is going to be is going to be touting his or her Green New Deal. But, again, Trump does need to be conscious of the economy. Most voters vote with their paychecks. Voters that Trump needs in the suburbs or working-class voters who went from Obama to Trump want their wages to go up.

They don't want to be in fear of losing their jobs. So Trump needs to be careful here. But, at the same time, it's going to be very easy for Trump, if the economy is not doing well, to point to the Democratic Party and be like, well, are higher taxes really something that you think would help the economy?

PAYNE: Joe, something tells me pretty Trump is conscious of the -- all that stuff you just said.

(LAUGHTER)

PAYNE: Thank you very much.

All right, so, we had a massive stock market sell-off today, this amid the rising trade tensions. Does this make younger generations fearful of investing? You might be surprised.

(COMMERCIAL BREAK)

PAYNE: Escalating trade tensions with China had the market very worried today.

But are millennials?

"Your World" audio tech Dion Baia, New York Post's Brooke Rogers, and the host of "Sincerely Kat" on the FOX Nation, Kat Timpf, are here to weigh in.

Kat, what do you think? Did you make -- did you call your broker up and get out today?

KATHERINE TIMPF, CONTRIBUTOR: I was concerned. I am concerned about everything, right?

I know that the fact is that a normal, healthy economy is going to have ups and downs. However, the thing about my money is that I like to have more of it. And I think that that is something that spans across generations.

And when I see everybody panicking, I have a hard time not also panicking. I know that it's good for me to be invested in the stock market, which I am.

PAYNE: Right.

TIMPF: But when things are so volatile, it's just another thing to worry about. And I already have a very stressful life already, let me tell you.

PAYNE: You know, it's interesting. I'm glad you said that, because perhaps the most successful investor in the history of mankind, Warren Buffett, is famous for saying, when there's blood in the street, he's eager to buy.

So, Brooke, when people are panicking, this is when fortunes are made. This is when you actually outperform the market, if you have the nerve.

Do you have the nerve.

BROOKE ROGERS, THE NEW YORK POST: I think the problem with our generation is that a lot of us came of age during the Great Recession.

So I think a lot of us may not have the nerve. And when we look at something as volatile as the stock market, it scares us, because we know what happens when things go wrong. I think that will prevent a lot of people our age from investing.

PAYNE: But doesn't it make you feel better that just -- we're about just a few points away from the all-time high? So we went through all of that turmoil that you lived through, and all of a sudden, you're young, you're successful, and the market is at near the all-time high.

How did that happen?

ROGERS: I think that the -- this president has had an effect on the economy, in that a lot of businesses in the last couple of years have had a little more confidence.

PAYNE: Right.

ROGERS: But consumers are worried. And I think that the tariffs especially are contributing to that concern.

And I think that we're seeing those ups and downs. And I think that people will continue to get a little more fidgety about investing as time goes by.

PAYNE: OK.

Let me get you in, Dion, because, if consumers are worried, they got a funny way of showing it. Target's stock was up 21 percent yesterday. It hit an all-time high. Walmart stock is at an all-time high. Retail sales are at an all-time high.

TIMPF: Well, Target is paradise, to be clear.

PAYNE: Except for those carts, right? That last -- that tire is always -- I don't know.

DION BAIA, AUDIO TECHNICIAN: I think people, younger people, especially millennials, I don't know if they even have the money or the liquidity to be able to invest.

PAYNE: They go to Coachella. Come on, man.

BAIA: Well, you know, that's the thing is, there's a lot of...

TIMPF: Coachella is paradise.

(LAUGHTER)

BAIA: There's a lot of luxuries that we like to spend on, cell phones, TVs. People do not even think of them as luxuries.

PAYNE: Right.

BAIA: They look at them as necessities.

So when you're, at the end of the day, paying your rent, paying your -- for your food, paying for everything else, paying your student loans, you may not even have that kind of money.

PAYNE: But I have been reading more and more that millennials are opening accounts. This Robinhood thing has really blown up pretty big.

BAIA: Sure. And there's apps you can -- that make it very simple or dumbed down.

But you may have an extra hundred dollars or a couple hundred dollars one month, and then suddenly you have a bill comes in. And I don't even know. I would really wonder what the average of people our age are actually investing.

ROGERS: And those are very low-risk.

Those apps take very small amounts of money and invest them. So it's not as much of a risk as investing a lot of...

PAYNE: The bottom line, though, is, you're putting your money to work. I think that's ultimately the goal, especially at your age. Take advantage of it.

TIMPF: Well, I like when -- my money to make itself, because I get to take more naps.

PAYNE: All right, Kat, paradise.

(CROSSTALK)

PAYNE: All right, see you guys later.

BAIA: Thank you, Charles.

PAYNE: Hey, that's all we have time for today.

Of course, I will be back on Monday on FOX Business Network 2:00 p.m. Eastern time for "Making Money."

And be sure to tune in tomorrow at 10:00 a.m. Eastern for "Cavuto Live" right here on FOX News. We're going to have U.S. Ambassador to Germany Ric Grenell, 2020 Democrat Tim Ryan, and former House Judiciary Chair Bob Goodlatte, and many, many more tomorrow.

All right, it was a rough week for the market. The Dow was down only 200 points. Think about that.

"The Five" starts right now.

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