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US stocks have rallied after Donald Trump said the US and China were “very” close to a “big” trade deal.
“They want it and so do we!” the US President wrote on Twitter.
The statement comes just days before the US is due to impose another round of tariffs on Chinese goods.
The two sides are negotiating to avoid those duties, looking at a deal that contemplates higher Chinese purchases of US agricultural products and a roll back of existing tariffs.
In October, Mr Trump said such a deal was likely to be completed by the end of the year. That so-called Phase One accord would leave many of the more thorny issues – such as Chinese subsidies – to be dealt with in later agreements.
However, negotiations have dragged on since that announcement. Without progress, the US has threatened to impose tariffs on more than $150bn worth of Chinese exports on 15 December.
Mr Trump’s comment sent the main US stock indexes up about 1%.
Since the start of the trade war more than two years ago, the two countries have raised tariffs on more than $450bn worth of goods in annual trade.
Previous rounds largely spared the US consumer, the main driver of the US economy. But this time, the new tax would fall on a wide range of everyday goods, including smartphones, children’s books, footwear and clothing.
Goldman Sachs analysts estimate that US economic growth could be 0.4% lower next year, without some sort of deal to avoid the next tariffs and roll back some of those already in place.
White House officials have downplayed the risks, arguing the tariffs are aimed at making China give up “unfair” trade practices, such as alleged intellectual property theft.
A deal would deliver a victory to Mr Trump, who is under political pressure due to impeachment proceedings led by Democrats.
However, the potential agreement under discussion falls short of what the US initially said were its goals, said Jennifer Hillman, a senior fellow at the Council on Foreign Relations and a former trade official.
“This should NOT be described as a trade agreement,” she wrote on Twitter.
“It is a purchase and sale agreement that does virtually nothing to address substantive concerns of US (+rest of the world) with China’s trade practices.”