Struggle. Little sign of progress between the u. S. And china. They agreed to talk again in september. In a clear sign of american frustration, the president threatened to impose tariffs and 300 billion of additional chinese goods. This time the tariffs would hit not just industrial goods, but highprofile products American Consumers love including cell phones and other electronics. China responded by depreciating its currency to make its exports cheaper around the world. And by declaring it would suspend purchases american agricultural products. Then, President Trump responded to that by formally declaring china it currency minutes later under american law. The Financial Markets are worried. The u. S. Stock market suffered through its worst day of the year on monday. Its rebounded since but theres been a lot of volatility in the stock market and the bond market as investors decide where this is going and how much it might affect Economic Growth in the months to come. All of this raises crucial questions nearing the end of the summer. Is this just a temporary spike in trade tensions with china . Or the beginning of a prolonged trade war . When talks resume in september are the chinese going to be more willing to make the kinds of structural changes to their state run economy that the u. S. Is demanding . Is there any prospect of an agreement with President Trump and the chinese president meet at a pacific summit meeting in november . Or have the chinese decided to simply wait out President Trump through november of next year and see if he is reelected or not. Here to help answer all the questions and more, peter navarro. Assistant to the president for trade and manufacturing policy. And a key player in determining americas approach to foreign trade. He joins us from washington. Peter, thank you for being with us. Good to see you, sir. Jerry let me start with something president said friday morning. He raised the possibility that maybe next round of talks in september, might not come to pass. Do you think that will happen . Well be talking september . What do you think the chinese attitude will be if that in fact takes place . If i may, i think where we really need to start is talking about what we are fighting for here in this dispute. Because your viewers, if they are trying to figure out whether we will get a deal, a settlement, negotiation, you really have to understand what this is all about and its really about seven forms of economic progression is been documented by the u. S. Trade representatives. And lets go through the list. You got cyber intrusions into the business that works to steal the trade secrets. That is ubiquitous. Youve got forced technology transferred and exchanged for market access. In other words, if a u. S. Company wants to get access to the chinese market, they have to surrender their technology. Youve intellectual property theft and estimates of that are in the several hundred billion dollar a year range. It is huge, really. You have dumping your product into our markets below cost, things like steel, aluminum, robotics, across the spectrum. That cost us jobs, put our factories out of business. Im only up to four. Five, state owned enterprise, heavily subsidized, going around the world, competing with capitalist corporations, its an unfair deal there. Six, you mentioned earlier currency manipulation, her trainer lowers the value of their currency to boost their exports at the expense of ours. Lastly, and this is an important part of the negotiation. Made in china, fentanyl and other opioids killing about 100 americans a day, 1000 a week and over 50,000 a year. So this is what we are struggling with when we negotiate with the chinese. The chinese say meet us halfway. But the problem there is, how do you meet them halfway, do let them steal half as much work you will have as many people with fentanyl . This is where we have the issue, these are structural problems. We bargained in good faith, the president has been consistent about this. He has bargained in good faith going back to maralago summit. In spring of 2017. But every time the chinese failed to honor their commitments, which is frequently, he has taken actions which is why the tariffs have been put in place. Thats the big picture we are grappling with. Jerry you paint a pretty bleak picture there. And what youre looking for are structural changes, not shortterm changes. Correct. Jerry the chinese is simply not want to make those changes . Or do they find it hard to make structural changes . That is the question. We had a deal, almost a deal. It was 150 pages plus that ambassador lighthizer and Steve Mnuchin had negotiated literally word by word. China was going to restructure their economy and put that in as a matter of law and regulation. And then they changed their mind. The question that they have to answer, is whether they can have a Strong Economy thats not dependent on steel and technology from the west. Thats a big question. In 2001 we saw george bush do nothing about chinas cheating. We saw barack obama, joe biden do nothing. And over the course of that we lost over 70,000 factories, or 5 Million Manufacturing jobs. And this is a program where you have sophisticated Corporate Executives watching this. I mean if you are a corporation of China Incorporated and you dont have to pay anything for your research and development, you steal it from your competitor, you will win every time. If they are not dependent on these forms economic right now in august, this is a time where the chinese retreat to the countryside and have working vacations. It will sort that out. In september, we are planning on having them come here if they come. That is uncertain at this point but they have to make their mind. But in the meantime, was interesting here is that we have bipartisan consensus on capitol hill about something that is very rare that we have to take a strong stand on china. In Public Opinion polls show very clearly a Harvard Harris poll for one, that the American Public is behind the president. In terms of the tariffs and taking a strong stand. So that is where we are and theres another thing i think we need to talk about because theres a lot of people who are saying incorrectly that somehow the American Consumers buried the burden of these tariffs and is just false. I was strongly, im a professor so i will give everyone an assignment. There is a beautiful clip on fox business website. With maria bartiromo, one of the best, interviewing the former ceo to his arrest. A lot of activity in china. And he goes through, chapter and verse, why American Consumers will feel virtually nothing from the china terrace. It has a lot to do with chinas evaluating currency, lowering prices and the supply chain moving elsewhere and production moving elsewhere. Jerry stay with us, well talk about how much stomach about how much stomach americans have for a prprprprpr hey, who are you . Oh, hey jeff, im a car thief. What . im here to steal your car because, well, thats my job. What . What . . What . laughing what . . What . what . [crash] what . haha, it happens. And if youve got cutrate car insurance, paying for this could feel like getting robbed twice. So get allstate. And be better protected from mayhem. Like me. groans hmph. food grunting menacingly when the food you love doesnt love you back, stay smooth and fight heartburn fast with tums smoothies. Tum tumtum tum tums who used expedia to book the Vacation Rental that led to the ride which took them to the place where they discovered that sometimes a little down time can lift you right up. Flights, hotels, cars, activities, Vacation Rentals. Expedia. Everything you need to go. Expedia. On a scale of one to five . One to five . Its more like five million. Theres everything from happy to extremely happy. Theres also angry. Im really angry clive actually, really angry. Thank you. But what if your business could understand what your customers are feeling. And then do something about it. Turn problems into opportunities. Thanks drone. Customers into fanatics change the whole experience. Alright who wants to go again . I do i do i have a really good feeling about this. Jerry i am back with peter navarro. Peter, let me ask you this directly to the Financial Markets producing this week that they are nervous about potential Economic Impact of the prolonged tariff fight with china. Should they be worried or are they overreacting . What is your message to them . They are overreacting. Basically what we have, lets start with the fact that the stock market is a leading indicator of the economy. The trump economy is absolutely rock solid. Weve had strong real gdp growth, we have historic low unemployment among blacks, hispanics, women, disabled and veterans. We have rising productivity. Rising wage gains which are disproportionately going to bluecollar workers. I think what investors need to worry most about right now, is the Federal Reserve. The Federal Reserve raised rates too far, too fast and that had the effect of suppressing our investment directly and indirectly suppressing our exports. Their currency effect and you saw that in q2. We came in at 2. 1 percent real gdp. That is good, the president likes great. We could have been at three percent if not for the fed. It is clear in the numbers we lost two thirds of a point to the fed on exports. We lost some investment as well. So investors are trying to i think that the big things to propel the dow past 30,000 is getting the fed to lower rates, and passing the usmexico candidate agreement. This deal is far more important in the short run then working things out methodically with the chinese over the next several months. Jerry peter, let me ask you this. China has been knocked off its leading trade partner in the u. S. But overall u. S. Trade deficit increased over 7. 9 percent in the first half of the year. Exports flattened and imports from other companies started to increase. Is this working . A couple of things to note here. First of all, the American Economy under President Trumps leadership is the strongest in the world. So we are attracting investment, thats having some currency issues but the problem is when the fed raised rates, we saw the dollar go up by almost 10 percent. At the same time since we put in tariffs, the chinese went down. This having a negative impact on the trade deficit. What we need to do is have a fed policy where our Interest Rates are not several hundred basis points above the rest of the world. Thats not sustainable. It is not good for america. So are things working . Yes in terms of the trump economy. Because its rocksolid but we can use some help from the fed. Not because the economy is weak but simply because the fed needs to allow us to grow. I remember a school bus they had these things called like governors that did not let them go over 50 miles per hour. The fed basically is put a governor on the trump economy and you know we want to grow and we can not grow without creating inflation over three percent. By the fed with his policies right now are holding us down. Jerry peter, so much want to talk about but the clock has run out. Thank you for joining us. We hope to have a chance to do it later on in there. Up next, they leadership in beijing, help may be viewing the trades that with the us. Stay with us. vo the hamsters, run hopelessly in their cage. Content on their endless quest, to nowhere. But perhaps this year, a more exhilarating endeavor awaits. Defy the laws of human nature,at the summer of audi sales event. Get exceptional offers now. Why go with anybody else . We know their rates are good, we know that theyre always going to take care of us. It was an instant savings and i should have changed a long time ago. Were the tenneys and were usaa members for life. Call usaa to start saving on insurance today. And were usaa members for life. From the 5am wakers, to the 6am sleepers. Everyone uses their phone differently and in different places. Thats why Xfinity Mobile created a Wireless Network that auto connects you to millions of secure wifi hot spots. And the best lte everywhere else. Xfinity mobile is a different kind of Wireless Network designed to save you money. Save up to 400 a year on your wireless bill. Plus get 250 back when you buy an eligible phone. Click, call or visit a store today. Jerry with me now former u. S. Ambassador to china, gary lott. He held the post for 2011 through 2014. Also governor of the state of washington and president obama as commerce secretary. Gary joined us from seattle. Thank you for being with us, mr. Ambassador. My pleasure, jerry. Jerry you know china very well. Bruce often present xi jinping s mind. How was he looking at this now . How does he think it will end . The obvious he wanted to win because its also impacting the economy of china and therefore creating more unemployment, its a lesson the chinese leaders need which is any type of domestic instability. Because instability leads to threats to the authority of and control of the communist party. Job number one is maintaining that control. But at the same time, he needs to save face. He cannot be seen as capitulating to the demands of america. China has known for quite some time and its only own economic selfinterest to reform their markets, to increase protections for intellectual property. To help ensure that private businesses can also compete against the government on businesses but they try to do this slowly. At the same time, then no foreign governments, american governments, american businesses have deep concerns about economic and trade policies of china. In some ways interests are aligned but they do not want to move so fast and do not want to be seen as capitulating to america. And the latest threats by the president to impose a 10 percent tariff on all remaining chinese goods which are really hurt American Consumers. That is being seen as upping the ante. And certainly, the chinese cannot be seen as buckling under that pressure. And in fact, president xi has other challenges, considerable challenges. The Democracy Movement in hong kong creating real problems for him. A slowing economy. Do those things restrict his ability to make concessions to the u. S. . Well, i dont think the issue of hong kong impactor has any bearing on the trade dispute. The slowing economy of china is of concern to the Chinese Government because again, it slows down the leftjob opportunities of those coming from the diversities are coming from the countryside into the city looking for jobs. Thats why its in their best interest to resolve this trade dispute as quickly as possible. As well as for america. The Federal Reserve is already estimated that the tariffs already in place will cost american households on average, 1000 and if President Trump goes ahead with the 10 percent tariffs on all remaining chinese goods come september 1, it will really increase the price of things like electronics. Whether it is game consoles, phones, clothing Christmas Decorations and everything else. Shoes. It will really impact consumers even more. Certainly, what the chinese announcement that they are going to stop buying u. S. Agricultural goods it will hurt our farmers. So this latest uproar ante of the trade war is not good for either side. If the chinese want to settle this as much as the u. S. Does, why do they find it difficult to make the kind of structural changes the administration is demanding . Why is it so difficult for them . They have a demented economy they want to nurture their companies as much as we want to help our u. S. Companies as well. For instance, they know they have to open up their markets. Theyve already made some movements there. In the past summary sectors of the chinese economy were offlimits to any type of foreign investment. And where investment was allowed, the us company cannot own more than 50 percent more than 49. 9 percent of a business operation. Therefore, you had to have it chinese partner. If you had to have a Chinese Party had to share your trade secrets, technology with that partner. After a few years when the terms of the deal are over, that chinese partner has grown in sophistication and can operate on its own to the disadvantage of the american company. So theres some of the disputes we have a china has already began to open up. They said more u. S. Companies in different sectors can operate without a chinese partner. And the Banking Financial Services they are allowing American Companies to come in and offer services. J. P. Morgan, their taken advantage of some of that. But more needs to be done. They need to stop some of their subsidies, heavy subsidies to some of the emerging industries. Whether its Artificial Intelligence or electric automobiles or biopharmaceuticals. So they are trying to make some of those moves. We of course say they have to do much more and much faster. That is the real. In a short time that we have left, lest talk about production most dont talk about the trade dispute the end of the year do you think will go to a resolution between now and then . And really hopeful that we will. Weve got to get back to the drawing board. Maybe not as grand a bargain as we hoped for but weve got to have some sort of progress, some deal and i think some tariffs will still remain in place. As a way to enforce the agreement to hold the chinese accountable and hold their feet to the fire. Jerry best of luck i think we have to leave it there. We will see, thank you for joining us very much. Thank you. Jerry as a trade ficus hi we will see why the dispute can be the defining moment in the the defining moment in the the defining moment in the oh, come on. Flo dont worry. Youre covered. dramatic music and youre saving money, because you bundled home and auto. Sarah, get in the house. Were all here for you. All all day, all night. dramatic music great job speaking calmly and clearly everyone. Thats how you put a customer at ease. Hey, did anyone else hear weird voices while they were in the corn . No. No. Me either. Whispering voice jamie. What . What might seem like a small cough can be a big bad problem for your grandchildren. Babies too young to be vaccinated against whooping cough are the most at risk for severe illness. Help prevent this talk to your doctor or pharmacist today about getting vaccinated against whooping cough. 2,000 fence posts. 900 acres. 48 bales. All before lunch, which we caught last saturday. We earn our scars. We wear our work ethic. We work until the works done. And when it is, a few hours of shuteye to rest up for tomorrow, the day well finally get something done. jerry when President Trump took office the Financial Markets appeared thrilled. The stock market started rising immediately. In the first year in office the Dow Jones Industrial average rose 30 percent. Since then except for a dip at the end of 2018, in some measure by concern that the Federal Reserve is raising Interest Rates, it has stayed high. It seemed to reflect a gambler marcus took on the trump presidency. The cognition was that the markets would get from him two things investors and Business Community really like. A big tax cut and a lot of deregulation. And they would not get the third outcome they dislike. A trade war. The first half of that gamble turned out to be a winner. The president signed into law a broad tax cut including a big cut in corporate taxes. Plus working with congress theres been a lot of deregulation. But this week we saw markets displayed doubts about whether the second part of the bargain would work out the way they hoped. Thats why this is a dangerous juncture for the trump presidency. He or she has a lot of bipartisan support for the stance hes taken against china, lots of democrats quietly applaud his efforts. And big segments of the Business Community are behind him. But the calculation has been that the trade tensions will be temporary and tolerable. If those calculations change, the months ahead could be much trickier for President Trump. That is it for us this week. For thelatest update should follow us on twitter , facebook and instagram. And if you want to join us next week, our guest will be former Federal Reserve chair janet yellen. Right here on wall street journal at large. Thank you for joining us. They hound everyone in show biz. Look its Ingrid Bergman janet leigh. Theres natalie wood. And get their autograph. Audrey hepburn. Steve mcqueen. Ronald reagan. Ronald reagan . Is that Angelina Jolie . Thousands of them it really became an obsession and a drug. An obsession that fathered this mans strange inheritance. 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