"We're going to work with China where we left off", Trump said after a lengthy meeting with Xi while the leaders attended the Group of 20 summit in Osaka. "It's hard to predict what will happen tomorrow, so I can not say when the relations will return to right track".
Questions over the enforcement of any possible trade deal played a large role in collapsing talks in May, which resulted in both the USA and China raising tariffs.
The United States says China has been stealing American intellectual property for years, forcing USA firms to share trade secrets as a condition for doing business in China, and subsidising state-owned firms to dominate industries.
It is not clear if China made any new concessions to win the promise that the US would hold off on further tariff hikes.
Trump promised to hold off on his threat to slap new 25% tariffs on $300 billion in Chinese imports and agreed to lift some restrictions on Huawei, the Chinese technology giant at the centre of a dispute between the nations.
But the stakes remain high for both sides, despite Trump saying that China needs the deal more than the US.
Huawei isn't off the Commerce Department's Entity List, but Trump's statement allows the likes of Google, Intel, and Qualcomm to provide services to Huawei.
"Cooperation and dialogue are better than friction and confrontation", he said.
"The problem is that many countries have misgivings in expressing their opposition to U.S. bullying tactics out of fear of [Washington's] power, or hope to profit from the United States stirring up the global order through opportunism".
"This is a big concession to China", said Wendy Cutler, a veteran U.S. trade negotiator now at the Asia Society. The Chinese also want the United States to drop its tariffs as a condition of any deal.
"Even if a truce happens this weekend, a subsequent breakdown of talks followed by further escalation still seems likely", Capital Economics said in a commentary on Friday.
"The base case scenario was met at G20 and while we are no worse for wear, let's see what the G20 hangover brings", said Stephen Innes, market analyst at Vanguard Markets.
China and the United States have highly integrated interests and extensive cooperation areas, and they should not fall into so-called traps of conflict and confrontation, Xi said.
Trump had threatened to extend existing tariffs to cover nearly all imports from China to the U.S. unless Beijing made progress in meeting USA demands for economic reforms.
He said that China is honest in continuing trade negotiations and managing differences with the United States, but negotiations should be based on equality and mutual respect and address each other's legitimate concerns.
Trade talks between the United States and China stalled in May after Beijing backtracked on commitments to address structural issues, such as intellectual property theft, government subsidies to boost domestic sectors, and forced technology transfers.
But an agreement appeared to have been reached there too, with German Chancellor Angela Merkel telling reporters that the final communique would preserve language used at the two past G20 summits.
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