President Donald Trump and European Commission president Jean-Claude Juncker leaves the podiums after speaking in the Rose Garden of the White House, Wednesday, July 25, 2018, in Washington. (AP Photo/Evan Vucci)

A short while ago, President Trump and European Commission President Jean-Claude Juncker gave a joint press conference on the end of the trade war that seemed imminent between the US and the EU.

The deal calls for both sides to “work together toward zero tariffs” on industrial goods, Trump said at a joint appearance in the Rose Garden after meeting with Juncker. The European Union will also import more U.S. soybeans and liquefied natural gas, or LNG, both leaders said. And both sides will work together to reform the World Trade Organization, they said. While Washington and Brussels pursue these aims, the leaders agreed “we hold off further tariffs and reasses existing tariffs on steel and aluminum,” Juncker said. Trump imposed global tariffs on aluminum and steel earlier this year as part of his escalating trade confrontation, and he is currently weighing the imposition of auto tariffs. “While we are working on this, we will not go against the spirit of this agreement unless either party terminates the negotiation,” Trump said. “We also will resolve the steel and aluminum tariff issues and we will resolve retaliatory tariffs.” Juncker said the EU would build more terminals to import LNG as part of the deal. The statements, at an unexpected press conference, could temporarily ease fears that Trump’s trade war could escalate further. Markets jumped in the closing minutes of the day when word of a potential deal began to circulate.

Trump reportedly gets concessions from EU on trade. Dow up +160 pts pic.twitter.com/eLGIZmajj6 — Seana Smith (@SeanaNSmith) July 25, 2018

RECORD CLOSE for #Nasdaq & DOW spikes into the close as the US/EU reach a positive #trade deal! We are predicting BIG US #GDP numbers this Friday & talked autonomous driving with #Uber & $f Ford spinning out it's $4bln unit to compete with $gm Cruise $googl Waymo pic.twitter.com/5akGlGPbl7 — Susan Li (@SusanLiTV) July 25, 2018

Much earlier in the day, the EU had threatened to hit the US with a multibillion-dollar package of sanctions…something I don’t think either side actually believed but the EU had to look like it was stepping up rather than stepping off. None of the EU economies are strong enough to weather an actual trade war with the US and, more importantly, the EU isn’t politically strong enough to hold its member nations in check.

The key thing here is the goal they’ve set of reducing tariffs to zero…which is what trade reciprocity and free trade are really about. And, there is a NATO component in the deal. Europe will build LNG terminals and this will reduce their dependence on Russia.

This is creating a model for the dispute with Canada and other trading partners and it is beginning to describe the outlines of how the major trade spat with China will be resolved.

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