The European Union and United States have agreed a deal that will lock in tariffs on most EU imports to the US, but prevent the prospect of an economically devastating trade war, sources said on Sunday evening.

President Donald Trump is set to meet with European Commission chief Ursula von der Leyen in Scotland to discuss trade. Both sides are seeking an agreement on tariff rates.

The South China Morning Post, a Hong Kong-based English-language newspaper, reported on Sunday that "Beijing and Washington are expected to extend their tariff truce by another three months at trade talks in Stockholm beginning on Monday,

The European Union must open up its markets for U.S. exports in order to convince U.S. President Donald Trump to reduce a threatened 30% tariff rate due to kick in on August 1, U.S. Commerce Secretary Howard Lutnick said on Sunday,

If there is no deal and the US imposes 30 per cent tariffs, the EU has prepared counter-tariffs on US$109 billion of US goods.

European Union countries approved a package of retaliatory tariffs on U.S. goods that could start in August if no trade agreement is reached. The list covers more than $100 billion worth of annual U.S.

A threatened 30% tariff on European wines would hurt many U.S. companies while hiking prices at home and in restaurants, industry experts warn.

Europe's smaller companies are emerging as a popular vehicle for investors to help insulate portfolios against both tariffs and a stronger euro, as cheaper credit and the prospect of more government spending bolster confidence in the economic outlook.

China is facing an August 12 deadline to reach a durable tariff agreement with President Donald Trump’s administration.

European pharmaceutical stocks have swooned while the broader market has climbed higher. As a result, stocks in the sector are looking like a buying opportunity.