Trump Says He Thinks U.S. Will Reach Trade Deal With China

(Bloomberg) -- President Donald Trump said he thinks the U.S. and China will reach a deal to end the ongoing trade dispute and that it would be good for both sides.

Trump, speaking at the White House on Friday, added that he will have dinner with Chinese President Xi Jinping at the upcoming Group of 20 summit in Argentina at the end of this month.

“We'll make a deal with China, and I think it will be a very fair deal for everybody,” Trump said before boarding the Marine One helicopter on his way to a campaign rally in West Virginia. The two sides are “getting much closer to doing something” and “a lot of progress has been made.”

Trump added that he spoke with Chinese President Xi Jinping on Thursday and the Chinese “very much want to make a deal.”

Trump has asked key Cabinet secretaries to have their staff begin drafting potential terms of a deal to stop the escalating trade dispute with Beijing, four people familiar with the matter said. He made the request after his telephone call with Xi, they said.

It was unclear if Trump was easing up on U.S. demands that China has resisted, and reaching any accord still faces significant hurdles.

U.S. stocks pared losses and Treasuries sold off with the 30-year yield touching a four-year high following Trump's comments. The dollar briefly pared gains.

News of constructive talks between Trump and Xi prompted stocks to surge in Hong Kong and China, while the offshore yuan jumped as much as 0.5 percent for the biggest two-day gain since August. The Hang Seng Index rose 4.2 percent, the biggest gain since 2011, and the Shanghai Composite Index climbed 2.7 percent, posting a fourth day of gains for its longest winning streak since February.

White House economic adviser Larry Kudlow said the administration wasn't making any unusual preparations for the G-20 meeting in an interview with CNBC Friday afternoon.

“No, not specifically,” Kudlow responded when asked about Bloomberg's report on Trump's directions. “We're doing a normal, routine run-through of things we already put together and normal preparation. OK, there's no mass movement, there's no huge thing, we're not on the cusp of a deal.”

U.S. Trade Representative Robert Lighthizer has reservations about pursuing a trade agreement at the G-20 and has expressed his concerns to others in the administration, according to two of the people. Lighthizer's office didn't immediately respond to a request for comment.

One person said a key sticking point in any potential deal is intellectual property theft, where the Trump administration has sought to take a hard line. On Thursday, the U.S. charged a Chinese state-owned company with conspiring to steal trade secrets from U.S. chipmaker Micron Technology Inc., part of a Justice Department crackdown against China in cases of suspected economic espionage.

U.S.-China talks have made little progress since May, when Trump put a stop to a deal that would see China buy more energy and agricultural goods to narrow the trade deficit. In Beijing Trump's move was seen as an insult to Xi, who sent a personal emissary to Washington for the negotiations, and cemented a view that Trump's real goal is to thwart China's rise.

--With assistance from Jenny Leonard, Saleha Mohsin, Jennifer Jacobs and Jenny Paris.

To contact the reporter on this story: Alyza Sebenius in Washington at asebenius@bloomberg.net

To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Joshua Gallu, Mike Dorning

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