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The US and Mexico have agreed to revamp Nafta, the North American Free Trade Agreement, in what Donald Trump called a "really good deal" for both countries.
The US President, who has frequently criticised the existing deal, made the announcement on Monday.
Canada - the other member of Nafta - is yet to agree to the new terms and will hold more discussions on Tuesday.
Mr Trump had threatened to pull out of the deal, triggering a year of talks, reports BBC.
He demanded a renegotiation of the 1994 trade agreement, which he blames for a decline in US manufacturing jobs, especially in the car industry.
US shares rose and the Mexican peso strengthened on news of the preliminary deal on Monday.
Mr Trump said the US and Mexico had agreed on terms that would make for a deal that was "much more fair".
Negotiators have been rewriting the Nafta treaty over the past year, but in the past five weeks, Canada has not been part of the discussions.
"We will see whether or not we decide to put up Canada or just do a separate deal with Canada," Mr Trump said.
He also threatened Canada with tariffs on cars and said he wanted to get rid of the name Nafta, which he said has "bad connotations".