Trump Aide Pedals Back On 'trade Deal Over' Remark

White House trade adviser Peter Navarro has said the trade deal with China "continues in place', walking back on his earlier remarks that the pact was 'over', stoking volatility in markets already frazzled by the coronavirus pandemic.

Navarro said his comments were taken 'wildly out of context', while US President Donald Trump confirmed in a tweet the deal with the China was "fully intact".

"Hopefully they will continue to live up to the terms of the agreement," Trump said on Twitter.

Earlier, Navarro told Fox News 'it's over' in an interview when asked about the trade agreement.

He said the "turning point" came when the United States learned about the spreading coronavirus only after a Chinese delegation had left Washington following the signing of the Phase 1 deal on January 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," Navarro said.

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 Navarro, one of the most outspoken critics of China among 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 of Chinese products, whipsawed financial markets and dented global growth well before the coronavirus outbreak triggered a worldwide recession.

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

But disruptions wrought by the pandemic saw US goods exports to China fall in the first quarter, providing a further challenge to the Trump administration less than five months out from the presidential election. (Reuters)