USA and Mexico reach NAFTA overhaul deal, upping pressure on Canada

Wall Street traders send Nasdaq to record high following new trade agreement between US and Mexico

How the latest US - Mexico trade deal looks to overhaul NAFTA: 5 things to know

President Donald Trump said Monday the US and Mexico had reached a bilateral trade "understanding" that could lead to an overhaul - or maybe the demise - of the three-country North American Free Trade Agreement.

Freeland cancelled her trip to Europe this week to return to the NAFTA bargaining table after the US and Mexico agreed on numerous trade issues throughout their bilateral, summertime talks.

U.S. President Donald Trump announced the deal with Mexico on Monday and has pressured Ottawa to join the new agreement by Friday - otherwise he says he will impose devastating tariffs on Canada's auto sector.

Michigan State University professor of economics Charles Ballard says a trade deal with Canada is essential to Michigan.

"Some positions have moved since the last time we met face to face and we'll be looking closely at what those changes are and what they mean for Canada", said Freeland, who credited Mexico for making "tough decisions" to compromise on labour as part of its auto rules of origin talks with the U.S.

"The fact that agreement on those hard issues for Mexico was able to be reached definitely clears the way for us to have significant, substantive, and I hope productive, conversations with the U.S. this week", Freeland said after a brief meeting with U.S. Trade Representative Robert Lighthizer.

Canadian Foreign Minister Chrystia Freeland on Wednesday expressed optimism about ongoing trade talks with the White House, part of fast-moving negotiations in President Trump's push to rework the North American Trade Agreement. Herman questioned how that approach could possibly be seen as falling within Trump's authority to modernize NAFTA. Mexican President Enrique Pena Nieto is keen to sign the agreement before leaving office at the end of November.

He said the Fed will continue to raise interest rates, but noted that the USA central bank sees no clear sign of inflation accelerating above 2 percent.

"We could have a separate deal (with Canada) or we could put it into this deal", Trump told reporters in the Oval Office.

Lighthizer wants to send a letter to Congress by Friday that would formally begin a 90-day process for reworking the trade deal.

But first, he said, he would give Canada a chance to get back in - "if they'd like to negotiate fairly". USA demands have ranged from ending those tariffs to scrapping a pricing system for milk ingredients that hurt US exports of milk proteins.

"That is something that we have made very, very clear to the Americans even though it has been very obvious that the Americans want us to get rid of supply management", Trudeau told reporters at an event in northern Ontario.

Canadian officials were largely boxed out of discussions in recent weeks because of Trump's ongoing feud with Canada's prime minister, Justin Trudeau.

Canada's protected supply-managed dairy industry emerged as a major 11th-hour irritant as the Trudeau government returned Tuesday to what could be the final, pivotal round of talks to salvage the North American Free Trade Agreement.

In 2016, Canada created the Class 7 pricing agreement that has essentially restricted USA exports of ultra-filtered milk used to make dairy products.

Will she be presiding over the death of the 24-year-old continental trade pact?

Experts say Trump has not specifically set his sights on dismantling supply management, and is more angered with a new classification of milk products that Canada introduced two years ago that he says has undercut US exports and hurt his country's farmers. On Monday, he suggested that the parties might be close to a new framework after more than a year of negotiations.

The Trudeau government has repeatedly pledged to protect dairy farmers, but Canada has opened up limited access to its dairy market in previous trade talks, including its comprehensive pact with the European Union. Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.

Latest News