Trump's remarks come after Beijing infuriated him by expanding export controls on rare earth products that are used in smartphones, fighter jets, electric vehicles and more.
"I think we're going to end up having a fantastic deal with China," he told reporters at the White House.
"It's going to be a great trade deal. It's going to be fantastic for both countries, and it's going to be fantastic for the entire world."
When asked about China's leverage, Trump said Beijing "threatened us with rare earths, and I threatened them with tariffs."Â
But he insisted his good relationship with Xi means they would work out "a very fair deal."
All eyes are on a potential meeting between Trump and Xi because any failure to reach some agreement raises the risk of destabilising not only relations between the two superpowers but also the global economy.
Trump affirmed that he would meet with Xi this month on the sidelines of the Asia Pacific Economic Cooperation summit, a grouping of 21 economies. Beijing has not announced plans for Xi to make the trip to South Korea, but it's not unusual for such details to emerge closer to the travel date.
The president has threatened to impose a new 100 per cent tariff on China in response to Beijing's expanded rules on rare earth products. And he said it has already had results.
"Now, they're treating us with great respect," Trump said. "Now, we'll see what happens. I said, if we don't make a deal, I'm putting on an additional 100 per cent on November 1. I think we'll make a deal."
Since returning to the White House, Trump has levied additional 30 per cent across-the-board tariffs on China. Trump said the total rate on Chinese goods is about 55 per cent to 57 per cent and that Beijing has paid the US "hundreds of billions of dollars worth of money for tariffs."
China, however, has indicated it would play hardball.
"Threatening high tariffs is not the right way to deal with China," Lin Jian, a spokesperson for the Chinese foreign ministry, said in response to Trump's new tariffs threat.
When asked if the 100 per cent tariff could stand and how it could affect the economy, Trump told Fox Business' Maria Bartiromo last week that "it's not sustainable."
Trump said he has other options to use against China: "They can't get parts for their aeroplanes. We build their aeroplanes."
Still, he said he prefers reaching a deal. "I want to be good to China. I love my relationship with President Xi," Trump said.
Trump also dismissed concerns that Beijing could soon attack the self-governed island of Taiwan. That is because, he said, the US is far superior in military power.
"It's not even close," Trump said. "We have the best equipment. We have the best of everything, and nobody's going to mess with that."
The United States is obligated by its own laws to give military support to Taiwan, which split from China in 1949 during a civil war. Beijing claims sovereignty over the island and vows to seize it by force if necessary to achieve what it says to be "the unification of the motherland."
Trump acknowledged that Taiwan is "the apple of his eye" for Xi but said: "I don't see anything happening. We have a very good trade relationship."
When asked if he could yield to Beijing's pressure not to support Taiwan independence in exchange for a deal, Trump said, "Well, I'm not going to talk about that."
with AP
