The U.S. president made the announcement today in the Oval Office, with Mexican President Enrique Pena Nieto joining by speaker phone.
The agreement between the United States and Mexico on Monday was a significant marker in the yearlong effort to renegotiate the trilateral trade pact, sweeping away key obstacles impacting the USA and Mexico that had held up trilateral talks.
One of the most fundamental parts of Trump's campaign for president was his promise to change America's deeply flawed trade arrangements. Canada and the US are both on the eve of contentious mid-term elections, which could affect the timeline of the negotiations.
While it could be more of a NAFTA tweak than an overhaul, several issues remain to update the 1994 accord. Canada has been on the sidelines for the last month, as the USA and Mexico have tried to work through their problems. The big question now is whether Canada, the third party to the original deal, will come onboard.
Negotiations on rewriting the three-country NAFTA agreement began about a year ago.
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Trump has frequently condemned the 24-year-old NAFTA trade pact as a job-killing "disaster" for American workers.
Al Jazeera's John Holman, reporting from Mexico City, said outgoing President Nieto "probably had to make sacrifices" to protect a trade agreement with the United States, with a possible effect being the flight of vehicle manufacturing companies from the country. The U.S. wanted to bring back auto manufacturing jobs that had gone to Mexico. Trump, like labour unions in the USA and Canada, has expressed concern about the NAFTA-era migration of auto jobs to lower-wage Mexico.
There are still questions about how these would work with tariffs on auto imports enacted by the Trump administration. The new preliminary agreement would increase that requirement.
The president said that he will be calling Canadian Prime Minister Justin Trudeau. They then would either agree to a new 16-year deal or the pact would expire.
That would be essential, as the sunset clause was a major sticking point - erupting, for instance, at the Group of Seven summit. He also floated the idea of entering a bilateral trade deal with Canada, provide Canada was "fair" to the United States.
Republican lawmaker Kevin Brady, chairman of the tax and trade-focused Ways and Means Committee, called on Canada to return to talks quickly "with the aim of concluding a modern, seamless three-way agreement".
A spokesman for Canadian Foreign Minister Chrystia Freeland issued a statement on Monday that warned against jumping to conclusions.