The deal, known as the United States-Mexico-Canada Agreement – or USMCA – is said to grant the US greater access to Canada’s dairy market and will include a cap on car exports to the US, according to media outlets.

The joint US-Canada statement did not give any details of the agreement. 

It said: “USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region.

“It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.”

Nafta, which US president Donald Trump has wanted to change for a while, governs more than $1 trillion in trade.

The deal comes amid a global trade war that has developed after the US placed tariffs on steel and aluminium imports, including from Mexico and Canada.

Reuters reported that US farmers will have access to about 3.5% of Canada’s dairy market, under the new deal.

But it also reported that US tariffs on steel and aluminium would remain for now.

The deal was welcomed by Angel Gurría, secretary general of the OECD, who praised the political leadership and negotiating efforts of the US, Canada and Mexico.

He said: “Today’s announcement supports strong growth and good jobs in all three countries; it will boost the confidence of firms and investors by preserving stable and predictable rules-based trade in North America. It will make the region more productive and more competitive internationally.”

Earlier this year the International Monetary Fund warned that the rising trade tensions between the US and the rest of the world could cost the global economy billions of dollars.