New NAFTA deal reached, according to multiple sources

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The United States and Canada reached a deal on Sunday to salvage NAFTA as a trilateral pact with Mexico, beating a midnight deadline with agreements to substantially boost American access to Canada's dairy market and protect Canada from possible USA auto tariffs, sources with direct knowledge of the talks said.

The question of how to deal with the hefty tariffs that Trump imposed on Canadian steel and aluminum earlier this year is still being discussed, the Canadian official said.

U.S. -Canada talks bogged down earlier this month, and most trade analysts expected the September 30 deadline to come and go without Canada being reinstated. "We still have a couple of tough issues, so we're doing our best".

By 7:30 p.m. Sunday, the outline of a deal had been reached, leaving both countries' chief negotiators to brief their respective leaders and get approval from Trump and Prime Minister Justin Trudeau, the source said.

"They used to call it NAFTA", said Trump after a deal had been reached with Mexico. He blames the treaty for the loss of American manufacturing jobs and has repeatedly threatened to abandon the trade past signed in 1994, during the Clinton administration.

Meantime, congratulations were being offered among key stakeholders who have been on the edge of their seats waiting to see if Canada and the United States would find common ground.

WASHINGTON-The U.S. and Canada were preparing to announce a trade deal late Sunday to include Canada in a rewrite of the North American Free Trade Agreement, according to a U.S. official.

The Canadian dollar surged to its highest since May against the us dollar, gaining around 0.5 percent. "We're working towards a deal that is good for Canada", he told Global TV's "The West Block".

However, Canada has continued to impose high tariffs on dairy products as the country's politically powerful dairy farmers have resisted changes to the high tariffs that protect them from foreign competition.

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"Today, Canada and the United States reached an agreement, alongside Mexico, on a new, modernized trade agreement for the 21st Century: the United States-Mexico-Canada Agreement (USMCA)", the US and Canada said in a joint statement.

Mexico agreed to remove NAFTA's Chapter 19, a dispute resolution mechanism for anti-dumping matters, which put Canada in a hard position.

Following the Cabinet meeting, Trudeau said it was "a good day for Canada", while Jesus Seade, the trade negotiator for Mexico's incoming president, tweeted that the deal meant "the door closes on trade fragmentation in the region".

Canadian Prime Minister Justin Trudeau said it makes no sense to sign onto a new NAFTA only to be hit by new tariffs and is seeking safeguards.

Another Canadian channel, CBC, said a "senior source" confirmed that a deal had been reached on significant sections of a new NAFTA. And only vehicles that failed to meet the rules of origin for auto parts agreed to by the US and Mexico would even potentially be subject to the proposed auto tariffs. "We're going to call it the US-Mexico Trade Agreement".

"Lots of progress but we're not there yet", MacNaughton told reporters in Ottawa, where the Canadian team is gathered. That can now take place before President Peña Nieto of Mexico leaves office on December 1.

The deal must clear a series of procedural hurdles to get to Congress for a vote, which is unlikely to come before 2019.

The two nations signed a side letter allowing Washington to pursue tariffs on annual Mexican auto and SUV imports of over 2.4 million vehicles, a number that significantly exceeds last year's total.