WASHINGTON, United States (AFP) — The United States and the European Union will “immediately resolve” their dispute over US steel and aluminium tariffs and subsequent EU counter-measures, US Treasury Secretary Steven Mnuchin said today, as the two sides work to defuse a costly trade row.

The punishing US metals tariffs had angered Washington’s major trading partners including the EU and sparked retaliation against important American exports, spooking global stock markets.

But US President Donald Trump and European Commission chief Jean-Claude Juncker announced a truce in their trade war after White House talks on Wednesday.

The agreement was short on details, but Mnuchin made clear the primary source of the aggravation would be addressed.

“The first issue that we’ll begin negotiating is… the issue on the steel and aluminum tariffs and retaliatory tariffs,” Mnuchin said on CNBC.

“We have the groundwork laid and I hope to resolve that very quickly.”

Brussels had hit back at the US over the metals tariffs by imposing duties on more than US$3 billion of US goods, including blue jeans, bourbon and motorcycles, as well as orange juice, rice and corn.

Mnuchin also confirmed that the US would not impose threatened auto tariffs on European cars while negotiations were still ongoing. That would head off another round of EU tariffs threatened on US$20 billion in US exports.

“Phase one will be to immediately resolve those issues so there will be no tariffs in either direction,” Mnuchin said.

He reiterated that Trump and Juncker agreed that as long as negotiations continue, “there will be no new tariffs in either direction.”

The US and EU account for about US$1 trillion in transatlantic trade.

The talks with Juncker seemed a resounding victory for Trump and his confrontational trade strategy, as Washington appears to have conceded little.

On Wednesday, the pair agreed to “launch a new phase” in the relationship and “to work together towards zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” Trump said.

In addition, the EU has made a commitment to buy US soybeans and natural gas.

On Thursday, European Central Bank chief Mario Draghi called the tentative truce a “good sign, because in a sense it shows that there is a willingness to discuss trade issues in a multilateral framework again.”

He however warned it was too soon to “assess the actual content.”

Germany unsurprisingly hailed the decision, given their world dominating auto industry was the first in line to be punished by Trump’s protectionist offensive.

But France quickly spoke out in anger, with Finance Minister Bruno Le Maire demanding “clarifications” over the agreed measures.

– Watching China on yuan movements –

Trump also won a commitment from Juncker to work together to reform the World Trade Organization to address some of his complaints about China on theft of US technology, the behaviour of state-owned enterprises, and overcapacity in steel.

The Republican president has long complained that the WTO has been unfair to the United States, despite the fact the US has won most of the disputes against China and others.

Mnuchin said there were no new developments on the dispute with China, which has been the target of most of Trump’s trade policies.

“I’ve made perfectly clearly that any time China is willing to seriously negotiate – and we’re talking about a commitment to reduce the bilateral trade deficit as well as to deal with technology issues – we’re available any time,” he said.

“There continue to be some quiet conversations, but we’re prepared if they’re going to make serious moves to negotiate.”

But he also cautioned that the US is watching China’s currency movements for any signs Beijing is manipulating the yuan.

The Treasury chief also said the administration hopes to work out an agreement with Canada and Mexico to revise the North American Free Trade Agreement “very soon.”

Talks between the three countries were due to continue in Washington today.