The U.S. and Mexico reached an agreement to revise the North American Free Trade Agreement, President Trump announced on Monday.
The Nasdaq Stock Market rose past 8,000 and the Dow Jones Industrial Average reached more than 26,000 as speculation about the deal circulated Monday morning.
Reuters reported officials said that the deal requires 75% of auto content to be manufactured in the U.S. and Mexico. Currently, the U.S. and Mexico handle nearly 63% of production. The deal also expects workers to be paid at least $16 an hour.
Trump said that NAFTA will be dropped as the name, and it will now be called the U.S./Mexico Trade Agreement. He said that the talks had ended in "a really good agreement" between the two countries.
"We're getting rid of the name NAFTA because it's got a bad connotation...it's hurt the U.S. pretty badly," Trump said during the press announcement.
"It is our wish, Mr. President, that Canada will now be able to be incorporated into this," President Enrique Nieto, president of Mexico, said on a phone call with President Trump.
President Nieto's comment came after Trump said that he wished to keep the deal between the U.S. and Mexico.
The announcement came after Trump tweeted:
A big deal looking good with Mexico!— Donald J. Trump (@realDonaldTrump) August 27, 2018
Canada had previously said that it was stepping away from the talks until the two countries could reach an agreement about the automotive industry. President Trump is unhappy about the amount of jobs in the auto industry in Mexico. The agreement between the two countries opens the door for Canada to rejoin the talks.
Any deal reached by Mexico and the U.S. still has to be signed off on by Canada. Reuters reported that Canada would rejoin the talks in an attempt to secure a finalized deal by Friday.
Trump has threatened auto tariffs on Canada if the country doesn't agree to the deal. He believes that the U.S. could make a two-way or three-way deal with Canada.
"I'd like to call this deal the U.S.-Mexico Trade Agreement...we will see whether or not we will put up with Canada or do a separate deal with Canada," Trump said.
He followed up by saying that he plans on calling Canadian Prime Minister Justin Trudeau "very soon."
"Markets have initially cheered progress between the US and Mexico on a new trade deal. Trade news has mostly been negative this year, so it makes sense that signs of cooperation would spur gains, though the deal has not yet arrived at the finish line and it remains unclear if or when Canada will be involved," said Craig Birk, CIO of Personal Capital. "Overall, markets continue to react to trade news, but the magnitude has grown smaller as investors realize President Trump's trade agenda will be a long and winding road. So, it is likely today's news will be largely forgotten by tomorrow."
The tentative deal will not be legalized until all countries can agree.
The talks have been going back and forth for almost a year.