President Donald Trump said he’d prefer not to have to impose tariffs on China, his latest dovish remark toward the world’s second-biggest economy even as he continues to threaten sweeping action.

“We have one very big power over China, and that’s tariffs, and they don’t want them,” the US leader told Fox News host Sean Hannity in an interview that aired Thursday in the US. “And I’d rather not have to use it. But it’s a tremendous power over China.”

Trump has wielded tariffs as a frequent threat against friends and adversaries, and for the US promised additional revenue from them would help fund his domestic priorities. The US leader threatened on his second day in office to put 10% tariffs on China as soon as Feb. 1 for allowing fentanyl to “pour” into America.

Markets have taken it as a positive sign that Trump stopped short of imposing tariffs on China in his first days in office, and his recent threats were softer than those issued last year. On the campaign trail, the Republican floated additional levies on China around the 60% mark, which economists have said could decimate US trade with a Chinese economy heavily reliant on exports.

The yuan extended gains and rose 0.6% in both onshore and offshore markets after Trump’s latest comments. Chinese stocks also extended gains, with the benchmark CSI 300 Index ending the day up 0.8%.

“Markets are likely to reduce bets on tariffs right now,” said Fiona Lim, a senior strategist at Malayan Banking Bhd. “Trump continues to take a softer approach with China.”

Since taking office, the Republican leader has given China-owned app TikTok a reprieve from an immediate US ban, and downplayed concerns over the platform’s national security risks. He’s threatened Beijing with lower tariffs than leveled at Canada and Mexico, and hosted Vice President Han Zheng at his inauguration - the first time a senior Chinese official witnessed a US president being sworn in.

Trump has reason to avoid alienating Beijing with early trade salvos, as he tries to convince Russian President Vladimir Putin - a close diplomatic partner of Xi - to end the war in Ukraine. “They have a great deal of power over that situation,” Trump said of China, during a Thursday video address to the World Economic Forum in Davos.

Chinese Foreign Ministry spokeswoman Mao Ning said there were “huge common interests” between the US and China on Friday at a regular press briefing in Beijing. “The two sides should step up dialogue and consultation,” she added. ‘Smart Guy’

Trump’s latest comments came in a wide-ranging conversation that also touched on other immediate global challenges he faces in his first week in office. The US president threatened to impose “massive” additional financial penalties on Russia if it didn’t get to the negotiating table to end its war in Ukraine, called Iran’s leadership “religious zealots,” and said he also planned to reach out to North Korean leader Kim Jong Un.

The president had praise for Kim, saying the North Korean leader “happens to be a smart guy” and isn’t a “religious zealot” like the leaders of Iran. Trump said he plans to reach out to Kim.

While Kim hasn’t directly namechecked Trump since his election victory, North Korean state media earlier carried comments from the nation’s leader saying talks with the US during Trump’s first term had only served to confirm Washington’s “unchangeable” hostility.

Trump had harsher words for Russia’s Vladimir Putin, threatening “massive” tariffs and big new sanctions if he didn’t settle the war. “I don’t want to do that, but we’ve got to get this war ended,” he said.

While Trump did attack Beijing over its green exports, calling its wind turbines “horrible” and mocking fields of Chinese-made solar panels as “ridiculous,” he also reiterated his admiration for Xi Jinping.

“I had a great relationship with him prior to Covid,” he said. “They are a very ambitious country. He’s a very ambitious man.”

With assistance from Iris Ouyang, Hadriana Lowenkron, Soo-Hyang Choi, Romy Varghese, Shikhar Balwani, Betty Hou and Lucille Liu.