Some European Union carmakers and capitals are pushing for an agreement with President Donald Trump that would allow for tariff relief in return for increasing investment in the US, according to people familiar with the matter.

Donald Trump has threatened to impose a punitive 17pc tariff on French wines, Spanish olive oil and Italian cheese as he pressures the EU to strike a trade deal.

"The U.S. proposal from last week is aimed at an agreement in principle," one EU official, who did not want to be named due to the sensitivity of the talks, told CNBC, adding that this agreement in principle would then "be negotiated out into a proper trade agreement at a later stage."