US President Donald Trump today said he sees an end to the escalating trade dispute with China, after tit-for-tat retaliatory tariffs and threats that rattled markets. "China will take down its trade barriers because it is the right thing to do," Trump said in a tweet. "Taxes will become reciprocal & deal will be made on Intellectual Property. Great future for both countries!" He added that he and Chinas President Xi Jinping "will always be friends, no matter what happens with our dispute on trade." US stocks plunged more than two per cent Friday after Trump warned of tariffs on an additional USD 100 billion of Chinese imports, provoking a strong response from Beijing and fanning fears of a full-blown trade war.

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Investors were unnerved by the latest broadside from the volatile US president and by Chinas strident response, which vowed Beijing would stand firm "until the end at any cost." Some global investors have, however, taken solace from signals that the Trump administration may be taking a harsh line as a bargaining tactic towards dealmaking with China. In the wake of Trumps decision in March to impose steep tariffs on steel and aluminum imports, primarily to target China, the United States on Tuesday published a list of USD 50 billion in Chinese goods to be hit by tariffs over what Washington says is widespread theft of intellectual property and technology.

China retaliated by unveiling planned levies on USD 50 billion worth of major US exports including soybeans, cars and small aircraft. Trump hit back again late Thursday, instructing trade officials to consider the additional levies on USD 100 billion in imports.