NATO's agreement to more than double allies' defense spending targets will rebalance Europe's trade relations with the U.S. and see the region buy more American weaponry, European Union Council President Antonio Costa told CNBC on Friday.

Earlier this week, NATO allies agreed to more than double their defense spending target from 2% of gross domestic product to 5% by 2035.

The move has solved the main trade-related issue between Europe and the United States, Costa told CNBC's Silvia Amaro.

"What we have decided to do is strengthen our position and to assume greater responsibilities in our own defense. Then I think we solved already the main issue, and then I think the path is paved to solve the other issues," he said.

At least some part of this higher defense expenditure will be used to "buy American," according to Costa.

"And of course, if we buy more American, that means then the trade relations rebalance. Then that's the reason — because I have said always that we cannot separate these two negotiations about defense — [that this] was the most important issue for the United States, and [it] is already solved."

Costa, who served as prime minister of Portugal up until last year, reiterated Trump's previous statements that the military agreement is a "big win," adding that it effectively rebalances the burden sharing on defense.

The EU is among the trade partners rushing to strike an agreement with Washington ahead of U.S. President Donald Trump's early July deadline for hiking so-called reciprocal tariffs on imports from nearly all countries.

Steps toward a deal were made this week after the U.S. presented the European Commission with a new proposal. Markets were also buoyed by the Thursday announcement from White House Press Secretary Karoline Leavitt that the July 8 and 9 deadlines for restarting tariffs on nations are "not critical."

"Perhaps it could be extended, but that's a decision for the president to make," Leavitt said.

When asked whether the EU could reach a deal ahead of the July deadlines, Costa said the European Commission is currently assessing the White House's trade proposal.

"Both parties are very engaged to find a solution, and I hope that we will and that we achieve this before the ninth of July," he said.