Mexican Foreign Minister Luis Videgaray and Economy Minister Ildefonso Guajardo leave a meeting with US trade officials in Washington. Photo: AFP/Alina Dieste

US President Donald Trump and his Mexican counterpart, Enrique Peña Nieto, announced on Monday a breakthrough in trade negotiations between the two countries.

Trump spoke on the deal in a televised broadcast from the Oval Office of a phone call with Peña Nieto, suggesting that the agreement represented a symbolic end to the North American Free Trade Agreement.

Citing the “bad” connotations of the term, Trump said: “We’ll get rid of the name NAFTA.”

US stocks rose on the announcement. The Mexican peso spiked on optimism for a deal earlier in the day, rising more than 1% versus the dollar.

The agreement, which has been variously described as “partial” and “preliminary,” is said to focus on changes that would affect the auto and energy industries.

Details aside, the development shows that the Trump administration is determined to resolve some of the trade fights it has picked, while barreling toward a dramatic escalation in a tariff battle with China.

The deal follows a vague “agreement” reached with the European Union that represents a delicate truce that may or may not preclude the Trump administration imposing tariffs on auto imports.

US trade officials will now shift their attention to fellow NAFTA member Canada, negotiators from which were sidelined from recent rounds of negotiations. Trump said on Monday that US officials were starting talks with Canada “immediately.”