Despite the intensification of the trade and currency fights between the U.S. and China, President Donald Trump remains open to a deal that would lead to flexibility on tariffs, White House economic advisor Larry Kudlow said Tuesday.

"The reality is we would like to negotiate," Kudlow told CNBC's "Squawk on the Street" during a live interview. "We're planning for the Chinese team to come here in September. Things could change with respect to the tariffs."

Kudlow, director of the National Economic Council, serves as a chief economic advisor to Trump. He spoke a day after the stock market tanked amid worries that the trade and currency dispute had hit a new level as the U.S. accused China of manipulating its currency to gain an unfair economic advantage.

Wall Street saw a positive open Tuesday, though concerns remained over what happens next in the long-simmering battle. The U.S. is looking for China to open up its markets more to U.S. companies and to not steal technology.

Trump has rattled off a series of aggressive tweets against the Chinese, stating his intent Thursday to tax the remaining $300 billion or so of imports not already subject to tariffs and continuing to demand that the U.S. get a better deal.

"In the course of his tweets and his conversations with the trade team, he would like to continue negotiations," Kudlow said. "He would like to make a deal. It has to be the right deal for the United States. We would much prefer a commercial transaction."

Kudlow declined comment on a Wall Street Journal report that he was against the new tariffs.

He did say that he sees the U.S. as having a clear advantage as the impasse continues, adding that the tariff burden "is falling almost 100% on China."

"The American economy is in great shape. It's booming, there is no inflation," Kudlow said. "We're in terrific shape. The Chinese, regrettably, are not."

He added: "The Chinese economy is crumbling. It's just not the powerhouse it was 20 years ago."