US, China were 'very close' to trade deal but Beijing began renegotiations: Trump

The Trump administration on Friday increased tariffs on USD 200 billion worth of Chinese products from 10 per cent to 25 per cent despite China threatening to retaliate.

Trump on Thursday told reporters that such a move is necessary to hold China to previous commitments.

The US and China are locked in a trade war since Trump imposed heavy tariffs on imported steel and aluminium items from China in March last year, a move that sparked fears of a global trade war. In response, China imposed tit-for-tat tariffs on billions of dollars worth of American imports.

The US President said: "We were getting very close to a deal, then they started to renegotiate the deal. We can't have that".

Later in the day, Chinese Vice Premier Liu He held meetings with US Trade Representative Robert Lighthizer.

"We cannot have that. So, our country can take in USD 120 billion a year in tariffs, paid for mostly by China, by the way not by us. A lot of people try and steer it in a different direction. It's really paid - largely by China. And businesses will pour back into our country. So instead of making the product, it'll be old fashion way, the way we used to do it.  We made our own product," Trump said, defending his decision.

Trump appeared to be fine with the situation wherein the US does not enter into a trade deal with China.

"Things are going along pretty well there. But a large group delegation headed by one of the most respected men and highest officials of China will be coming in today. They start at 5 o'clock. And they'll see what they can do.

"But our alternative is an excellent one. It's an alternative I've spoken about for years. We'll take in well over USD 100 billion a year. We never took in 10 cents from China. I think it will be a very strong day, we'll see. It was their idea to come back," he said in response to a question.

At the same time, the President said, it is possible that the US and China will enter into a trade deal.

"Once the tariffs went on, they upped the meeting. It was supposed to take place originally on Thursday. Then about five weeks ago they said, 'How about Friday? How about next week?  I said, What's this all about? And I said That's okay, let's -- don't worry about it. Let's take in USD 100 billion a year. And we put the tariffs on, we made the statement and then they upped the meeting," Trump said, referring to the conversation his administration is having with China.

Trump said last night he received a letter from Chinese President Xi Jinping.

"I have no idea what's going to happen. I did get last night a very beautiful letter from President Xi. Let's work together. Let's see if we can get something done. But they renegotiated the deal. I mean they took -- whether it's intellectual property theft, they took many, many parts of that deal and they renegotiated. You can't do that," he said.

Trump reiterated that the US is having trade imbalance with China, which he will not let happen any longer.

"I'm different than a lot of people. I happen to think that tariffs for our country are very powerful. We're the piggybank that everybody steals from including China. We've been paying China USD 500 billion a year for many, many years. China rebuilt their country because of us.

"They couldn't have done what they're doing. They're building a ship every three weeks. They're building aircraft like you've never seen. Fighter jets. I respect it. I don't blame them. I blame our past leadership for allowing this to happen," the President said.

Trump said what he is doing now with China should've happened many years ago.

"Not just (Barack) Obama; long before Obama. I always say -- you know, if you look, NAFTA is one of the first deals ever made -- trade deal. But the worst trade deal ever made is the WTO, because China was flat-lining for many, many decades. It was flat, right here. The WTO came along. We allowed China into the WTO and they became a rocket ship.

"We are not going to be taken advantage of anymore. We're not going to pay China USD 500 billion a year. So we put very heavy tariffs on China, as of Friday, and we put them on, also, eight months ago," Trump added.

Judd Deere, a White House spokesman, said: "This evening, Ambassador Lightizer and (Treasury) Secretary (Steven) Mnuchin met with President Trump to discuss the ongoing trade negotiations with China. The ambassador and secretary then had a working dinner with Vice Premier Liu He, and agreed to continue discussions tomorrow morning (Friday) at USTR".

China is the world's second largest economy after the US.

Trump is demanding China to reduce the USD 375 billion trade deficit. He also called for verifiable measures for protection of Intellectual Property Rights (IPR), technology transfer and more access to American goods in the Chinese markets.