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Donald Trump announces new trade deal with Mexico

Donald Trump announces a deal which may overhaul the North American Free Trade Agreement (NAFTA) with Mexico and Canada.

Donald Trump
Image: Donald Trump has announced a trade 'understanding' with Mexico
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Donald Trump has announced a trade "understanding" with Mexico which could lead to an overhaul of the 24-year agreement between the two countries and Canada.

Calling the deal "very good" for US farmers and manufacturers, Mr Trump said Mexico has agreed to purchase "as much farm product as possible" immediately.

The deal could replace the 24-year North American Free Trade Agreement (NAFTA), which also includes Canada.

Mr Trump has not yet begun negotiating with Canada, but has called on Prime Minister Justin Trudeau to lead negotiations "fairly".

Mexican President Enrique Pena Nieto said the new deal could be done by the end of the week
Image: Mexican President Enrique Pena Nieto says the new deal could be completed by the end of the week

He announced the progress from the Oval Office, with Mexican President Enrique Pena Nieto joining in on speakerphone.

"It's an incredible deal for both parties," Mr Trump said.

The US president said he intended to terminate NAFTA while he pursues trade deals with Mexico and starts negotiations with Canada.

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Mr Trump threatened to slap tariffs on Canadian cars if he does not get what he wants.

Mexican Foreign Minister Luis Videgaray and Jared Kushner ahead of the announcement
Image: Mexican foreign minister Luis Videgaray and Jared Kushner

He said: "If they'd like to negotiate fairly, we'll do that.

"We could have a separate deal, or we could put it into this deal."

Mr Pena Nieto tweeted: "I spoke with Canadian Prime Minister Justin Trudeau on the state of the NAFTA negotiations and the progress made between Mexico and the United States.

"I told him it was important that (Canada) rejoin the process, with the goal of concluding trilateral negotiations this week.

"I talked to the President @realDonaldTrump. Mexico and the United States have reached a commercial understanding. We want Canada's re-incorporation into talks to achieve a successful trilateral negotiation of NAFTA this week."

Mexico's incoming foreign minister, Marcelo Ebrard, later added that it is "vital" to include Canada in the negotiations if they will be able to renew the pact.

Donald Trump made the announcement with the Mexican president on the phone, and Mexican Foreign Minister Luis Videgaray nearby
Image: Mr Trump made the announcement with the Mexican president on the phone

A spokesman for the Canadian foreign minister Chrystia Freeland said they had been in touch with NAFTA negotiators, and added: "We will only sign a new NAFTA that is good for Canada and good for the middle class."

Ms Freeland is to travel to Washington on Tuesday for talks.

Mr Trump has been critical of NAFTA, signed in 1994, which he blamed for sending US manufacturing jobs to Mexico. He previously called it a "terrible deal".

He said it would be replaced in part by the newly named United States-Mexico Trade Agreement.

Negotiations for a new deal began more than a year ago and have proved difficult. Officials worked through the weekend to close differences.

The Office of the US Trade Representative said Mexico had agreed to ensure 75% of automotive content would be produced in the trade bloc to receive duty-free benefits. It's also promised that 40% to 45% of it be made by workers earning at least £12.40 ($16) an hour.