The United States-Mexico-Canada Agreement (USMCA) will come into effect on July 1, replacing the 26-year-old North American Free Trade Agreement (NAFTA), the US Trade office said in a statement.
"The USMCA's entry into force marks the beginning of a historic new chapter for North American trade by supporting more balanced, reciprocal trade, leading to freer markets, fairer trade, and robust economic growth in North America," the statement said.
US President Donald Trump had criticized NAFTA for being unfair towards US business, an assessment in which he was backed by multiple labor unions and economic populists. Even though overall economic output was receiving a boost with new employment opportunities, many believed that some well-paying jobs in the US were being lost.
The new deal has stricter labor laws that could move jobs from Mexico to the US or Canada. It also brings about changes to auto manufacturing, e-commerce, protection of intellectual property and more.
According to the US, it would "deliver more jobs, provide stronger labor protections and expand market access, creating new opportunities for American workers, farmers and ranchers."
The USMCA was signed in November 2018, after Trump threatened to scrap NAFTA without a new deal in place. After some amendments, Mexico ratified the deal in December 2019, following which Trump signed it into law.
The Canadian parliament was the last to adopt it in March this year.