Reuters/Jonathan Ernst
Trump and Turnbull were discussing a controversial refugee deal originally brokered by the Obama administration. Under the terms of the deal, the US would resettle 1,250 refugees held by the Australian government in detention facilities on Manus Island and the island of Nauru.
By "local milk people," Trump was likely referring to dairy farmers in states such as New York and Wisconsin, who rely heavily on immigrant labor.
According to a transcript of the call, published Thursday by The Washington Post, Trump told Turnbull that the deal was "rotten" and he resented taking in the refugees.
"I guarantee you they are bad. That is why they are in prison right now," he said. He added that the refugees could "become the Boston bomber in five years."
Turnbull attempted to correct Trump, saying, "I would not be so sure about that." The refugees have not been convicted of crimes, but have been held in the detention facilities because they were intercepted attempting to reach the Australian mainland.
The Australian government has refused to admit refugees who journey to the country by boat, arguing that allowing them to enter would embolden more refugees to make similar attempts and facilitate human smuggling.
Trump, in the phone call, praised Australia's tough stance on border security, but emphasized that he did not want to follow through with the deal and blamed his predecessor for agreeing to it.
"Well, maybe you should let them out of prison," Trump said. "This shows me to be a dope. I am not like this but, if I have to do it, I will do it, but I do not like this at all."
Trump then proposed accepting the refugees, but subjecting them to US security screening.
"Suppose I vet them closely and I do not take any?" he said.
Turnbull replied: "That is the point I have been trying to make."
He added that Australia would act in good faith and allow the US to make its own decisions based on the vetting, as had always been the conditions of the deal.