Trump says China deal 'fully intact' after Navarro's remark roils markets

WASHINGTON • US President Donald Trump said the phase 1 trade deal with China is "fully intact", after his adviser Peter Navarro sowed confusion and spurred a temporary stock slump with comments interpreted as a decision to end the agreement.

"The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!" Mr Trump said in a Twitter post late on Monday.

White House trade adviser Navarro later said his comments were taken "wildly out of context", walking back on his remark that the US-China trade pact was "over".

His comment stoked volatility in markets already frazzled by the coronavirus pandemic.

Mr Navarro had told Fox News "it's over" in an earlier interview when asked about the trade agreement. He said the "turning point" came when the United States found out about the spreading coronavirus only after a Chinese delegation had left Washington following the signing of the phase 1 deal on Jan 15.

"It was at a time when they had already sent hundreds of thousands of people to this country to spread that virus, and it was just minutes after wheels up when that plane took off that we began to hear about this pandemic," Mr Navarro said.

China yesterday responded to Mr Navarro's claims about the trade deal with disdain.

"He consistently lies and has no honesty and trustworthiness," Foreign Ministry spokesman Zhao Lijian told reporters at a regular press briefing.

As for the trade deal, Mr Zhao said: "China's stance on the issue has been consistent and clear." He directed specific questions to relevant departments.

Financial markets were choppy, with US stock futures initially turning negative and risk-sensitive currencies including the Australian dollar falling.

They have since recovered much of the lost ground after Mr Navarro, one of the most outspoken critics of China among Mr Trump's senior advisers, issued a statement saying his comments "have been taken wildly out of context".

"They had nothing at all to do with the phase I trade deal, which continues in place. I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world," he said.

The US-China trade negotiations lasted more than two years, heaped tariffs on US$370 billion (S$515 billion) of Chinese products, whipsawed financial markets and dented global growth well before the coronavirus outbreak triggered a worldwide recession.

Relations between the US and China have reached their lowest point in years since the coronavirus pandemic that began in China hit the US hard. Mr Trump and his administration have repeatedly accused Beijing of not being transparent about the outbreak.

Under the phase 1 trade deal, China had pledged to boost purchases of US goods by US$200 billion over two years.

But disruptions wrought by the pandemic saw US exports to China fall in the first quarter, providing a further challenge to the Trump administration, with less than five months before the presidential election.

REUTERS, BLOOMBERG