US, Mexico reach trade "understanding", Trump threatens to cut out Canada

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Many hurdles remain, including the fact that any final deal would need to be ratified by Congress.

"We want Canada's re-incorporation into talks to achieve a successful trilateral negotiation of NAFTA this week".

Trump said he would call Canadian Prime Minister Justin Trudeau soon and that the United States is open to talks with Canada if it is willing to negotiate fairly.

Under the current conditions, Ottawa essentially faces a take-it-or-leave-it offer, which is based on the US-Mexico trade pact.

Larry Kudlow, the director of Trump's National Economic Council, turned up the heat on Canada's negotiators during a televised interview Tuesday morning. Alternatively, the White House could just ship the new Mexico deal to Congress-but then lawmakers would be able to substantially rewrite the pact, which could scuttle all the agreements already reached with Mexico. His administration has been working on renegotiating the agreement for about a year and it appears big changes are coming.

Trump says: "We could have a separate deal (with Canada) or we could put it into this deal".

Mexico, its top officials said with visible relief, had made it through the other side.

On the editorial page of the Rupert Murdoch-owned newspaper, the new agreement - involving Mexico but not Canada - was condemned as "notably worse in many ways", based on what little is known about it.

While the full text and details of the U.S. -Mexico deal have not been published yet, officials from both countries told S&P Global Platts that the new agreement would not significantly change the so-called Investor-state dispute settlement (ISDS) mechanism that gives protection to foreign companies that have invested in the oil and gas industry. Sitting in the Oval Office, U.S. Trade Representative Robert Lighthizer to ask when the deal would be signed. But that doesn't do anything to clear up the other sticking points that have clogged NAFTA talks for more than a year, notably including Trump's longstanding demand for better access to Canada for US dairy exports.

The U.S. Congress wouldn't vote on it until next year - after November midterm elections that could end Republican control of the House of Representatives. The Trump administration is also seeking a sunset clause that would end the pact after five years, unless the three countries explicitly agree to continue it.

"Trudeau and his ruling Liberal party will be concerned about a backlash from rural voters if they cede too much ground to the U.S. That said, there is some wiggle room, and Canada made concessions on this topic in the TPP agreement", he said. But it raises questions about the country's relationship with Canada and the possibility of redrawing the North American Free Trade Agreement.

Foreign Affairs Minister Chrystia Freeland is on her way to Washington to re-join Mexico and the United States for urgent negotiations that could determine NAFTA's future.

"You're not going to be able to make all the parts for any sophisticated manufacturing product in any given country", Hanson said.

"This is something very positive for the United States and Mexico", Pena Nieto replied, saying he is looking forward to toasting Trump with tequila to celebrate, expressing to his American counterpart that he is "really grateful and greatly recognize and acknowledge your political will in all of this".

US automakers have opposed raising the North American content requirement, but the United Auto Workers union has supported it.

"Trade Representative Robert Lighthizer appears to have weakened US demands that the new deal should include an automatic five-year break clause, under which the agreement would need to be explicitly renewed by the legislative bodies in each of the three countries", Ashworth said.

If they are to agree to it, the United States might first have to drop its higher tariffs on steel and aluminum imposed on Canada and Mexico earlier this year, one trade expert said.

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