Trump suggests 'second thoughts' about China tariff war, triggers confusion at G-7 summit

SAINT JEAN DE LUZ, France -- President Trump triggered a wave of confusion at the Group of 7 summit Sunday when he seemed to express second thoughts about increasing tariffs on China and setting off a tailspin in the global markets.

"Yeah, sure," Trump said when asked if he had second thoughts about his escalating trade war with China. "I have second thoughts about everything."

The president's comments, over breakfast with new United Kingdom prime minister Boris Johnson, appeared to be the first time there were any hints of regret over the trade war with China. Soon after, he added that he wasn't planning on declaring a national emergency over China's retaliatory tariffs.

But then hours later, after news spread that Trump was backing off, White House press secretary Stephanie Grisham released a statement saying his words had been "misinterpreted."

"This morning in the bilat with the UK, the President was asked if he had “any second thought on escalating the trade war with China.' His answer has been greatly misinterpreted," Grisham said. "President Trump responded in the affirmative -- because he regrets not raising the tariffs higher."

The moment of confusion came as allies have been warning the president about the global ramifications of his trade war with China.

Earlier in the day, the president said he wasn't facing any pressure from the other countries over its trade war with China.

"I think they respect the trade war," Trump said when asked if he was facing pressure from his allies to give up the trade war with China. "So the answer is nobody’s told me that. Nobody would tell me that."

Trump also held his first face to face meeting with Johnson at the Hotel du Palais in Biarritz, France.

Over scrambled eggs and sausage, Johnson congratulated Trump on "everything the American economy is achieving," but then cautioned Trump.

"We think that on the whole, the U.K. has profited massively in the last 200 years from free trade and that's what we want to see," Johnson said.

"We don't like tariffs on the whole," Johnson said, echoing the warnings allies have been sending as Trump escalates his tit-for-tat with China.

The president also said he has the right to declare a national emergency in order to force U.S. businesses to leave China, but doesn't have any plans at the moment. He then added that actually, the U.S. and China are getting along "very well" right now.

"I have the right to. If I want, I could declare a national emergency," Trump said. "I think when they steal and take out intellectual property theft -- anywhere from $300 billion to $500 billion a year -- and when we have a total loss of almost a trillion dollars a year, for many years this has been going on. And in many ways that’s an emergency. I have no plans right now.

"Actually we’re getting along very well with China right now. We’re talking," he added. "I think they want to make a deal much more than I do, so we’ll see what happens. We are talking to China very seriously."

He said he has no concerns about the market's reactions to his tariffs on China, and that he's been getting praise and compliments from other leaders about the American economy.

"You people want a recession, because maybe that's the way to get Trump out," Trump said. "Maybe that's the way we get him out."

Trump and Johnson had plenty to discuss Sunday morning: the global markets are reeling from the United States' trade wars, the Amazon rain forest is on fire and North Korea is testing rocket launchers.

As Johnson tries to navigate the U.K.'s divorce from the EU by Halloween, he's also working on a potential trade deal with the U.S.

Trump said it's a "very big trade deal, bigger than we've ever had with the U.K.," noting the U.K. will no longer have the EU as an "anchor around their ankle."

The president, who criticized the former prime minister's handling of Brexit, said that he had no advice for Johnson.

"He's the right man for the job," he said. "I've been saying that for a long time."

Johnson said he's "very excited" about their trade talks. Trump said he hopes they can make a trade deal "very quickly," noting he was "stymied" by Johnson's predecessor.

The two leaders also talked about the potential for Trump to invite Russian President Vladimir Putin to next year's G-7 hosted by the United States.

"It's certainly possible," Trump said. "We'll see."

Meanwhile, in an unexpected announcement, Trump and Prime Minister Shinzo Abe said they have agreed in principle to a trade deal following months of negotiations.

Trump said the United States and Japan planned to sign the agreement around the same time as the United Nations General Assembly in New York this September.

The deal will focus on "agriculture, industrial tarries and digital trade," per U.S. Trade Rep Lighthizer.

“We’ve agreed to every point," Trump said, adding that they'll be preparing the deal to sign at a "formal ceremony.”

Abe added through a translator that the countries "still have some remaining work that has to be done at the working level."

In addition to that surprise announcement, reports swirled around the summit that Iran's Foreign Minister Mohammad Javad Zarif arrived in France for an unplanned visit.

Trump, however, would not confirm the reports.

"No comment," he told reported when asked.

The White House would also not confirm reports that there were no plans form members from the U.S. delegation to meet with their Iranian counterparts while they are in town.

"The president has said before that if Iran wants to sit down and negotiate with us without preconditions to those negotiations," Treasury Sec. Mnuchin said during at gaggle with reporters after a Sunday show appearance in Saint Jean de Luz. "I'm not going to make any more comments about who's here and who's not here, and what conversations may or may not be made."

Zarif met with President Macron on Friday in Paris ahead of the summit.

The deal between the U.S. and Japan would include large purchases of American agricultural products by Japan. It would allow the U.S. to compete with countries that were part of the Trans- Pacific Partnership, Lighthizer said.

After the U.S. pulled out of the TPP, some countries have stepped in to increase trade with Japan. Lighthizer said this new deal would open up the markets to $7 billion in products.

“It’s very good news for our farmers and ranchers,” he said.