This is a rush transcript from "Your World," May 10, 2019. This copy may not be in its final form and may be updated.
NEIL CAVUTO, ANCHOR: Well, they're on a jet plane now. Don't know when they will be back again anytime soon now.
The Chinese delegation is headed home, folks. No deal yet, but President Trump says the talks will continue. Now, his treasury secretary just said kind of the opposite, that nothing is planned right now.
Nevertheless, stocks were trimming earlier gains, but they came back from huge, huge losses.
Also today, we were focusing on Uber shares, a big debut in the market today, a bit of a dud when it came to its opening day performance, down about 8 percent. Those were the crosscurrents today. What a day.
Welcome, everybody. I'm Neil Cavuto.
And Fox on top of trade tensions that are still over the top.
We have got John Roberts at the White House on where those talks are standing now, Jacqui Heinrich on in Bayonne, New Jersey on the impact to our economy right now, and Robert Gray out in Los Angeles, where consumers are bracing for an inevitable hit right now.
We begin with John Roberts.
JOHN ROBERTS, CHIEF WHITE HOUSE CORRESPONDENT: Neil, good afternoon to you.
First of all, officials tell Fox News that there are currently no more trade talks with China scheduled. It's not to say that there won't be any more trade talks, but there is nothing on the books right now.
And in the last few minutes, President Trump weighing in on today's talks with the vice premier of China, Liu He, the president tweeting -- quote -- "Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries. The relationship between President Xi and myself remains a very strong one, and conversations into the future will continue. In the meantime, the United States has imposed tariffs on China, which may or may not be removed, depending on what happens with respect to future negotiations."
Late last week, China reversed itself on some core issues that it had already agreed to, and then started to play the delay game on another round of talks. So, the president lit a fire under them with the imposition of new tariffs, which had been postponed. That increases tariffs from 10 to 25 percent on $200 billion worth of Chinese goods.
President Trump also turning up the heat, threatening more tariffs, tweeting this morning that the process has begun to place additional tariffs at 25 percent on the remaining $325 billion. That would be the biggest round of tariffs yet.
After last night's brief talks and dinner, the Chinese delegation saying they would prefer a different route of negotiations than the imposition of tariffs. Here's Liu He.
(BEGIN VIDEO CLIP)
LIU HE, CHINESE VICE PREMIER (through translator): Of course, China believes raising tariffs in the current situation is not a solution to the problem, but harmful to China, to the United States and to the whole world.
So, our way out should be to solve the practical problem in a better and principled manner, so that we can finally come to the only result of cooperation.
(END VIDEO CLIP)
ROBERTS: Now, Liu He did say that the talks went -- quote -- "fairly well," and confirmed that there will be more talks in the future.
Curious, though, Neil. Last night, according to sources, he told Steve Mnuchin, the treasury secretary, and the U.S. trade representative, Robert Lighthizer, that there was nothing more that he, Liu He, could do, that it had to come down to President Trump and Chinese President Xi Jinping getting together to try to pull this wagon of a trade deal across the finish line.
We haven't heard anything more about that, at least from the U.S. side, but we may hear more from President Trump, who's got an event in the East Room coming up here in the next few minutes -- Neil.
CAVUTO: All right, John, thank you very, very much.
Now to Jacqui Heinrich in Bayonne, New Jersey, with the impact all of this could have been our economy -- Jacqui.
JACQUI HEINRICH, CORRESPONDENT: Well, Neil, the effects of these new tariffs aren't being felt quite yet.
The cargo ships coming in today and for the next three to four weeks were already in transit by the time those new tariffs took effect, so those ones will be taxed at the 10 percent rate, the old rate.
Anything, though, that leaves China, left China after midnight last night will be subject to that 25 percent new tariff rate. That is a huge price difference, and it's causing a big conundrum for business owners and retailers.
Part of the question is whether the retailers and suppliers will absorb some or all of the costs increase, hoping to keep consumers shopping, or if they will reprice their items to reflect those tariffs and risk losing some business.
Some big retailers made bulk orders, anticipating the tariffs, and may be able to fend off price hikes until that inventory is gone. But smaller shops may pass off that extra cost to consumers faster -- $200 billion dollars worth of goods are impacted, nearly 6,000 products, including things that American shoppers purchase regularly, like furniture, clothes, food and electronics.
Some industries are being hit harder than others. The Consumer Technology Association said: "The tariffs already in place have cost the American technology sector about $1 billion more a month since October. That can be life or death for small businesses and startups that can't absorb the added costs."
(BEGIN VIDEO CLIP)
REP. ANN MCLANE KUSTER, D-N.H.: I'm worried about it. I'm worried about what the impact is going to be on our farmers. And I'm definitely worried about what's going to happen, automobiles, anything with aluminum or steel. So I think we got to wait and see.
(END VIDEO CLIP)
HEINRICH: As John Roberts mentioned, the president has one big card left to play.
Earlier this week, he threatened a 25 percent tariff on goods that are already impacted by those tariffs. That's about $325 billion worth of Chinese exports, just about every Chinese export left. He didn't pull the trigger on that. And retailers are hoping that he doesn't have to, and this negotiation reaches a conclusion -- Neil.
CAVUTO: All right, Jacqui, thank you very, very much.
I do want you to peek at a chart of the Dow today. It was -- it was crazy, folks. I mean, talk about a roller-coaster ride. We were heading south, and quickly, down about 358 points at one point, finished up about 114 points.
Everything was going tick for tick on where this particular trade negotiation was going. Now, the silver lining here is that the $200 billion worth of additional Chinese goods the president has targeted with these 25 percent tariffs, they will not affect goods that are already in transit here or right here, only new goods.
So there's about a couple of weeks, maybe three weeks of wiggle room, presumably, the markets like to think, to avoid them ever being implemented on a formal basis, let alone the threat of adding another $325 billion to that.
But the fact that matter is that talks would continue. And the president was optimistic that they would, even though you got a slightly mix vibe out of the treasury secretary. Didn't seem to matter. By day's end, we avoided having the worst week of the year. The Dow came back, but the major averages did have a rough time this week.
Let's get the read from market watchers Frances Newton Stacy, Ted Oakley, and Scott Shellady.
Scott, to you. What do you make of just how we ended on the day? Could have been a lot worse. Right?
SCOTT SHELLADY, TJM INVESTMENTS: Right. It could have been.
It would have been a lot easier to be sitting here when it was down 350. You could just blame it all on the Chinese talks.
SHELLADY: But you can't do that now.
What I think really happened was -- is what we saw on our desk. The selling really happened in the first four or five days -- four days this week, and then started to slowly but surely dry up, looking at the Uber offering that we saw today, and that we just didn't have those people come in and continue to keep -- keep pressing that market.
And then that's when the buyers could start to take over. And they did and they brought it up higher on the day.
But I will tell you this. We see a lot of these desks. We see equities. We see fixed income and we see commodities. The commodities across the board pretty much are telling us this is going to be longer and more protracted than we think.
So that's giving me a yellow danger signal. Then you have got the equity market trading the U.S. economy, right? Everything great, it's hunky-dory. And every now and again, we do trade on China. But we're still up there like we did today.
And then, lastly, I go to the fixed income or interest rate market. Interest rates are telling me also, flashing yellow, 2.45 percent, things that might not be that good going forward. So we're thinking that we have got more of a danger ahead of us than we do happiness.
CAVUTO: All right, you were referring to 2.45 percent, the yield on a 10- year note...
CAVUTO: ... a popular way to sort of gauge interest rates, a flight to quality. People were running to that. They interpreted perhaps that a trade war, whatever you want to call it, even an impasse, is going to slow things down.
Has yet to happen. But I guess that is the worry.
Frances, we're also worried or some people were about how China responds. They threatened their own retaliatory measures to counter what the president did with these higher tariffs on $200 billion worth of goods. What do you think they're up to?
FRANCES NEWTON STACY, OPTIMAL CAPITAL: Well, I think that there's actually a psychological component that might be being missed.
And certainly I have read "The Art of the Deal." And I really understand President Trump trying to increase his leverage point. And we -- certainly when it comes to trade, we have a lot more leverage. However, the Chinese are all about saving face. They do not have the same political goals that we do.
They do not have the same definition of transparency that we do. And I just have to think, if Trump can go in and make Xi look good, rather than trading these punches, then maybe we can get a little bit closer psychologically, so that we can start kind of building the trust back, because China does have options in making us feel pain.
Maybe it's not on the trade front, but maybe they can put pressure on the U.S. multinationals, which puts pressure on our stock market and our stock prices, which, of course, Trump likes. And also -- hopefully not -- but they have -- they could make things with North Korea a little bit difficult. So...
CAVUTO: No, no, you're right. They have a number of options.
Ted, one of the things that's remarkable about China is, we have a -- they have a surplus with us, a half-a-trillion dollars, whatever it is. They import a little over $100 billion worth of U.S. goods. So you talk about impact. Obviously, they're on the tougher end of that particular stick.
But they have a couple of so-called nuclear options, right? They could devalue their currency, cheapen it to the point that's a global impact right there. Or they could just say, you know what, all those treasuries we own, we just stop buying them. In fact, we might just start selling them. Then what?
TED OAKLEY, FOUNDER, OXBOW ADVISORS: Well, you could see that, Neil.
NEWTON STACY: Oh, yes.
CAVUTO: Go ahead, Ted. I'm sorry.
OAKLEY: Yes, you could see that, Neil, for sure.
And I think you saw a little of that today, when they came in and supported their own market, which made the market, their market, move up another 3 percent or so. But, in general, I think they would wait on the treasury side, I mean, from we're on a rate situation.
But they have those two options. I think they would do the yuan first, though.
CAVUTO: All right, you're talking about their currency, the yuan.
Scott, obviously, that's an extreme scenario. They didn't do anything today thus far. Maybe they're trying to see if they can patch things up. Obviously, you have got the delegation going back. They're going to get their marching orders from Xi Jinping.
What do you think they are?
SHELLADY: I think that they're pretty -- well, I think they're closer than they have been. And I think things ultimately will get done.
I mean, look, I have got a farm. We have got a family farm. I hear a lot from the soybean farmers out there. It's not good either. But I think that we have still got some political goodwill capital that we're going to be able to spend here. It's not going to happen overnight. Like, everybody who is waiting for some sort of May 10 epiphany, that's not happening.
But I need to remind everybody also, the U.S. economy is so big, so big and so good that, with a 3.2 percent GDP growth in the first quarter, you take into consideration these new tariffs, that's probably going to shave 0.3 -- three-tenths or maybe at the most four-tenths off of our growth. So it's not disastrous, and we're still very, very healthy.
CAVUTO: You can all see it also in the global markets. They kind of shrug of their shoulders today. I'm not saying that from our levels last week at this time, you lost about $1.8 trillion in wealth.
But if you think of that, Frances, it seems like the world is collectively saying or finger-crossing cooler heads prevail. What do you think?
NEWTON STACY: absolutely. Nobody likes chaos, I mean, just looking over what's going on with Brexit.
But we do become a bit numb to it. I think the -- I think if Trump could call Xi before we get into this let's punch each other, let's punch each other, let's punch each other, and let him save a little bit of face.
I think he sent Liu He over today because he knew that nothing was going to happen today. And he doesn't want that failure on him. And the Chinese are about saving face. And I know Trump is a tough talker. But I think, if he allows them to do that, it'll go through smoother and faster. I still think it's going to take a couple of months. I think we're going to get a deal. And I think the equities were trying to readjust to the possibility of no deal and then readjusted to yes, a deal is coming.
CAVUTO: Real quickly, Ted, what do you tell average investors who see this whipsawing in the market this week and say, oh, I don't know?
OAKLEY: Well, you would have to tell the average investor, hey, if you're worried about it, you need to carry some liquidity.
And if you look at those top 10 down markets really the last two weeks, they may tell you a little bit more about what's going on worldwide than just the U.S. market.
CAVUTO: All right, guys, I want to thank you all. Have a safe and pleasant, well, I would call it, like, promising financial weekend. We will see.
CAVUTO: In the meantime, the U.S. is calling these trade talks with China constructive. China says they went fairly well.
So, the interpretations are different, but this much is irrefutable. We were down a lot today, and we came back a lot today -- after this.
CAVUTO: All right, I want to take you to the White House, the East Room.
The president is set to speak to military moms there in honor of Mother's Day. We're going to be monitoring that, because he might have something to say about what's been going on in these China trade talks and the rest.
Ahead of that, we have got Edward Lawrence at the White House with the very, very latest.
EDWARD LAWRENCE, BUSINESS CORRESPONDENT: Hey, Neil.
Yes, it would seem that this deal between the U.S. and China would come down to a phone call between President Donald Trump and President Xi Jinping of China.
China's top negotiator, Liu He, told the U.S. delegation yesterday at dinner that he has nothing left that he could do and it would come down to that phone call.
Right now, I can tell you the top negotiator also told us today the talks went fairly well today. In addition, he says that more talks could happen in the future. He said the talks will continue. However, though, the White House confirming that there's no schedule for those talks going forward at this point.
Now, President Donald Trump says that he doesn't mind collecting all those tariffs, the administration remaining positive, Vice President Mike Pence today saying that a deal is possible with the Chinese still.
Now, it means that if you buy something of the one of 6,000 items that went up to 25 percent tariff -- that's $200 billion worth of imports -- it could cost you more. We're talking about airplane rubber, plywood, also inflatable rafts.
Now, moving forward, there is no schedule, as I say, of right now as to what happens next. The Chinese have left the United States now. They're on a flight on their way back to China. The administration also started the paperwork to put everything else that China imports into the United States under a 25 percent tariff there.
The Chinese seem to be on the clock now, the president following through with his -- with his threats to add these tariffs. And the ball seems to be in the Chinese court -- back to you, Neil.
CAVUTO: All right, Ed, thank you. Great reporting today, my friend.
Let's go to Andy Puzder, the former CKE Restaurant CEO. Remember, the president had briefly considered him to be a labor secretary.
But, Andy, what's interesting here is, we do have some wiggle room before the implementation of these 25 percent tariffs, but -- because it's -- if they already have goods in transit, they're not affected. It's the new -- the new stuff that will be.
But, having said that, if they were to go into effect, absorbing a 10 percent hit is one thing. Businesses will try to swallow and not pass it along to their consumers; 25 percent, it would be another matter. Then what?
ANDREW PUZDER, FORMER PRESIDENT & CEO, CKE RESTAURANTS: Well, I think it's a lot -- it's going to be a lot tougher on the Chinese than it's going to be on the Americans.
I think this -- there is -- a deal needs to be done here. It needs to be done. The Chinese need it done. We need it done here in the United States to get things back on track as far as our trade relationship with China.
CAVUTO: But you don't think there would be a hit with the 25 percent thing? Maybe they eat -- to your former strength, they go out less, they eat out less.
PUZDER: Well, you would have some -- you would have different problems in different sectors.
For example, the prior guest mentioned inflatable rafts. I don't think we're going to get hurt much if inflatable rafts go up in price.
PUZDER: The other -- the other -- if you look at the restaurant industry, the restaurant industry actually likes it when foreign countries stop buying our produce.
Now, farmers don't like it.
PUZDER: But restaurants like it because the price of those commodities go down. Therefore, you can -- you can pass price benefits on to consumers at the restaurant level.
You have also got people -- look, you have got more people working than have ever worked, wages going up to 3 percent a month year over year for nine straight months. And you have got people taking home more of what they earn because of the tax cuts.
So, we can absorb some of this.
CAVUTO: No, no, you're right. You're right on that.
We're in the position of strength here. That's undeniable.
CAVUTO: And there's more on the line for the Chinese, that they're the ones with the 500-plus-billion-dollar surplus. They have $100 billion worth of import from us they could play with, but the threats aren't exactly equal.
Do you think that the president would impose the other $325 billion, you know, to compound this, or do you he just holds his fire?
PUZDER: I think he would -- I think he will go as far as he needs to go to get a deal done.
I think that the Chinese need to understand that not only are we in a better negotiating position, but for the first time since the Reagan administration, we have a president who's willing to use that power to negotiate a better deal and someone who's very experienced in negotiating.
So if they think they're going to push us around, they think they're going to play the politics, this president is not someone who's going to succumb to any of that.
CAVUTO: All right, I always like to help out viewers, the pro side, the worry side.
Part of the worry side is something like this, Andy, that things get out of control, that, all of a sudden, this gets tougher, cooler heads do not prevail. Even there, I could see half-glass full. Whatever impact would be on the trade front is dwarfed by just the underlying strong economy, and because this, in the scheme of things, is a small percentage of that.
What do you say?
PUZDER: No, I think you're absolutely right.
Look, I think that the fact that this could get out of control is more of a threat to the Chinese than it is to us. Our economy, as you said, is growing. Theirs is showing signs of pulling back.
And you have to remember that the Chinese people know they're not living like Americans live. Our GDP per capita is about $68,000. In China, it's about $10,000. So they're -- we live much better than they live.
CAVUTO: Got it.
PUZDER: They need our business. They need our trade. They need to keep growing, if the people that are in power are going to remain in power.
CAVUTO: All right.
PUZDER: So this is important to them.
CAVUTO: All right, and we need your perspective. And we just got it.
Andy Puzder, thank you very much, my friend.
PUZDER: Thanks, Neil.
CAVUTO: Have a great weekend.
You know, it wasn't great for Uber today, I got to tell you, its debut a little bumpy, actually a lot bumpy.
It doesn't necessarily mean the end of the world for Uber, but let's say a rough start.
CAVUTO: All right, there was another big theme in the market today.
I didn't want to forget about it. Uber, the ride-sharing service, had a big debut today. It was a rocky debut, came in priced at 45 bucks, and then it was moving south, and fast, in a volatile market.
A lot of people look at that and say, all right, what does that mean for other public offerings that are sort of waiting on the runway?
Who better to ask than my friend Charles Payne? I'm not kidding. I think he's about the smartest read of the markets and certainly the most accurate one that I know.
But, then again, I have a small pool of a pair or two.
CAVUTO: Good to see you, buddy.
CHARLES PAYNE, CONTRIBUTOR: Thanks a lot.
CAVUTO: Let's talk about Uber. What happened? I thought they were very conservative, tame in their forecasts. They didn't overhype. What happened?
PAYNE: You're right.
And a couple of weeks ago, there was thought, hey, this is going to be $150 billion dollar IPO. And, of course, it didn't help that Lyft went public.
PAYNE: And Lyft actually did what everyone thought. It opened high, significantly higher, and then proceeded to freefall. And it's been freefalling, and it's been freefalling.
CAVUTO: Yes, fell more today.
PAYNE: They came out with their earnings, and it kept going down.
None of that actually helped Uber. But I think the problem with all these companies -- and it's so ironic, because you get Wall Street and its reputation for being greedy. No one is greedier than Silicon Valley and the venture capitalists out there, no one out there.
They have had 24 rounds of fund-raising over the years. What that means is that, years ago, certain people got a bite at the apple at a $500 million valuation, then $1 billion valuation, and it goes up and goes up.
And for a long time, they were able to go public, these companies, and knowing that the public, particularly the users -- I mean, think of this. Tens of millions of users around the world would automatically want to own the stock. And that's kind of backfiring right now. People are getting a little hip to this.
CAVUTO: But they even said stuff like, we're not going to make money, we might never make money.
CAVUTO: And I'm thinking, well, that's a problem.
So, I know the comparison was always made to Amazon.
CAVUTO: They were going to build up their infrastructure and all of that. But it's not Amazon.
PAYNE: It's not Amazon.
CAVUTO: Amazon was like a rocket pouring all of this fast-moving revenue back into the operations.
PAYNE: And they had something to show for it, right?
PAYNE: We saw the physical build-out that Amazon was doing.
And any time -- and we always knew Amazon could be public. The greatest thing Jeff Bezos did was, he didn't care what Wall Street cared about.
PAYNE: He said, I'm going to build something here that's going to be very hard, if not impossible, to duplicate.
CAVUTO: But this technology, or whatever you want to call it, it...
PAYNE: It's an app.
CAVUTO: I get it, but it's still a very promising -- it's changed the whole taxi, ride-sharing business.
PAYNE: It has.
And they got Uber Eats, Uber Transports, and a whole lot of other things, but they're operating at massive losses. I don't think any company has ever gone public losing this much money in the history of the markets either.
CAVUTO: So you're looking at the prospects a year or two, three out, what do you think for this whole industry?
PAYNE: I think it's going to -- I think the interesting part of this industry comes with auto -- when they start getting these robot cars.
CAVUTO: Got it.
PAYNE: I think that -- I think as long as they're paying people -- And, by the way, they're paying them less and less, hence those protests.
It's going to be tough. It's going to be really, really difficult. And the barrier to entry is not that difficult, really, to be a competitor to these guys. They have got -- and they're trying to figure out unique ways to make money on the data and stuff like that.
CAVUTO: Leverage what they can.
PAYNE: But it's going to be tough, yes.
CAVUTO: What do you make of the markets' comeback today, the trade stuff, all of that?
PAYNE: I thought it was absolutely remarkable.
I think couple things here. First, there are a lot of other moving parts to the -- to the stock market beyond tariffs, right? I mean, that held us hostage this week, for good reason.
PAYNE: A week ago, we assumed it was done.
We were talking about last Friday, I would have been, Neil, done deal, Rose Garden celebration.
CAVUTO: But I will say this. You weren't worried about it. It wasn't dominating your theme on whether you liked or disliked the market.
PAYNE: No, it wasn't, because I always get back to the fundamentals.
PAYNE: Particularly in America, the backdrop of our economic -- our economy right now, Neil, wages are soaring, blue-collar worker wages are soaring.
PAYNE: The 3.2 percent GDP growth.
I think we're an economic juggernaut right now that continues to get better and better and better. Trade is a small portion of what we do, and this is a fight, I think a time that's come. And it goes beyond trade, let's face it.
PAYNE: There are implications, military implications, the ability to be the world's reserve currency. There are whole lot of implications.
CAVUTO: There's a lot on the line.
PAYNE: Yes, a lot on the line.
CAVUTO: That's why I don't understand your support for Bernie Sanders.
CAVUTO: Kidding. Kidding. I don't know.
PAYNE: Bernie's got some unique ideas.
CAVUTO: Yes, he does. Yes, he does.
CAVUTO: Yes, he does, as do you, my friend, Charles Payne, right on the money all the time.
CAVUTO: In the meantime, shoppers are getting ready to pay more at stores, as China gets ready for its move. But what if it never moves, and what if this fear, what we're seeing at the stores, never materializes?
CAVUTO: So what are you getting mom for Mother's Day? I don't know, but I can guarantee you this. It'll be a heck of a lot more than you give dad for Father's Day.
Gen Hexed is here to say why they're -- they hate their fathers -- after this.
CAVUTO: All right, bracing ourselves for those 25 percent tariffs. Remember, governments don't pay them. You do.
Now, a lot of businesses will try not to pass it all along to you, but it will affect you.
Robert Gray, if it comes to pass, at a Best Buy in Los Angeles.
ROBERT GRAY, CORRESPONDENT: Hey, Neil.
That's right. Now, this could be ground zero for a lot of those tariffs. We will hit that in a second. I mean, keep in mind, electronics, bicycles, toys, furniture, you name it, made in China being slapped with fresh tariffs up to 25 percent or something elevated up to 25 percent.
It's going to affect $40 billion in consumer goods. And if this is passed along to consumer, well, and one economist saying it's going to be about 500 bucks per household per year just off the tariffs alone in added cost as they get passed along.
And we're not just talking made in China, but things made with parts in China could also be slapped with this. You will be looking for the goods that were shipped before midnight last night, because that's when it went into effect.
Unclear if all products will be hit, though. Analysts are saying Apple may be spared. So if you're looking for a new iPhone, it may help you. Gene Munster, a widely followed analyst at Loup Ventures, saying that Apple is seen by the president as a sign of U.S. strength in business, and they also have a good working relationship.
And keep in mind Apple was spared from tariffs last fall. So, we will see how this falls out as a case-by-case basis. If hit, though, Munster is saying Apple would eat those costs initially. Many small businesses won't have that luxury, though, as they're having to pay more for goods. They will have to pass it along to folks.
And some folks like farmers say they're getting hit coming and going, Neil. They're paying higher prices for steel products -- think of tractors -- and then of course, ag prices falling, as they're being hit with tariffs on some of the agricultural products in China.
So, it will be interesting to see how this shakes out. And think about stores like Best Buy. Lastly, Neil, they have razor-thin margins, about 5 percent. And almost all the goods that they're selling are made in China. So you will be paying more, no doubt, at the till pretty soon if you're buying stuff from Best Buy and other retailers -- back to you.
CAVUTO: All right, thank you, Robert Gray.
Let's go to Jerry Storch, a former Toys 'R' Us CEO, of Storch Advisors now.
It's interesting. I have always found toys to be a unique product, because parents won't nickel-and-dime when it comes to their kids, we're told, at least. And I understand that. But if it's all of a sudden a 25 percent more expensive toy, they might, right?
GERALD STORCH, FORMER CEO, TOYS 'R' US: Well, toys are one category that is heavily concentrated on Chinese production.
STORCH: It's probably one of the highest I can think of.
So prices for toys will definitely go up if that next round of tariffs goes into effect. So I think we have to keep track of what's happened yet and what hasn't happened yet. So, that's not now.
What's happened so far is an increase on tariffs on the goods that were already tariffed. And really that was a blip on the radar effect.
CAVUTO: You're right.
STORCH: It didn't affect very much, if we're straight about it.
Sure, there were individual companies affected by it, but not much, and not much on the consumer. The next round, if it's put into place, would have more of effect. But companies will work hard to shift that production.
And for most categories, a lot of that has already occurred, as China is no longer the low-cost producer it once was. For toys, for bicycles, it still made in China for quite some time to come.
CAVUTO: You know, I think I was seeing an ad by one retailer in the newspaper saying, buy now before you will have to pay more.
Now, I don't know how many do that on a widespread basis, because I think it loses its impact when people get into these gobbledygook arguments.
But what do you make of that? Because a lot of retailers were preparing for this by building up their inventories, putting more on their shelves, just in case. A lot of people said that's why the first-quarter GDP was as strong as it was.
What do you think?
STORCH: Well, I certainly think that it would be retail malpractice not to have tried to bring goods and inventory and build up what you had when you knew the tariffs were coming. You didn't just wake up this morning and go, oh, there might tariffs.
I mean, this has been talked about for a very long time.
STORCH: And so many companies certainly have been working on this.
Meanwhile, again, I want to reinforce that many companies have been moving production outside of China for years, both because it's no longer as cheap as it once was to make product there, but also to diversify their sources of production.
So it's only certain categories that are so heavily affected. And I am always amazed at the flexibility and responsiveness of capitalism.
CAVUTO: Yes, you're right.
STORCH: So, if there is a short-term blip in certain categories, it'll move fast.
STORCH: And, in that regard, the president might get -- he might get exactly what he wants, which is the production will shift out of China to other countries.
CAVUTO: All right, Jerry, thank you very much.
To Jerry's point, we should tell you that a number of people have been doing that. GoPro, for example, moved some of its Asian operations to Guadalajara, Mexico.
We have also seen Steve Madden shoes moving from Cambodia to other parts in the Southeast Asia as well, or to Cambodia. This is a trend that we're seeing pick up steam, including Foxconn that might start making Apple phones in India.
Stay with us.
CAVUTO: Any of you remember this?
(BEGIN VIDEO CLIP)
SEN. MITCH MCCONNELL, R-KY: Two years of exhaustive investigation, and nothing to establish the fanciful conspiracy theory that Democratic politicians and TV talking heads had treated like a foregone conclusion.
They told everyone there had been a conspiracy between Russia and the Trump campaign. Yet, on this central question, the special counsel's funding is clear: Case closed. Case closed.
(END VIDEO CLIP)
CAVUTO: Well, apparently, Senate Intelligence Chairman Republican Richard Burr didn't get that memo, because now he is among those coming under fire by Republicans to try and subpoena Donald Trump Jr.
So what does all of this mean?
Let's go to former South Carolina Congressman Trey Gowdy, also at Fox News contributor, more important to us.
Congressman, what do you make of what the senator is doing here?
TREY GOWDY, CONTRIBUTOR: Two things.
Number one, the fact that Richard Burr is issuing a subpoena means the attempts to negotiate a voluntary appearance failed. I know Richard Burr pretty well. He's not an ambitious person. He's not running for reelection. He's one of the few senators not running for president either now or in the future.
So if he's sending a subpoena, that tells me that private negotiations for a voluntary appearance failed. The next question is, OK, what does he want?
The Senate Intelligence Committee found no evidence of criminal collusion a long time ago. You ought to be forgiven for maybe not remembering that, because it didn't get a lot of play in the D.C. media, but the Senate Intelligence Committee long ago said no criminal collusion.
Richard Burr is not investigating obstruction of justice, because he's not a prosecutor. That leaves two things, election security and the report that he has yet to publish.
And my suspicion is, there is testimonial discrepancy between witnesses. And chairman Burr is wanting to give one of those witnesses an opportunity to clarify, amplify, otherwise correct a discrepancy. He did it with Jared Kushner.
GOWDY: Remember, Kushner came back a second time. I think that's what Richard Burr is trying to do.
CAVUTO: Well, where in confused, he obviously had to know the Republican wrath he would face for doing so, or recommending that he do so.
And I'm wondering if the report itself, the Mueller report, has anything to do with it, and anything attributed to Donald Trump Jr. that doesn't jibe with his closed-door meeting with the same committee. What do you think?
GOWDY: Well, I think, if Senator Burr were here, he would say he has great respect for the executive branch and their ability to conduct investigations, but he's a member of a co-equal branch that also has a responsibility.
GOWDY: And I do understand that a lot of our focus has been on that alleged collusion angle, but it has never been the focus of a conversation I had with Senator Burr.
He has always been much more interested in the counterintelligence and the election security component. Remember, the Senate Intelligence Committee said no collusion before Mueller did. I mean, this is old news to them.
So I appreciate what Majority Leader McConnell said about case closed. It's been closed on collusion for Richard Burr for months.
CAVUTO: But what is this case then about, Congressman? That's where I'm a little confused.
If he is pursuing and wants to hear again from the president's son, what is it you suspect he is zeroing in on?
GOWDY: Witness discrepancies. I would be willing to bet that one witness said the light was red, another witness said the light was green.
He's about to publish a report that is going to be consumed by everyone, and he wants the report to be fulsome. So if you have witness discrepancy, the fair thing to do is to give those witnesses a chance to say, I had inaccurate recollection or misrecollection, my recollection has been refreshed.
The only way to do that is to invite the witness to come back in voluntarily. Apparently, that did not work. Your next option, which I think Burr was pretty reluctant to use, is a subpoena.
When this final story is written, Neil, I think you will find that he offered a voluntary, it didn't work out, and this has nothing to do with collusion or obstruction.
GOWDY: It is about writing a report that you can have confidence in.
CAVUTO: All right, but then the president isn't going to let his son speak, just like he's been against having others speak, right? Where does this go?
GOWDY: Well, I -- Donald Trump Jr. appeared before the House Intelligence Committee and acquitted himself extremely well. He's appeared before the Senate Intelligence Committee.
I would -- I think the president's correct to not allow witnesses to go in front of Nadler and Schiff and people who wanted to impeach him.
CAVUTO: You don't think this will be -- it will come to that, that he in the end probably would testify?
GOWDY: I think if there is a factual discrepancy that he has the ability to clear up, keeping in mind he has no criminal exposure.
Richard Burr can't prosecute him for anything, no criminal exposure, no collusion. That leaves election security and writing a report.
CAVUTO: Trey Gowdy, thank you very much. Have a good weekend.
GOWDY: Yes, sir. You too. Thank you.
CAVUTO: All right, in the meantime, our Gen Hexed is really hexed today, especially over what to get mom for Sunday.
CAVUTO: All right, the markets kind of calmed down, but what about young folks responding now to news that a lot of things they love are going to be 25 percent more expensive?
We got attorney Natalie Elisha Gold here, "Blood in the Streets" author Dion Baia, my own sound wingman as well, and The Washington Examiner's Tiana.
Tiana, would you pay 25 percent more for, let's say, a device that you really like, a phone, let's say, and you will -- you will be OK with it?
TIANA LOWE, THE WASHINGTON EXAMINER: It depends on what the competitors are, and the issue being that, whenever we're talking about these imports, especially from Chinese production, it means that all the competitors become more expensive.
And that's where I think the buck stops here.
CAVUTO: Assuming they all come from China.
LOWE: Yes, exactly.
NATALIE ELISHA GOLD, ATTORNEY: But here's the thing, right?
We are addicted to the almighty iPhone. Does it matter if it's 25 percent more? Because Sprint will just tell me it's $4 more a month to lease the phone.
Am I going to stop using the iPhone, which by the way, Steve Jobs made a statement to -- come on.
CAVUTO: There is that.
DION BAIA, CORRESPONDENT: I don't -- I don't feel like people will make the correlation, especially young people, that it is related to China.
At the end of the day, people will pay more for anything. Every year, it seems like prices are going up on the inflation with everything. So I think now...
CAVUTO: I don't think a lot of people, young or old, though, know this is happening, right? I think they probably expect that it won't. Right?
ELISHA GOLD: Yes.
Look, people think that this is not really going to make a big change in their life, but here's the deal. Even if it does, what's the alternative? For us not to use the iPhone? For us not to check in on Instagram every day? Good luck.
CAVUTO: Do you look at the prices of things?
ELISHA GOLD: Of course.
CAVUTO: Because you're a lawyer. Your probably...
ELISHA GOLD: Of course. And I'm a wealth preservation expert. So, I'm always looking at the prices.
But if -- an iPhone, we can do work from it. We can build our office from this device.
BAIA: I think we're addicted to this technology, if we like it or not.
ELISHA GOLD: Yes.
BAIA: And no matter what...
CAVUTO: But it's beyond technology. This is 1,000 different products.
BAIA: And I think, well, yes, it goes to that too. But I think, if we want it, we're going to pay for it no matter what.
LOWE: Just as we have transitioned away from having home lines, I know people who do not have cell phone numbers. All they use is iMessage through their e-mails, through their computers.
ELISHA GOLD: Wow.
CAVUTO: Do you ever pick up the phone and just talk to people? I guess not.
CAVUTO: There's another story that kind of interested me, guys.
Microsoft is apparently testing a new version of Word. It uses artificial intelligence to check if you're not only grammatically correct, but politically correct.
ELISHA GOLD: This is so plain vanilla.
Dion, you and I are both authors. Unbelievable. What I'm going to be writing is now going to be streamlined every time. Talk -- sometimes, you need a four-letter expletive.
CAVUTO: I have read his book. And that would be a problem.
BAIA: And I also think that's the other -- the other big thing is I think that we're going to find out later on that they will be cataloging everything, like, you find out with Facebook, when you like something or whichever -- me and you were talking. Our private messages, it's all being catalogued and remembered.
CAVUTO: We don't privately message. Don't act like we're buds.
BAIA: I know. I know. That's a lie.
But I think down the line, though, if you start implementing this Word program, what's to say in a couple years, it's like, oh, they were logging everything you were saying for advertisers?
CAVUTO: And who judges it, right, Tiana? I'm saying, how the heck can they judge what is...
BAIA: Well, it's an algorithm.
LOWE: What they want to do is they want to de-gender society, which I don't really care about from a political perspective, except for the fact that it becomes extremely rhetorically clunky.
If you have ever tried to write about two groups of people, an actor and an actress, and you don't want to say their name every single time, having a gender difference is helpful.
But now we're being told that that is politicizing that?
ELISHA GOLD: But here's the slippery slope, right? What is next?
I mean, is Facebook going to start saying what we can and cannot write about? Oh, wait, that's actually happening already.
CAVUTO: We were thinking of this. Just call a congressman a congressperson, unspoken agreement a gentleman's agreement. Get rid of that. That's sexist.
BAIA: It seems like it's another hurdle you're going to have to go through where someone's going to be tapping you on the back, saying, this is wrong. You're doing that wrong.
ELISHA GOLD: And here's the thing. As a woman who's empowered, I want to be known as an empowered woman.
I want to be out there, not just be a gender-neutral thing.
CAVUTO: But are you against empowered men?
See, that will come up in the Word.
ELISHA GOLD: Of course not. Of course not.
BAIA: I am empowered.
ELISHA GOLD: Of course not. We have to empower all of us together.
CAVUTO: Now we're empowered to talk about Mother's Day this weekend.
The one thing that shocks me is that we spend a lot more on mom than we do dad. Did that surprise you guys?
BAIA: No, I think that's a really good thing. I think we need love in this world. And I think it's nice.
CAVUTO: I know, but there's a lot less love for dad.
LOWE: Women are inherently materialist. It's just a thing about us.
CAVUTO: Well, what are men, baboons?
ELISHA GOLD: Well, I also think, as a mom -- I have a nine-month-old.
And believe you, my husband will be the first person to tell you, Natalie does 90 percent of the work.
CAVUTO: I don't care if you're doing 90 percent of the work. I want the...
BAIA: I think it's also -- it's just -- it's another way of expressing thank you.
And men sometimes just suck it up and do it. I think it's a little...
CAVUTO: You have issues. You have issues.
BAIA: Well, it's the silent job.
CAVUTO: But are you going to generous? Apparently, we're spending record amounts this year on mom.
ELISHA GOLD: Here's what I would tell people. Just skip the flowers
ELISHA GOLD: And buy instead a wealth asset, so, a beautiful bag.
CAVUTO: Or maybe the new Microsoft Word.
BAIA: That's politically correct now. You know what I mean?
CAVUTO: You can't say...
BAIA: I know.
CAVUTO: All right, guys, I want to thank you all. I'm sorry we truncated this, with all the breaking news.
But we are getting some more news now on this trade war that has yet actually to be waged. But there are some interesting behind-the-scenes developments.
Stay with us.
CAVUTO: Everyone is waiting for the next products that are going to get hit.
What if I told you, when it comes to the trade war, farmers already are, hog farmers already are?
And Jeff Flock knows it, reporting from Illinois right now.
JEFF FLOCK, FOX BUSINESS NETWORK CORRESPONDENT: Retaliatory tariffs, Neil, by China on U.S. imports, and hog farmers hit hardest by them.
And the president tweeted today -- and I will read it for you -- "Tariffs will actually make our country much stronger, not weaker. Just sit back and watch."
I just want to give one farmer one opportunity to respond.
BRIAN DUNCAN, HOG FARMER: How much longer do we watch? We have been watching for a year-and-a-half.
I would say farmers are out of patience, both economically and emotionally. And this week certainly did not end up as we had hoped.
FLOCK: Brian Duncan.
I'm going to leave it right there. We're almost out of time on the broadcast, but important to hear the farmer's tale on this, Neil. They have not had an easy time. A tough one -- Neil.
CAVUTO: And your reporting today has been outstanding on this, because people forget there's a group that has been feeling the impact of this for a long, long time. They don't have to wait for something. It's been very real, very palpable, and very painful.
Thank you very, very much, Jeff Flock.
We are all over the trade impact of this, because, for now, it might be limited to agricultural items feeling the pinch, and the U.S. is trying to help them out any way it can.
But who knows what's going to happen? Who knows if this escalates? Who knows if cooler heads ultimately will prevail?
Ten a.m. Eastern time tomorrow, we're all over it, the impact on you, your money and the next time you go shopping.
Here's "The Five."
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