The US president told Reuters he would like to solve the crisis diplomatically but that it was “difficult” and a “major, major conflict” was possible.
He also said it had been “very hard” for Kim Jong-un to take over North Korea at such a young age.
The UN Security Council is meeting to discuss North Korea on Friday.
US Secretary of State Rex Tillerson has said China has told the US it will impose sanctions on North Korea if it conducts further nuclear tests.
Shortly after being elected, Mr Trump had accused China of not doing enough to rein in North Korea, and suggested the US could take unilateral action.
But in a wide-ranging interview with Reuters from the Oval Office, Mr Trump – who met Mr Xi earlier this month – said the Chinese president “certainly doesn’t want to see turmoil and death”.
“He is a very good man and I got to know him very well.
“He loves China and he loves the people of China. I know he would like to be able to do something, perhaps it’s possible that he can’t,” he said.
Of Mr Kim, he said: “He’s 27 years old. His father dies, took over a regime. So say what you want but that is not easy, especially at that age.”
But he stressed he was “not giving him credit”, and added: “I hope he’s rational.”
“There is a chance that we could end up having a major, major conflict with North Korea. Absolutely,” said Mr Trump.
North Korea has carried out repeated missile tests in recent months and is threatening to conduct its sixth nuclear test.
Other developments have escalated tensions in recent weeks:
- North Korea executed a failed missile launch and held a massive military parade in an apparent show of strength
- The US has deployed a group of warships and a submarine to the region
- Pyongyang has reacted angrily to this, threatening a “super-mighty pre-emptive strike”
- The US has begun installing a controversial $1bn (£775m) anti-missile system system called Thaad in South Korea – which Mr Trump said South Korea should pay for. Seoul said on Friday that there was “no change” in its position that the US pays for it
- Mr Tillerson and US Vice President Mike Pence have visited South Korea, reiterating that “all options are on the table” in dealing with the North
Earlier on Thursday, Mr Tillerson told Fox News that China has again urged North Korea to refrain from carrying out more tests.
China banned coal imports from North Korea in February – one of the country’s key exports – and is reportedly also considering restricting oil shipments if Pyongyang continues to behave belligerently.
Mr Tillerson is due to chair a UN Security Council foreign ministers meeting on Friday, where he will lobby for existing sanctions against North Korea to be fully implemented to “increase the pressure on the regime,” he said.
Earlier, Russia’s Vladimir Putin called for the resumption of talks with North Korea as tensions on the peninsula continue to escalate.
Speaking in Moscow, where he met Japanese Prime Minister Shinzo Abe, he urged those involved to “refrain from using belligerent rhetoric”.