WASHINGTON – The United States and the European Union have agreed to drop all tariffs, trade barriers and subsidies, President Donald Trump announced Wednesday at a joint news conference with the European Commission President Jean-Claude Juncker.

Trump said they agreed to hold off on further tariffs as they work toward “zero tariffs, zero nontariff barriers and zero subsidies on non-auto industrial goods.” The goal is to restore reciprocal trade practices to open markets for workers and increase investment in both the United States and Europe.

“We will never allow farmers to fall victims of trade wars,” Juncker said later in a speech at the Center for Strategic and International Studies. “Trade wars have no winners.”

The two leaders reached an agreement to expand European imports of U.S. liquefied natural gas (LNG) and soy beans, as well as to increase trade in chemicals, pharmaceuticals and medical product, said Trump.

They will also join forces to reform the World Trade Organization and address unfair trading practices, including intellectual property thefts, forced technology transfer, industrial subsidies, distortions created by state-owned enterprises and overcapacity.

The U.S. and the EU have a $1 trillion bilateral trade relationship, together accounting for more than half of the world’s trade.

“The transatlantic partnership must remain the anchor of global stability,” said Juncker.

The meeting comes at a time of escalating tensions between the U.S. and EU.

Relations between the two sides have reached a breaking point over recent weeks, with Trump calling the EU a “foe” and threatening to impose additional 25 percent tariffs on imported vehicles.

The United States has already imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum. In response, the EU has levied tariffs for $ 3.2 billion worth of iconic U.S. goods –Bourbon whiskey, peanut butter, motorcycles, blue jeans – and made clear it would have introduced retaliatory measures on around $20 billions of American goods if the U.S. imposed levies on imported cars.

Trump’s criticism of Europe has often focused on its trade surplus in goods with the United States: The U.S. tacks a 2.5 percent tariff on European-made cars, while the EU imposes a 10 percent tariff on American cars. The trade imbalance of $101 billion has been addressed by Trump as a national security matter – a way to apply Section 232 of the Trade Expansion Act of 1962, a broad legal authority to impose tariffs on goods in the interest of national security.

“Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs,” Trump tweeted on Tuesday. “It’s as simple as that – and everybody’s talking! Remember, we are the “piggy bank” that’s being robbed. All will be Great!”

But Trump and Juncker announced they will “resolve” U.S. tariffs as well as EU retaliatory duties in order to ease the tensions and proceed with the negotiations.