Donald Trump has announced a tariff deal with the EU to end four months of difficult negotiations between Washington and Brussels and averting a damaging transatlantic trade war.

The European Commission chief, Ursula von der Leyen, said “we have a deal” after a 40-minute meeting with Trump at his Turnberry golf resort in Scotland where the US president is on holiday for the weekend.

She described it as “a big deal, a huge deal” that would bring “stability” and “predictability” to both sides.. “The two biggest economies should have a good trade flow,” she said.

“It solves a lot of stuff and was a great decision,” said Trump, describing the agreement, which also involved the EU agreeing to spend tens of billions of dollars more on US energy products, as “a powerful deal” and an “important” partnership.

“This is this is really the biggest trading partnership in the world, so we should give it a shot,” he had said before the private meeting started.

Keeping the EU delegation, who had flown in on Sunday for the meeting, on tenterhooks to the end, the US president had repeated less than an hour earlier that the chances of a deal were only a “50-50”, and that “three or four sticking points” remained.

Under the agreement, the US will levy a 15% baseline tariff for most EU exports to the US, limiting a higher border tax charge on EU goods sold to the US market. However, the tax rate is higher than before Trump came to power, and a 50% tariff remains on steel exports; a set back for that industry.

Pharmaceuticals and semi-conductors are also excluded and could yet face punitive tariffs.

In one of the most important breakthrough moments in Trump’s sweeping global tariff war, the agreement prevents the imposition of rates of as high as 50% on all EU goods that was threatened by the president in May, and which had been lowered to 30%. Washington had set a deadline for a deal of 1 August.

However, Trump keeping 50% tariffs on steel and aluminium products could bode ill for British steelmakers, who are hoping that rate will be eliminated when Trump meets Keir Starmer, the British prime minister, in Scotland on Monday.

On steel, Trump said the levy was a “worldwide thing that stays the way it is”.

The agreement struck in Scotland is likely to be greeted with relief by financial markets when they open on Monday, after a turbulent few months with jittery investors spooked by the prospect that Trump’s tariff wars could pummel the world economy.

Trump also signalled progress could be made in trade talks with China, with the US president saying “we’re very close”. Reports by the South China Morning Post on Sunday suggested Washington and Beijing were preparing to announce a 90-day extension to a pause in tariffs to allow for continuing negotiations, before a 12 August deadline.

Markets rallied sharply last week after Trump reached a trade deal with Japan, the world’s fourth-largest economy, amid investor hopes that the measures announced by Washington in the president’s 2 April “liberation day” plan could be avoided.

Under the terms of the EU deal, Brussels will agree to purchase $750bn worth of energy including liquified gas while at the same time agreeing to invest $600bn in the US, a deal that includes purchases of military equipment.

Facing von der Leyen in the eponymously named DJT ballroom at his Turnberry golf resort, Trump said he was “very honoured” to have done the deal, telling the European Commission president her staff had been “fantastic”.

The two sides shook hands and congratulated each other in front of a bilateral delegation that included the US commerce secretary, Howard Lutnick, and the trade representative, Jamieson Greer

Looking relieved and flanking von der Leyen were trade commissioner Maroš Šefčovič; Björn Seibert, her head of cabinet; Sabine Weyand, a key player in the Brexit negotiations and now the director general of the EU’s trade commission; and Tomas Baert, a member of von der Leyen’s cabinet who has taken a lead role in talks.