US President Donald Trump and European leaders have pulled back from the brink of a trade war over automotive goods and agreed to open talks to tear down trade barriers between the United States and the European Union.

But the agreement was vague, the coming negotiations with Europe are sure to be contentious and the United States remains embroiled in major trade disputes with China and other trading partners.

In a hastily called Rose Garden appearance with Trump, European Commission President Jean-Claude Juncker said the US and the EU have agreed to hold off on new tariffs, suggesting that the United States will suspend plans to start taxing European auto imports – a move that would have marked a major escalation in trade tensions between the allies.

Trump also said the EU had agreed to buy “a lot of soybeans” and increase its imports of liquefied natural gas from the US And the two agreed to resolve an ongoing dispute over US tariffs on steel and aluminum.

“It’s encouraging that they’re talking about freer trade rather than trade barriers and an escalating tariff war,” said Rufus Yerxa, president of the National Foreign Trade Council and a former US trade official. But he said reaching a detailed trade agreement with the EU would likely prove difficult.

On Wednesday, Trump and Juncker said they have agreed to work toward “zero tariffs” and “zero subsidies” on non-automotive goods.

Trump told reporters it was a “very big day for free and fair trade”.

The president campaigned on a vow to get tough on trading partners he accuses of taking advantage of bad trade deals to run up huge trade surpluses with the United States.

He has slapped taxes on imported steel and aluminium, saying they pose a threat to US national security. The US and EU are now working to resolve their differences over steel and aluminium – but the tariffs are still in place. And they would continue to hit US trading partners like Canada, Mexico and Japan even if the US and the EU cut a deal.

-AAP