Donald Trump says China deal 'fully intact' despite Peter Navarro

Donald Trump took to Twitter to say that an initial trade agreement with China is still on after a top White House adviser's comments seemed to suggest it was over, spooking markets late on Monday.

The president tweeted: "The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the agreement."

The Trump administration has been extremely critical of China's efforts to contain coronavirus early on and the president repeatedly blames China for the pandemic in his remarks, leading to questions about future cooperation in areas such as trade.

The president's tweet came after Peter Navarro, the director of trade and manufacturing policy at the White House, told Fox News "it's over" when asked a question that was focused on the China trade deal.

Mr Navarro said later that his comments had been taken out of context and had nothing to do with the deal.

"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," said Mr Navarro, a long-time critic of the Asian country.

He said the trade deal with China "continues in place".

Mr Navarro had told Fox News that the "turning point" came when the United States learned about the virus only after a Chinese delegation 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," Mr Navarro said.

Financial markets reacted to the comments, with US stock futures turning negative and risk-sensitive currencies including the Australian dollar falling.

They have since recovered much of the lost ground after Mr Navarro 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,” he said.

In January, the US and China reached an interim trade deal to reduce tariff tensions. China agreed to buy massive amounts of US products.

United States Trade Representative Robert Lighthizer testified on Capitol Hill last week that he was confident China would live up to its purchase commitments even though its economy had been weakened by the pandemic and the lockdowns and travel restrictions imposed to contain it.