Washington will suspend retaliatory tariffs against British goods beginning March 4, according to a joint statement released on Thursday night by the Office of the US Trade Representative.
"This will benefit a wide range of industries on both sides of the Atlantic, and allow for focused settlement negotiations to ensure that our aerospace industries can finally see a resolution and focus on Covid recovery and other shared goals," the statement said.
The move follows the UK's unilateral decision to suspend retaliatory tariffs against US goods from January 1.
Washington started to impose additional tariffs on a wide range of European products worth $7.5 billion in October 2019, after the World Trade Organization (WTO) ruled that Europe provided illegal subsidies to Airbus.
Following a similar WTO decision on subsidies to Boeing, the European Union (EU) slapped additional tariffs on American products worth $4 billion in November 2020.
While the UK ended its membership of the EU on January 31, 2020, it had followed the bloc's trade rules during a transition period that expired at the end of 2020.
Starting January 1, 2021, the UK officially left the EU Single Market and Customs Union, as well as all EU policies and international agreements.
The aircraft subsidy dispute has dragged on for 16 years.
In 2004, the US filed a case with the WTO, accusing the EU of providing illegal subsidies to Airbus in various forms.
The EU has since filed a similar case over allegedly illegal US subsidies to Boeing.
The WTO has ruled that both the US and the EU have provided illegal subsidies to their respective manufacturers.