"A truly historic day," Trump said, with Kosovo Prime Minister Avdullah Hoti and Serbian President Aleksandar Vucic sitting beside him in the Oval Office.

"Serbia and Kosovo have announced economic cooperation on a broad range of issues."

Serbia and its former territory, which declared independence in 2008, remain bitter over a bloody war fought two decades ago.

The European Union failed for nearly a decade to broker a thaw in relations.

The US effort focused on business and commerce, however, with Serbian negotiators insisting they would not go as far as recognizing Kosovo as a fully-fledged state.

"It took decades because you didn't have anybody trying to get it done," Trump said of the deal.

"There was a lot of fighting and now there's a lot of love."

Vucic said Trump had done a "great job" and praised the US president's commitment to the region, inviting him to visit Serbia.