The North American trade agreement has been renamed the United States-Mexico-Canada Agreement (USMCA).
It replaces the 1994 North American Free Trade Agreement (NAFTA), which had been called "perhaps the worst trade deal ever made" by US President Donald Trump.
The deal aims to brings more jobs into the United States, with Canada and Mexico accepting more restrictive commerce with the United States, their main export customer.
Trump is claiming a win over an eleventh-hour trade deal with Canada which he has labelled the "most important trade deal we’ve made".
“The United States is respected again but it’s also respected as to trade and industry,” President Trump told reporters in Washington.
President Donald Trump gestures as he announces a revamped North American free trade deal. Source: AAP
“This is a truly extraordinary agreement for the US, Canada and Mexico.”
It follows months of friction over the deal between President Trump and Canadian Prime Minister Justin Trudeau.
The president has admitted there was ‘a lot of tension’ but said it didn’t affect negotiations.
“I don’t think it did. He’s a professional, I’m a professional. We had very strong tensions.”
The new deal avoids the collapse of the North American Free Trade Agreement or NAFTA.
Canadian Prime Minister Justin Trudeau said his country was in a more stable place now that it had completed the negotiations. He said the deal needed to be fair since one trading partner was 10 times larger.
He said Canada did not simply accept "any deal."
"We got the right deal. We got a win-win-win for all three countries," Trudeau said.
Likewise, outgoing Mexican President Enrique Pena Nieto said via Twitter that the deal negotiated over the past 13 months "achieves what we proposed at the beginning: a win-win-win agreement."
President Trump has long threatened to pull the United States from NAFTA.
The President said he plans to sign the deal by the end of November. It will then need to be ratified by congress.
The main goal of the agreement for the United States is to have more car and truck parts made in North America.
To qualify for zero tariffs a car or truck must have 75 per cent of its components manufactured in Canada, Mexico or the United States, which is a boost from the current requirement of 62.5 per cent.
“Once approved, this will be a new dawn for the American auto industry and for the American auto worker,” President Trump said.
“We will be manufacturing many more cars and our companies won’t be leaving the United States, firing their workers and building their cars elsewhere.”
Farmers in the United States would also gain greater access to Canada’s dairy market through the deal.
“This is a very very big deal for our farmers. Mexico and Canada will be opened up a lot more than they are now.”
The US President said it is a privilege for other countries to do business with the United States and to “come in and attack the piggy bank”.
