Top aides say Trump still determined to hike China tariffs

President Donald Trump is not backing away from recently announced plans to raise tariffs on Chinese goods, despite indicating earlier Sunday he was having second thoughts, top administration aides said.

"The president is determined to have fair and reciprocal trade with China," Treasury Secretary Steven Mnuchin said on "Fox News Sunday." "This morning's comments weren't meant to back that off. It was meant to say he is as determined as ever on this issue. He wants a good deal."

White House chief economic adviser Larry Kudlow underscored that point on CNN's "State of the Union," suggesting Trump had misheard a question from a reporter about the trade war with China.

Trump announced Friday he would raise tariffs on approximately $550 billion worth of Chinese goods by an additional 5 percentage points this fall. He made the announcement after China said it was retaliating for an earlier Trump tariff action by increasing duties on $75 billion worth of American goods from 5 percent to 10 percent, in waves on Sept. 1 and Dec. 1.

The escalating trade tensions between the world's two largest economies triggered a sharp sell-off in the stock market on Friday, with the Dow Jones Industrial Average down more than 600 points and the S&P 500 tumbling about 2.6 percent by the end of trading. Trump’s own tariff escalation came an hour after regular trading closed for the week.

The president confused the situation Sunday when asked by a reporter at the G-7 summit in Biarritz, France, whether he was having second thoughts about ratcheting up the trade war with China.

“Yeah, sure. Why not? Might as well. Might as well,” Trump responded, adding that he has “second thoughts about everything.”

However, despite the prospect of a further slide in the U.S. stock market on Monday, Mnuchin said Trump is determined to go ahead with the tariff increases he announced Friday.

"Absolutely," Mnuchin said in an interview from Biarritz. "And to the extent that the Chinese respond again, you can assume the president will consider all his options."

Kudlow said on CNN that Trump was trying to indicate he had thought about increasing tariffs by more than 5 percentage points.

"So it was not to remove the tariff," Kudlow said. "He was thinking about a higher tariff response. Having said that, we're staying with the policy that was announced on Friday."

Both Mnuchin and Kudlow also backed up Trump's assertion that he could use presidential authority under the International Emergency Economic Powers Act to require American companies to close their operations in China, but they insisted Trump has no such plans at the moment.

Trump tweeted on Friday that "American companies are hereby ordered to immediately start looking for an alternative to China," triggering a debate over whether he really had that power under the 1977 law.

"Ultimately, we do have such authority, but it is not going to be exercised presently," Kudlow said.

"I think what he was saying is he's ordering companies to start looking because he wants to make sure, to the extent we are in an extended trade war, that companies don't have these issues and move out of China," Mnuchin added. "We want them to be in places that there [are] trading partners that respect us and trade with us fairly."

The American business community broadly supports Trump's goals of ensuring China plays fairly in international trade and stops practices that force companies to turn over valuable intellectual property to compete in its huge market. But they are increasingly alarmed by his use of tariffs and other unconventional trade tools to pressure Beijing.

Trump seems to think "it would be either benign or maybe even helpful for the United States to decouple completely from the Chinese economy," Josh Bolten, president of the Business Roundtable, said on CBS News' "Face the Nation." "That would be a disaster. Not just for the Chinese, [but] for the global economy and for the United States."

The uncertainty caused by Trump's trade policy also makes it harder for businesses to plan and make new investments, with potentially detrimental effects on U.S. economic growth, Bolten said.

"What we saw on Friday with the stock market was the markets tapping the brake lightly. But if this spirals out of control, the risk is that everybody's going to slam on the brake," he said. "We need to resolve the trade situation."

Mnuchin also said China has become an "enemy" of the United States on the trade and the financial front, even though the personal relationship between Trump and Chinese President Xi Jinping is still strong.

"I was with President Trump today, and he was very clear that President Xi is still his friend," Mnuchin said. "He has a very good relationship with President Xi. We worked on lots of different things together, but as it relates to financial issues and trade, we have become enemies. We are not making progress.

"We are still somewhat hopeful that China will come around and enter into a fair, good deal with us," he added.

In that regard, a round of deputy-level negotiations took place by phone last week and another is being scheduled for this coming week, Kudlow said.

The U.S. side, "at least," is still planning to host China for high-level trade talks in September, Kudlow said, without giving a date. "So, the negotiating talks continue. That's an important point I think."

Kamran Rahman contributed to this story.