Trump said his conversation with Chinese President Xi Jinping last week was friendly and he thought he could reach a trade deal with China.
The leaders of the world's two biggest economies discussed issues including TikTok, trade and Taiwan in a phone call before Trump took office on Monday.
When asked if he could stop the Chinese president from taking Taiwan and reach a trade agreement, Trump told Fox News that the US had a "very big power over China - that's tariffs."
"They don't want them, and I'd rather not have to use it. It's tremendous power over China," he said.
Trump said his conversation with Chinese President Xi Jinping last week was friendly. (AP PHOTO)
Trump threatened China with high tariffs shortly after winning the election. These would further burden the already ailing Chinese economy as the US is China's most important export market.
But tariffs would not be without consequences in the US either, and would probably lead to higher prices, thus fuelling inflation. The latter is something Trump wants to avoid.
Earlier this week, Trump said he is considering imposing a 10 per cent tariff on imports of Chinese-made goods as soon as February 1.
Beijing could also consider not only imposing its own tariffs on US products, but also taking other targeted retaliatory measures, such as restricting the export of raw materials or stepping up investigations of US companies operating in China.
Overall, relations between the two superpowers would be likely to deteriorate further as a result.
Separately Trump told the World Economic Forum that businesses should make their products in the United States if they want to avoid facing a tariff.
Appearing in a video conference with business leaders at the annual conference in Davos, Switzerland, Trump said companies should set up manufacturing operations in the US.
Trump made his first major speech at the World Economic Forum since being elected as president. (AP PHOTO)
"My message to every business in the world is very simple: come make your product in America and we will give you among the lowest taxes of any nation on earth."
"But if you don't make your product in America, which is your prerogative, then very simply, you will have to pay a tariff," Trump said.
"Differing amounts but a tariff which will direct hundreds of billions of dollars and even trillions of dollars into our Treasury to strengthen our economy and pay down debt."
Trump said Canada and Mexico faced a 25 per cent duty on February 1 on goods they ship to the US because of illegal immigration and illicit drug shipments across US borders.
Trump also said he would promote the fossil fuel industry and roll back climate rules put in place by his predecessor Joe Biden.
He said he would put pressure on the Saudi-led OPEC oil cartel to bring down prices.
"I'm also going to ask Saudi Arabia and OPEC to bring down the cost of oil. You got to bring it down, which frankly, I'm surprised they didn't do before the election," he said.
with DPA
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