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Happy Friday!

Plot twist! "Longtime Donald Trump attorney and fixer Michael Cohen has brought in [Lanny Davis,] an outspoken critic of the president — a former special counsel for Bill Clinton — to help respond to a federal probe of his businesses." (Bloomberg)

1 big thing: NATO's nightmare
Trump writes to Norway Prime Minister Erna Solberg to demand an increase in defense spending. The letter was released by the Norwegian Defense Ministry. (J. David Ake/AP)

President Trump's harsh blast at NATO during a rally last night in Helena, Mont., was Europeans’ worst nightmare come to life, Western diplomatic sources tell Jonathan Swan and me:

  • Trump portrayed the alliance as one-sided, transactional and bad for the U.S.
  • He seemed to suggest that U.S. military support is conditional on the Germans paying more, calling out “Angela" — the German chancellor.

The president's views on NATO and trade are inseparable: He believes that, as he said in Montana, Americans are "the schmucks paying for the whole thing."

  • Trump re Europe: "[T]hey kill us on trade. They kill us on other things. ... [T]hey kill us with NATO. They kill us."
  • He sees both as examples of international systems set up to screw the U.S. And now he’s going around the world with his hand out, collecting what he sees are America’s dues.

Why it matters: When the history of the Trump presidency is written, one of the most important chapters will be the way he changed America’s relationship with Europe.

  • He doesn’t do what normal U.S. presidents do and make unequivocal statements about solidarity against shared threats. He asks them to pay up.
  • Rhetorically at least, he seldom distinguishes between allies and adversaries. And when he does, he often saves the toughest words for America’s allies.
  • Trump’s theory of the case is that Europe needs us more than we need them. And certainly for now, at least, Europeans have nowhere else to turn for their protection.
  • It’s possible his theory works out in the long term and they become militarily much more self-sufficient. But what’s not clear is what it will mean for the U.S. in the long run to draw down so much goodwill with our traditional allies.
  • European officials have been telling us they’re worried Trump will take a "purely transactional" approach to NATO and ignore shared values and the other dimensions of the alliance.

Reality check: Trump is correct that the other NATO members aren’t living up to their financial commitments. But they have been improving over the past two years.

What's next: The other NATO member states worry — and the rally seems to confirm their fears — that Trump will come into next week's NATO summit in Brussels like a wrecking ball, and beat up on them over not paying their bills.

  • The path they would prefer: a victory lap for the progress made since he became president. 
  • The Germans are especially concerned, but it’s not just them. There are so many other countries who live in real fear of Russia and know that Vladimir Putin is rooting for transatlantic tensions and divisions. 
  • The Europeans' worst fear of all — so bad it’s almost unthinkable — would be for Trump to say at the summit that U.S. protection is somehow conditional on them meeting defense spending targets.
  • Trump’s aides assure the allies he will provide an “ironclad” commitment to continue defending them, and certainly he’s done so a number of times over the past year.

Be smart: European officials tell us they’re still nervous because they don’t trust that Trump’s advisers actually speak for Trump.  

How it's playing ... MSNBC's "Morning Joe": "FALSEHOODS FLY AT MONTANA RALLY."

2. Trade war begins

"The United States and China slapped tit-for-tat duties on $34 billion worth of the other’s imports on Friday, with Beijing accusing Washington of triggering the 'largest-scale trade war' ever in a sharp escalation of their months-long conflict," per Reuters:

  • "Hours before Washington’s deadline for the tariffs to take effect, U.S. President Donald Trump upped the ante, warning that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount of U.S. imports from China last year."
  • "The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal."

Why it matters: "The fear is that a prolonged battle would disrupt makers and importers of affected goods in a blow to global trade, investment and growth."

How it's playing ... WashPost, top of column 1: "Trade war with China begins."

  • What's next: "American ketchup next on EU’s list of trade targets" (Financial Times — subscription)
3. Scott Pruitt loses "war of attrition"

Illustration: Lazaro Gamio/Axios

Be smart ... Axios' Amy Harder: "The Environmental Protection Agency is likely to see smoother processes, less ethical controversy and a small number of potential policy shifts with Administrator Scott Pruitt gone. But don’t expect the overall direction of the agency to change."

Courtesy N.Y. Post

A senior administration official tells Swan that Pruitt "ultimately lost the war of attrition":

  • "If the people who've been covering for him start turning on him under oath, you know you've got a problem."
  • "Privately, people would say [to Trump] that the media was just picking on Pruitt and it was fake news. But he wouldn't really bite like he normally would."
  • "Privately, Trump would say to them things like: 'I don't know if they're trying to pick on him — he's giving them a lot to work with.'"
  • "Put it this way: He never said the words 'witch hunt' to describe what was going on with Scott Pruitt."

How it's playing ... L.A. Times lead story: "Scandals catch up to Pruitt" ... N.Y. Times 2-column lead: "MIRED IN SCANDAL, PRUITT IS FORCED TO EXIT EPA."

4. Pic du jour
Brendan Smialowski/AFP/Getty Images

How we see the world ... President Trump speaks to an Independence Day picnic for military families on the South Lawn of the White House.

5. Stat du jour

HHS Secretary Alex Azar said "his agency must reunite nearly 3,000 children with their parents, a sharp increase from the roughly 2,000 his agency contemplated last week," per USA Today:

  • "Azar said his department was forced to examine the cases of all 11,800 minors in its custody because the judge ordered all children to be reunited with their parents, even those separated before the zero tolerance policy went into full effect in May."
  • "Most of the cases, he said, were minors who crossed the border on their own, but almost 3,000 may have been separated, leading to the higher estimate."
  • "About 100 of them are under age 5."
6. Why Americans are having fewer babies
Expand chart
Reproduced from Zillow Economic Research. Chart: Axios Visuals

"At first, researchers thought the declining [U.S.] fertility rate was because of the recession, but it kept falling even as the economy recovered. Now it has reached a record low for the second consecutive year," Claire Cain Miller writes for N.Y. Times Upshot:

  • "Because the fertility rate subtly shapes many major issues of the day — including immigration, education, housing, the labor supply, the social safety net and support for working families — there’s a lot of concern about why today’s young adults aren’t having as many children."
  • The reasons, according to a Morning Consult survey for the N.Y. Times: "Wanting more leisure time and personal freedom; not having a partner yet; not being able to afford child-care costs — these were the top reasons young adults gave for not wanting or not being sure they wanted children."

Go deeper ... "Fertility rates are falling faster in areas with higher home values," by Axios' Stef Kight.

7. Goals

Group text from college buddy Jeff Kimbell ...

8. "The Western alliance is in trouble"
Courtesy The Economist"

"The mood before the NATO summit in Brussels [next Wednesday and Thursday] is poisonous," The Economist writes:

  • "As President Donald Trump accuses the Europeans of bad faith and of failing to pull their weight, they accuse him of crass vandalism."
  • "A second summit, between Vladimir Putin and Mr. Trump in Helsinki [next Monday], could produce the once-unthinkable spectacle of an American president treating his Russian opponent better than he has just treated his allies."
  • "Every alliance has its tensions, but the Western one is strained on a bewildering number of fronts."
  • Why it matters: "Asia is watching, as is Mr. Putin. The more Mr. Trump bullies his allies, the more the world will doubt America’s security guarantees. Because great powers compete in a gray zone between peace and war, that risks miscalculation."
9. Trump rallies get big airtime on Fox
Fox News

"Trump’s campaign-style rallies have found a receptive audience at Fox News Channel, which unlike the other cable news networks often carries his speeches live and in their entirety," AP's David Bauder writes:

  • Five times "in the past few weeks, Fox has set aside its usual prime-time programming to air the president speaking live to supporters at events in [Montana last night,] South Carolina, Minnesota, North Dakota and West Virginia."
  • "CNN and MSNBC generally do not air the rallies live," and didn't last night.
  • "The president gives an overwhelming percentage of his TV interviews to Fox personalities, prime-time host Sean Hannity is a close confidant and fierce defender, and the White House [yesterday] announced the hiring of former Fox News executive Bill Shine as deputy chief of staff for communications."

"Fox News is seeing what every network discovered during the campaign — that Trump draws eyeballs":

  • "During the South Dakota, Minnesota and North Dakota events, which pre-empted Tucker Carlson’s prime-time show, Trump’s audience was bigger than what Carlson alone drew for his own show in the days surrounding the rallies ... Trump’s average audience twice exceeded 3 million viewers."
  • Sean Hannity "already has the most popular program on cable, but on the night of the North Dakota rally — which took over the first 20 minutes of Hannity’s show — he averaged more than 4 million viewers. That was a bigger audience than Hannity reached on his own the previous week."
Fox News

FoxNews.com from last evening ... "MONTANA MELEE: Trump claims Maxine Waters' IQ in 'mid-60s,' slams 'fake Pocahontas' Elizabeth Warren in rally to unseat Jon Tester."

10. 1 phone thing

Landline comeback ... "Once thought doomed, landline phones are answering the call of people who are sick of mobiles’ spotty service—and the constant pinging distractions of texts and alerts" — Wall Street Journal's Paul Schrodt (subscription):

  • "Despite its demotion to a means of harassment, ... the landline refuses to die. According to a 2017 U.S. government survey, about 44% of households still own traditional phones, down from 53% three years before."
  • "Cell service is spotty in large, rural stretches of the country and even the hills of Los Angeles. Rocky elevation disrupts communication with cell towers, which are also often banned in environmentally protected areas. You can rely on a landline when the power is cut, or during an emergency like a hurricane that causes cell blackouts."

Thanks for finishing this short week with us. See you all weekend on Axios.com.