The EU and US have agreed a temporary truce to avoid a doubling of tariffs on American bourbon imports, part of a larger trade war over steel.

The automatic 50pc tariff was due to kick in next month, and could have hit investment in Irish distillers owned by US drinks makers, such as the Slane, Cooley, Kilbeggan and Tyrconnell brands.

European Commission trade chief Valdis Dombrovskis said on Monday that the bloc was “walking the talk in our efforts to reboot the transatlantic relationship”.

“By suspending our measures, we are creating the space to resolve these issues before the end of the year,” he said.

The tariffs date back to 2018, when then-US President Donald Trump slapped a 25pc tariff on EU steel and aluminium, citing “national security” concerns.

The EU clapped back with 25pc tariffs on €2.8bn worth of American products, including bourbon, motorbikes and denim jeans. Those were due to double to 50pc on June 1.

William Lavelle, head of the Irish Whiskey Association, told this newspaper last week that the doubling of tariffs would likely hit investment in Irish distillers owned by US drinks makers Beam Suntory and Brown–Forman.

The tariff suspension can last for up to six months and must be approved by EU governments. The previous 25pc tariffs continue to apply in the meantime.

Mr Dombrovskis insisted on Monday that “the EU is not a national security threat to the US”.

In a joint statement, Mr Dombrovskis, US Trade Representative Katherine Tai and US Secretary of Commerce Gina M Raimondo said they would now “enter into discussions on the mutual resolution of concerns” on the tariffs.

In their joint statement, Mr Dombrovskis, Ms Tai and Ms Raimondo said the trade war was down to “global excess capacity” in steel production, largely driven by China.

“The distortions that result from this excess capacity pose a serious threat to the market-oriented EU and US steel and aluminium industries and the workers in those industries,” they said.

Earlier this year the EU and US agreed to temporarily suspend tariffs in a separate dispute that had affected Kerrygold butter and Bailey’s cream liqueur exports.

Talks are still ongoing to find a permanent solution to that dispute, which stemmed from a decades-long fight over subsidies to aircraft makers Airbus and Boeing.