US, Mexico reach new trade agreement

The U.S. and Mexico reached an agreement on Monday to enter a new trade deal, ending months of talks regarding a replacement for the North American Free Trade Agreement (NAFTA).

The new trade pact will be called “The United States Mexico Trade Agreement,” Trump said when announcing the deal from the Oval Office, adding that the previous trade deal between the two countries and Canada would be scrapped.

“It’s a big day for trade, it’s a bid day for our country,” Trump said. “A lot of people thought we’d never get here because we all negotiate tough – we do, so does Mexico.”

U.S. Trade Representative Robert Lighthizer, also in the Oval Office, said the deal would likely be signed by the end of November.

The new agreement stands to improve conditions in auto industry, a key issue that prevented the pair of countries from reaching an agreement at an earlier time. Trump has argued that lower wages in Mexico have cost domestic jobs at General Motors, Ford and Fiat Chrysler – “The Big Three” – all of which have production sites in Mexico. The new deal encourages U.S. manufacturing and regional economic growth by requiring that 75 percent of auto content be made in the two countries, according to the Office of the U.S. Trade Representative, and would also require that 40 percent to 45 percent of auto content to be made by workers earning at least $16 per hour.

Trump said the U.S. will begin negotiating with Canada “relatively soon.”

“They want to negotiate very badly,” Trump said. “But one way or the other we’ll have a deal with Canada. It’ll either be a tariff on cars or it’ll be a negotiated deal. And frankly, a tariff on cars is a much easier way to go, but perhaps the other might be much better for Canada.”

Canadian trade officials said on Monday they would only sign a new NAFTA if it benefited the country and its middle class.

“Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement,” a spokesperson for Canada’s Foreign Minister Chrystia Freeland said in a statement. “We are in regular contact with our negotiating partners, and we will continue to work toward a modernized NAFTA. We will only sign a new NAFTA that is good for Canada and good for the middle class. Canada’s signature is required.”

FOX Business' Susan Li contributed to this report