WASHINGTON (Reuters) – President Donald Trump said on Thursday he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline set by the two countries to achieve a trade deal.

U.S. President Donald Trump and China’s President Xi Jinping chat as they walk along the front patio of the Mar-a-Lago estate after a bilateral meeting in Palm Beach, Florida, U.S., April 7, 2017. REUTERS/Carlos Barria

Asked during an event in the Oval Office whether there would be a meeting before the deadline, Trump said: “No.”

When asked whether there would be a meeting in the next month or so, Trump said: “Not yet. Maybe. Probably too soon. Probably too soon.”

The remarks confirmed comments from administration officials who said the two men were unlikely to meet before the deadline, dampening hopes of a quick trade pact and sparking a drop in U.S stock markets.

Late last year during a meeting between Trump and Xi in Argentina, the two sides agreed to take a 90-day hiatus in their trade war to give time to negotiate an agreement.

If the talks do not succeed, Trump has threatened to increase U.S. tariffs on Chinese imports. Another round of talks is scheduled for next week in Beijing.

Trump, who is proud of having a warm relationship with Xi, said last week he would meet with him again to hammer out a final deal. The president is scheduled to travel to Asia at the end of this month for a summit with North Korean leader Kim Jong Un in Vietnam, and some had speculated that he could meet with Xi on the same trip.

White House economic adviser Larry Kudlow told reporters that the leaders of the two economic superpowers could still meet at a later date.

“At some point the two presidents will meet, that is what Mr. Trump has been saying. But that is off in the distance still at the moment,” he said.

The news prompted a sharp selloff in U.S. stocks, dashing the optimism that had been building that the countries were progressing toward a deal before tariffs on Chinese imports rise to 25 percent after the March 1 deadline.

The S&P 500 Index closed down 0.93 percent in its biggest drop in two weeks. Treasury bond yields dropped as investors sought safety in sovereign U.S. debt. The benchmark 10-year yield slid 4 basis points to 2.66 percent, the lowest in nearly a week.

“I could see where that would impact the markets because obviously we had a lift in the month of January from optimism surrounding these trade talks,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin are leaving on Monday for the next round of talks in China, one administration official said. “They’re hoping for more success,” he said.

The United States is pressing China to make major reforms, including on structural issues related to how it treats U.S. companies doing business there. Washington accuses China of stealing U.S. intellectual property and forcing American businesses to share their technology with Chinese companies. China denies the accusations.

Trump said in his State of the Union address on Tuesday that any new trade deal with Beijing “must include real, structural change to end unfair trade practices.”

Such reforms have been a sticking point in talks so far.

Lighthizer told reporters last week that the two leaders may not meet if the negotiations do not progress sufficiently.

“If we don’t make headway between now and then, my advice would be we can’t fit. But if we do make headway, and the president thinks we’re close enough that he can close the deal on major issues, then I think he’ll want to have a meeting and do that,” he told reporters. “I have complete confidence in the president, both to close a deal if we get to that point, but also to make that judgment.”

Trump has vowed to increase U.S. tariffs on $ 200 billion worth of Chinese imports to 25 percent from 10 percent currently if the two sides cannot reach a deal by 12:01 a.m. (0501 GMT) on March 2.

CNBC reported that the tariffs were likely to remain at the 10 percent rate. Three sources familiar with the matter indicated that report was wrong. The president has said repeatedly that the tariffs would go up if no deal has been reached, and that position has not changed, one source said.

Lighthizer said last week that tariffs had not been a subject of the talks.

Reporting by Jeff Mason and Steve Holland; additional reporting by Alexandra Alper; Editing by Lisa Shumaker and Alistair Bell

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Reuters: Business News