Trump announced the new agreement on Monday from the White House with President Enrique Pena Nieto in Mexico on a conference call.
However, the deal raised questions as to if Canada, also a member of NAFTA, would be in agreement with the new changes and Trump said he would like to throw out the NAFTA name. Trump said it used to be called NAFTA, but we will call it the United State-Mexico trade deal.
U.S. Trade Rep Robert Lighthizer called the agreement absolutely terrific and added that it would modernize a deal that was seriously out of whack. He concluded by saying it hoped the U.S. Congress would pass it with bipartisan support.
Changes the two countries agree to for auto manufacturing were that 75% of parts in any vehicle sold in North America must be produced in the U.S. or Mexico. The current mark is 62% must be produced in either in the U.S., Canada or Mexico.
Changes to higher labor standards require that 40% to 45% of all auto parts in cars must be made by workers that earn a minimum of $16 per hour.
The Sunset clause says the agreement will be for 16 years and reviewed one every six years.
A large portion of the business community has been concerned about the trade polices of Trump and when the new deal was announced, the stock market increased. The Dow closed higher Monday by nearly 260 points.
The agreement reached by the U.S. and Mexico could restart the negotiations between all three countries for NAFTA.
Despite the signal by Trump the deal could bring about a bilateral trade deal between the U.S. and Mexico, Pena Nieto expressed that he wanted Canada to be a part of the deal.
Both Mexico and Canada have been firm on how important it is to maintain the trilateral deal even as Trump has shown a desire to make individual deals with the two countries.
Canada is expected to send it negotiator on Tuesday to Washington to continue with negotiations. The negotiations to rewrite the trilateral agreement began almost one year ago.