Reuters

President Donald Trump said on Tuesday that trade progress with China had been made but that tariffs could still be "substantially" increased.

His comments sowed uncertainty about the fate of an interim trade agreement between the two largest economies.

Businesses and investors around the globe were watching closely for signs that negotiations remained on track.

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President Donald Trump on Tuesday vacillated between optimism toward trade negotiations with China and renewed escalation threats, sowing uncertainty about the fate of an interim trade agreement between the largest economies.

In a highly anticipated speech at the Economic Club of New York, Trump said that the first part of a deal with China could be finalized "soon" but that tariffs would be increased if it isn't. Businesses and investors around the globe were watching closely for signs that negotiations remained on track.

"If we don't make a deal, we're going to substantially raise those tariffs," the president said.

Few details have been made public about the terms Trump announced as part of that partial deal, which has not been put to paper. In October, he said China would significantly increase purchases of US farm products, take steps to open its financial markets, and make unspecified changes to rules on intellectual property and technology transfers.

But concerns about those negotiations emerged in recent days after Trump denied China's claim that the two sides had agreed to lift some of the punitive tariffs levied on thousands of products over the past year. That came even after some White House officials initially appeared to confirm a tariff rollback.

The contradictory messages were a sign of an increasingly apparent divide over trade policy in the Trump administration and raised uncertainty around the 19-month dispute.

"What we're basically hearing so far is residual noise from infighting between Trump's protectionist and globalist advisers on one side and China's aspirations for taking down tariffs on the other," said Jared Bernstein, who was a top economic adviser in the Obama administration. "Impossible, at this point, to know where it lands."

China has also not confirmed key stipulations, including a $50 billion agricultural-import quota touted by the Trump administration. That would be roughly double the $24 billion worth of farm goods China imported in 2017.

"A small deal can be signed before the end of the year, just like a small deal could have been signed in 2018," said Derek Scissors, a China scholar at the right-leaning American Enterprise Institute. "The question is whether the president is more focused on the stock market or the trade problems he campaigned on."

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