United States and the European Union have reached a final trade agreement, agreeing to impose a 15 per cent tariff on most EU exports, including cars, in a move aimed at averting a looming transatlantic trade war.

U.S. President, Donald Trump, met with European Commission President, Ursula von der Leyen, in Scotland, where the two leaders finalised the deal just days before the August 1 deadline that would have triggered a 30 per cent U.S. tariff on European goods.

The breakthrough follows a tense week in which the European Union prepared a list of €93 billion ($109 billion) worth of counter-tariffs on U.S. goods.

The agreed tariff is half the 30 per cent import tax rate Trump had threatened to implement starting this Friday, August 1. He said the 27-member bloc would open its markets to US exporters with zero per cent tariffs on certain products.

Von der Leyen hailed the deal, saying it would bring stability for both allies, who together account for almost a third of global trade.

Last week, the European Union said a negotiated outcome was “within reach” but simultaneously secured approval from member states to proceed with retaliation if talks collapsed. Those measures were scheduled to take effect in phases starting August 7, with tariffs of up to 30 per cent on a wide range of American products.