Donald Trump has announced a trade "understanding" with Mexico which could lead to an overhaul of the 24-year agreement between the two countries and Canada.
Calling the deal "very good" for US farmers and manufacturers, Mr Trump said Mexico has agreed to purchase "as much farm product as possible" immediately.
The deal could replace the 24-year North American Free Trade Agreement (NAFTA), which also includes Canada. Further details are expected to be released later today.
Mr Trump has not yet begun negotiating with Canada, but has called on Prime Minister Justin Trudeau to lead negotiations "fairly".
He announced the progress from the Oval Office, with Mexican president Pena Nieto joining in on speakerphone.
"It's an incredible deal for both parties," Mr Trump said.
The US presidents said he intended to terminate NAFTA while he pursues trade deals with Mexico and starts negotiations with Canada.
Speaking about Canada, Mr Trump threatened to slap tariffs on Canadian cars if he does not get what he wants.
He said: "If they'd like to negotiate fairly, we'll do that.
"We could have a separate deal, or we could put it into this deal."
Mexican president Pena Nieto tweeted: "I spoke with Canadian Prime Minister Justin Trudeau on the state of the NAFTA negotiations and the progress made between Mexico and the United States.
"I told him it was important that (Canada) rejoin the process, with the goal of concluding trilateral negotiations this week.
"I talked to the President @realDonaldTrump. Mexico and the United States have reached a commercial understanding. We want Canada's re-incorporation into talks to achieve a successful trilateral negotiation of NAFTA this week."
A spokesman for the Canadian foreign minister said they had been in touch with NAFTA negotiators, and added: "We will only sign a new NAFTA that is good for Canada and good for the middle class."
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Mr Trump has been critical of NAFTA, signed in 1994, which he blamed for sending US manufacturing jobs to Mexico. He previously called it a "terrible deal".
He said it would be replaced in part by the newly named United States-Mexico Trade Agreement.
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