BIARRITZ, FRANCE (AFP) - United States President Donald Trump on Sunday (Aug 25) denied that his trade war with China is causing friction at the Group of Seven summit, but indicated he would hold off from a threatened further escalation for now.

"I think they respect the trade war. It has to happen," Mr Trump told reporters in Biarritz, France, where he was meeting with other leaders of the G-7 group.

Asked if the other leaders had criticised the massive trade struggle, he said: "No, not at all. I haven't heard that."

In fact, European members of the G-7, which includes Britain, Canada, Germany, France, Italy, Japan and the US, have repeatedly expressed concern over the trade war's threat to the wider global economy.

British Prime Minister Boris Johnson was the latest, telling Mr Trump at a breakfast meeting on Sunday that "we don't like tariffs on the whole".

"We are in favour of trade peace," he said.

Talks between Washington and Beijing on ending what Mr Trump says is a massively unfair trade relationship have hit a brick wall.

On Friday, Mr Trump responded to a new hike in Chinese tariffs on US goods by imposing heavy extra levies against a total of US$550 billion (S$760 billion) in Chinese imports.

But on Sunday, Mr Trump signalled what might be a slight softening in his position, admitting that he did have doubts about escalating the trade war.

"I have second thoughts about everything," he said.

He said he would hold off for now on declaring a national emergency to invoke an obscure law that he says gives him the power to order US companies out of China.

"I have the right to, if I want. I could declare a national emergency," he said. "I have no plan right now."

Mr Trump first brandished the possibility of the drastic measure on Friday, when he tweeted that American companies "are hereby ordered to immediately start looking for an alternative to China".

Despite the more nuanced comments on Sunday, Mr Trump doubled down on the rationale for his high-risk strategy with China, saying "they steal and take out, and - intellectual property theft, anywhere from $300 billion to $500 billion a year".

"We have a total loss of almost a trillion dollars a year," he said.

"In many ways, that's an emergency."

As he has repeatedly over the last months, Mr Trump insisted that China will eventually cave to US demands for reforming its economic model and transforming the trade relationship.

"We're talking. I think they want to make a deal much more than I do," he said.