President Donald Trump said Friday that the US and China have reached a limited trade deal, marking the first tangible achievement in the 18-month trade war between the world's two largest economies.

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Speaking in the Oval Office during a meeting with Chinese Vice Premier Liu He, the president said negotiators had reached a "substantial phase one" agreement though details remained to be written down. As part of the partial agreement, the White House agreed not to proceed with plans to increase tariffs on US$250 billion ($394.7b) in Chinese goods next week from 30 per cent from 25 per cent.

The partial accord, involving major Chinese purchases of US farm products and US tariff concessions, is intended to pave the way for a more complete bargain between Washington and Beijing. Trump and Chinese President Xi Jinping could meet to finalise such an agreement in Chile at an Asian-Pacific leaders summit in mid-November.

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"Both presidents have to own this thing," said Craig Allen, president of the US-China Business council.

News of a potential deal, which capped two days of talks in Washington, had cheered Wall Street earlier on Friday. Even before the president spoke, the Dow Jones Industrial Average was up more than 480 points or 1.8 per cent amid hints that a partial accord was imminent. But the lack of specificity in Trump's announcement, and his comment that the partial deal could still take weeks to iron out, cooled some of that optimism. And the Dow Jones Industrial Average closed up slightly more than 300 points on the day.

US President Donald Trump (left) and Chinese President Xi Jinping. Photo / AP
US President Donald Trump (left) and Chinese President Xi Jinping. Photo / AP

"This deal temporarily puts off any further escalation of tensions but does not resolve any of the major underlying sources of frictions between the two countries or mitigate uncertainty about the future of the bilateral economic relationship," said Eswar Prasad, former head of the International Monetary Fund's China unit.

Some China hawks were unimpressed by the agreement.

"It's basically some purchases and a bunch of fluff because no one in the administration really wants to go through with the tariffs anyway," said Derek Scissors, a China expert at the American Enterprise Institute.

The protracted US-China trade dispute has unnerved investors, disrupted global supply chains and featured the most aggressive use of tariffs by an American president since the 1930s. Trump says his "America First" policy is designed to benefit workers who have suffered from decades of globalisation and prevent China from supplanting the US as the world's top technology power.

Friday's announcement leaves the toughest US-China issues for future negotiations, including Trump's demands for far-reaching structural changes in the state-directed Chinese economy. Robert Lighthizer, the president's chief trade negotiator, wants China to stop forcing US companies to transfer technology to Chinese companies to gain access to the Chinese market. Chinese officials deny doing that and are also resisting US demands to curb subsidies for state enterprises that compete with American companies.

Trump also has yet to announce whether he will extend a license allowing Chinese telecommunications company Huawei to continue buying American parts when it expires November 18.

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Trump has vowed to close the persistent US deficit in its trade with China. Yet the US continues to import far more from China than it sells to Chinese customers with last year's gap totaling US$419b or 21 per cent larger than before Trump took office.

The first steps include an increase in Chinese agricultural purchases, good news for American farmers who have lost billions of dollars in sales during the trade war. China recently began stepping up orders of US farm products as a deal neared. But exports of US soybeans to China fell from US$12.2b in 2018 to just US$3.1b last year, according to the US Census Bureau.