>> HELLO AGAIN AND HAPPY

MOTHER'S DAY FROM FOX NEWS IN

WASHINGTON.

PRESIDENT TRUMP SHOWS NO SIGNS

OF BACKING OFF HIS TRADE WAR

WITH CHINA AFTER NEGOTIATORS

FAILED TO STRIKE A DEAL.

ON FRIDAY HE MORE THAN DOUBLED

TARIFFS ON SOME 5,000 CATEGORIES

OF CHINESE PRODUCTS INCLUDING

FURNITURE, ELECTRONICS, AND

OTHER CONSUMER GOODS.

THE PRESIDENT IS THREATENING TO

IMPOSE TARIFFS ON ESSENTIALLY

ALL REMAINING IMPORTS FROM

CHINA, THAT'S ANOTHER

$300 BILLION OF PRODUCTS.

JOINING US NOW FOR AN EXCLUSIVE

INTERVIEW TO DISCUSS WHAT

HAPPENS NEXT, PRESIDENT TRUMP'S

TOP WHITE HOUSE ECONOMIC

ADVISOR, LARRY KUDLOW.

WELCOME BACK TO

\"FOX NEWS SUNDAY.\"

>> Larry: THANK YOU, CHRIS,

APPRECIATED, HAPPY MOTHER'S DAY.

>> Chris: THANK YOU.

I'M NOT SURE WE SHOULD BE SAYING

HAPPY MOTHER'S DAY TO EACH OTHER

BUT I WILL TAKE IT.

I WANT TO START WITH SOMETHING

THAT YOU SET A COUPLE OF WEEKS

AGO WHEN YOU WERE PRETTY

OPTIMISTIC ABOUT A TRADE DEAL

WITH CHINA.

HERE YOU ARE.

>> I THINK WE ARE ON ABOUT THE -

>> I THINK WE ARE ON ABOUT THE A

>> I THINK WE ARE ON ABOUT THE D

>> I THINK WE ARE ON ABOUT THE L

>> I THINK WE ARE ON ABOUT THE N

>> I THINK WE ARE ON ABOUT THE E

>> I THINK WE ARE ON ABOUT THE .

MAYBE EVEN THE 5-YARD LINE

LOOKING INTO THE END ZONE.

>> Chris: WHAT YARD LINE ARE

WE ON NOW AND WHAT SET US BACK?

>> Larry: WE MAY STILL BE ON

THE FIVE OF THE SEVEN BUT AS I

SAID IN THAT CLIP, THOSE OF THE

TOUGHEST YARDS TO GET.

SO LOOK, THE SITUATION FOR US,

FROM OUR STANDPOINT, WE WERE

MOVING WELL, CONSTRUCTIVE TALKS

AND I STILL THINK THAT'S THE

CASE, WE ARE GOING TO CONTINUE

THE TALKS AS THE PRESIDENT

SUGGESTED IN HIS TWEET ON

FRIDAY, BUT THE PROBLEM IS TWO

WEEKS AGO IN CHINA THERE WAS

BACKTRACKING BY THE CHINESE AND

WE COVERED THE SAME GROUND THIS

PAST WEEK, AMBASSADOR LIGHT

HEISER AND SECRETARY STEVEN

MNUCHIN.

WE CAN'T FORGET THIS, THIS IS A

HUGE DEAL, BROAD OF SCOPE AND

SCALE OF ANYTHING THE TWO

COUNTRIES HAVE HAD BEFORE BUT WE

HAVE TO GET THROUGH A LOT OF

ISSUES FOR MANY YEARS CHINA

TRADE IT WAS UNFAIR,

NONRECIPROCAL, UNBALANCED, IN

MANY CASES UNLAWFUL.

SO WE HAVE TO CORRECT THOSE AND

ONE OF THE STICKING POINTS RIGHT

NOW AS WE WOULD LIKE TO SEE

THESE CORRECTIONS IN AN

AGREEMENT WHICH IS CODIFIED BY

LAW IN CHINA, NOT JUST THE STATE

COUNCIL ANNOUNCEMENT.

WE NEED TO SEE SOMETHING MUCH

CLEARER AND UNTIL WE DO WE HAVE

TO KEEP OUR TARIFFS ON, THAT'S

PART OF THE ENFORCEMENT PROCESS

AS FAR AS WE ARE CONCERNED OF

THE PRESIDENT HAS SAID THINGS

SEEM TO BE TAKING TOO LONG AND

WE CAN'T ACCEPT ANY

BACKTRACKING.

WE ARE REPRESENTING THE

UNITED STATES, ECONOMY, FARMERS,

AUTOWORKERS, MANUFACTURERS,

THESE ARE CRUCIAL PARTS OF THIS

DISCUSSION, SO WE WANT TO BE AS

SURE AS WE CAN BE, WE DON'T

THINK THE CHINESE HAVE COME FAR

ENOUGH.

WE WILL WAIT AND SEE, THE TALKS

WILL CONTINUE AND I WILL SAY

THIS, THE G20 MEETING IN JAPAN

TOWARD THE END OF JUNE NEXT

MONTH, THE CHANCES THAT

PRESIDENT TRUMP AND PRESIDENT XI

WILL GET TOGETHER AT THAT

MEETING ARE PROBABLY PRETTY GOO

GOOD.

>> Chris: SO HE POINTED OUT

THE PRESIDENTS TWEET ON FRIDAY

WHERE HE SEEMED PRETTY

CONCILIATORY.

IN FACT, THE STOCK MARKET, WHICH

I DROPPED DRAMATICALLY FRIDAY

WITH NEWS THAT THE TALKS, THE

NEGOTIATIONS HAD ENDED WITHOUT

ANY DEAL, ROSE ON THE KIND OF

CONCILIATORY OPTIMISTIC TONE

FROM THE PRESIDENT AND FROM THE

PROJECT ON MY TREASURY SECRETARY

STEPHEN MANAGING.

THE PRESIDENT WAS MUCH MORE

COMBATIVE IN A TWEET YESTERDAY.

I THINK THAT CHINA FELT THAT

THEY WERE BEING BEATEN SO BADLY

IN THE RECENT NEGOTIATIONS THAT

THEY MAY AS WELL WAIT AROUND FOR

THE NEXT ELECTION, 2022C IF THEY

COULD GET LUCKY AND HAVE A

DEMOCRAT WIN.

IF THE WILL BECOME FAR WORSE FOR

THEM IF IT HAS TO BE NEGOTIATED

IN MY SECOND TERM.

THAT'S A LOT TOUGHER THAN THE

PRESIDENT WAS TALKING ON FRIDAY,

HOW COME?

>> Larry: LOOK, THAT'S HIS

VIEW.

WE THINK SOMETIMES CHINA MAY BE

MISINTERPRETING THE U.S.

POLITICS.

I DON'T WANT TO GO DEEP INTO

THAT, BUT I THINK THERE'S ALWAYS

AN ISSUE THERE.

THE FUNDAMENTAL THINGS AND WE'VE

SAID THIS MANY TIMES,

INTELLECTUAL PROPERTY THEFT HAS

TO BE FIXED.

FORCED TECHNOLOGY TRANSFER AND

OWNERSHIP OF AMERICAN COMPANIES

HAS TO BE FIXED.

CYBER INTERVENTIONS HAVE TO BE

FIXED.

TARIFF AND NONTARIFF BARRIERS

HAVE TO BE FIXED AND THERE HAVE

TO BE VERY, VERY STRONG

ENFORCEMENT PROVISIONS.

SOME OF THE CHINESE OFFICIALS

HAVE SAID BOTH IN BEIJING AND

HERE THAT THE AGREEMENT WAS TO

UNBALANCED.

THE RELATIONSHIP HAS BEEN TO

UNBALANCED AND BECAUSE OF THESE

PROBLEMS OF UNFAIR AND SOMETIMES

UNLAWFUL TRADING PRACTICE, WE

HAVE TO HAVE A VERY STRONG

AGREEMENT TO CORRECT, TO RIGHT

THESE WRONGS BEFORE WE WOULD BE

SATISFIED.

>> Chris: I WANT TO GO THROUGH

A QUICK CHECKLIST AND I WANT YOU

QUICK ANSWERS HERE, LIKE A

LIGHTNING ROUND ON WHERE WE

STAND RIGHT NOW.

DO YOU EXPECT CHINA TO RETALIATE

FOR OUR INCREASE IN TARIFFS, AND

HOW SOON?

>> Larry: I THINK I DO, BUT

IT'S INTERESTING, THE EXPECTED

COUNTERMEASURES HAVE NOT YET

MATERIALIZED.

WE MAY KNOW MORE TODAY OR EVEN

THIS EVENING OR TOMORROW.

I RECKON THEY WILL.

WE WILL SEE WHAT THEY COME UP

WITH.

SO FAR WE HAVEN'T HEARD ON THAT

BASIS.

>> Chris: ARE NO TALKS -- AT

THIS POINT IT'S TALKS WILL

CONTINUE, OUR NEW TALKS

SCHEDULED WITH CHINA?

>> Larry: NOT YET, BUT THE

CHINESE HAVE INVITED THE

AMBASSADOR TO COME OVER TO

BEIJING, SECRETARY MINH NGUYEN

ALSO.

NO CONCRETE DEFINITE PLANS YET.

AND BY THE BY, LET ME REPEAT THE

STRONG POSSIBILITY THAT THE TWO

PRESIDENTS WILL MEET IN JAPAN AT

THE G20 MEETING.

>> Chris: HOW LONG BEFORE

PRESIDENT TRUMP MAKES GOOD ON

HIS THREAT TO IMPOSE 25% TARIFFS

ON ALL THE REST OF CHINESE

IMPORTS INTO THIS COUNTRY,

BASICALLY THE FINAL $300 BILLION

IN CHINESE GOODS?

>> Larry: WE'VE ALREADY

LAUNCHED THAT PROCESS UP ON THE

WEBSITE.

WHAT HAPPENS IN THIS IF I GET

THIS RIGHT, WE WILL HAVE

ANNOUNCEMENTS, WE WILL HAVE

HEARINGS, WE WILL HAVE PUBLIC

COMMENTS.

HOW LONG DOES IT TAKE?

I DON'T KNOW, IT COULD BE A

COUPLE OF MONTHS, THEREABOUTS.

>> Chris: THREE OR FOUR WEEKS,

BUT YOU'RE SAYING IT COULD TAKE

LONGER.

>> Larry: AMONG OTHER THINGS,

AS I UNDERSTAND IT, A 60 DAY

PUBLIC COMMENTARY OR SOMETHING

LIKE THAT.

CALL IT A COUPLE MONTHS, CALL AT

THREE MONTHS, I DON'T KNOW.

THE AMBASSADOR CAN DETAIL THAT.

BUT THAT WILL TAKE SOME TIME AND

THEN OF COURSE THE PRESIDENT IS

GOING TO HAVE TO MAKE THE FINAL

DECISION ON THAT.

>> Chris: LET'S TALK ABOUT WHO

PAYS, WHO PAYS FOR THE HIGHER

TARIFFS ON CHINESE IMPORTS.

HERE'S WHAT PRESIDENT TRUMP HAD

TO SAY THIS WEEK.

>> OUR COUNTRY CAN TAKE AND

$120 BILLION A YEAR IN TARIFFS,

PAID FOR MOSTLY BY CHINA, BY THE

WAY, NOT BIAS.

A LOT OF PEOPLE TRY TO STEER IT

IN A DIFFERENT DIRECTION.

WILLIE IS ULTIMATELY PAID FOR

LARGELY BY CHINA.

>> Chris: BUT LARRY, THAT

ISN'T TRUE.

IT'S NOT CHINA THAT PAYS

TARIFFS, IT'S THE AMERICAN

IMPORTERS, THE AMERICAN

COMPANIES THAT PAY WHAT IN

EFFECT IS A TAX INCREASE AND

OFTENTIMES PASSES IT ON TO U.S.

CONSUMERS.

>> Larry: FAIR ENOUGH.

IN FACT, BOTH SIDES WILL PAY.

BOTH SIDES WILL PAY IN THESE

THINGS.

>> Chris: BUT THE TARIFF ON

GOODS COMING INTO THE COUNTRY,

THE CHINESE AREN'T PAYING.

>> Larry: KNOW, BUT THE

CHINESE WILL SUFFER GDP LOSSES

AND SO FORTH WITH RESPECT TO A

DIMINISHING EXPORT MARKET AND

GOODS THAT THEY MAY NEED.

>> Chris: THE PRESIDENT SAYS

IF THEY DON'T PAY THE TARIFFS

THEY MAY SUFFER CONSEQUENCES BUT

IT'S U.S. BUSINESSES AND U.S.

CONSUMERS WHO PAY, COLLECT?

>> Larry: YES, TO SOME EXTENT.

I DON'T DISAGREE WITH THAT.

AGAIN, BOTH SIDES WILL SUFFER ON

THIS.

>> Chris: I WANT TO PICK UP ON

BOTH SIDES BECAUSE LET'S LOOK AT

ONE STUDY THAT PROJECTS WITH THE

COSTS ARE OF ALL U.S. TARIFFS.

LOOK AT THE SCREEN.

THIS STUDY FOUND THAT CURRENT

TARIFFS, ALL CURRENT TARIFFS

COST AN AVERAGE FAMILY OF $4767

A YEAR AND CUT U.S. EMPLOYMENT

BY MORE THAN 900,000 JOBS.

AND THE STUDY FOUND IF THE

PRESIDENT WERE TO IMPOSE THAT

25% TARIFFS EXTENDED ON ALL

CHINESE IMPORTS, INCLUDING THE

300 BILLION, PLUS THE COST OF

CHINESE RETALIATION, IT WILL

COST AN AMERICAN FAMILY OF

$42,200 A YEAR, CUT THE AMERICAN

EMPLOYMENT BY OVER 2 MILLION

JOBS AND CUT GDP GROWTH BY MORE

THAN 1%.

>> Larry: I WORK ON -- I THINK