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After Trump hosted Chinese Vice Premier Liu He at the White House last week, one administration official privately likened the direction of negotiations to the president's caving to Democrats in the shutdown battle over funding for a border wall. The countries had taken a 90-day hiatus in their trade war, putting a planned increase in tariffs on hold, to hammer out an accord.

According to media reports, the meeting may take place in Vietnam on February 27-28.

Meanwhile, the USA has threatened to increase tariffs on $200 billion worth of Chinese goods to 25 per cent from 10 per cent if a deal is not reached by March 2.

CNBC reported that the tariffs were likely to remain at the 10 percent rate. Analysts had hoped that Trump would jump over to China on his upcoming trip to Asia, when he is scheduled to meet North Korean leader Kim Jong Un, but Trump's most recent comments dispelled this belief.

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But the US president said the two would "maybe" meet later. But that is off in the distance still at the moment, ' Kudlow said.

The S&P 500 Index market worth dropped by 0.93 percent, the biggest drop in 2 weeks.

"Maybe". Nonetheless, earlier last month, Trump had said that he would like to meet the Chinese President in order to resolve their trade differences and sprouted optimism over ongoing tariff warfare with China. Treasury bond yields dropped as investors sought safety in sovereign US debt.

Treasury bond yields dropped, while the benchmark 10-year yield slid 4 basis points to a low of 2.66%.

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The US stock market has fallen in response to the news, with hopes of a swift trade pact between the two leaders quickly dampened.

He does anticipate the US and China could reach a deal later this year to remove the tariffs, with the upcoming election cycle playing a role in the timing.

Last week, Chinese and USA negotiators said they made "important progress", China's state media reported following the conclusion of two days of high-level talks in Washington, DC.

Both Trump and his top trade negotiator, Robert Lighthizer, have confirmed March 2 as the deadline and clearly stated that there would be no extension of the timeline. Washington accuses China of stealing USA intellectual property and forcing American businesses to share their technology with Chinese companies.

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Mr Lighthizer told reporters last week that it was not certain a deal could be reached. "China's representatives and I are trying to do a complete deal, leaving NOTHING unresolved on the table".