President Donald Trump and his Chinese counterpart Xi Jinping said they made progress in trade talks this week and they’ll continue to work toward a deal, though the White House cautioned that “much work remains’’ to avoid another escalation of tariffs after March 1.

“It’s going extremely well,” Trump said, referring to two days of high-level trade negotiations that wrapped up Friday in Beijing. “The tariffs are hurting China very badly, they don’t want them. And frankly if we can make the deal it would be my honor to remove them, but otherwise” many billions of dollars are pouring into Treasury from the tariffs, the president said at the White House on Friday.

President Xi Jinping said the week-long round of meetings “achieved important progress in another step,” according to China’s Xinhua News Agency.

Earlier Friday, the White House released a statement saying that “these detailed and intensive discussions led to progress between the two parties. Much work remains, however.”

Investors applauded signs that the trade war between the world’s two largest economies isn’t escalating. U.S. equities surged, with the S&P 500 Index rising 0.9 per cent by 11:05 a.m. in New York.

Both sides agreed to resume discussions in Washington next week as they work toward a “memorandum of understanding” that could form the basis of a deal between Trump and Xi. A summit meeting between the leaders hasn’t yet been scheduled.

In his statement, Xi said China was “willing to solve the bilateral economic disputes and frictions through cooperation, and push for an agreement that both sides can accept. But cooperation has principles.”

The Chinese side added that they “reached consensus in principle on major issues,” without providing further details, according to Xinhua.

The U.S. has set a deadline of March 1 to ratchet up tariffs on US$200 billion of Chinese goods to 25 per cent from 10 per cent. Earlier this week, Trump said he’s open to extending that deadline for higher tariffs if the two sides are close to striking a deal. Bloomberg News reported that Trump is considering a 60-day extension for negotiations.

The White House statement said the Americans focused on structural issues in the Chinese economy “including forced technology transfer, intellectual property rights, cyber theft, agriculture, services, non-tariff barriers, and currency.”

Treasury Secretary Steven Mnuchin sounded a positive note on Friday in Beijing, saying he and U.S. Trade Representative Robert Lighthizer held productive meetings with China’s Vice Premier Liu He. Xi also met Mnuchin and Lighthizer on Friday.

The two sides remained far apart this week on structural reforms to China’s economy that the U.S. has requested, according to three U.S. and Chinese officials who asked not to be identified because the talks were private. They said it would likely take a meeting between Xi and Trump to seal a deal.

Asked Thursday if the Trump administration was considering extending the deadline for tariff increases, White House economic adviser Larry Kudlow said no decision had been made.

--With assistance from Jennifer Jacobs, Kevin Hamlin, Saleha Mohsin and Haze Fan