This is a rush transcript from "Fox News Sunday," June 17, 2018. This copy may not be in its final form and may be updated.

CHRIS WALLACE, HOST: I'm Chris Wallace.

President Trump uses the Justice Department's inspector general report to attack the FBI and claim vindication.

(BEGIN VIDEOTAPE)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think Comey was the ringleader of this whole, you know, den of thieves. They were plotting against my election.

WALLACE: We'll discuss the fallout from the findings and what it means for the Mueller's special counsel investigation with Congressman Trey Gowdy, chair of the House Oversight Committee. It's a "Fox News Sunday" exclusive.

Then, President Trump with words of praise for Kim Jong-un after the Singapore summit.

TRUMP: He speaks and his people sit up at attention, I want my people to do the same.

WALLACE: What did both sides give up and what comes next? We'll ask Senator Jack Reed, the top Democrat on the Armed Services Committee.

Plus, the president blames Democrats for the separation of families at the

border.

TRUMP: The Democrats force that law upon our nation but I hate it. I hate to see separation of parents and children.

WALLACE: We'll ask our Sunday panel about chances for a compromise on immigration.

And, the Washington Capitals take the Stanley Cup down Constitution Avenue, and D.C.'s first major sports title in a quarter century.

All right now on "Fox News Sunday".

(END VIDEOTAPE)

WALLACE: Hello again and happy Father's Day from FOX News in Washington.

President Trump is back from his summit with North Korea's Kim Jong-un and is already taking on his next big challenge, the Department of Justice inspector general issued a report that is sharply critical of how the FBI conducted the Clinton email investigation. And the president says that undercuts Robert Mueller's probe with collusion and obstruction of justice.

Joining me now from South Carolina, Republican Congressman Trey Gowdy, chair of the House Oversight Committee.

Mr. Chairman, we get to the I.G. report, I want to discuss how President Trump and his lead lawyer, Rudy Giuliani, are using the I.G. report.

Here's the president linking what the inspector general found in the Clinton investigation to the Mueller investigation of him?

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I think that the report

yesterday maybe more importantly than anything, it totally exonerates me.

There was no collusion. There was no obstruction.

(END VIDEO CLIP)

WALLACE: Mr. Chairman, does the I.G. report exonerate President Trump?

REP. TREY GOWDY, R-SC, CHAIRMAN, HOUSE OVERSIGHT COMMITTEE: Well, it certainly helps him, Chris. I mean, keep in mind, the same people, the same players that were involved in the Clinton probe later move to the Russia probe. John Brennan who said he should be in the dustbin of history. Jim Comey who said impeachment was too good of a remedy. Loretta Lynch who wanted Hillary Clinton to win.

And then we got Peter Strzok and Lisa Page, the two FBI employees. Chris -- and this is what's most important to me, those two presumed and pronounced Hillary Clinton's innocence before her investigation ended, and they presumed and pronounced Donald Trump's guilt before the investigation

even began. So, when you have that pervasiveness of bias, yes, it's going to help the person who is complaining about the investigation.

WALLACE: On the other hand, Robert Mueller was not part of the Clinton investigation. Peter Strzok was fired by Mueller as soon as he found about those very bias and damaging texts. And, of course, we don't know what Mueller has found in the last year in his investigation.

So, again, I have to ask, has President Trump been exonerated? I clearly understand your point that there was bias in the FBI. But has he been exonerated on allegations of collusion and obstruction?

GOWDY: Well, part of that depends upon what you view the Mueller probe as. Now, you mentioned collusion, the only person in the universe who claims to have evidence of collusion is Adam Schiff. And unlike any other secret he's ever had, he's actually kept this one. He's never told anyone what evidence he has.

So, there's no evidence of collusion. Obstruction of justice, Chris, good luck having your star witness being Jim Comey in any prosecution, from shoplifting to obstruction of justice. Good luck if that's your start

witness.

For me, the Mueller is about what Russia did in 2016 and who, if anyone, they did it with. So, that's what I mean when I say Mueller probe, and I hope he does right to definitive accounting of what Russian did, but there's no evidence Donald Trump did it with them and Jim Comey would be about the starriest witness that I can imagine the prosecutor could have.

WALLACE: I find this very significant because you have not been in the tank for President Trump on all this.

GOWDY: I'm not now. I'm not now.

WALLACE: No, no, I understand that. I'm not saying you are now. But are

you saying this morning that Donald Trump is off the hook in the Mueller

investigation?

GOWDY: Well, I don't know what Mueller has. I do know this: that bias is

so pervasive and everyone who's ever stood in front of a jury and had to

explain it away we'll tell you it is most miserable feeling in the world.

And I have never seen this level of bias.

So, you have Peter Strzok who can't think of a single American who can vote for Donald Trump and you got Peter Strzok who says, we'll stop it. The

campaign and the presidency, we'll stop the campaign and if it doesn't work, the day after the election, he's talking about impeachment.

So, how would you like that to be your lead investigator? Two weeks after you're assigned to look into what a foreign country did to us, the only thing he can think to talk about is an insurance policy to keep Donald

Trump from winning, and then he says we'll stop it. I assume the "we" is the FBI. So, how would you like if you're Bob Mueller to present that case

to a jury?

WALLACE: You are co-chairing a hearing on Tuesday where the inspector

general, Michael Horowitz, who issued this damaging report, will appear.

What are the main questions you want to ask him?

GOWDY: There are a bunch. It's a 500-page report. And the good news,

Chris, is Michael Horowitz proved what we wanted the FBI and the DOJ to do,

which is that you can have an investigation that is fact-centric and fair

and even-handed.

There are a lot of questions I have for him. Number one, you know, the

Hillary Clinton failure to prosecute was predicated upon two things.

Number one, that her emails were not exposed to foreign actors. There's

some evidence that that's not true.

Number two, that there was no evidence of intent. Of course, there's no

evidence of intent. He didn't bother to ask her. You went into the

interview knowing that she was not going to be charged.

So, I think some members will ask about that. A lot of members are going

to ask about the bias. The same thing that exonerated her implicated him

before the investigation began and I suspect some members will ask about

the coziness between the FBI and the media.

WALLACE: While the FBI is very critical, as you pointed out, and we're

going to get into it in more detail about actions taken by Comey and Strzok

and others. Here is his overall judgment on the final conclusion of the

Clinton investigation.

I want to put this up on the screen. This is from the I.G. We found no

evidence that the conclusions by the prosecutors were affected by bias or

other improper considerations. Rather, we determine that they were based

on the prosecutor's assessment of the facts, the law, and past department

practice.

And here is current FBI Director Christopher Wray.

(BEGIN VIDEO CLIP)

CHRISTOPHER WRAY, FBI DIRECTOR: This report did not find any evidence of

political bias or improper considerations actually impacting the

investigation under review.

(END VIDEO CLIP)

WALLACE: So, when they say the final judgments -- yes, there may have been

bias, but that didn't affect the final judgments -- are the inspector

general, Michael Horowitz, and Christopher Wray, the current FBI director,

are they wrong?

GOWDY: Well, I'll say this, why did Loretta Lynch ask it to be called a

matter and not an investigation? Why was Cheryl Mills in the room when the

target was being interviewed? Why did you write an exoneration memo six

weeks before she was interviewed? Why did you start playing in your press

conference two months before the investigation was over?

Here's where I depart from Chris Wray -- I don't think it's my job to prove

the bias impacting the investigation. I think it's job to probe that it

did not.

Here's what I know: they exonerated her before the interview. They said

she did nothing wrong before they even bothered to talk to her and the same

group said Donald Trump should not be the president and/or should be

impeached before the investigation even began.

If that is not textbook bias, which is the prejudging of an outcome, I

mean, that's what bias is. We are prejudging the outcome. We're

prejudging her innocence before we talk to her. We're prejudging his guilt

before you even began to look into the fact pattern. That's bias, and,

yes, it impacted the outcome.

She -- the most important element is intent. That's what they told us.

She did not have the intent to commit a crime.

The best way to figure that out is to talk to her. But they went into the

interview, Chris, saying the only thing she'll be charged with is maybe

lying to us.

If you're Donald Trump or if you're any other defendant in the country, how

would you like that deal? We're not going to charge with anything as long

as you tell us the truth. That is blanket immunity and everyone in the

country would like that as they go into an interview with the FBI.

WALLACE: Now, a couple of top Republican leaders, House Majority Leader

McCarthy, Senate Majority Leader McConnell, are saying given all of this

and given the fact that the Mueller investigation is going on for more than

a year, it's time to wrap it up. It clearly is putting a cloud over the

president.

Do you agree with that?

GOWDY: I think it's putting more than just a cloud over the president. I

think it's putting the cloud over the entire country.

This is a unique, Chris. It is a counterintelligence investigation that's

become public. Most of them do not. It's a criminal investigation that

has political overtones, most of them do not.

Combine the two. It is a public counterintelligence investigation with

political overtones. This is not your traditional investigation. So, I

would encourage Bob Mueller, keep doing exactly what Rod Rosenstein hired

you to do.

Bob Mueller did not volunteer. We're here because Rod Rosenstein decided

we needed a special counsel. Do the very best you can with the evidence

and the witnesses you have. But understand that this is being used by

political enemies to hurt Donald Trump.

Adam Schiff wants to be the chairperson of the House Intelligence

Committee. Nancy Pelosi wants to be the speaker of the House. They want

Bob Mueller want to do what Peter Strzok and Hillary Clinton could not do,

which is beat Donald Trump.

So, just be aware that you're being used would be my advice to Bob Mueller.

WALLACE: I've got about three minutes left, I want get I'm going to ask

you for quick answers.

Should, based on what you knew before, and what you know now from the

I.G.'s report, should Hillary Clinton have been charged with the crime?

GOWDY: I need to interview her effectively. I need to ask her those

questions on intent. We know she lied. We know she's concealed evidence.

We know they destroyed evidence.

Those are all circumstantial markers of intent. So, I would need to

interview her without going into it, knowing I was going to clear her like

the FBI did.

WALLACE: Should Comey and Peter Strzok be called to testify before

Congress?

GOWDY: Yes.

WALLACE: On what issues?

GOWDY: Well, Peter Strzok, you name it. The highest level of bias I've

ever witnessed in any law enforcement officer.

And, Comey, in the words of my grandmamma, has some explaining to do. He's

having a hard time getting his histories to match up. Horowitz was very

critical of him and deservedly so.

WALLACE: Finally, where are House Republicans in your demand, your call

for the Department of Justice to share more documents, especially on this

question of the use by the FBI of a confidential informant to penetrate the

Trump campaign? And also, do you believe, as some of your colleagues have

suggested, that Deputy Attorney Rosenstein threatened the House and

threatened staffers for demanding those documents?

GOWDY: Well, I wasn't in the room for that January meeting. I've been in

the room with some other meetings, where tensions run really high. We had

a meeting Friday night. Under the heading of minor miracles, you had

members of the House working on a Friday night.

Paul Ryan led this meeting. You had Devin Nunes, Bob Goodlatte, myself,

and everyone you can think of from the FBI and the DOJ and we went item by

item. On both of those outstanding subpoenas, we either have compliance,

we have partial compliance, or we have noncompliance.

And Paul made it very clear. There is going to be action on the floor of

the House this week if the FBI and DOJ do not comply with our subpoena

request.

So, Rod Rosenstein, Chris Wray, you were in the meeting in the meeting, you

understood as just as clearly as I did. We're going to get compliance, or

the House of Representatives is going to use its full arsenal of

constitutional weapons to gain compliance.

This is too important. It was important before the I.G. report. The I.G.

report has even heightened the need for us to understand what happened in

2016, so the new guys can either be part of the cleanup crew or they can be

part of the cover-up crew. And I would encourage them to be part of the

cleanup crew.

WALLACE: And very briefly, sir, the areas where you see noncompliance, and

you might see action on the floor this week. That's on what area?

GOWDY: It would be FISA abuse. It would be a little bit on the Strzok-

Page text. We're a little miffed that most damning text the same time you

did, where we've been asking for it for a long time.

So, Devin's subpoena is largely -- most of the issues were with Devin's

subpoena and not Chairman Goodlatte's, and that's FISA abuse and it's what

led up to the Russia probe.

And Chris and Rod are -- there's no ambiguity. The speaker of the house

was really clear. You're going to comply or there's going to be floor

action, and I think they got the message.

WALLACE: And floor action would be a --

GOWDY: The full panoply of constitutional weapons available to the

people's house?

WALLACE: Including contempt of Congress?

GOWDY: That would be among them, yes, sir. I don't want the drama, I want

the documents. And I think that Chris and Rod got that message.

Contempt of Congress just means we're going to be talking about this six

years from now. I don't want that. I want the documents. I don't want

the dram and I don't want the floor fight.

But they need to know that we're willing to do it and unless they were in a

different meeting than the one -- I have never seen Paul Ryan as animated

as I saw him Friday night. He is sick and tired of the delay and he

communicated that point very effectively.

WALLACE: Chairman Gowdy, thank you. Thanks for your time. Always good to

talk with you.

GOWDY: Yes, sir.

WALLACE: And I got to say, you had a lot to say today. Thank you, sir.

GOWDY: Happy Father's Day. Thanks.

WALLACE: Same to you, sir.

Up next, we'll bring in our Sunday group to discuss the FBI's handling of

the Clinton investigation and what it means for the Mueller probe of

President Trump.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: There was no collusion.

There was no obstruction. The I.G. report yesterday went a long way to

show that. And I think that the Mueller investigation has been totally

discredited.

SEN. CHUCK SCHUMER, D-NY, SENATE MINORITY LEADER: Certain actions taken

by the FBI, intentionally or not, help the Trump campaign and hurt the

Clinton campaign.

(END VIDEO CLIP)

WALLACE: President Trump and Senate Democratic Leader Chuck Schumer

drawing very different conclusions from the I.G. report this week on the

Clinton email investigation.

And it's time now for our Sunday group. GOP strategist, Karl Rove, Fox

News correspondent Gillian Turner, former Democratic Congresswoman Jane

Harman, director of the Woodrow Wilson Center, and Chris Stirewalt, FOX

News politics editor.

Well, Karl, I've got to say, that was a different Trey Gowdy that we have

heard because for weeks, for months, he's been the one Republican kind of

pushing back on other Republicans and certainly the Trump White House or

rushing to judgment, the Mueller is fake, he pushed back on spygate.

Today, he was basically, it seemed to me, saying, that the I.G. report and

what it found in terms of rampant bias on the part of Comey and Strzok and

others has blown the Mueller investigation out of the water as far as it

concerns president Trump.

KARL ROVE, FORMER BUSH WHITE HOUSE ADVISER: Well, I had a slightly

different take on some of that. I do -- look, this was a very damaging

report, the I.G. report, to Comey, McCabe, Strzok, Lisa Page's lover, and

to generally the FBI itself. But, it raises questions about what the FBI

did in 2016 in Papadopoulos, and others in the Trump campaign.

But at the end of it, we have in May of 2017, the appointment of Bob

Mueller. And when he finds out literally in matter of days and weeks

later, the text messages with Peter Strzok, he essentially fires him. He

removes him from his position as head of the counterespionage section of

the FBI.

And because you can't fire an FBI agent, he has some detailed to human

resources. I mean, as about the biggest emotion as you can possibly get.

WALLACE: I understand all of that. But when I asked Gowdy about exactly

that, he in effect said that the fruit of all this is poison, that the

launch of the investigation was poisoned. That Comey would be the main

witness or a main witness in any obstruction of justice case against

President Trump is fatally flawed. I mean, Gowdy did not leave -- I gave

him a lot of opportunities and he didn't want to take them.

ROVE: I agree with him about Comey. Comey is one of the biggest victims

out of not only this I.G. report but the whole process. But, look, there

is no --

WALLACE: I wouldn't say not a victim, but --

ROVE: Yes, you're right.

(LAUGHTER)

ROVE: He gets what he deserves.

WALLACE: Yes.

ROVE: But, look, what we do have here is, look, let's look into the

question of collusion but, look, there's never been any evidence of

collusion. Every presidential campaign leaks. The Trump campaign leaks

than worse than any I've seen in my life.

If there was any collusion, we would have heard a hint about it from

somebody inside the campaign. But at the end of the day, Mueller's

investigation is going to be judged by the report of the Mueller

investigation. We're going to make a judgment about it, and my sense is,

is that it's going to clear the present of any question of collusion

between his campaign and the Russians and there will be people like Paul

Manafort who have real liability and have real legal problems because of

their actions unconnected to the campaign.

WALLACE: I want to go back to that newly discovered text exchange between

two FBI officials in August of 2016. That's Lisa Page and Peter Strzok.

Let's put it up on the screen.

Page: Trumps not ever going to become president, right? Right? Strzok:

No, no, he won't. We'll stop it.

Congresswoman Harman, you don't have to be a conspiracy theorist to say,

that is pretty damaging. And this is coming exactly at the point when the

Clinton campaign is ramping down, and the Trump -- the Clinton

investigation is ramping down by the FBI, and the Trump investigation is

ramping up.

JANE HARMAN, FORMER U.S. CONGRESSWOMAN, D-CALIFORNIA: Well, first of all, happy Father's Day, to everyone.

WALLACE: Thank you.

HARMAN: To my two sons and two sons in law.

But, you're right, and it's not pretty damaging. It's very damaging.

And Comey's actions, all three of his press events in 2016 were

inappropriate and wrong. And the I.G. nails him on and should have nailed him on it. Yes, he is a compromised witness, if he ever becomes a witness. All of that is right.

But let's understand, let's -- that there are two different investigations. One was the investigation and what the I.G. looked at with the Clinton emails and things that happened in 2016. And the second is, Mueller's investigation.

And I agree with Karl that that investigation is a different one. Trey Gowdy went out of his way to say it should be completed. Most members of Congress --

(CROSSTALK)

WALLACE: Yes, well, wait. But except he said it should be completed in terms of Russian interference.

HARMAN: Correct.

WALLACE: Russian interference. He wasn't talking about collusion or

obstruction.

HARMAN: Well, I don't think we know. I hope there is no collusion or obstruction, but I think we should let the investigation conclude and find out what Mueller knows.

And Mueller, no one -- while some people are impugning Mueller, but I certainly wouldn't, and most members of Congress wouldn't. He had an exemplary run as the head of the FBI and U.S. attorney before that. He was

nominated and supported by immigrants and Republicans when he became FBI director, right around 9/11. I worked closely with him in my role as ranking member of the intelligence committee.

And just the last comment about the FBI, this isn't the first strange event

at the FBI. I had my own event which was very strange with the FBI. My

view is that, yes, there need to be changes at the FBI. But Christopher

Wray seems to be a responsible leader and will take in a better direction.

WALLACE: Chris Stirewalt, how big a deal is this to hear Trey Gowdy who's

been a pretty honest broker on all of this suddenly, really change his

opinion about the Mueller investigation and President Trump's potential

legal liability?

CHRIS STIREWALT, FOX NEWS POLITICAL EDITOR: I suspect that Trey Gowdy will

do the same thing with the Mueller investigation that he rightly did with

the inspector general's report, which is wait for the work to be concluded

and then render judgment after that fact.

I heard him definitely saying it was time to wrap up but I also heard a guy

that said he did not express any concern about Mueller. But I definitely

heard this -- anybody who's attached to the Comey administration at the

FBI, the catastrophic Comey administration at the FBI, if you're of that

leadership bubble up there, you better not be part of what comes out at the

end for Mueller. And Mueller's findings have to be able to rise above the

decrepitude of Comey and his team. It has to be better than that.

WALLACE: Gillian, I want to pick up on another point that Trey Gowdy made

today which I thought was news and something I didn't know about -- and I

don't think has been reported that there was this big meeting on Friday

night between House leadership and the top leadership, Rod Rosenstein and

Chris Wray, FBI, Department of Justice deputy attorney general, and they

basically put the wood to the Justice Department and said, you produce

these documents or we're going to go to the floor and we are going to take

serious action to force you to comply with our subpoenas .

GILLIAN TURNER, FOX NEWS CORRESPONDENT: That's right, Chris.

A quick word if I may on the Strzok/Page texts. I've been scouring the

intelligence community all week on this story. And over and over, what I

hear from operatives and analysts is that those few text messages that you

highlighted for viewers have been more damaging than anything that's

transpired so far in the Mueller investigation and are probably going to be

more damaging than anything that could come out in the future. And it's

something that I think is causing a lot of -- causing people to pause and

reflect upon their service in the intelligence community.

When it comes to -- when it comes to the inspector general's report, I just

want to point out, there's an uncomfortable reality buried in the inspector

general's report for the Trump administration which is that they got five

of the most important national security departments and agencies unfilled

inspector general positions -- Department of Homeland Security, Department

of Defense, the CIA. Even White House inspector general position is

currently vacant.

So, it's quite -- every time they lob sort of criticism against the Obama

administration for the way they policed themselves, it highlights the fact

that they are choosing not to police themselves at all -- at least up until

now.

WALLACE: I've got less than a minute left. Carl, your reaction to Gowdy

and the revelation that House Republican leadership is fed up.

ROVE: Friday meeting didn't need to take place. Wray and Rosenstein and

the FBI need to be responsive to the will of Congress. Congress has

oversight on the Department of Justice and FBI. And it is astonishing to

me that these request for access to documents have been stonewalled,

delayed, ignored. And the speaker was right and the House is right. And I

don't understand why.

Wray has a chance to make a clean break with Comey in the past, and he can

do so by being forthcoming. I hope to God they are forthcoming here in the

next 24 hours.

WALLACE: All right, panel, we have to take a break here. We'll see you

all a little later.

Up next, President Trump defends the deal he made with Kim Jong-un, saying

it's made the world safer. But Democrats say he gave up a lot without

getting much in return. We'll talk with Senator Jack Reed, the top

Democrat on the Senate Armed Services about those concerns, next.

(COMMERCIAL BREAK)

WALLACE: A look at Shinnecock Hills Golf Club in Southampton, New York,

home of this year's U.S. Open.

The Singapore summit between President Trump and Kim Jong-un produced

stunning and surprising pictures. But what about the substance? Did the two

leaders resolve differences that could lead to a nuclear confrontation?

Joining me here in Washington is Jack Reed, the top Democrat on the Senate

Armed Services Committee.

Senator, welcome back to FOX NEWS SUNDAY.

SEN. JACK REED, D-RHODE ISLAND: Thanks, Chris.

WALLACE: President Trump says that North Korea is no longer a nuclear

threat, his words, and on Friday he added this.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I have solved that problem. Now, we're getting it memorialized and all.

QUESTION: You solved the problem?

(CROSS TALK)

TRUMP: But that problem is largely solved.

(END VIDEO CLIP)

WALLACE: Senator, your reaction?

REED: North Korea is a nuclear threat. The president's statement was

absolutely, in my view, preposterous. North Korea has between 20 and 60

nuclear weapons. They have missiles that they can deliver those weapons to

Japan, South Korea, Guam. They have an intricate infrastructure of nuclear

laboratories, testing facilities, et cetera. This issue is just beginning

to be dealt with. It has not been solved.

WALLACE: But -- and -- and in fairness, it -- it hasn't and the president

acknowledges that, although he clearly is more optimistic than you are that

it's going to get settled. North Korea has suspended its nuclear bomb and

missile test for months. It has destroyed one of its main testing

facilities. The two sides are talking at the highest level. Would you

concede that President Trump has dramatically reduced tensions between the

two countries?

REED: Well, I think initially President Trump helped elevate the tensions.

I mean the fire and fury, the demeaning Twitters about Kim Jong-un, et

cetera.

I think the path of diplomacy that he's chosen is the wiser one and I

commend him for that. But if -- the meeting itself, the summit, was a great

victory for Kim Jong-un. He got the prestige of the first leader of North

Korea to be literally embraced by the president of the United States. His

sorted record on human rights, on mistreating his own people was not only

ignored, but, frankly, contradicted in many respects by the president's

comments.

The sanctions regime, which, again, the president, I think, and his staff

did very well in putting it together, will dissipate given the lack of

enthusiasm for enforcement, guarantees about the security of North Korea,

which the president seemed to imply and is different than -- than the --

the maximum pressure campaign he's put on. And then conceding with that any

other quid pro quo, the exercises that we conduct with the South Koreans

was, I think, a mistake. Indeed, the president chose to call them

provocative war games, which are not the case at all.

So, at the end of that summit, Kim Jong-un walked away, I think, with a

great deal. And we're just now beginning to try to put together -- put it

back together.

WALLACE: I just want to press on that one point here. The top Democrat in

the Senate Armed Services Committee, the president did agree to suspend

joint military exercises between South Korea and the United States. He did,

however, say that if North Korea drags its feet on denuclearization, he can

always resume the games.

So how -- how big a deal is that?

REED: It is a big deal. First of all, it was a complete surprise to our

allies, the South Koreans and the Japanese. They are very concerned.

Second, it is part of our determined not war gaming but deterrence of the

North Koreans. And if this goes for a long period of time, operationally

we'll lose the skills that we need to collaborate with our colleagues in

the region.

And I think also it was interesting that the Chinese were among the first

to report the succession of these exercises. And I think they're going to

take a great deal of comfort from that.

So --

WALLACE: Let me switch subjects on you.

REED: Yes, sir.

WALLACE: President Trump announced Friday that he is imposing now finally -

- not threatening but imposing stiff, new tariffs on China effective July

6th. Here he is.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We're just going to do $50

billion on $50 billion of high technology equipment and other things coming

into the country.

(END VIDEO CLIP)

WALLACE: China responded quickly that it is going to respond and it's going

to retaliate with tariffs on U.S. farm products, on crude oil, on U.S.

cars.

Senator, are we now in a trade war with China?

REED: It looks that way. But the -- the president, I think, is right in

calling out China. They have abused, in many respects, the free trade

arrangements that have been built up over generations. They don't allow

American companies to compete in China or international companies, as they

are allowed to in other countries. They have, I think, used the trade

system to their advantage.

So the president, I think, is right in taking action. The question is, are

these actions coordinated? I don't think so. I mean he -- before he left

for the Singapore summit, he had a very, very difficult meeting with the G-

7. So he's not going into this trade battle with China with the unified

effort by the western powers.

And then, second, I think a lot of his judgements seem to be snap

judgements. He imposed tariffs on countries aiming at China and it wound up

sort of hitting Canada and other countries where we have not only trade

relationships but very strong national security relationships.

So the concept, I think, is right to go after China. The methods, I think,

he employs, just, in many cases, is counterproductive. But to the trade war

issue is, we are -- could be dangerously approaching such a trade war.

WALLACE: I want to switch to one other subject which is gaining interest

and concern by the moment, and that is the issue of families at the border

being separated.

Let's put up some statistics. In the first six weeks after the

administration launched its zero tolerance policy, we now find out that

1,995 minors were separated from 1,940 adults coming across the border

illegally.

Here is President Trump's explanation.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: That's the law. And that's

what the Democrats gave us. And we're willing to change it today if they

want to get in and negotiate. But they just don't want to negotiate.

(END VIDEO CLIP)

WALLACE: Your reaction to the policy and the impact it's having in terms of

separating these families.

REED: It's not the law. It's the president's policy. In fact, he has

stated, and it's been reported in the press, that he's using it as a

negotiation tool. He's using it to intimidate families so they don't come

across the border. He's using it as a political ploy. So it's not the law.

And to say it is law is just misrepresenting -- misrepresenting the fact

dramatically.

WALLACE: Let -- let me -- let me ask you about two aspects of that. One, in

terms of trying to deter families from coming across the border, they're

coming across illegally, what's wrong with that?

REED: We should have, and we've tried in the past on a bipartisan basis to

develop comprehensive immigration reform, which would secure the border. We

-- we can't have a border that is open. But it also would recognize, one,

the individuals that are here for many years and, two, provide a much more

effective process if people are seeing asylum, if people are trying

legitimately to -- to come into the United States.

We have to protect our borders. But it is, I think, repugnant to most

Americans when you have people like Dr. Franklin Graham condemning these

family separations as abhorrent to the core American values. That's --

WALLACE: Franklin Graham, the -- the son of Billy Graham.

REED: Billy Graham.

WALLACE: Let -- let me ask you about the other aspect of it, because it has

been suggested -- some people in the White House are saying, this is a

negotiating poly. And the argument is that the president has suspended the

DACA program, although the courts have stopped that, and he has imposed

this policy to try to bring Democrats, like yourself, to the table to

create a kind of grand bargain, yes, he'll stop this policy, he'll provide

some protection on -- for the dreamers, but, in return, you, the Democrats,

will give him the border wall and limits on legal immigration, things like

the visa lottery and chain migration.

REED: I don't think Americans would like to see children, two years old,

four years old torn away from their parents as a negotiating poly in

Washington, D.C. I think that's the American view of this. There are other

ways to negotiate between Republicans and Democrats. Using children, young

children, as political foils is abhorrent.

WALLACE: But as you saying that you will not agree to a deal that has this

as an element in it?

REED: I'm -- I am just saying that this is repugnant to most Americans. And

when you have leaders of the -- community leaders, like Dr. Graham,

speaking out, that sends a strong, strong signal. There are ways we can

negotiate. We had, a few months ago, we thought, a deal with the president

with respect to some enhancement of water -- border security, including

stretches of the wall. In return, the DACA, the dreamers, would be allowed

to stay. At the last moment, that blew up. That was a fair, comprehensive,

bargained negotiation and he just sort of walked away from it.

But to use children in this way, to me, is something that, frankly, you

know, that's not what we're about in this country.

WALLACE: Senator Reed, thank you.

REED: Thanks, Chris.

WALLACE: Thanks for coming in. Always good to talk with you, sir.

REED: Yes, sir.

WALLACE: Coming up, our Sunday group returns to discuss the showdown over

immigration. Will the party's resolve their differences on separating

families and the dreamers and border enforcement?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We had good chemistry. You

haven't had any rockets shot up in the air for seven months.

UNIDENTIFIED MALE: Right.

TRUMP: You haven't had any research. They just blew up there test site.

SEN. BOB MENENDEZ (D-NJ), RANKING MEMBER, FOREIGN RELATIONS COMMITTEE: This

is the weakest statement I have ever seen come out of any engagement with

North Korea.

(END VIDEO CLIP)

WALLACE: The top Democrat on the Senate Foreign Relations Committee, Bob

Menendez, questioning President Trump's positive assessment of the nuclear

deal he struck with North Korea's Kim Jong-un.

And we're back now with the panel.

Congresswoman Harmon, how do you assess the Singapore summit? What are the

pluses for the U.S.? What are the minuses?

JANE HARMAN, FORMER U.S. CONGRESSWOMAN (D-CA): Well, it was a made for TV

moment. And let's understand that there were two big images. One was at the

G-7, with Trump's sitting like this, glaring at Angela Merkel, and the

second one in the exact same timeframe was shaking hands with Kim Jong-un

and slightly later saluting in return to his salute a North American -- A

North Korean general.

How do I assess it? I think it's a short-term propaganda win for Kim. He

got almost everything he wants. Jack Reed just said that, Senator Jack

Reed, on your program. But I think if he just makes no more threats and

doesn't test again, he's gotten away with becoming a nuclear nation, being

recognized by the world and I think there will be more economic advantages

to him. I think China will trade more and we won't punish China for trading

with North Korea. And I think that, you know, yay him.

Just one other comment. There are two winners here short term I think. One

is China, which now has much more of an advantage in Asia now that we're

suspending our exercises and possibly reducing or eliminating our troops in

South Korea. But the other is Russia. Because of what we did with the G-7

and the new tariff plan -- let's not call it a war -- Europe is

destabilized and that gives Russia huge advantages with respect to Ukraine

and in the Middle East because were renounced the Iran deal, it seems to

me, Russia has more free reign in Syria and parts of the Middle East.

WALLACE: Gillian, as someone who worked on the National Security Council

for President Bush and President Obama, President Trump seems confident he

got a deal from Kim to give up his nuclear weapons, even if that isn't

spelled out in the final agreement. The joint agreement that they signed.

Do you share the president's confidence?

GILLIAN TURNER, FOX NEWS CORRESPONDENT: I share the president's hope and

optimism, not necessarily his confidence, because I think no matter what is

said now, truly only time will tell.

One thing to point out that, you know, a lot of -- in the wake of -- of

this summit, it seems to be that the response is breaking down along

political lines, much like it did to President Obama's overtures to the

Iran regime. But when it comes down to policy matters here, there's one

major challenge the Trump administration's facing that President Obama

didn't really have to deal with back in 2012, '13 and '14, and that is

North Korea's continued super aggressive gray zone warfare in cyberspace.

I've been speaking to cyber expert and tech experts this week who say that

during the lead up to the summit, even as the summit was ongoing, North

Korea sponsored hackers were infiltrating U.S. banks, financial

institutions and carrying out attacks on them. And this is something that

they've not yet dealt with. They might be able to get to some kind of a de-

neutralization deal without addressing that, but it will ultimately fall

apart unless the Trump administration confront this head on. I hope they're

doing it behind the scenes through covert channels.

WALLACE: Let's turn to the other subject I discussed with Senator Reed, and

that's the separation of families coming across the border, which I think

it's fair to say is sparking growing outrage as we now learn that almost

2,000 miners were separated from their adult parents as they came across

the border in the first six weeks after the president and his

administration announced a zero-tolerance policy. Here was the president on

this, this week.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: They're all saying about

separating the families. And that's a Democrat bill. That's Democrats

wanting to do that. And they could solve it very easily by getting

together. But they think it's a good election point.

(END VIDEO CLIP)

WALLACE: Karl, what do you think of this separation of families? The zero-

tolerance and what's come from it. What do you think of it as policy and

what do you think of it as it apparently is being used by the Trump

administration as leverage to get the Democrats to negotiate a bigger deal

on immigration?

KARL ROVE, FOX NEWS CONTRIBUTOR: Well, let's -- let's take the politics of

it first and then go back to the policy. If you take a look, there's a new

Harvard Harris poll that -- that says, give the dreamers a -- they can

remain here and have a path to citizenship in return for which there is

increased -- use merit rather than family connections. You eliminate the

diversity lottery and you provide funding for the border wall. And in that

poll, that deal gets better than two to one.

So at the end of this --

WALLACE: In favor of it?

ROVE: In favor of it.

And so at the end of this, the president's position, I'll give you the

dreamers and a path to citizenship in return for these three things has the

support of the American people. So the administration's on firm ground.

The president's not on as firm a ground when it comes to his description of

the -- of the detention of minors and separation from -- of families. This

is being driven by a decision by the Justice Department for zero tolerance.

That is to say anybody who comes across the border is now going to be

charged. It used to be to the policy that if you came across the border, if

you were a Mexican, you were immediately removed out of the country. Now

apparently they're going to charge the Mexicans with an immigration

violation. That makes it impossible for them to enter the country legally

in the future to work or become a U.S. citizen.

So the administration had taken the zero tolerance policy and rather than

taking, you know, OTM's, we would hold them and move them out of the

country within 30 or 35 days. Now you have to hold these people until the

whole process of charging them, litigating in a court, finding them guilty

or not and then processing them out of the country takes place. And we only

have two facilities in which you can put families intact. A small one in

(INAUDIBLE), New Mexico, and another one in Dilley, Texas. We used to have

a big facility in Taylor, Texas, but the courts have made us, in essence,

restricted and then Obama closed it down.

WALLACE: So where -- so where are we on the idea that somehow this policy,

which is sparking a lot of growing outrage, is going to be an effective

tool for the Trump administration to use to bring Democrats to the

negotiating table?

ROVE: Look, my hope is, is -- I know the president said it's a negotiating

tactic. I hope the Democrats will not get stuck on trying to win that

argument with the president. They're not going to convince him that this

was the wrong thing to do. They ought to find a way to resolve the

situation, which is, provided an opportunity for the dreamers, to -- to --

and this is also incumbent upon the Republicans in the House. The dreamers

get a path to citizenship and get to remain here and there are other

changes on the other side, including money for the border wall.

Look, we have a border -- we have a wall along, I think, 600 miles of the

board. It needs to be replaced and upgraded. That's primarily what the

president is talking about. He has given up on the notion of -- of building

a wall at the top of the canyon in Santa Elena Canyon in Texas, which --

where the U.S. border is 1,500 feet in the air. He's finally given up on

that notion. So he's talking about a limited wall.

WALLACE: OK.

ROVE: Maybe a couple of dozen miles more than we now have, but upgrading it

to make it modern and repairing it.

WALLACE: Chris, let me bring you into this, because it strikes me that the

president is in the kind politically risky position here. One, to the

degree that he keeps the separation going -- and I'll ask you, does he get

blamed for this or do Democrats get blamed? And, if he were to get a deal,

which would include, what Karl says, the amnesty or citizenship for the

dreamers and a lot of hardline conservatives are going to call that amnesty

--

CHRIS STIREWALT, FOX NEWS POLITICAL EDITOR: Right.

WALLACE: That has some downside for him too.

STIREWALT: So he is in a box. And he's in a box with his own base. And he's

in a box because Republicans can't agree on anything. Their real problem

here is, they can't come to terms amongst themselves about what does

acceptable immigration legislation look like.

Paul Ryan, they just totally faced Paul Ryan. Paul Ryan did a deal. He

avoided a discharge petition that would have been basically rebellion among

the members of the House. You know how rare that would be. So Paul Ryan

defeats this and he says, OK, boys, hang together because we're going to

come out with legislation next week. And then the president goes and dumps

on it. No, we're not going to do that. Now, later, the White House comes

back and tries to clean it up and say, well, what the president meant to

mean was this.

WALLACE: But in any -- well, wait, but, in any case, the president, 5:30

Tuesday, is going up to Capitol Hill to talk to House Republicans to try to

work this out.

STIREWALT: They've got to do a deal. Until Republicans can agree on what

they think immigration policy should look like amongst themselves, the

Democrats are off the hook. They are totally getting away scot free because

Republicans have to finish their own work first.

ROVE: And, remember, Quinnipiac, 64 percent of Republicans believe that

dreamers out to be allowed to remain and allowed to apply for citizenship.

Sixty-four percent of Republicans. Seventy-seven percent of independents,

92 percent of Democrats, 79 percent of the Americans overall. Republicans

ought to do it absent the Democrats.

WALLACE: So we've got less than a minute left.

Will Democrats be forced to deal to try to end the separation of families

or do they actually see this as a political benefit for them, as heartless

as it may be?

HARMAN: (INAUDIBLE) shame on anybody who wants these kids to be pawns. It's

the wrong policy. The right policy was something Mike Pence and John Kelly,

when he was the head of Homeland Security, tried to pursue in Florida,

where they had a summit on helping Central American governments, the push

factor comes from Central America. Mexico should police its southern border

better. But these kids and migrants are coming from Central America, where

there's rampant corruption and danger to their families. That's why they're

coming through.

WALLACE: So clean up the situation at home.

HARMAN: Yes.

WALLACE: Thank you, panel. See you next Sunday.

When we come back, Lord Stanley comes to Washington, finally.

(COMMERCIAL BREAK)

WALLACE: While our trip last week to Singapore was fascinating, the

downside was we missed being here in D.C. for the Washington Capitals

victory celebration.

On Tuesday, the streets here rocked the red as the newly minted district of

champions held a parade. It's Washington's first major sports title in 26

years.

Days before, Alex Ovechkin and the Capitals made franchise history, beating

the Vegas Golden Knights in game five of the Stanley Cup finals. Ovechkin

and his teammates hoisted the cup along Constitution Avenue, headed for a

rally in front of the Capitol. Some 100,000 fans celebrated the victory, 44

years in the making, doing it peacefully with no arrests. And just possibly showing our nation's leaders what can be accomplished when everyone pulls

together.

We congratulate owner Ted Leonsis, the players and the city of Washington on the victory. Now let's do it again next year.

And that's it for today. Have a Happy Father's Day. For all you kids out there, especially mine, call your dad, and we'll see you next "Fox News Sunday."

END

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