Trump says he will end NAFTA after reaching new trade deal with Mexico

President Donald Trump said he would terminate the North American Free Trade Agreement and sign a new trade accord with Mexico, potentially leaving Canada out of the bloc.

Trump announced the agreement with Mexico in a hastily arranged Oval Office event Monday with Mexican President Enrique Pena Nieto joining by conference call. Pena Nieto said he is “quite hopeful” Canada would soon be incorporated in the revised agreement, while Trump said that remains to be seen.

Trump said he would speak with Canadian Prime Minister Justin Trudeau “in a little while” and hoped to begin negotiations with him “almost immediately.”

As he announced the move, Trump said he would drop the name Nafta from the accord because of its unpopularity.

“We’re going to call it the United States/Mexico Trade Agreement,” he said. Nafta “has a bad connotation because the United States was hurt very badly by Nafta for many years.”  The President hailed the Mexico agreement as “a big day for trade.”

There is no deal reached yet with Canada, people familiar with the agreement said. The northern neighbour has been on the sidelines of the talks since July as Mexico and the US focused on settling differences.

A spokesman for Canadian Foreign Minister Chrystia Freeland issued a statement on Monday that warned against jumping to conclusions. “Canada’s signature is required,” spokesman Adam Austen said in an email. “We will only sign a new Nafta that is good for Canada and good for the middle class” and “we will continue to work toward a modernised Nafta.”

Nieto said in a tweet on Monday that he spoke with Trudeau and stressed the importance of Canada rejoining Nafta talks.

US stocks, peso rally

US stocks added to all-time highs, and Mexico’s peso rallied versus the dollar as the Trump administration closed the bilateral trade deal. Treasuries fell.

The S&P 500 Index closed in on 2,900 as Trump unveiled details of the agreement. Shares of carmakers and parts producers in the equity benchmark surged more than 3 per cent.