^ It's a "push nut", as I recall. Spring steel affair. I find them on lawnmowers now and then.
I pry them off with a flat-bladed screwdriver. Sometimes I'll have to drop a deep-well socket into one of them and give it a whack with a ball pein to put it back to right. Not sure how you'd tackle it and preserve the plastic cap, though.
I would try a bit of penetrating oil and gently pry on that red cap. That wheel is already trashed so you may want to cut away at it so you can get behind it better and maybe get a direct hit from behind it.
Used In Model 18 Classic Red Wagon. Includes 5 red hubcaps, 1 cotter pin, 1 hex nut, 1 handle bolt, 9 lock-nuts, 8 bolts and 1 bolt w/hole. All Sales Final.