The US government has announced the European Union will be among trading partners that are spared from tariffs on steel and aluminium imports into the United States.

US President Donald Trump had planned to impose tariffs of 25% on imported steel and 10% on aluminium to restrict China flooding the world with cheaper goods but in practice it would have affected many allies.

The EU had threatened to impose their own tariffs in retaliation, but the move reduces risk of a trade war.

The United States trade representative, Robert Lighthizer, has said the European Union along with Argentina, Australia, Brazil and South Korea, would be exempted. Canada and Mexico had already been told they were free from tariffs.

The White House also announced further steps to restrict Chinese investment and placed tariffs on nearly $50 billion worth of Chinese imports to punish Beijing for "stealing American technology".

China has already warned that it will take "all necessary measures" to defend itself, signalling the likelihood of a trade war between the world's two biggest economies.