The new deal, reached just before a midnight deadline imposed by the USA, will be called the United States-Mexico-Canada Agreement, or USMCA.
Other compromises were reached on protecting Canada from possible auto tariffs, and raising the value of goods Canadians can order online from outside the country without paying duty, the source said. They suspected that Canada, which had said it wasn't bound by US deadlines, was delaying the talks until after provincial elections Monday in Quebec, where support for Canadian dairy tariffs runs high.
Canada will open its dairy market further to USA producers, and Washington left unchanged the dispute settlement provisions which Ottawa demanded.
The importance of a new U.S. -Mexico-Canada trade deal can not be underestimated: trade between the three partners affects jobs and profits in all three countries and all three wanted to get a deal done before the change of government in Mexico in two months, CBS News' Pamela Falk reports.
Federal cabinet ministers were summoned to a late Sunday meeting at the prime minister's office near Parliament Hill, and the White House called its own late-night trade briefing.
Reaching a deal would remove a key irritant in the trading relationship between the US and Canada, its top export market.
Mr. Trudeau has had occasional contact with bank CEOs throughout the long-running negotiations between Canada, the US and Mexico to revamp the North American free-trade agreement.
"It's a great deal and that's why Mexico has already entered into that deal with us", he told Fox News in another interview on September 29.
Under the deal signed with Mexico in August, 75 percent of auto content will be made in the United States or Mexico, up from the original threshold of 62.5 percent.
Lawmakers from the three countries still need to approve the pact. "So if you comply with the rules of origin, there's no way you are subject to 232 tariffs", he said.
In exchange, U.S. negotiators have agreed to retain Chapter 19, the dispute resolution mechanism of NAFTA, and exemptions for Canadian creative industries.
"It's a good day for Canada", Trudeau told reporters leaving his office Sunday night.
But it came at a cost, with Canada agreeing to provide United States dairy farmers with access to about 3.5% of its $16bn annual domestic dairy market, according to Canadian sources - and Canadian farmers hurt by the deal set to receive compensation.
Representatives for the government of Mexican president-elect Andres Manuel Lopez Obrador have called a press conference to discuss details of the trade deal on Monday.
Under the current system, US imports exceeding quota levels are subject to excessively high tariffs, such as 245 percent for cheese and 298 percent for butter.
The North American Free Trade Agreement (NAFTA) has hurt Mexicans, Americans, Canadians, Quebecers, and Indigenous peoples. Canada also agreed to open up some of its dairy market to U.S. producers. "We're going to call it the US-Mexico Trade Agreement".
USA negotiators reached a bilateral deal with Mexico late last month.
The formal NAFTA text is due before Monday in order to meet U.S. congressional notification requirements and allow U.S. President Donald Trump and outgoing Mexican President Enrique Peña Nieto to sign the pact by November 30, Nieto's final day in office. Talks to revamp NAFTA began in August previous year.