Trump moves to cool tensions over China, Iran

Biarritz, France

US President Donald Trump on Monday offered an olive branch to China after days of intense feuding over trade that has spooked financial markets. He also opened the door to diplomacy with Iran, easing tensions on the last day of a strained G-7 summit.

The leaders of the world's major industrialised nations, meeting in the French coastal resort of Biarritz, agreed on a deal to provide US$20 million in emergency help to Brazil and its neighbours to stop the Amazon forest fires.

While they were not expected to leave Biarritz with a more comprehensive set of agreements or even a joint communique, Mr Trump and his Western allies appeared to have at least agreed cordially to disagree on issues dividing them.

These ranged from Washington's escalating trade war with China, which many fear could tip the slowing world economy into recession; how to deal with the nuclear ambitions of both Iran and North Korea; and the question of whether Russian President Vladimir Putin should be readmitted to the group.

Mr Trump, a turbulent presence at last year's G-7 gathering, insisted during the Biarritz meeting that he was getting along well with other leaders of a group that also comprises Britain, Canada, France, Germany, Italy and Japan.

The trade war between the United States and China, the world's two largest economies, escalated last Friday as both sides levelled more tariffs on each other's exports.

On Sunday, a White House spokeswoman said that when Mr Trump told journalists that he had had second thoughts about last week's tariff blow against China, they were regrets only for not raising them more.

However, the mood-music changed abruptly on Monday, hours after China's yuan fell to an 11-year low against the dollar amid fears that the quickening Sino-US trade war would inflict more damage on the world's largest economies.

Speaking on the sidelines of the G-7 summit on Monday, Mr Trump said he believed China wanted to make a trade deal after it contacted US trade officials overnight to say it wanted to return to the negotiating table.

Mr Trump hailed Chinese President Xi Jinping as a great leader and said the prospect of talks was a very positive development. "He understands, and it's going to be great for China, it's going to be great for the US, it's going to be great for the world," he said.

In Beijing, Foreign Ministry spokesman Geng Shuang said he had not heard that a phone call between the two sides had taken place.

Mr Trump also backed away from confrontation over Iran on Monday, a day after French President Emmanuel Macron stunned other leaders by inviting Iran's foreign minister to Biarritz for talks on the stand-off between Washington and Teheran.

Mr Trump told journalists that they had been wrong to report that he was blindsided by the five-hour visit of Mohammad Javad Zarif to the summit's sidelines, and said that while he thought it was too soon for a meeting he had no objections to it.

European leaders have struggled to calm a confrontation between Iran and the US since Mr Trump pulled his country out of Iran's internationally brokered 2015 nuclear deal last year and reimposed sanctions on the Iranian economy.

Mr Macron has led efforts to defuse tensions, fearing a collapse of the nuclear deal could set the Middle East ablaze.

Mr Trump indicated an openness to discussions with Iran on a nuclear deal and said he was not looking for regime change. "I'm looking at a really good Iran, really strong, we're not looking for regime change," he said.

"And we're looking to make Iran rich again, let them be rich, let them do well." Mr Trump and Mr Macron met over a long lunch on the first day of the summit and, as they gathered with other leaders for further talks on Monday, greeted each other warmly and smiled.

Taking more heat out of the annual meeting, French and US negotiators meeting behind the scenes reached a compromise agreement on France's digital tax, a levy that had prompted Mr Trump to threaten a separate tax on French wine imports.

The row had threatened to open up a new front in the trade spat between Washington and the EU as economic relations between the two appeared to sour.

France's 3 per cent levy applies to revenue from digital services earned by firms with more than 25 million euros (S$38.6 million) in French revenue and 750 million euros worldwide.

Mr Trump skipped a session of G7 leaders on climate change at which they agreed to the US$20 million technical and financial help for the Amazon jungles. Mr Macron said Mr Trump agreed on the initiative but could not attend because of bilateral meeting engagements. REUTERS