This is a rush transcript from "Fox News Sunday," May 20, 2018. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

Another school shooting leaves ten dead in the worst attack since the massacre in Parkland, Florida.


UNIDENTIFIED FEMALE: And you hear boom, boom, boom, and I just ran as fast I could.

GOV. GREG ABBOTT, R-TEXAS: We need to do more than just pray for the victims and their families.

WALLACE: We'll discuss if there's any way to protect our children with the incoming president of the National Rifle Association, Oliver North. And we'll get reaction from a leader in preventing gun violence, Mark Kelly, the retired astronaut husband of Gabby Giffords.

Then, will President Trump given on trade with China? We'll talk with the president's point man, Treasury Secretary Steven Mnuchin, only on "Fox News Sunday."

Plus, President Trump offers security assurances to Kim Jong-un on after the North Koreans threatened to cancel the summit.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We are willing to do a lot and he's willing to I think to a lot also. And he'll get protections that will be very strong.

WALLACE: We'll ask Senator Lindsey Graham whether the president can keep the Singapore summit on track.

Then --

RUDY GIULIANI, PRESIDENT TRUMP'S ATTORNEY: If you're going to write a fair report, fine, write it. If you're going to write an unfair report, write it, and we will combat it. We're ready to rip it apart.

WALLACE: A new effort by President Trump and his supporters to discredit Robert Mueller's Russia investigation as he marks one year as special counsel. We'll ask our Sunday panel about reports the FBI have an informant on the campaign.

And our "Power Player of the Week".

UNIDENTIFIED MALE: This is Justify. He's a big boy as you can see.

WALLACE: A Triple Crown trainer on why his horses keep making it to the winners circle.

All right now on "Fox News Sunday."


WALLACE: And hello again from Fox News in Washington.

There is major news today on a Trump-Kim summit and trade talks with China. But we begin with another school shooting, the 16th this year. This time a high school in Santa Fe, Texas, where 10 people were killed. The attack coming just weeks after nationwide walkouts by students seeking tougher gun controls after the massacre in Parkland, Florida -- walkouts students participated in before they begin the next targets.

This hour, we'll look at what can be done to protect our children. We'll talk exclusively with incoming NRA President Oliver North, and get reaction from gun control advocate Mark Kelly.

But first to Doug McKelway in Santa Fe, Texas, with the latest on the investigation.


For the first time, we are hearing from the family of the accused gunman. The Pagourtzis family in a formal statement they ask for their privacy and they added, quote: We are as shocked and confused as anyone else by these events that occurred. We are gratified by the public comments made by other Santa Fe high school students that showed Dimitri as we know him: a smart, quiet, sweet boy.

But like so many other Americans, they seem unaware of some of their son's disturbing social media postings.

The suspect made an initial court appearance on capital murder charges. He told investigators that he spared the students he liked. The death toll remains at 10. Among the 13 wounded, San Fe ISD Police Officer John Barnes who ran to the sound of the gunshots and helped neutralize the shooter. Barnes nearly bled out but remains in critical but stable condition.

Another of the wounded, sophomore Rome Shubert was shot in the back of the head.


ROME SHUBERT, SHOOTING VICTIM: It went in through the back of my head just right like kind of in the middle of the back of my head and it came out right here. People were like let's go, let's go, and I just took off running. I still had no idea that I had been shot yet. I took off running out the door, and there's something for a while out there. (INAUDIBLE) hard and that I just propelled myself over the wall.


MCKELWAY: Among the dead, Sabika Sheikh, who was in the U.S. on a State Department exchange program from Pakistan. Funeral prayers for Sheikh will take place today in Houston. And the Houston Texans NFL football team confirms that there are star defensive end JJ Watt has indeed agreed to pay for the funeral services of all of the deceased -- Chris.

WALLACE: Doug McKelway reporting from Santa Fe, Texas -- Doug, thanks for that.

Joining me now, the next president of the National Rifle Association, Oliver North.

Ollie, welcome back to "Fox News Sunday."


WALLACE: I want to start by playing two students from Santa Fe High said after the shooting. Here they are.


DAKOTA SCHRADER, SANTA FE SHOOTING SURVIVOR: I shouldn't be going through this. This is my school. This is my daily life. I shouldn't have to feel like that, and I feel scared to even go back.

PAIGE CURRY, SANTA FE SHOOTING SURVIVOR: It's been happening everywhere. I've always felt eventually it was going to happen here too.


WALLACE: What do you say to young people like that who have come to expect shootings in their schools?

NORTH: They shouldn't have to. They shouldn't be afraid to go to school. They shouldn't worry about the fact that they might not go home that night because some crazed person comes in with a firearm. Which is one of the reasons why the NRA for over two years has been advocating a program called School Shield and there's legislation for it. Seventy-five to a hundred million dollars appropriated by the federal government to assist in that.

But if School Shield had been placed in Santa Fe high school, far less likely that that would have happened. The problem that we got is we are trying like the Dickens to treat the symptom without treating the disease.

And the disease in this case isn't the Second Amendment. The disease is youngsters who are steeped in a culture of violence. They have been drugged in many cases. Nearly all of these perpetrators are male and they are young teenagers in most cases.

And they have come through a culture where violence is commonplace. All you need to do is turn on the TV, go to a movie. If you look at what has happened to the young people, many of these young boys have been on Ritalin since they were in kindergarten.

Now, I am certainly not a doctor, I'm a marine, but I can see those kinds of things happening endangering those two gals --.

WALLACE: Let's get specific because this was the 16th --


WALLACE: -- sixteenth school shooting so far this year. That is the most at this point in a year since they started keeping records after Columbine in 1999. Two, three key specific things that you think would keep our children safe?

NORTH: Well, one, School Shield, because School Shield --

WALLACE: Which is what?

NORTH: It's a program -- the NRA introduced it two years ago. It's a -- we'll go do an assessment, costs the school nothing, costs the taxpayers nothing to get the assessment, as to what the issues are in terms of ingress, egress, the ability to hide a firearm and get them into a school. The number of officers you really need. And very few schools actually have that --

WALLACE: Let's just talk about that specific -- if I may, just talk about that specifically. This school had to go policeman armed, roaming the halls. The school administrator said yesterday they considered Santa Fe a hardened school.

NORTH: But there's no way to detect a firearm being brought into the building. Look, you and I came through the lobby here in this building for we are sitting right now. There's a security desk there. There's a barrier for us to pass through. You can't get on an airplane today without going through a metal detector.

WALLACE: I was going to say, there's no metal detector in our building. Are you suggesting that there be a metal detector? I'm not saying that's wrong, a metal detector at the entrance to every school for millions and millions of schools?

NORTH: Well, if you want to stop the carnage -- look, you are not going to fix it by taking away the rights of law-abiding citizens. You've got to take it away to harden the place sufficiently, that those kids are safe inside the door. If that means five metal detectors getting and out of the high school, you get five metal detectors.

WALLACE: OK. Cameron Kasky, one of the Parkland students who has led the March for Our Lives movement, tweeted this after the shooting. Donald Trump does not care about you or your kids getting shot.

Here's what you've said about the Parkland school movement: What they did very successfully with a frontal assault and now intimidation and harassment and lawbreaking, is they confused the American people.

Question, what's wrong with students like this fighting, they would say, for their lives?

NORTH: Look it, I -- that is taken out of context as people are fond of saying in our business. I was talking about the people who organized the harassment, the vandalism, the threats, the hacking and showing the full force of the First Amendment against the Second Amendment. And they are leading the cause.

I'm not -- these kids aren't the problem. They are being used by forces far bigger than they are to make sure that the Second Amendment goes away.

WALLACE: Who is using the Parkland students?

NORTH: We know that -- we know what Mayor Bloomberg was up to. We know what George Soros has funded. I mean, in our business, his creations have gone after you, me and everybody else.

WALLACE: Cameron Kasky would say he is speaking and working for himself and those other kids.

NORTH: OK. But my point being I was not criticizing those kids. Your next guest is going to be a person who was an advocate for more gun control. He's got a First Amendment right just like I do.

I believe that what we are doing right now with the National Rifle Association is trying to make sure that kids are protected without taking away the rights of law-abiding citizens. And that's -- that's all it's about.

WALLACE: I got less than a minute left. You say that one of your jobs as the incoming president at the NRA is you want to reassure politicians with all of this movement now for gun control that it's a good thing to be associated with the NRA, not a liability. How is that going?

NORTH: Well, my goal is a million more members. We have 6 million now. We've been around since 1871. It took us that long. I want to get a million more. And then I'm going to go out and ask every NRA member to recruit one more.

That will put 14 million activists on the streets. Not the types that George Soros is fielding, not the types that showed up down there in Dallas to protest our right to gather. But those are going to be people who support the Second Amendment. That's our cause.

WALLACE: Ollie, thank you. Thanks for coming in today.

NORTH: A pleasure.

WALLACE: Now, let's bring in Mark Kelly, the retired astronaut who became a leader in preventing gun violence after his wife, former Congresswoman Gabby Giffords was severely injured by a deranged shooter in 2011.

Mark, you just heard Oliver North. Here's what President Trump said after the shooting.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: My administration is determined to do everything in our power to protect our students, secure our schools and to keep weapons out of the hands of those who pose a threat to themselves and to others.


WALLACE: Mark, your reaction?

MARK KELLY, FORMER NASA ASTRONAUT: Well, you know, on the surface, those sound like reasonable words. I mean, keeping guns, weapons, out of the hands of people that pose a threat. You did not hear Ollie say that. You know, Ollie talked about the school being the problem and not the fact that we have proliferated guns throughout society.

I'm a gun owner. Like Ollie, I'm a supporter of the Second Amendment, but we make it so easy for irresponsible people and criminals to get access to firearms.

WALLACE: But let me pick up on that because let's review the facts of this specific case.

The shooter in this case had a shotgun and a pistol, there were no assault weapons. The guns had been bought legally by his father. He was on the school football team. He was on the honor roll. There were no red flags.

The fact is most of the things that you generally talk about would not have prevented this shooting.

KELLY: In general, but, you know, one thing that could be done, I mean, the state of Texas is an example, could pass a piece of legislation that requires parents to safely store their firearms if they have a child in the house. I mean, this kid was 17 years old. He shouldn't have access to a semiautomatic shotgun and a .38 revolver.

I mean, there is legislation. I mean, it works. It works in the states that have less gun violence. You know, they have stronger laws.

WALLACE: But you are talking about Texas, people go hunting. The idea that a 17-year-old is not going to have access to his dad's shotgun and that we're going to have a law preventing that?

KELLY: I mean, it exists in some places. I mean, I go hunting as well, but, you know, all my firearms are locked in a safe and if I had -- I don't even have a kid in the house anymore. I mean, if I did, you know, I would even probably even double down on that.

I mean, there are things that work. When we allow irresponsible people to get their hands on firearms and criminals -- I mean, your last guest is about to take over as the president of an organization that is against background checks for gun sales. I mean, the most common sense thing that we can do to protect society, they are so strongly against. And then they advocate for an alternative reality, that the problem is the school and the access point.

WALLACE: Well, wait, wait, I want to --


KELLY: Certainly, we can take steps.

WALLACE: Mark, I want to pick up on that, though, because as I discussed with Oliver North, this is the 16th school shooting so far this year. There clearly is a copycat aspect of this. One disturbed student seeing what another disturbed student did, and following in that deranged path. And the question does become at a certain point, particularly as I point out where a lot of the things, assault weapons, red flags don't -- wouldn't have worked in this case, do we need to harden our schools the way we do our airports with metal detectors and limited access to get in and out of the school?

KELLY: Absolutely. I mean, I think we should make it more difficult. I mean, figure out a way to prevent people coming in the door with a firearm. At the same time, make sure that that irresponsible person can't get the gun in the first place.

I mean, there are a lot of reasons why we have the level of gun violence that we currently have in this country. It's not one reason we have 38,000 people dying every year from gun violence, another 110,000 people are shot and injured.

I can tell you this, and this is from somebody who owns eight firearms -- it's not because we don't have enough guns in our society. I mean, we have more guns than almost every other country. If the issue was more firearms in more places, which is what Ollie North and the NRA advocates for, we would live in the safest country on the planet and that's not the case.

WALLACE: I have about a minute left, and I want to ask you one final question.

Gun control has generally not been a big -- pro-gun control -- a big voting issue in elections. You just heard Oliver North say that he is on a campaign to try to reassure politicians that being part or associated with the NRA is a plus, not a minus. He wants to add a million more members/voters.

Do you think you can make pro-gun control issues a key voting issue in this campaign?

KELLY: Well, I mean, gun safety already is. I mean, we saw that in November in Virginia. We're going to see this year in November. These kids from Parkland, who, by the way, Ollie referred to as terrorists I believe it's what he said about them several weeks ago.

I mean, these kids are motivated. They are smart, they are articulate and they are angry. And they have a right to be angry. The kids in Santa Fe, I live 10 miles from that school for 15 years. Those kids have a right to be angry about this.

And the alternative reality -- I mean, Rex Tillerson just gave -- just gave a speech at VMI, a commencement speech, and he talked about how alternative realities are a threat to democracy. And I think what --

WALLACE: All right.

KELLY: -- the NRA is proposing as an alternative reality.

WALLACE: Mark, we are going to have to leave it there. Thank you, thank you for joining us today. And unfortunately we will stay on top of this continuing story.

Up next, Treasury Secretary Steven Mnuchin on talks to settle big differences between the U.S. and China. Can the world's two against economies avoid a trade war?


WALLACE: China is showing some signs of compromise in talks with the U.S. But heading off a trade war that has kept the global markets on edge is still far from a done deal.

Joining us now, President Trump's point man in the negotiations, Treasury Secretary Steven Mnuchin.

Mr. Secretary, welcome back to "Fox News Sunday."

STEVEN MNUCHIN, TREASURY SECRETARY: Thank you. It's great to be here with you.

WALLACE: After two long days of talks, Thursday and Friday, where are we on the one hand on China agreeing to buy $200 billion more of U.S. goods in return for the U.S. dropping tariffs on $150 billion of Chinese goods?

MNUCHIN: Well, Chris, I'm pleased to report that we have made very meaningful progress and we agreed on a framework, which is important to understand. And the framework includes their agreement to substantially reduce the trade deficit by increasing their purchases of goods. We also discussed very important structural issues that they are going to make in their economy to make sure that we have a fair ability to compete there, and also protections about technology, which have been very important to the president.

WALLACE: But China and one of the big things the president has said is he wants them to reduce the deficit by $200 billion, by $200 billion worth of U.S. goods, they reportedly refused to agree to that specific target. There's nothing about a specific target in the statement. One, have they refused to agree to a target, and is there still the possibility of a trade war?

MNUCHIN: Well, Chris, we're putting the trade war on hold. So, right now, we are -- we have agreed to put the tariffs on hold while we try to execute the framework. The president has been very clear since the first meeting with President Xi in Mar-a-Lago, that it is -- we are going to reduce the trade deficit. We have an agreement with China that they will substantially agree to it.

I would just comment that, ultimately, these are not government to government transactions. It's not a giant purchase order with us. We are immediately going to follow this up with Secretary Ross going there with very hard commitments in agriculture where we expect to see a very big increase, 35 to 45 percent increases in agriculture this year alone. In energy, doubling the energy purchases.

I think that you could see $50 billion, $60 billion a year of energy purchases over the next three to five years. And, strategically, that's very important for us and very important for them.

WALLACE: But just to lock down two points, sir -- one, no specific target of $200 billion?

MNUCHIN: Chris, we have specific targets. I'm not going to publicly disclose what they are. They go industry by industry and as I said, not only do we have targets, but ultimately, this is about industry being able to have hard contracts and deliver these goods.

WALLACE: And as far as the president's threat, first, of $50 billion in tariffs on Chinese goods and $150 billion, those are all on hold?

MNUCHIN: They are. And the president had a very productive meeting with the vice premier in the Oval Office, with all of us and the vice president. He heard these commitments himself and he can always decide to put the tariffs back on if China doesn't go through with their commitments.

WALLACE: Now, President Trump shocked a lot of people this week when he tweeted this. Let's put it up on the screen. President Xi of China and I are working together to give massive Chinese phone company ZTE a way to get back into business fast. Too many jobs in China lost.

The Trump administration has banned U.S. companies from selling components to ZTE. And the president indicated that perhaps he would be willing to and that ban, which resulted in this exchange. Take a look.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: President Xi asked me to look at it, I said I would look at it, but anything we do with ZTE is always -- it's just a small component of the overall deal.

SEN. CHUCK SCHUMER (D), NEW YORK: President Trump bemoans too many jobs in China lost. What about American jobs?


WALLACE: Now, the issue with ZTE is that they violated our sanctions for selling goods to Iran and North Korea. Is ZTE part of these trade talks and is President Trump willing to relax the ban on U.S. companies selling components to ZTE?

MNUCHIN: So, Chris, I don't know why anybody is surprised about this so let me give you the facts. President Xi asked President Trump to look into this. That's not a surprise.

President Trump often asks other leaders to look into things that are important to our companies. The president asked Secretary Ross to look into it, OK?

And that's what Secretary Ross -- this is an enforcement issue. It's not a trade issue. We didn't agree to any quid pro quo and Secretary Ross will make sure that the enforcement issue is in, but in in a way that's good for American companies and I'm not going to go through the discussions on the enforcement issue. That was completely independent of our trade negotiations.

WALLACE: But we just have the sound bite of President Trump saying it's a small component of the overall deal. He seems to be linking ZTE with the trade talks.

MNUCHIN: Again, the president asked us to look into it as part of the delegation, and that's what we did. I can assure you -- and you know I'm very involved in all the sanctions issues myself -- I can assure you that whatever changes we make to the enforcement issue on ZTE, we will be protecting American technology, American jobs and make sure that the secretary is comfortable with enforcement.

This is -- but this is an enforcement issue and I can assure you the president wants us to be very tough on ZTE. And all he did was ask the secretary to look into this.

WALLACE: OK, President Trump also suggested that President Xi, Chinese President Xi may be using his leverage with Kim Jong-un on relative to a summit to get a better trade deal with the U.S.

Take a look.


TRUMP: It could very well be that he is influencing Kim Jong-un. We'll see what happens. Meaning the president of China, President Xi could be influencing Kim Jong-un.


WALLACE: Now, the president has suggested before that if President Xi is helpful with regards to North Korea, then he, President Trump, might go easier on China on a trade deal. Is the whole issue of a Trump-Kim summit and President Xi's conceivable role in that, is that part of trade talks?

MNUCHIN: Well, it is only part of trade talks in the sense of I have very direct conversations with the vice premier. You know I'm responsible for sanctions and I have a commitment from them that they are going to continue to enforce the sanctions that are in place and this is very important.

And China has the same objective as we do. They want to get rid of the nuclear weapons.

WALLACE: So, we are not going easy on China and the trade talks to try and get Xi's help for a summit?

MNUCHIN: I don't think we are going easy on the trade talks at all. I think for the first time, OK, many presidents haven't dealt with this issue.

President Trump has dealt with this issue. He threatened to put on $150 billion tariffs. We have a really good framework agreement that's not just about buying goods.

It's about structural changes. It's about lowering tariffs. China has committed to lower tariffs on many things and made structural changes and protect our technology.

So, these are very important issues for the U.S. economy, and now, we are going to make sure that this gets implemented.

WALLACE: All right. As if you didn't have enough on your plate, there's also NAFTA, are negotiations of the effort to renegotiate a trade deal with Canada and Mexico, and there are reports or speculation that prospects for a deal are diminishing after the administration missed a deadline this past week that had been set by House Speaker Paul Ryan for getting the deal done.

What are the chances that NAFTA will be renegotiated and it will be passed by Congress this year?

MNUCHIN: The president is more determined to have a good deal then he is worried about any deadline. So, whether we pass it in this Congress or whether we pass it in a new Congress, the president is determined that we negotiate NAFTA. That's something we're doing, I can tell you I've been in contact with the finance ministers in both Canada and Mexico.

President Trump and Trudeau had a very good conversation last week. As Ambassador Lighthizer has said, we are still far apart but we are working every day to renegotiate this agreement and that's what we're focused on --

WALLACE: So, you are suggesting the president is not setting any kind of deadline and might be willing to let this spillover into 2019?

MNUCHIN: I'm not saying he's willing to let it spill over, OK? He has all these alternatives. I'm just saying, right now, we are focused on negotiating a good deal and we are not focused on specific deadlines. I can tell you that Ambassador Lighthizer and others are still working around the clock on his negotiations with Canada and Mexico. We are far apart but our objective is still to get a deal.

WALLACE: Secretary Mnuchin, thank you. Thanks for your time. You've got
a lot on your plate.

MNUCHIN: Very busy. Don't forget Iran sanctions, which we are also very focused on, Chris.

WALLACE: I wanted to ask about that. Please come back and we will discuss that as well.

Coming up, Kim Jong-un threatens to cancel the Singapore summit and President Trump says Kim can stay in power if he makes a deal. We'll discuss where things stand with Senator Lindsey Graham, next.


WALLACE: Coming up, President Trump offers assurances to North Korea's Kim Jong-un in exchange for a nuclear deal.


TRUMP: We are going to say that he will have very adequate protection and let's see how it all turns out.


WALLACE: We'll ask Senator Lindsey Graham what to expect from the planned summit in Singapore, next.


CHRIS WALLACE, FOX NEWS HOST: North Korea is making good on its reputation for being unpredictable, now threatening to back out of next month's planned summit between Kim Jong-un and President Trump. So what should we make of the diplomatic gamesmanship?

Joining me now from South Carolina, Senator Lindsey Graham, a key member of the Senate Armed Services' Committee. Senator, North Korea suggested this week, as we say, that they may not show up in Singapore for the summit.

Are they playing us?


I don't know, but they are making a mistake. If they don't show up that means diplomacy has failed and President Trump is intent on calling the question on North Korea in his first term. So, that puts us back on the path to conflict. It would be time to take American families and dependents out of South Korea.

I talked with the president two or three days ago. He's not going to be played. They are trying to run out the clock. They have a record of promising to give up their nuclear weapons.

In reality, they build up their weapons. They've done this for 30 years. It's going to end one way or the other by 2020.

WALLACE: And you've also said that if they do show up, have the summit and then don't make a deal that that's dangerous as well.

GRAHAM: Well, that ends diplomacy. The last thing you want is want is diplomacy to be ended or to have a meeting with President Trump and you continue to play him because they've done that for 30 years.

Trump is not Obama. He's not going to tolerate that. He wants a win-win. We're not out to replace Kim Jong-un. We're not trying to reunify the peninsula. We're not trying to spread democracy to North Korea.

We are trying to get them to give up their nuclear weapons program, and the Korean War and make it a win-win. If they don't show up, that's the end of diplomacy. If they do show up and try to play Trump, and that means military conflict is the only thing left. And if we have a conflict with North Korea, they will lose it, not us.

WALLACE: I want to be clear, because you do talk to the president a lot. You said you talked to him two or three days ago.


WALLACE: Has he said to you, if they don't get a deal, a diplomatic deal to end North Korea's nuclear program that he is going to use military efforts against North Korea, against the regime?

GRAHAM: He says he's going to end this conflict within his first term, that every other president has been played. They've done every agreement known to man -- bilateral, multilateral agreements. They promised to give up their weapons. They back out and they build up their weapons program. There's no place to kick the can.

President Trump told me three days ago that he wants to end this in a win-win way. He thinks that's possible, but if they pull out, they play him, that we're going to end North Korea's threat to the American homeland in his first term and I'll let you surmise as to what that might look like.

WALLACE: Now, you just heard Treasury Secretary Mnuchin talk about trade negotiations with China. Here was the president this week.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I can only tell you this: we are going to come out fine with China. Hopefully, China is going to be happy. I think we will be happy.


WALLACE: Any concern that President Trump is too much of a hurry for a deal with China either to score a political win or to try to satisfy Xi to help broker the Kim-Trump summit?

GRAHAM: Well, I think it's smart to engage China on trade abuses and it would also be smart to get them more involved in trying to help us with North Korea. So, we finally got some leverage now with China.

Anything before Trump didn't work, being quiet, not disturbing North Korea. We've engaged them like 20 times in the last 20 or 30 years. Nobody has ever really pushed back against China.

So, North Korea wants to wait Trump out. They're going to try to nickel and dime the president. They're going to give a little bit, take a lot. They're going to play China against the United States.

None of that is going to work. They are trying to run the clock out. They understand our electoral system and the only thing I can tell you after talking to President Trump three days ago, China and North Korea have a chance to end the conflict in a win-win fashion and if it doesn't end soon, it's going to be a real mess and if there's a war, it will be in China's backyard, not ours.

WALLACE: I want to continue, though, on this question of China and traded because let's talk about ZTE, which I was discussing --

GRAHAM: Right.

WALLACE: -- with Treasury Secretary Mnuchin. It's not just that they violated U.S. sanctions against companies doing business with Iran and North Korea. As you well know, there are also concerns that ZTE is a national security threat to this country. So, when you hear President Trump talk about, well, you know, maybe we need to reduce some of our sanctions against ZTE, does that concern you?

GRAHAM: Yes. I think President Trump is going to -- is a good negotiator. You know, we are not going to withdraw our troops as part of the deal with North Korea because that's been stabilizing. As to ZTE continuing to do business with them as normal, that would be a real backlash in Congress if that were on the table because this is Chinese-run company that's up to no good.

But where are we? We're at the table with China about leveling out trade imbalances. We're talking about a summit with the North Korean leader directly with the president of the United States.

The only reason we are where we are is because President Trump has tried something new. He's approaching this issue from strength, not weakness. He wants a good deal. North Korea could come out of this thing just fine.

But if they play Trump, if they try to nickel and dime Trump, and if they try to run out the clock on President Trump, then we're going to have a conflict and it's going to be in his first term. I'm highly confident of that because there is no other place to kick the can. We've get it get too bad for too long and President Trump is going to end this problem with North Korea one way or the other, and he should.

WALLACE: All right. Finally, the Russia investigation -- and I will take you back to a tweet that president Trump put out on Thursday. Here it is.

Wow. Word seems to be coming out that the Obama FBI spied on the Trump campaign with an embedded informant. If so, bigger than Watergate.

Now, there have been, Senator, several reports since then, there was no mole inside the campaign but as the FBI became increasingly worried about possible links with Russia, it had a fellow, apparently, an American professor based in England, talked to several members of the Trump campaign, particularly in the foreign policy area.

Does that bother you?

GRAHAM: Yes, it bothers me that there may be an informant and one of the campaigns, unless there is a damn good reason. All I can tell you is that the dossier compiled by Mr. Steele that was given to the Justice Department, where they obtained the warrant against Carter Page, somebody inside the Trump orbit, was a bunch of political garbage. It was not well-vetted. And that's a very --


WALLACE: If I may, let me just ask you because what we're talking about here is not a mole inside the campaign, but asking somebody outside the campaign to make efforts to reach out to Carter Page, to George Papadopoulos, apparently to Sam Clovis, to try to find out what they were doing with the Russians. Do you think that's a problem?

GRAHAM: I think this whole area is a problem, let me tell you why. The Department of Justice used a document prepared by a foreign agent paid for by political party to obtain a FISA warrant and never told the court if they were using as somebody to engage the Trump campaign, was their judicial oversight? They had the thumb on the scale when it came to the Clinton investigation. Somebody has got to watch those who watch us.

Senator Grassley sent a letter asking questions about this. I'm intend on letting Mr. Mueller do his job but I want to make sure the FBI and the Department of Justice did not try to, in their own way, change the outcome of the election. Did they use techniques and tactics approved by the court or did they just make this up themselves? I don't know.

WALLACE: OK, I've got less than a minute left. The president's lead lawyer Rudy Giuliani was back at it again this week attacking the special counsel investigation. Here he is.


RUDY GIULIANI, PRESIDENT TRUMP'S ATTORNEY: If you're going to write an unfair report, write it, and we will combat it. We're ready to rip it apart. And we're ready to rip them apart if that's what they want.


WALLACE: Do you think Rudy Giuliani is helping or hurting the president?

GRAHAM: I think he's showing a determination to push back and aggressively defend his client. With Rudy, it's a little bit of both, but I'd like to have Rudy on my team if I were the president because he's pretty good at talking to the American people. His reputation has been as a solid prosecutor.

Let Mr. Mueller do his job and then see what's there, and let the Trump people rip into it and we'll figure out as a country whether or not there's anything there. I haven't seen the evidence of collusion by the president, but time will tell.

WALLACE: Senator Graham, thank you. Thanks for sharing part of your weekend with us. Always good to talk with you and let's both hope --

GRAHAM: Thank you.

WALLACE: -- we never need a good lawyer.

GRAHAM: Let's hope so.

WALLACE: Up next, we'll bring in our Sunday group to break down year one of the Mueller investigation, and what to expect as the president and his legal team launch a new strategy.



RUDY GIULIANI, ATTORNEY, DONALD TRUMP: We would have to know what is it do you want clarified. If we knew that and they told us that if we gave the explanation that we're proposing, he was -- they were going to end it, fine. We're trying to get him to end this.


CHRIS WALLACE, HOST, FOX NEWS SUNDAY: President Trump's lead lawyer Rudy Giuliani going on TV to negotiate the terms under which his client would sit for an interview with the Special Counsel. And it's time now for our Sunday group. Fox News Senior Political Analyst Brit Hume back after a long time on the beach. Welcome back.

Columnist for The Hill, Juan Williams. Former Democratic Congresswoman Jane Harman, director of the Woodrow Wilson Center and Josh Holmes, Mitch McConnell's former chief of staff and now a GOP strategist. Brit, first anniversary of the Special Counsel investigation, Robert Mueller. What do you think of the effort by his present being (ph) increasingly aggressive effort by the president and his team to try to end it and what do you make of this controversy about an apparent FBI informant who was asking questions of Trump campaign officials?

BRIT HUME, SENIOR POLITICAL ANALYST, FOX NEWS: Well, the aggressive approach is probably worth a try. I'm not sure it's going to work. Because the truth is, Chris, for all the talk about there being some real accountability to higher authorities within the government by the Special Counsel, there really isn't. I mean, they're effectively have a roving commission (ph).

No matter what you'd call them, no matter what legal authority they're operating under. So he's -- it seems to me that as a practical matter, the -- the Special Counsel is free to rove in any direction he wants.

WALLACE: And the FBI informant?

HUME: And the FBI informant it seems to me is an interesting question. And the question, it seems to me, is this. Did they actually have a basis in law to create this investigation in the first place? Was it sufficient? Was it sufficient to go to all the lengths they've gone to, actually, with the -- you know, with -- with -- with the informants, with the subpoenas, with breaking down doors and all of that that they've -- that they have done.

You know, it all hangs on a rather small thread, which was this Papadopoulos meeting that we've all heard so much about.

WALLACE: Former advisor George Papadopoulos supposed being told that the Russians had dirt on Hillary Clinton.

HUME: A man -- a man hardly at the center of the Trump campaign.


HUME: So I think it comes down to that in the end. And whether this was all much ado about not much and it has gone on too long. Remember, you say it's the first anniversary. It's really the second -- almost the second because it started as a counterintelligence investigation under Comey. Then that was the thread that was picked up by Mueller when he took over.

WALLACE: Juan, I want you to -- too address particularly this issue. Because originally there was speculation and then even the president tweeting about a mole planted inside the campaign. And now it turns out that it was an American professor based in Britain who reached out to a few members of the -- of the campaign to try to ask them about relations with Russia.

JUAN WILLIAMS, OPINION CONTRIBUTOR, THE HILL: Right. So what you have is an ongoing effort, I think, to undermine not only the Mueller investigation but the intelligence organizations. Both CIA and FBI that started this counterintelligence effort based on the idea that Russia was interfering in an ongoing election. But this changes nothing in terms of the substance.

The president this morning has backed off the embedded stuff, he just -- and at one point he said this was bigger than Watergate. You know, the Obama --

WALLACE: He was (ph) talking about infiltration.

WILLIAMS: Yes. But it's -- it's the cases -- all three of the people we are discussing here -- Papadopoulos, as Brit mentioned but also Sam Clovis, Carter Page all met with this professor. And we know that all three are implicated in the Russia probe. So it doesn't change anything.

I think what we have here is an effort in advance of the likelihood that Mueller's going to ask the president to testify under oath to somehow diminish the quality of the investigation and the quality of the intelligence agencies that contribute to it.

WALLACE: I want to turn to the other big story this week, and that of course is the on again off again Singapore summit between Trump and Kim. The North Koreans saying not so fast and the president, quite remarkably is offering assurances to Kim. If you make a deal with us, you can stay in power and your country will see untold riches from investment from the west. Congresswoman Harman, what do you make of this?

JANE HARMAN, DIRECTOR, WOODROW WILSON CENTER: Well, talking is better than bombing. And I hope the talks are successful and I applaud President Trump for making this his highest priority at the beginning of the administration, something that President Obama did not do. And President Trump tells us that all the time but it's true. Obama did not do this.

I'm dubious that this gets to a good place fast. This is going to take a long time for lots of reasons. One of which is it's not a slam dunk that the Kim regime survives just because we say so, unless we're going to go to war to protect the Kim regime, which I doubt.

The reason is once the people of North Korea understand that over 70 years, tens of thousands have been in gulags and they've been deprived of food -- which is why they're three inches shorter than South Koreans -- in order to build this nuclear industry which just got given up. I don't know how that's going to go down.

So that's kind of my point about that. But in addition to that, denuclearization doesn't mean the same thing to Kim that it does to us. And I don't think we will or should give up our nuclear umbrella in Asia, which protects our allies. We still have some there.

WALLACE: So, what do you think, if this doesn't go the way the president wants, what do you think of Lindsey Graham, who really wanted to send a message today, one way or another this is going to end by 2020?

HARMAN: Well, 100 years ago World War I was fought based on a miscalculation and more people died than in any time in our history. And I sure hope we don't go to war because President Trump wants to fit this in a box of his first term. I think we ought to go to ware, if we do, and maybe we have to, but I hope not, for the right reasons, not to meet a time clock.

WALLACE: Josh, after all of this week's developments involving the president, involving Kim, involving China, how do you feel about a Trump-Kim summit?

HOLMES: Well, look, I think the notion that we would go from a nuclear showdown to peace in our time, in a course of three months without any bumps in the road is pretty ridiculous. I mean, obviously we are going to have some setbacks here. And I think if history is our guide, we are going to have a Lucy and a football moment with North Korea where they retract some of the things that they said they were going to go forward with, and I think we will have a lot of setbacks.

WALLACE: And how do you think President Trump is going to deal with that, because he sure makes it sound like -- I mean, he says if this doesn't work out in Singapore, I'm going to walk out on the table. I mean, does diplomacy continue then?

HOLMES: Yeah, I mean, I think he's been remarkably circumspect about how he has approached this whole thing. We have the showdown last summer where his rhetoric was pretty hot, but since then he has talked about, you know, if there is something to be done here I will be there, butthe moment there is not I will walk away.

And I think he has put for the first time in decades American foreign policy in a place where it's kind of a win-win here. If we get a diplomatic solution we are pursuing we are there. If not, the world is going to see Kim for what he is.

HUME: And, Chris, remember this, for the longest time, and for good reason, threats of force against North Korea have been considered unimaginable because, not so much because they are an emerging nuclear power, but because they have conventional weapons that could cause unspeakable destruction in the south, particularly around the South Korean capital.

So President Trump, by his rhetoric seems to me to have created in the mind of the North Koreans the idea that he might just do it, which is a useful thing. That's what you want him to think going into a negotiation.

WALLACE: All right, well this will be continued. From now to and perhaps after the Singapore summit.

Thank you panel. See you next Sunday.

Up next, our Power Player of the Week, the man riding high in the sport of kings.


WALLACE: Around this time of year, people get excited about the idea of another super horse ready to take on the challenge of racing's Triple Crown. This spring, there is a new contender trained by the most recognizable figure in horse racing. Here's our Power Player of the Week.


BOB BAFFERT, HORSE TRAINER: This is Justify. He's a big boy, as you can see.

WALLACE: Bob Baffert introduced me to his latest Kentucky Derby winner Thursday.

ANNOUNCER: Justify takes the lead as they round the far turn.

WALLACE: Just two days before they went for the Preakness, the second jewel in racing's Triple Crown.

Baffert said his new star intimidates other horses and trainers before he even gets on the track.

BAFFERT: When they see him in the paddock, it's like that scene from Jaws, we need a bigger boat. That's it when they see him.

WALLACE: Horse racing's leading trainer took us inside his operation.

BAFFERT: All right, let's go ahead and get on him.

WALLACE: As Justify went for a morning gallop.

After a commanding win in the Derby, he said the pressure was off.

BAFFERT: I feel more like relaxed enjoying the moment, because, you know, you want to show your Derby horse off to everybody.

WALLACE: It had been raining for days, and Baffert wanted to make sure his horse got a safe ride on the sloppy track.

BAFFERT: I would stick to the middle, because it's deep out there, just backtrack just in the middle. So go right straight to the middle and go.

WALLACE: As justify went for an easy gallop, Baffert, who has won five Derbies, six Preakness Stakes, and two Belmonts, talked about his sport.

BAFFERT: If you ask any golfer have you ever won the Masters that's what the Kentucky Derby is to a horse trainer.

WALLACE: Three years ago, Baffert won the first Triple Crown in 37 years with American Pharoah. He doesn't like to get ahead of himself, but he said Justify could do it again.

BAFFERT: You know, he's got to win this one, but you know we have the horse. Look at him. He's a picture, isn't he?

WALLACE: Baffert is the face of horse racing.

BAFFERT: How are you?

WALLACE: As personable as he is successful.

BAFFERT: Ever since you joined, the weather went bad here. The black cat.

WALLACE: And the media cover his horses like movie stars on the red carpet.

BAFFERT: This horse I compare him with like LeBron James, you know, he just basically came out of high school and just went to the NBA.

WALLACE: He's referring to the fact Justify went from his first race to winning the Derby in 76 days, the first Derby winner not to run as a two year old since 1882.

BAFFERT: The horse brings you to the Derby, you don't -- you can't make it happen. And that's what this horse did.

WALLACE: Baffert grew up on a ranch in Arizona. As a kid, he wrote in match races against another horse and jockey.

BAFFERT: I was like 13, 14 and I was doing this. I just loved it. I wanted to be a jockey. And the first thing my father would tell me, now don't tell your mother.

WALLACE: He started training quarter horses, as we found out on the track.

Let me just start with a couple general questions, we'll get a little more specific. What's it like training a great race horse?

BAFFERT: When I came from the quarter horse worlds, every sentence we started out with, I tell you what, he's a good un, he's a good un Chris. He can fly.

WALLACE: Now, his thoroughbreds have won more than 2,600 races and more than $232 million. And Baffert is having the ride of his life.

BAFFERT: Our stomachs are just churning the day of the race, but when those horses, when those beautiful horses, win, it's like -- it's like, this is what -- this is what we're in it for. And they just love to run. They're born to run. You know, it's a privilege to be a horse trainer, it's a privilege to have a horse like Justify. So, I'm just one of the luckiest guys in the world.


WALLACE: Baffert and Justify took on the Preakness yesterday, racing through a thick fog. And here was the thrilling finish.


UNIDENTIFIED MALE: On the outside Tenfold, Bravazo. Justify. He's unstoppable! He won the Preakness!


WALLACE: Horse and trainer are now headed for New York and the Belmont Stakes in three weeks with a chance to win racing's Triple Crown.

And that's it for today. Have a great week. And we'll see you next "Fox News Sunday."


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