Fox Business/screenshot
Cruz has suggested voters in Iowa should consider the real-estate mogul's hometown in recent days, amid the end of a lengthy détente between the two candidates.
Fox Business anchor Maria Bartiromo asked Cruz to explain what he meant by the term "New York values." Cruz initially declined to elaborate.
"I think most people know exactly what 'New York values' are," he said.
Bartiromo said she wasn't one of those people.
"You're from New York, so you might not," he told the anchor. "But I promise you in the state of South Carolina they do."
Cruz went on to praise "many wonderful, wonderful working men and women in the state of New York, but everyone understands that the values in New York City are socially liberal, are pro-abortion, are pro-gay-marriage, focused around money and the media."
The Texas senator then cited a 1999 "Meet the Press" interview, in which Trump offered a nod to social liberalism by noting his New York heritage.
"Not too many years ago, Donald did a long interview with Tim Russert. And in that interview, he explained his views on a whole host of issues that were very, very different from the views he's describing now. In his explanation, he said, 'Look, I'm from New York. That's what we believe in New York. Those aren't Iowa values." … That was his explanation," Cruz said.
"I guess I can frame it another way: 'Not a lot of conservatives come out of Manhattan,'" Cruz quipped. "I'm just saying."
Trump then got to fire back at Cruz.
"Conservatives do actually come out of Manhattan," the Queens-born businessman explained, citing William F. Buckley, Jr., the founder of the conservative magazine National Review.
As he did earlier this week, Trump said "New York values" could be seen in how the city came together and rebuilt itself after the September 11, 2001, terror attacks.
"He insulted a lot of people," Trump said of Cruz. "When the World Trade Center came down, I saw something that no place on earth could have handled more beautifully, more humanely than New York."
The crowd - and Cruz - then clapped.
"You had two 110-story buildings come crashing down," Trump recalled. "I saw them come down. Thousands of people killed. And the cleanup started the next day. And it was the most horrific cleanup probably in the history of doing this and in construction. I was down there. And I've never seen anything like it. And the people in New York fought, fought, and fought."
He added: "And I have to tell you, that was a very insulting statement that Ted made."