"It's a tremendous amount of money and it's a very simple negotiation". He says it will mark the end of the NAFTA name. Many manufacturers have built complex but vital supply chains that cross all three NAFTA borders.
Shares in companies that benefit from trilateral trade gained on Monday.
The White House appearance included a phone call with Mexican President Enrique Pena Nieto, who stressed the importance of an agreement that includes Canada.
"There is still a great deal of uncertainty. trepidation, nervousness - a feeling that we are on the outside looking in", said Peter MacKay, a former Canadian minister of justice, defense and foreign affairs who is now a partner at the law firm Baker McKenzie.
The agreement would require that 75% of the parts in any auto sold in North America be produced in the United States or Mexico to be exempt from tariffs.
"They want to talk", Mr Trump said. Congress has to approve it.
A senior US trade official announced a deal with Mexico to replace NAFTA, adding that talks with Canada were expected to begin immediately in hopes of reaching a final agreement by Friday. Trump realized the power this gives us and made a decision to use it to level the playing field for American workers-unlike other recent presidents.
He also made a pointed threat against Canada, saying that if it can't reach a new trade deal, then he will slap the country with devastating tariffs on automotive imports.
"While any news of progress on restoring Nafta certainty is reassuring for American farmers, there are questions that remain on the nature of a final deal", Brian Kuehl, the organisation's executive director, said in a statement. Those changes are meant to encourage more auto production in the United States.
It contains enforceable labor provisions that require Mexico to adhere to International Labor Organization labor rights standards in an effort to drive Mexican wages higher.
On auto manufacturing, which had been one of the stickiest issues, cars would qualify as tariff-free only if they used more local steel and more local parts and were assembled by higher-paid workers.
Some Japanese automakers could face a similar challenge, but their responses on Tuesday were mostly positive.
NAFTA, which came into effect at the beginning of January 1994, lifted tariffs on virtually all goods traded among the US, Canada, and Mexico.
The European Union and China will also be greatly concerned about the Mexico deal-and more likely to negotiate seriously.
A sunset clause could see NAFTA expire in 16 years, a considerable softening of the original US proposal calling for a five-year clause.
Mexico agreed to eliminate dispute settlement panels for certain anti-dumping cases, a move that could complicate talks with Canada, which had insisted on the panels.
Traditional vehicle companies like Ford (+3.2pc) and General Motors (+4.9pc) saw their share prices surge.
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