Europe and China will form a group aimed at updating global trade rules to address technology policy, government subsidies and other emerging complaints in a bid to preserve support for international commerce, EU officials said.
European Commission vice president Jyrki Katainen said unilateral action by US president Donald Trump in disputes over steel, China's technology policy and other issues highlighted the need to modernise the World Trade Organisation (WTO) to reflect developments in the world economy.
US officials have said the WTO, the Geneva-based arbiter of world trade rules, is bureaucratic, rigid and slow to adapt to changes in global business and needs an overhaul.
Mr Katainen said he did not expect negotiations on updating trade rules to be easy, but that they were necessary to save the environment for multilateral trade.
Late last month, Mr Trump infuriated US allies - from the EU to Canada and Mexico - by imposing tariffs of 25% on imported steel and 10% on aluminium.
The American president justified the move by saying imported metals threatened US national security - a justification countries have used rarely because it can be easily abused.
Mr Trump has also started a trade squabble with China over Beijing's sharp-elbowed efforts to overtake US technological dominance.
China's tactics range from forcing American companies to hand over technology in exchange for access to the Chinese market to outright cyber theft.
The White House has announced plans to slap 25% tariffs on 1,100 Chinese goods, worth 50 billion US dollars (€42 billion) in imports.
Beijing said it will respond in kind. Mr Trump said he would then retaliate with more tariffs.
All told, the 450 billion dollars (€385 billion) in potential tariffs would cover nearly 90% of the goods China sends to the United States.