Sen. Mike Braun explains why he voted against the Senate budget deal

This is a rush transcript from "Your World with Neil Cavuto," August 1, 2019. This copy may not be in its final form and may be updated.

NEIL CAVUTO, ANCHOR: Trade war on, stocks off a lot, as the president prepares to take off for a big rally tonight in Ohio, but he's taking reporters' questions as we speak.

Welcome, everybody. I'm Neil Cavuto.

And, this time, it wasn't the Fed. It was the prez. Yesterday's sell-off blamed on a Federal Reserve chairman who the president says didn't cut rates enough, today's on a president who, when it comes to rattling China trade talks, did more than enough.

Via a tweet, President Trump promising new tariffs on China that rocked the corner of Wall and Broad within minutes. Stocks reversed what had been a healthy triple-digit gain. Triple-digit losses ended up being the result, and all because the president was upping the trade ante with China, promising to slap 10 percent tariffs on another $300 billion worth of Chinese goods.

Now, that is in addition to the 25 percent tariffs already in effect on virtually all other Chinese goods.

So, come September 1, that means that tariffs will be in effect on pretty much everything we get from China.

Stocks weren't the only thing tanking in the face of this tougher trade war. So was oil, on the prospect that global demand could slide right along with the global economy, which is why interest rates started tumbling, and the dollar started tumbling.

And one of the few havens in times of a crisis, gold, well, those prices was soaring.

So time to start connecting.

We begin with FOX Business' Ed Lawrence and what got everything going.

Hey, Edward.

EDWARD LAWRENCE, FOX NEWS BUSINESS CORRESPONDENT: Hey, Neil.

Yes, the tweet heard around the world here, literally. Now, we have learned from Chinese sources within the last half-hour or so the meeting in Shanghai didn't go well between the two trade teams.

In fact, the Chinese sources are telling us that China said they will not add in any of the concession language that they had taken out of the agreement. Now, the Chinese telling us the U.S. trade representative -- or telling the U.S. trade representative that the U.S. needs to just trust them, that they will protect intellectual property without enforcement provisions.

Now, within China, the departments have been given the directive to start decoupling from the United States, so China no longer has to rely on U.S. products. That can be seen in an agreement they made with Russia basically helping the Russian soybean industry, meeting the demand of the Chinese.

Now, this is what the president is reacting to by these tariffs, announcing 10 percent tariff on basically the rest of what China imports into the United States. Now, these tariffs will affect more of what you buy. We're talking about pantyhose or stockings to alarm clocks and watches to roller skates.

This is a hard line from the White House. It's getting an immediate response from Democrats, actually support from those Democrats. Listen.

(BEGIN VIDEO CLIP)

SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: We have to be really tough on China. They have taken advantage of us. America has lost trillions of dollars and millions of jobs, because China has not played fair. And being tough on China is the right way to be.

(END VIDEO CLIP)

LAWRENCE: And the president has done this before, set deadlines and then pushed those deadlines back when China does certain things.

This time, though, seems to be a little bit different, China taking a very, very hard line in those talks there, saying they will not add in anything related to the concessions that they had agreed to over the past year. We will have to see if the president keeps this hard-line September 1 deadline for the next tariffs -- Neil.

CAVUTO: All right. I can't keep up with it. Thank goodness you can, my friend, Edward Lawrence at the White House.

(LAUGHTER)

CAVUTO: As I said the president is speaking with reporters as we speak right now, before he heads off for a campaign event. When that tape gets into our newsroom, we will get it right to you.

Meanwhile, Ted Oakley is following all this and the financial implications of all of this. He's with Oxbow investors.

Ted, good to have you.

What do you make of this? And it's a reminder how much trade does dictate trading, doesn't it?

TED OAKLEY, FOUNDER, OXBOW ADVISORS: Well, it is, Neil.

I think the thing about it, though, this has sort of been a relationship, for investors, like a Pavlov's dog situation, where you ring the bell, they expect something, and then eventually you don't have any food. And that's where you end up.

And I think that's what's going on now, and so really disappointed.

CAVUTO: I'm that way with Ponderosa, but I digress.

(LAUGHTER)

CAVUTO: One of the things I noticed was interesting is, the better things look for trade, the better things look for stocks, in other words, the prospect that a deal could be imminent.

This widened it out to pretty much touch every good that we get from China.  I guess the flip side hope is, the longer this drags on, the more the Federal Reserve cuts rates to sort of buttress the economy. Do you buy that?

OAKLEY: Well, I think they have to gut rates more.

We felt like that all along. We thought they were off the mark yesterday.  So I assume that, by the time you get to October, November, that they're going to be up against the wall, and they will have to come in and cut deeper.

CAVUTO: So, if you're cutting in an environment like this that, save the trade impact that's been minimal thus far, thus far, you don't have a lot of room here, do you?

OAKLEY: You don't have a lot of room. That's one of the problems.

If you look back -- they were comparing it to mid-cycle '95 to '97. It's not like then. That was a 6 percent Fed Funds rate.

CAVUTO: You're right.

OAKLEY: So it's a different kind of game right now.

CAVUTO: This global slowdown talk, it's always ignited every time you have an impasse on the trade.

I was a little bit stunned to see oil, like, just fall out of bed on the notion this is going to have a global impact, way beyond the United States and China. Do you buy that, if this drags on very long, that's exactly what happens?

OAKLEY: Well, I do, because, if you look at the Permian, you look at the Bakken, and you look at the places where that's happening, we're starting to see a lot of supply.

And I think that will have a big impact on oil during the summer.

CAVUTO: You know, the one thing I haven't noticed is that consumer behavior, while it's slowing from its highs, it's still pretty robust, consumer confidence still fairly robust.

Wage gains in this country, maybe the underpinning of that, actually quite, quite robust. So we have been able to weather this. How long do you think that lasts?

OAKLEY: I would guess, in the next one or two quarters, what you're going to see with the wage thing you're talking about is, you will be in a situation where rages will be going up, profits will be squeezed, though.

It'll have an impact on the markets in terms of stock prices. I think that's where the two are going to run into each other here.

CAVUTO: All right, interest rates are going low, market rates are going low. This situation today sent yields on a 10-year note, a popular mortgage instrument, for example, to fresh three-year lows.

What do you think is going on there?

OAKLEY: Well, we said a year ago that we felt like rates would be going down for the next 18 months. And we still feel like they will still be going lower eventually.

Now, they may break up a little bit here in the short run. But I think what's happening is, you are going to have a tremendous amount of debt right now. And when you have that much debt, it's really hard to push things higher.

And I think with everything worldwide breaking, you're going to have to have a situation where we catch up with everybody else.

CAVUTO: We will watch it closely.

Ted Oakley, thank you very, very much.

It might confuse you when you're looking at a bond quote. It's a little bit in reverse here. You notice the yield goes down, people are buying bond, price goes up, yield goes down. So it does catch some people off- guard, but just explaining that here.

Democratic presidential candidate Kamala Harris renewing her attacks on the president's trade policies just today.

(BEGIN VIDEO CLIP)

SEN. KAMALA HARRIS (D-CA), PRESIDENTIAL CANDIDATE: By tweet, initiating trade policy that has resulted in, as I said last night, farmers in Iowa facing bankruptcy, with soybeans rotting in bins, autoworkers in Michigan and other places of the country that are looking at the potential for no job by the end of the year.

American families paying $1.4 billion more a month on everything from shampoo to washing machines, because of these -- this so-called trade policy, which I call the Trump trade tax. It's irresponsible.

(END VIDEO CLIP)

CAVUTO: All right, so the economy's always been going the president's way and one of his greatest clarion calls. Is this his Achilles' heel, the trade situation?

FOX Business Network's Charlie Gasparino is here, Elizabeth MacDonald, host of "Evening Edit" on FOX Business, and Catalina magazine publisher Cathy Areu.

Now, Cathy, what she's saying is, this is the fly in the president's ointment, this trade thing.

CATHY AREU, PUBLISHER, CATALINA: Oh, absolutely.

The economy is going great. Why did he go off-script? Why did he do this?  It's -- there's no reason.

CAVUTO: Why did he add to this or what?

AREU: Why did he -- this tariff, where did this come from, this 10 percent tariff? I mean, he could say the economy is great. It's booming, boom, win the election 2020. Now we might have President Kamala Harris, because she's right.

I would call it a trade war, not -- I don't know what she called it, a tax, but it's a trade war. And no one wins in a trade war. And that's why everyone's nervous.

CAVUTO: Well, this other stuff, he's been gaining the advantage. And maybe this is a negotiating tactic. What do you think?

ELIZABETH MACDONALD, FOX NEWS CORRESPONDENT: Yes, that's what he's doing.

By the way, Kamala Harris overstated it, saying autoworkers, no one's going to have a job in the autoworker industry.

CAVUTO: Right.

MACDONALD: She said hundreds of thousands. That was clearly an overstatement. She was talking about the auto supply chain.

So you wonder what the president's game plan is here. The markets, we always say, is six months out. Should he get his act together six months ahead of time, meaning people start looking at the election in September, so he needs to act sooner?

So does he have -- what's his deadline? Is it by March of next year that he has to get this together?

I think, listen, the U.S. stock market is $34 trillion in equity value.  The U.S. economy is $22 trillion. Is this $300 billion a drop in the bucket? Can it weather it? That's the question mark.

I think that it's interesting that Democrats are now siding with the president, saying he's right, he needs to go tough on China.

CAVUTO: You could argue that the Federal Reserve yesterday emboldened this.

CHARLIE GASPARINO, FOX NEWS SENIOR CORRESPONDENT: Yes.

You could also argue that the Federal Reserve cutting rates is not even the issue. I mean, a quarter-point -- I mean, listen, you talk to any CEO, what it comes down to specifically is how -- what affects corporate earnings more, a 25-basis-point cut in the Federal Funds Rate, or these absurd trade wars?

And take China out of it. I mean, the market is reacting to a tweet or a statement, and that's what stock traders do. They're stupid. They press the button on any negative news.

The real fear in the market is the fact that we're not just at trade war with China. We're at trade war with half the world, OK? And that will impact...

(CROSSTALK)

CAVUTO: It's a slight exaggeration.

GASPARINO: China, Mexico, anybody.

(CROSSTALK)

GASPARINO: Canada.

CAVUTO: If that were the case, we would be getting pounded. The economy would be getting pounded.

GASPARINO: The economy's down to 2 percent growth because of trade.

CAVUTO: You think trade is doing that?

GASPARINO: Talk to any economist.

CAVUTO: Cathy, he almost sounds like you.

AREU: Yes, right. We're agreeing.

GASPARINO: Talk to any economist.

AREU: And now it's a trade war with a country that doesn't have to elect a president. China doesn't care if soybeans are over here.

(CROSSTALK)

CAVUTO: Do you think China waits him out, though, Cathy?

AREU: Yes.

CAVUTO: The president has argued, they don't want to negotiate with me.  They want to deal with some, what did he say, stiff or...

(CROSSTALK)

AREU: What's the point of it?

CAVUTO: But do you think that's the case here?

(CROSSTALK)

CAVUTO: Because China is not going to have any brakes in this.

AREU: China has no elections. What do they care? The soybeans are going to rot. They don't care.

CAVUTO: Well, they have a slowing economy, right, Lizzy? Isn't their economy slowing?

(CROSSTALK)

MACDONALD: Yes, it is. And it's pretty rickety and arthritic.

CAVUTO: Yes.

MACDONALD: Here's the thing.

Who's got leverage? Who's in the catbird's seat?

CAVUTO: The president says he does.

MACDONALD: And it seems like he is, because we know that manufacturers have been diversifying out of China toward other parts of Asia to put their production lines there.

(CROSSTALK)

MACDONALD: So I just think there's way too much hysteria.

And we know that the president's tweets -- I mean, algo traders, the traders, every tweet, they make money off of it. It brings back volatility into the market. People like it.

But it is too much hysteria and overreacting on what's going on, on these things.

(CROSSTALK)

GASPARINO: Wait a second. Wait a second.

It's one thing to talk algo traders in the market. It's another thing to talk about GDP.

CAVUTO: You're talking about algorithms.

GASPARINO: Yes, people that trade off -- the algos are attached to certain news items.

(CROSSTALK)

MACDONALD: And they're attached to his tweets. That was my point.

(CROSSTALK)

CAVUTO: I can hear people turning off their televisions.

(CROSSTALK)

(LAUGHTER)

GASPARINO: OK. Yes, but it's one thing to talk about it.

It's another thing to talk about GDP. And you talk to CEOs. I do it all the time. They are telling me that their bottom lines are affected by multiple trade wars.

And that's the bottom -- and that's the bottom line.

(CROSSTALK)

CAVUTO: You think this is going to be a pall over the economy? And it's a good thing the Fed is cutting, then.

GASPARINO: I can't tell you, because I don't think anybody can tell you that the tax cuts are going to ameliorate the trade wars. I can't tell you that.

CAVUTO: All right.

GASPARINO: But it looks like it's having an impact.

MACDONALD: People are nervous about business investments, what Charlie's trying to say, and GDP.

That's what's bringing that number down, is the trade fight.

(CROSSTALK)

MACDONALD: ... business investment.

GASPARINO: By the way, it goes beyond business investment.

It's farmer. It's inventories building up because we can't sell stuff.

CAVUTO: All right.

AREU: And why? Why? Why is he doing it? It doesn't make sense.

MACDONALD: Because it needs to be fixed, because it's been a problem festering for decades.

AREU: That's not going to fix anything.

GASPARINO: Because Peter Navarro think it's a good idea.

(CROSSTALK)

AREU: Yes, the one guy.

(CROSSTALK)

CAVUTO: All right, thank you. Look at the time, guys. All right.

In the meantime, after the dash, after passing the cash, senators are leaving town, but not before leaving taxpayers with a massive budget bill, but at least now we're not looking at a shutdown? Or are we?

(COMMERCIAL BREAK)

CAVUTO: Showing you the president at the White House.

He has been taking some questions, namely on these developments today, slapping tariffs on the remaining goods we get from China. Pretty much everything comes September 1 that makes its way from China to this country will be looking at tariffs of at least 10 percent.

The president addressing that and a lot more with reporters moments ago.

Let's listen.

(BEGIN VIDEO CLIP)

QUESTION: Mr. President, why the tariffs against China now? And are you concerned about the nosedive the Dow took today as a result?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: No, I'm not concerned about that at all. I expected that a little bit because people don't understand quite yet about what's happened.

We've taxed China on $300 billion worth of goods and products being sold into our country. And China eats it because they have to pay it, because what they do is they devalue their currency and they push money out.

Our people haven't paid. As you know, we're also charging them 25 percent on $250 billion. So we're taking in many billions of dollars. There's been absolutely no inflation. And, frankly, it hasn't cost our consumer anything. It costs China.

Now, what has happened is a lot of companies are moving out of China so they can, you know, avoid. And China has had a rough 20 -- this is their worst year in 27 years, according to yesterday's Wall Street Journal. I don't want that.

But when my people came home, they said we're talking. We have another meeting in early September. I said, that's fine. But in the meantime, until such time as there's a deal, we'll be taxing them.

We're just getting -- and we're getting very good numbers from the border, the 21,000 soldiers supplied by Mexico. And I want to thank Mexico.  They're doing a great job. The numbers are way down at the border.

QUESTION: On North Korea, sir. On North Korea, they apparently just launched their third missile in about a week. Is Kim testing you?

TRUMP: I think it's very much under control. Very much under control.

QUESTION: President Trump, we're talking about a full-blown trade war here. What do you say to American...

TRUMP: Well, what would you say it is?

QUESTION: No, I'm asking you...

TRUMP: Let me ask you a question.

QUESTION: What do you say to American business owners...

TRUMP: Right. Right. Right.

QUESTION: ... and consumers who are going to pay the price for these tariffs, sir.

TRUMP: Sure. Sure. What would you say when China, for the last 20 years, has been taking hundreds of billions of dollars out of our country? And we had a president that would never do anything , a number of presidents that never would do anything about it. What would you say?

For many years, China has been taking money out by the hundreds of billions of dollars a year. We have rebuilt China. So now it's time that we change things around. If they don't want to trade with us anymore, that would be fine with me. We'd save a lot of money.

QUESTION: Mr. President, sir, do you believe that Xi is slow-walking this?  And is this 10 percent tariff a bit of a hurry-up call?

TRUMP: No, I don't know.

I think President Xi, who's somebody I like a lot, I think he wants to make a deal. But, frankly, he's not going fast enough. He said he was going to be buying from our farmers. He didn't do that. He said he was going to stop fentanyl from coming into our country. It's all coming out of China.  He didn't do that. We're losing thousands of people to fentanyl. And this was time.

And, very importantly, for many years -- you know this better than anybody. You've been covering it for a long time. For many years, China has been taking out hundreds of billions of dollars a year and rebuilding China. It's time that we rebuild our country.

(CROSSTALK)

TRUMP: And, you know, the one thing I have to say -- and you have to say this -- what China is doing is they're devaluing their currency and they're pumping money out like they've never done before. And they're paying for these tariffs. We're not.

QUESTION: Are you concerned by reports that the Chinese army may be preparing to intervene in Hong Kong against the demonstrators? And what do you say to the accusation that the U.S. is somehow behind these protests?

TRUMP: Well, something is probably happening with Hong Kong because when you look at, you know, what's going on, they've had riots for a long period of time. And I don't know what China's attitude is.

Somebody said that at some point they're going to want to stop that. But that's between Hong Kong and that's between China, because Hong Kong is a part of China. They'll have to deal with that themselves. They don't need advice.

(CROSSTALK)

QUESTION: You put a date -- you put a date of September 1 on these tariffs. Are you giving Xi a chance to negotiate himself out of this?

TRUMP: No. No, no, no. It's September 1. The reason is, it takes a long time for the ships to come over. And it's a period of time. So I'm giving him four -- like a four-week period of time before the tariffs go on.

But we're now taking in tariffs on 10 percent on over $300 billion, and 25 percent on $250 billion. And it's been proven that our people are not paying for those tariffs.

QUESTION: Mr. President...

TRUMP: Go ahead. Go ahead.

QUESTION: Thank you. About North Korea, North Korea launched two missiles again yesterday. How did you feel about that? And...

TRUMP: Short-range missiles, we never made an agreement on that. I have no problem. We'll see what happens. But these are short-range missiles.  They're very standard.

QUESTION: And your response to Bernie Sanders who says...

TRUMP: Go ahead. What?

QUESTION: (OFF-MIKE) that you are a pathological liar, sir?

TRUMP: Go ahead.

QUESTION: Thank you.

Mr. President, are you concerned about reports that your DNI nominee, Congressman Ratcliffe, has embellished his record at all -- that Democrats plan to oppose his nomination?

TRUMP: Congressman Ratcliffe is an outstanding man, and I'm sure that he'll be able to do very well. I think he's just outstanding, highly respected by everybody that knows him.

QUESTION: On Huawei, what will you do on Huawei to give relief to the companies...

TRUMP: Well, we've not changed on Huawei. We're not allowing Huawei into our country. We're not changed on that. We can do business for non- security things with Huawei because that's -- you know, we'll do that.

But anything having to do with national security, we're not dealing with Huawei.

(CROSSTALK)

QUESTION: Mr. President, what do you think about the decision to not prosecute James Comey for leaking?

TRUMP: Well, I haven't actually heard that. I know there's a lot of things going on. That's a piece of it, I guess. But I really don't know.  I haven't spoken to them about that.

I would, frankly, be surprised, because what James Comey did was illegal.  So I would be surprised, but I don't know anything about that.

QUESTION: Mr. President, in Cincinnati, at your rally tonight, are you prepared to tell your supporters to stop if they begin chanting something problematic?

TRUMP: I don't know what's going to happen.

I can tell you this. I'm going to Cincinnati. The arena is a very large one. And we've sold it out. We could sell it out probably 10 times, from what I hear. The applications for seats, as you know -- never had an empty seat. The applications are very big. I have no idea.

We have a great group of people. They love our country. They love the job we're doing. And when they see the kind of people that want to represent us from the last two nights, that's not what they want.

I don't know -- I can't tell you whether or not they're going to do that chant. If they do the chant, we'll have to see what happens.

QUESTION: Will you stop it, sir? You think you will?

TRUMP: I don't know that you can stop people. I don't know that you can.  I mean, we'll see what we can do. I'd prefer that they don't, but if they do it, we'll have to make a decision then.

QUESTION: Mr. President, do you have a message -- do you have a message for them now, like before they go in?

TRUMP: I do have a message. My message is for the people I'm going to -- so, we had over 100,000 applications for whatever the size of the -- I think it's a 14,000-seat arena. But we're way over a hundred and -- I think 122,000 applications for those seats.

You know what my message is? I love them. And I think they love me.

QUESTION: So your message is not don't do this?

TRUMP: I actually think they love me.

QUESTION: India has rejected your offer of help on Kashmir. India is also -- India has rejected your offer of help on Kashmir. India says Kashmir is a bilateral issue between India and Pakistan.

TRUMP: Have they accepted the offer or not?

QUESTION: No, they have not.

TRUMP: Well, that's up to -- it's really up to Prime Minister Modi.

And I met with Prime Minister Khan. I got along great with -- I think they're a fantastic people, Khan and Modi. I mean, I would imagine they can get along very well.

But if they wanted somebody to intervene or to help them -- and I spoke with Pakistan about that, and I spoke, frankly, to India about it. But that's been going on, that battle, for a long time.

QUESTION: How do you want to resolve the Kashmir...

TRUMP: If I can -- if they wanted me to, I would certainly intervene.

Yes.

QUESTION: Is the U.S. government involved in the death of Hamza bin Laden?

TRUMP: I can't comment about that. But he was very threatening to our country. He was saying very bad things about our country. I will let you make your own comment about it.

QUESTION: Did you hear anything about it?

TRUMP: But I don't comment. But I will say, Hamza bin Laden was very threatening to our country, and you can't do that. As far as anything beyond that, I have no comment.

QUESTION: Mr. President, Robert Mueller said last week that Russia is interfering in U.S. elections right now. Did you raise that with Vladimir Putin yesterday?

TRUMP: You don't really believe this. Do you believe this?

QUESTION: He said it last week. Did you raise that with president Putin yesterday?

TRUMP: OK. OK. Fine.

We didn't talk about that. I spoke with President Putin of Russia yesterday. They're having massive fires in the -- in their forests. They have tremendous -- I've never seen anything like it. It's very big.

I just offered our assistance because we're very good at putting out forest fires, frankly. And if they should need it, I offered our assistance. We had a good talk, a short talk, but a good talk. And I think he appreciated it.

So we would be able to help them. It's -- these are massive fires like I haven't seen. That was the primary importance of the conversation. And I think they -- I think they very much appreciated it.

QUESTION: Mueller said right now, he believes, Russia is interfering with the election.

TRUMP: Well, I watched Mueller. I'm not sure Mueller knows what's going on, if you want to know the truth.

But all I do know is he said, no collusion with us, no collusion, and ultimately no obstruction, because it led to no obstruction by a very smart group of people, including our attorney general. So, no collusion, no obstruction.

As far as Mueller's performance, you would have to say it was maybe not so good.

QUESTION: On the Fed, sir? Sir, on the Fed? Mr. President, on the Fed, why wasn't a quarter rate cut good enough?

TRUMP: So, our country is doing very well. We're setting records in every way, including employment, unemployment. We have now more people working in the United States than ever before.

The stock market, it will take a little hit, but it will be phenomenal because, ultimately, it will be much better because of what I'm doing.  Somebody should have done this with China a long time ago. They decided not to do it. They made a big mistake.

But I will say this: There has never been a time in the history of our country like we have right now, the highest number of people employed, the best employment numbers for African-Americans, Hispanic, women, for everybody, I mean, the best numbers we've ever had.

Our military is being rebuilt and it's almost fully rebuilt. It's going to be at a level, in a very short period of time, stronger and better than ever before with new aircraft, new missiles, new everything. Hopefully, we don't have to use it.

Go ahead.

QUESTION: Mr. President, what did you think of the Democratic debate last night? Biden and, specifically, the charge from Congresswoman Gabbard that you're assisting Al Qaeda.

TRUMP: So, yes, nobody knows what she meant by that. I think even you probably didn't like that statement, John. She doesn't know what she's talking about. If you remember, a short while ago, I defeated ISIS. We have 100 percent of the caliphate.

So, you know, you're always going to have somebody around. We're -- right now we have captured over 10,000. We have 2,500 ISIS fighters that we want Europe to take because they were going back into Europe -- into France, into Germany, into various places. So we have, right now, 2,500 ISIS that we captured.

We've captured 100 percent of the caliphate. And we've done a big job on Al Qaeda and everybody else.

So for her to make that statement is ridiculous, frankly.

(CROSSTALK)

TRUMP: For her to make that statement is so ridiculous. And she has taken a lot of heat on it, because nobody has done more against that war than I have.

So we have thousands ISIS fighters that we want Europe to take. And let's see if they take them. And if they don't take them, we'll probably have to release them to Europe.

QUESTION: Will you still negotiate, sir? Sir, can you still negotiate with Kim after what he's done this week?

TRUMP: Say it? What?

QUESTION: Can you still negotiate with Kim after what he's done now?

TRUMP: Oh, sure, sure, because these are short-range missiles. We never discussed that. We discussed nuclear. What we talk about is nuclear.  Those are short-range missiles.

Sure. And a lot of other countries test that kind of missile also.

QUESTION: Mr. President, why was the tariff 10 percent and not 25? And then on the Fed...

TRUMP: Oh, that's funny.

QUESTION: ... you said a quarter point wasn't good enough. What would be good enough for you on the Fed, sir?

TRUMP: That's so interesting, because everyone says, Gee, that's so tough.  And now you're saying I should have done more.

QUESTION: But why didn't you do more?

TRUMP: Look, I did more than anybody thought with the first $250 billion.  And the 10 percent is for a short-term period, and then I can always do much more or I can do less, depending on what happens with respect to a deal.

But I'm very happy the way it is right now. My people came back. They're going to meet again in September. I said, look, if you meet, that's great.  But in the meantime, we're going to pay -- they're going to pay a tariff, and it'll be a very substantial tariff.

Now, if you remember, when I did the 25 percent, I did it in stages. And this can also be lifted, ultimately, in stages, or it can be taken off.  But it can be lifted in stages. So we're starting at 10 percent, and it can be lifted up to well beyond 25 percent. But we're not looking to do that necessarily.

But this would be done in stages. So I put on 10 percent on 300 -- it's approximately $300 billion. We already have a 25 percent tariff on the first $250 billion. So, the 10 percent follows the $250 billion at 25 percent.

(CROSSTALK)

QUESTION: Mr. President, thank you. Are you considering a blockade or quarantine of Venezuela, given the amount of foreign involvement from Russia, China, and Iran?

TRUMP: Yes, I am.

QUESTION: You are considering it?

TRUMP: Yes, I am. Yes. Yes, I am.

QUESTION: I want to ask you, Mr. President, since the Mueller hearing, 116 House Democrats have said they want to launch a House inquiry. Why do you think that number continues to go up?

TRUMP: You know, it's interesting. Nobody has even mentioned this question to me in so long.

QUESTION: Right.

TRUMP: Until last night at the very end, it wasn't even mentioned in the debates. People aren't even -- thinking it's a hoax. I don't know if you know that. You know it's a hoax, right?

So, nobody has mentioned it to me.

One thing I will say that you haven't covered, two days ago, a highly respected judge in the Southern District of New York, in Manhattan, came out with a decision on the whole Russia hoax, and he said exactly that.  It's a hoax.

You ought to read the decision. This is a decision by a judge who is highly respected, who was appointed by Bill Clinton when he was president, and he came out and he said, it's a hoax. And that's exactly what it is.

This was a case brought by the Democrats against me, and nobody wants to talk about it. You know why? Because it's fake news.

QUESTION: Mr. President, what did you tell Putin about the INF Treaty?

TRUMP: We didn't discuss the INF. Mostly, we discussed the forest fires in Siberia and other parts of Russia. And I said, look, we have the greatest equipment. If we can help you, let us know. Large sections are burning.

And so I said to President Putin, if we can help you, let me know.

QUESTION: But we're pulling out of the treaty tomorrow.

TRUMP: Well, we'll see what happens.

By the way, I will say, Russia would like to do something on a nuclear treaty. And that's OK with me. They'd like to do something, and so would I.

QUESTION: What's your response to Elizabeth Warren's comment last night that...

TRUMP: Say it again.

QUESTION: What's your response to Elizabeth Warren's comment last night that white supremacy should be considered domestic terrorism?

TRUMP: Well, I think, Elizabeth -- I mean, I've watched Elizabeth Warren, sometimes referred to as Pocahontas, with her phony try at an ancestry that she didn't have.

I've watched her and, I don't know. To me, she doesn't have credibility.  It's possible I will have to run against her. But everything she did was a fraud. She got into colleges. She got teaching jobs. She said she was of Indian heritage. It turned out to be a lie. So Elizabeth Warren really has a big lack of credibility.

QUESTION: Mr. President, what did you think about the statements from...

TRUMP: The which?

QUESTION: The statements between Tulsi Gabbard and Kamala Harris. Do you think Tulsi really got Kamala (OFF-MIKE)

TRUMP: I didn't really. No, I didn't.

Look, I think that Kamala did not do well last night. I think that -- I think Biden did OK. He came through. He came limping through, as I say about sleepy Joe. He limped right through it. But he got through it. He really did. I think he was .

I think Kamala had a bad night last night, I would say. But it's really boiling down to four or five of them. Let's face it. I don't think -- I don't see anybody coming from the...

(CROSSTALK)

QUESTION: Do you have a message for Poland on the anniversary of Warsaw uprising, which is today?

TRUMP: Well, I have a lot of respect for Poland. And, as you know, the people of Poland like me, and I like them.

And I'm going to be going to Poland fairly soon. And I know they're building an installation that -- and they're putting in all of the money, 100 percent of the money. So they're building something very nice for the United States to have.

Go ahead.

QUESTION: On Nancy Pelosi -- I'm sorry. Just so I don't have to yell at you here, if you don't mind. House Speaker Nancy Pelosi -- I don't know if you saw -- but she described Jared Kushner as a kind of Baltimore slumlord because he owns property there. Do you think your son-in-law bears any responsibility for those conditions?

TRUMP: No.

I think the responsibility is the people that have run Baltimore for so many years, obviously headed up by Elijah Cummings. They've run Baltimore into the ground. We've given billions and billions of dollars to Baltimore. The people of Baltimore appreciate what I've done for them by bringing this up.

It's the number one city, proportionately, in the United States on crime.  I saw a statistic where it's worse than Honduras right now. And I think what the people of Baltimore -- I think they really appreciate what I'm doing. The money was stolen or misspent or wasted. And a lot of things happened, a lot of bad things.

But the government, for many years, has been very good to Baltimore. We have to help the people. Elijah Cummings has not helped the people. But maybe at some point we'll get together and we'll get it straightened out.  But what happened in Baltimore is disgraceful.

And it's not only Baltimore. It's other Democrat-run cities, and you ought to report on it some time.

Thank you.

(END VIDEO CLIP)  CAVUTO: All right, the president taking on any and all questioners there, about 20 minutes' worth outside the White House, before he boarded Marine One.

He's heading out to Ohio for a campaign event tonight.

Just real quickly, on this ongoing trade tiff that's turned into an outright war with the Chinese, the president effectively announcing today that, come September 1, $300 billion worth of goods we get from China will be slapped with a 10 percent tariff, on top of the $252 billion to $265 billion dollars worth of goods that already have a 25 percent tariff on them.

What that would essentially mean is everything that we get from China will eventually be subject to a tariff. The president hoping to move the needle on the Chinese on the talks. But he says that he's in no rush, says this is the right thing to do.

But it did surprise a lot of folks and prompted what had been a triple- digit advance of the markets into a triple-digit tumult.

Blake Burman at the White House with the very, very latest.

Blake, where do we stand on all of this?

BLAKE BURMAN, FOX NEWS CORRESPONDENT: I think it's a good reminder, Neil, as you just said, that we are indeed in the middle of a trade war right now between the United States and China.

Let me just sort of walk you through how everything shook out today.  Earlier today, here at the White House, there was a meeting. The president was briefed by his team that was over in Shanghai earlier this week about the discussions there, briefed by Steve Mnuchin, Robert Lighthizer, other members of the economic team.

After that briefing, that is when we got the statement that was put out on Twitter by the president, in which he said that China is not living up to its to its expectations to have an ag buy from the U.S., that China is not slowing down the sale of fentanyl that is making its way into this country and killing people all across the country.

And the president said he was disappointed with President Xi about it. And that's also when the president announced that, come September 1, which should be days before the next meeting of the trade teams of the United States and China here in Washington, that the next batch, that $300 billion worth of goods, will have a 10 percent tariff attached to it.

What we just heard from the president just now is a reminder that it'll be at 10 percent for the moment, but it could go up, could potentially go higher than 10 percent. And, as you mentioned, there's also that $250 billion that is currently at 25 percent.

So, essentially, all U.S. goods or goods coming from China into the U.S. will now face this tariff, and now will face tariffs at least of some kind.

And according to my colleague at the FOX Business Network Edward Lawrence, Chinese sources are telling us that the directive in Beijing now is to -- quote, unquote -- "decouple' from reliance on the U.S.

You start to add all of this up, Neil, including the comments that we heard from the president now for days that maybe China is trying to wait him out, trying to wait out his presidency, and you have got to wonder where things go from here -- Neil.

CAVUTO: Blake Burman, thank you very much.

Now to Michigan Democratic Congressman, the chief deputy whip in the House of Representatives, Dan Kildee.

Congressman, good to have you.

What do you think of this added -- upped the ante, if you will, on the trade war?

REP. DAN KILDEE (D-MI): Well, nobody wins a trade war. I think we have pretty well established that during the course of recent history.

I have said all along, however, that the president was right to take on China. As has now recently been proven again, China doesn't keep his word -- or their word. China cheats when it comes to trade. And we have to take them on.

I think the president did, however, make a mistake when he began all this by not engaging our allies, and taking China on in a unilateral fashion.

This makes it easier for China to retaliate. And then, finally, let's be clear. One of the reasons that nobody wins a trade war is that a tariff is a tax. And that tax is paid by American companies and American consumers.

And it's already hurting the U.S. economy. And that's, I think, why you see some market jitters, because this is not going to be good for the U.S. economy.

But it's complicated. Let's give the president credit for taking them on.  But let's hope that he can get it right and engage our allies and actually change Chinese behavior.

CAVUTO: We're told, Congressman, that the U.S. Federal Reserve, in charge of interest rates, will probably keep lowering them if this keeps dragging on.

Now, there's no guarantee of that, as you know, but what do you think of that?

KILDEE: Well, I mean, I think -- honestly, I think the Fed has done a good job over both administrations, recent administrations, in helping to do their part to manage the economy. And I think they're doing essentially the right thing. I think Mr. Powell has been responsible.

It is worrisome, though, that they now have seen the need to reduce the Fed rate. They only have so much room to go down. And that's one of the reasons that I know that Chairman Powell has been really reluctant to go in that direction, because you get to a certain point, and your tools are taken away.

But it is an indication that there is some weakening in the U.S. economy when the Fed sees the need to lower the rate.

CAVUTO: You know, in your state of Michigan and elsewhere, I mean, the president has pretty solid support among union members and the like, manufacturing employees, who feel that, if we give up on this fight, that they might as well just surrender their jobs.

What do you think of that?

KILDEE: Give up on the fight with China?

CAVUTO: Yes.

KILDEE: Yes, I think it would be a mistake to simply walk away.

I do think, though, the president needs to consider a different approach.  And while he's on the phone with Mr. Putin -- I know he engages with world leaders on a regular basis. When he's doing that, I think he would be wise to ask them to join us in taking on China.

We're not the only country that suffers because of the bad practices that China employs. They have a lot more patience than we do. So we have to find other tactics.

And I think it would be a mistake to walk away. But what we're seeing right now is simply ratcheting up unilaterally against China with increased tariffs is a tax on American companies and consumers.

And the Chinese just have more patience than we do. So we're going to have to engage our allies to try to have much greater heft in dealing with them.

CAVUTO: We shall see. Still, the tit for tat goes on.

Congressman, thank you very, very much. Good seeing you.

We should say, as the congressman and I were speaking, the U.S.-China Business Council has put out a statement on this extended trade war, if you will, saying that: "We're concerned today's action will drive the Chinese from the negotiating table, reducing hope raised by a second round of talks that ended this week in Shanghai."

The upshot from the business guys is, we're worried.

More after this.

(COMMERCIAL BREAK)  CAVUTO: All right, Congress getting out of town, but not before getting enough votes to go ahead and spend an extra 320 million bucks.

It wasn't a slam dunk, 23 Republican senators voting against this spending measure that extends the debt ceiling for another couple of years.

Indiana Republican Mike Braun wasn't intrigued by this at all. He voted no, one of, again, about two dozen Republicans who did so

Senator, very good to have you. Thank you for coming.

SEN. MIKE BRAUN (R-IN): Good to be on.

CAVUTO: It's on, as you know, and it was passed.

And now we're looking at the next couple of years of a trillion dollars added to the deficit for the next two years. What do you think?

BRAUN: Well, I think it's kind of what I knew was coming when I got here in the first place.

And I understand all the political reasons. We do get normally left kind of holding the bag on explaining about government shutdowns and all the things that go along with trying to hold the line on spending.

And I'm just hoping -- been here seven months now -- that, when we win in November of 2020, we remember the roots of what conservatism is about. And that's not running trillion-dollar deficits on a budget that's our size year after year, when we got all this debt.

So, hopefully, it's a wakeup call. I'm going to keep saying the same thing. And I was glad at least 22 others stood in line to make a strong statement.

CAVUTO: Nevertheless, the president -- as you know, he's expected to sign off on this -- praised the budget deal. He says there's plenty of time to cut.

Now, there have been enormous and plenty of opportunities long before you came to Washington, Senator, for both parties, each party at different times under control, and no one ever did anything.

So what makes you think that the president and his promise to finding plenty of time to cut will deliver?

BRAUN: You know, he's been here a couple years or so.

I remember when I was running back in March of '18, when they did the continuing resolution that re-enabled defense.

CAVUTO: Right.

BRAUN: And I think the president said, we did this for the last time.

He's in now the reality of D.C., to where, when you have been doing this for so long, it just gets to be part of the system. And I hope, because I will be mentioning to the administration, leadership in the Senate, we can't keep doing it.

We're going to lose credibility with the core of who supports us. And it's not people that look at this kind of behavior to where you say the same thing every year, and never change it.

So it's up to those of us that are new. I know Governor Rick Scott from Florida, Mitt Romney. We're the three new business guys in the Senate. We have doubled the Business Caucus. Maybe voters need to send more of us here. We know how to do a budget, make a payroll, make the hard decisions.

CAVUTO: Well, you might. And some of your colleagues might.

But the rap against Republicans is, they talk a good game, much like Democrats, on wanting to get spending under control, and they do everything but.

Do you think voters are ticked at both of you?

BRAUN: I hope they are.

Democrats believe in this. We end up going along to get along to accommodate defense. I voted against the defense reauthorization bill out of principle, because how do we expect to ever hold the Democrats accountable when we hold defense as because sacrosanct?

Believe me, there's waste and ways to cut 1 percent or freeze it until we get back in order. Neil, that would be the easiest job any CEO in America would have, any governor, if that's all you needed to do.

CAVUTO: Well, you're in Washington right now, Senator.

BRAUN: I know.

CAVUTO: You're in Washington right now.

BRAUN: I know.

CAVUTO: And I know, as a former businessman, and a successful one, it's a little odd for you.

But, Senator, thank you for taking the time. I do appreciate it.

BRAUN: You bet. Good to be on.

CAVUTO: All right, Usama bin Laden's son is dead. We just don't know when he was killed.

What we do know is the guy who took out his dad is here.

(COMMERCIAL BREAK)

CAVUTO: All right, he was supposed to the heir to his father's terrorist empire, but now we're getting word that Hamza bin Laden is dead, Usama bin Laden's son, again, the man who was supposed to be the successor to Usama bin Laden.

To the man now who killed Usama bin Laden, the former Navy SEAL, bestselling author Rob O'Neill.

We just found out about something that could have happened quite a while ago, right?

ROB O'NEILL, FORMER U.S. NAVY SEAL: Yes, we put out a million-dollar bounty on Hamza bin Laden's head back in February.

And some people are saying he may have been killed in a drone strike in March. But others are saying it could have been before that.

CAVUTO: Really?

O'NEILL: But they're saying -- no one's confirming this yet, but it looks like a drone strike because of the lack of hands-on evidence.

And you need to rely on so many different types of intelligence in order to confirm. And we want to make sure we confirm he's dead. We don't want to say stuff -- like the Russians said Abu Bakr al-Baghdadi, the leader of ISIS, was dead, and then he resurfaces.

We don't want something like this to happen. And it's so significant because if -- I mean, he is more than likely dead, but if he's dead, that kind of wipes out the future leadership of Al Qaeda, because he was more of a millennial generation. He's a 30-year-old.

Ayman al-Zawahri, who's the chief of Al Qaeda now, is a lot older. He's pushing 70, maybe in his 70s. And he just didn't have the charisma or the name or even the ability to kind of stick his neck out, for lack of a better term, to get out there and threaten.

And Hamza was -- he was the new -- the new, you know, leader of Al Qaeda, leader of the caliphate.

CAVUTO: And even before you killed him, the father was grooming him for that.

O'NEILL: Right.

Well, we found...

(CROSSTALK)

CAVUTO: When you invaded the compound in Pakistan, where...

O'NEILL: Sure.

CAVUTO: ... when you took out some of Usama bin Laden, there were other sons at that compound.

O'NEILL: Right.

Right. Khalid bin Laden was in there. He -- and he was -- the three- letter agencies that told us about bin Laden said his son would be there on the stairs. And we did find Khalid bin Laden.

And we -- some of my guys were able to kill him in a gunfight. And then his brother -- I believe it was Saad bin Laden -- was killed in a drone strike a couple years prior.

And then Hamza wasn't in the building. But we found intelligence in the compound in Abbottabad in 2001 that said Usama bin Laden wanted Hamza to come up to be groomed because he was the most charismatic, and like his father, Usama bin Laden, very charismatic. His people loved him. And he felt the same way about Hamza.

And he was going to push Al Qaeda into the future. And, hopefully, we can confirm this. We will be able to eventually, but it takes a lot of intelligence, signal intelligence, human intelligence.

CAVUTO: How did you confirm Usama bin Laden?

O'NEILL: Well, we were able to confirm it because we had his body after...

(CROSSTALK)

CAVUTO: Yes, but having to make sure that was the body, right?

O'NEILL: Well, when -- after I shot him and we checked him, we actually got confirmation from an Arabic speaker.

One of the Navy SEALs who taught himself Arabic, which is pretty cool, got confirmation from one of bin Laden's daughters. And what she said was: "That's him. That's Sheik Usama," is what she said.

CAVUTO: OK.

O'NEILL: And then we...

CAVUTO: And he was a tall guy, besides.

O'NEILL: Yes, he was a few inches taller than our tallest sniper, we found out later.

CAVUTO: Right. I heard that.

O'NEILL: But then we were able to take some DNA.

We took his body back. And then we had some forensic people from the FBI test him. We had the pictures. We were able to confirm.

CAVUTO: How many sons, daughters did Usama have?

O'NEILL: They -- what they say is anywhere between 20 to 26.

And it's hard to tell, just different -- different places, different access, even the secrecy. Like, they were -- they were pretty secretive just even from the '80s, when bin Laden fought in the jihad against the Russians.

(CROSSTALK)

CAVUTO: A lot of money, right? He came from a billion-dollar empire.

O'NEILL: Oh, yes. Well, he didn't build it off terrorism.

CAVUTO: I know that, right.

(CROSSTALK)

O'NEILL: ... through construction.

But even telling how Hamza how to get from either Iran or Pakistan -- Iran to Pakistan or Saudi Arabia, make sure you do it on a cloudy day. Make sure you don't use certain electronics.

CAVUTO: Any other of these kids have nefarious....

O'NEILL: I mean, it's hard to say. You never know.

CAVUTO: Yes.

O'NEILL: I think a lot of them they have sort of seen the light, kind of like our friends in the UAE.

Like, we can have both. We can have Islam, and we can have the West, and we can kind of live a good life with the money that we have. And maybe each of our gods will accept us to paradise in which ever afterlife you believe in.

CAVUTO: Yes, jump ball on that.

Rob O'Neill, former Navy SEAL, so much more, incredible young man.

All right, in the meantime, crowds are getting ready for the president's big event in Cincinnati tonight.

That's still hours away, and the place looks packed to me -- after this.

(COMMERCIAL BREAK)

CAVUTO: All right, after two nights of Democratic debates, the president will be taking the center stage in Cincinnati tonight, part of a campaign event.

He will be speaking to voters there, many of whom are already there. They have been there for a while.

Mike Tobin there with the latest.

Hey, Mike.

MIKE TOBIN, FOX NEWS CORRESPONDENT: And they line up hours before these events, Neil.

If the crowd here starts to chant "Send her back," about half the people I spoke with today said they will stand silently, not participate. Half the people say they will jump right in.

If the president engages that dust-up with Representative Elijah Cummings and the city of Baltimore, they say they are in 100 percent.

Frankly, what the people coming to these events are looking for is a shot in the arm to the base, a message of patriotism from this president. And, frankly, with a president that's got a unique set of skills at the podium and in front of the camera, they're looking to be entertained.

Coming on the heels of the debate, they're looking for the needle the Democrats. Now, Ohio is a red state, but Hamilton County, where we are now, is a deep blue county. There are counterdemonstrations. Police aren't particularly concerned about trouble -- Neil.

CAVUTO: All right, Mike Tobin, thank you very much.

The president will be there tonight.

Also, just refreshing your memory here, down 280 points today, the escalating trade war a big subject that will come up tomorrow in our coverage both on FOX News and FOX Business. Keep in mind, the jobs report is due out tomorrow as well.

We will have minute-by-minute coverage of all of that.

But now here comes "The Five."

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