(Bloomberg) -- US President Donald Trump said it would be possible to reach a fresh trade deal with China, signaling he is open to heading off a brewing trade fight between Washington and Beijing.
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“It’s possible, it’s possible,” Trump told reporters on Air Force One on Wednesday, when asked if he would make a new agreement with China.
Trump did not describe the parameters of a potential deal, and any agreement would face significant obstacles — some of the president’s own making. Trump has ratcheted up pressure on China with an additional 10% tariff on all imports from the country, punishment for what he said are unfair Chinese trade practices and failure to stop the flow of fentanyl into the US.
The president nonetheless heaped praise on Chinese President Xi Jinping, but once again did not say if or when they would speak directly.
“There’s a little bit of competitiveness, but the relationship I have with President Xi is, I would say, a great one,” Trump said.
Trump brokered what was billed as an initial trade deal with China in Jan. 2020, under which Beijing promised to crack down on theft of US trade secrets and technology, pledged to purchase an additional $200 billion in American products by the following year and lower some trade barriers for US exports. But the relationship was derailed just weeks later when the coronavirus pandemic swept the globe, which Trump blamed on China.
“They had about $50 billion worth of our product, and we were making them buy it. The problem is that Biden didn’t push them to adhere to it,” Trump said, referring to his predecessor.
‘Off the cuff’
Trump’s comments, made during Asian market hours, are the latest example of the president’s ability to influence market sentiment with a few short words, forcing China-focused traders to parse scant details and tone for clues as to the future of the US-China relationship.
Their initial read settled on mildly positive. The Chinese yuan climbed on Trump’s comments, gaining 0.2% in the offshore market after three straight sessions of drops. The onshore yuan rose 0.1%. Chinese stocks pared some of their early declines, and the Hang Seng China Enterprises Index, which comprises Chinese stocks listed in Hong Kong, trimmed its intraday drop to under 1.5% from as much as 2.4%.
“Markets are still getting used to the barrage of social media posts, comments to reporters and interviews that President Trump is giving,” said Khoon Goh, head of Asia research at ANZ Banking Group. “This is so different from the previous administration.”
Trump’s comments on China are “just an off the cuff comment and I wouldn’t read too much into it,” he added.
Eddie Cheung, senior strategist at Credit Agricole CIB in Hong Kong, said Trump’s approach to China has been “milder than expected” so far, which has given some support to markets. “But it’s reasonable to assume there will still be bumps on the way towards such a trade deal.”
--With assistance from Derek Wallbank, Iris Ouyang and Abhishek Vishnoi.
(Updates with market sentiment, analyst comments starting in eighth paragraph.)
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