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U.S. reaches 'deal in principle' with China on Trade -source

Heading into the threat of a new round of tit for tat tariffs this weekend between the U.S. and China - the world's two biggest economies have a deal to resolve their 17-month trade war...

well...in principle - at least that's what a source is telling Reuters.

The agreement Thursday, which would secure a "phase one" trade deal reached months ago, came as sources told Reuters U.S. negotiators offered to reduce by half - tariffs already in place and suspend a threat to slap new tariffs on $160 billion worth of goods that were supposed to go into effect on Sunday.

Those tariffs would have brought particular pain to U.S. consumers impacting items such as video game consoles, computer monitors, toys and Apple iPhones.

Anticipation had been building after President Trump started the day with a tweet: "getting VERY close to a BIG DEAL with China. They want it and so do we!"

Yet, later - at an event at the White House - Trump was uncharacteristically tight-lipped.

SOUNDBITE (ENGLISH): PRESIDENT DONALD TRUMP, SAYING:

"We won't talk about China because we're working a deal with China but I wouldn't say up until now they've loved me."

An official in Beijing also said the two sides were in talks.

SOUNDBITE (MANDARIN WITH ENGLISH TRANSLATION): CHINESE COMMERCE MINISTRY SPOKESMAN GAO FENG, SAYING:

"In regards to China-U.S. trade negotiations, trade and economic teams from both sides have been maintaining close communication. I have no further details to provide now."

That was enough to inspire hope Beijing and Washington were close to resolving a trade war that has hampered global supply chains and dented business sentiment.

Stocks rallied on the optimism - sending the S&P 500 and the Nasdaq to their highest closes ever.