"I would do additional tariffs ... very substantial additional tariffs if that doesn't work, if we don't make a deal," the US President during an interview, the Efe news reported.
Trump said: "Companies are moving out of China, by the way, some are coming back to the United States because they don't want to pay the tariff."
Trump said the US was benefiting from the tariffs imposed on Chinese goods.
"When tariffs go on in China we are taking in billions and billions of dollars - we never took in 10 cents - now you have another $325 billion that I haven't taxed yet - it's ripe for taxing - for putting tariffs on," Trump said.
The US President, however, said he was optimistic about reaching a trade deal with Beijing, adding that China needed an agreement more than the US.
Trump said the Chinese government knows "what we have to have" to cut a trade deal.
"We don't have intellectual property rights protections, we don't have the opening of China," Trump said. "You know, China's not open. We're open, but China's not open. So, if we don't have the openings of China, if we don't have the things that we negotiated, and maybe even more than that."
Trump said that while he hoped to reach a deal with Xi, his "plan B" could include a 10 percent tariff on "$600 billion" worth of goods from China.
"Now what's going to happen ... all of those companies will move out of China - most of them - and they'll move to other places like Vietnam and other places that take advantage of us, and we'll start working on that too ... I don't want to do too many at one time," Trump said, referring to trade deals.
The US President said he had decided to use tariffs differently than his predecessors and that his policy was getting results.
Trump and Xi are expected to meet on Saturday in an effort to deal with the trade tensions and amid threats from Washington to impose additional tariffs.
The G20 summit will take place in Osaka, a city in southern Japan, June 28-29.
In May, Trump imposed a 25 percent tariff on Chinese imports worth $200 billion in response to the lack of progress in reaching a trade deal with Beijing.
China, for its part, retaliated by slapping tariffs on US imports worth $60 billion.
In 2018, the US posted a trade deficit of $419 billion with China due, largely, to the fact that US exports to Asia's largest economy totalled just $120 billion, while American imports from China reached $540 billion.
( With inputs from IANS )