Donald Trump announces new trade deal with Mexico

Stocks surge to new heights on NAFTA hopes

America's neighbors to the north were not part of the negotiations.

Officials want to reach an agreement before the newly elected Mexican president, Andres Manuel Lopez Obrador, takes office in December. "This doesn't seem like a well-thought-out plan that leads anywhere sensible".

On Monday, President Trump called in the TV cameras to record a speakerphone call with Mexican President Enrique Peña Nieto on NAFTA negotiations.

U.S. Trade Representative Robert Lighthizer told reporters Monday a TPA notice should be sent by Friday, triggering the 90-day period.

Italian borrowing costs too rose to three-month highs after Deputy Prime Minister Luigi Di Maio said the country's public deficit could exceed the European Union's ceiling of 3 percent of gross domestic product next year. The deal also does not resolve a broader issue over what are known as "232 tariffs", taxes on foreign goods the Trump administration has imposed in the name of national security. Canada and the US have been at odds over trade in recent months. The government says the changes will "incentivize billions a year in vehicle and automobile parts production in the United States, supporting high-wage jobs". Canadian leaders insist that they are in no hurry to renegotiate the pact or to agree to anything not in their favor. "So if they had to compromise on energy, so be it".

Trump also threatened Canada that if it can't reach a new trade deal, then he will slap it with devastating tariffs on automotive imports. "It's not part of a negotiating strategy", said one administration official. (The Administration said Monday that it believes that it has met its legal requirement).

First, though Trump declared NAFTA dead, only Congress can actually undo the legislation that created the three-way trade bloc in 1994.

"I'll be terminating the existing deal", Trump said in reference to NAFTA.

The New York Times and The Washington Post reported the agreement, and the White House said it would make an announcement Monday about the trade deal.

Trump said Monday during an Oval Office event that he'll be calling the emerging agreement the "United States-Mexico Trade Agreement". "Maybe the largest trade deal ever made". "Trump was trying to emphasize that he's prepared to leave Canada out, even though the Mexicans are making it clear that they would prefer a trilateral deal".

A Canadian Foreign Ministry spokesperson said earlier on Monday that Ottawa was encouraged by "progress" between the USA and Mexico, but cautioned any new version of NAFTA would need to be beneficial for Canada before being signed off on by officials.

"We will only sign a new NAFTA that is good for Canada and good for the middle class", said Adam Austen, a spokesman for Freeland, adding that "Canada's signature is required".

Trump, rebuking decades of free-trade orthodoxy that helped to define the modern Republican Party, has complained time and again that NAFTA is unfair to America. Details on other issues including dispute resolution and US rules on government procurement remained unclear.

This preliminary agreement does not include Canada.

The new agreement also seeks to raise labor standards by requiring 40 to 45 percent of auto parts to be made by workers earning at least 16 US dollars an hour. A fresh round of tariffs on autos would be more painful. Canada will have an option to sign into the agreement later if a breakthrough doesn't happen this week, he said.