Malcolm Turnbull says the United States and Chinese presidents are "both big guys" who see eye-to-eye, so they can avoid a trade war.
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US President Donald Trump has signed a presidential memorandum that could impose tariffs on up to $US60 billion ($A84 billion) of imports from China, sparking plans from China to retaliate.
But Mr Turnbull backed two of Australia's largest trading partners to get a deal done.
"Donald Trump has said this is the beginning of a negotiation," Mr Turnbull told reporters in Sydney on Friday.
"The important thing is, no one wins from a trade war. We look forward to the US and China being able to negotiate a satisfactory arrangement that suits both sides."
Mr Turnbull said the presidents of both countries had a lot in common.
"President Trump has talked about how much he respects President Xi (Jinping)," Mr Turnbull said.
"Actually I've been with them and ... the two men see eye-to-eye on every respect. They're about the same height, both big guys."
The prime minister said Australia had free trade agreements with both countries, and he expected trade to continue to improve with both nations.
The US memorandum targets Chinese imports only after a consultation period, which will give industry lobbyists and legislators a chance to water down a proposed target list that runs to 1300 products.
"I view them as a friend," Mr Trump said.
"We have spoken to China and we are in the middle of negotiations."
The president said the alleged theft of US intellectual property was a key issue he wanted to address.
China unveiled plans on Friday to impose tariffs on up to $3 billion of US imports.
The country was considering a 15 per cent tariff on US products, including dried fruit, wine and steel pipes, and a 25 per cent tariff on pork products and recycled aluminium, the Chinese commerce ministry said in a statement.
China had a list of 128 US products that could be targeted if the two countries were unable to reach an agreement on trade issues, the ministry said.
Federal opposition trade spokesman Jason Clare said the US and China needed to talk to each other to "make sure this does not lead to a full-blown trade war".
Australian Associated Press
