US President Donald Trump's hard-ball trade tactics come to a head this afternoon with his tariff time-bomb ticking and last-minute negotiations underway.

Last weekend, with most commentators picking US-China trade talks were in good shape, Trump tweeted his dissatisfaction and declared that he would raise tariffs on Chinese goods from 10 per cent to 25 per cent.

His deadline was this Friday and the tariffs will kick in at 12.01 am - that 3.01pm NZ time today.

The tweet and subsequent escalation of the rhetoric from both sides - China has said it will respond - sent global markets into meltdown.

The timing of threat is very precise, set to kick in immediately right in the middle of two days of face to face negotiations between Chinese and US delegations in Washington.

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As terrifying as it is for small exporting nations like New Zealand to watch, the man who wrote Art of the Deal is treating trade negotiations like a property deal.

Unfortunately, it's not a casino that is at stake here it is global economic growth - something that has already slowed this year with US-China tensions causing the volume of trade to dip.

Markets too will be watching closely. Hopefully, much of the risk of higher tariffs kicking in and a more prolonged trade war will have been priced into the weeks earlier falls.

The flip side is that Trump's tough tactics may work - he may pull off a last minute deal which will give him some much needed political capital to wield on the domestic political front.

Either way, it is high stakes stuff and the timing on this side of the world - with markets open - will make for an interesting afternoon.

The countdown is on.

On Thursday Trump insisted a trade deal with China was still possible to reach this week, even as he reiterated plans to raise tariffs on Chinese goods within hours.

Speaking at an event in Washington, he said he may hold a phone call with his Chinese counterpart Xi Jinping, who sent him a letter about working closely together to ease trade tensions. The president spoke as China's top trade envoy Liu He was due to land in Washington for two days of trade talks.

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Chinese Vice Premier Liu He waves as he arrives for trade talks. Photo/AP.
Chinese Vice Premier Liu He waves as he arrives for trade talks. Photo/AP.

"He just wrote me a beautiful letter, I just received it, and I'll probably speak to him by phone but look we have two great alternatives, our country is doing fantastically well," Trump said. "Our alternative is an excellent one, it's an alternative I've spoken about for years. We've taken well over $100 billion from China in a year."

There was no phone call planned between the two leaders as of 1pm Washington time, The Washington Post has reported.

On Wall Street, shares climbed from lows after Trump's remarks.

US tariffs on US$200 billion in Chinese goods are set to increase to 25 per cent from 10per cent as of 12:01am Friday (US time), in a move that economists and businesses say risks being the most economically consequential of all of Trump's tariff moves so far.

Trump also repeated a threat on Thursday to impose new 25 per cent tariffs on US$325 billion of Chinese imports, which aren't currently covered, saying that his administration has started preparing the paperwork.

The mood on both sides going into the talks had appeared to be hardening with U.S. Trade Representative Robert Lighthizer calling members of Congress to warn that a deal this week is unlikely, according to people familiar with the conversations.

While Trump on Wednesday insisted that Liu was coming to make a deal and dubbed him a "good man," he later told a rally of supporters that China "broke the deal" by backsliding on prior commitments, leading him to order higher tariffs.

China has disputed Trump's characterisation that the country reneged. But it has also sent its own signals that a deal could take time.

Data released on Thursday offered Trump a chance to claim his tariff war is yielding the desired result. The U.S. trade deficit with China decreased to the narrowest in almost three years as imports slowed and exports advanced.

"When people looked at the economic numbers, they were shocked. When they look at the import-export numbers they were shocked," Trump said. "Try looking at all of the tariffs that China's been paying us for the last eight months. Billions and billions of dollars."

Economists disagree with the president and say the evidence is that American consumers and companies are bearing the costs of his tariffs via higher prices.

- Additional reporting via Washington Post