Mexico and the European Union are announcing a revamped agreement that they said would boost trade and investment, amid Trump's tariff threats.

The EU and Mexico on Friday agreed a long-delayed trade deal as they seek to reduce reliance on the US ahead of Donald Trump’s return to the White House. The two sides will modernise their existing agreement just weeks after Trump threatened them with tariffs.

The migration of manufacturing to Mexico could undermine Trump’s promise to voters that ratcheting up tariffs on China would incentivize companies to bring production back to the U.S and give American companies a more even playing field.

China has strengthened trade with Latin America at the expense of the U.S. But Donald Trump, who threatens to raise tariffs on Mexico, could upend those ties.

The European Union and Mexico reignited a stalled upgrade to their free trade deal on Friday, just days before the return to office of U.S. President-elect Donald Trump, who has threatened both sides with tariffs.