Trump announced the agreement in a hastily arranged Oval Office event Monday with outgoing Mexican President Enrique Pena Nieto joining by conference call.
When asked by reporters if a deal had been reached, Mexican Economy Minister Ildefonso Guajardo said an announcement was "probably on the agenda", but that he still had to conclude a "very important" issue.
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U.S. Trade Representative Robert Lighthizer said that if finalized and approved by Congress, the new trade agreement with Mexico would take effect in November, after a 90 day waiting period.
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But Trump hinted that all might not be smooth sailing from here, suggesting he could cut Ottawa out of the deal reached with Mexico and adding that he wanted to change the agreement's name.
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The U.S. push to finish NAFTA talks comes at the same time it's in a spiralling trade war with China, and has threatened to place tariffs on cars imported from major manufacturing centres in Asia and Europe - efforts that have created new uncertainty for many businesses and investors. They will also be required to use more local steel, aluminum and auto parts, and have a certain proportion of the vehicle made by workers earning at least $16 an hour, a boon to both the United States and Canada.
Trump has repeatedly indicated he would prefer to reach bilateral agreements with Canada and Mexico, but the two countries have maintained a united front that a trilateral agreement is the only one they will sign. "We will only sign a new NAFTA that is good for Canada and good for the middle class". A draft fact sheet specified the content would be made in the United States and Mexico.
Over the weekend, USA and Mexican negotiators worked to narrow their differences, capping talks that had begun a year ago and have proved highly contentious. He said the US, which wants Canada to loosen its protection of the supply-managed dairy industry, has not had "market access conversations with Canada of any substance". Many manufacturers have built complex but vital supply chains that cross all three NAFTA borders.
"We'll see if Canada can be part of a deal", he said.
Trump says that on Friday, the Mexican deal will go to the lawmakers. They then would either agree to a new 16-year deal or the pact would expire.
But pressed as to whether Mexico is willing to enter a bilateral deal with the United States, a senior White House official on the same call dodged.
Talks will resume at 9am (1300 GMT) Monday, Guajardo said.