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Bedminster (United States) (AFP)

President Donald Trump on Thursday thanked Russian President Vladimir Putin for ordering the US embassy in Moscow to slash its staff -- boasting that this would cut payroll costs.

Last month, the Kremlin demanded that Washington reduce its diplomatic footprint in Russia by 755 employees -- both US diplomats and local staff -- and close two compounds.

This was seen as marking a historic new low in post-Cold war Russia-US relations but Trump, who has long argued the case for closer ties, said after a meeting with top aides in New Jersey he saw a silver lining in the crisis.

"I want to thank him because we're trying to cut down our payroll and, as far as I'm concerned, I'm very thankful that he let go of a large number of people because now we have a smaller payroll," Trump declared.

"There's no real reason for them to go back. I greatly appreciate the fact that we've been able to cut our payroll of the United States. We're going to save a lot of money."

The United States and Russia are at loggerheads over Moscow's armed intervention in Ukraine and Washington's imposition of economic sanctions on Kremlin allies.

Ties were further clouded by Russia's interference in last year's US presidential election, which US intelligence agencies say was designed to help Trump get elected.

Trump's supporters have dismissed this idea but a US special prosecutor is investigating allegations that members of his campaign colluded with Russian sources.

Last month, US lawmakers passed a law toughening sanctions imposed on Russia for corruption, rights abuses, subversion of Western politics and backing Ukrainian separatists.

Trump opposed the bill, which further blocks him from removing sanctions without consulting Congress, but begrudgingly signed it into law.

Meanwhile, Secretary of State Rex Tillerson has embarked on a wholesale review of State Department operations aimed at cutting costs and refocusing on new objectives.

While in Manila earlier this week, Tillerson had said his department would respond to the Kremlin's order to cut their Moscow staff before a September 1 deadline.

© 2017 AFP