Mr Trump's apparent change of heart came hours after White House officials said he was preparing to sign an executive order pulling the U.S. out of the North American Free Trade Agreement (Nafta).
Early in his presidency, Mr Trump fulfilled a campaign pledge by signing an executive order to withdraw from the Trans-Pacific Partnership (TPP). Trump spoke to Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto over a phone call and arrived at the decision.
"The leaders agreed on the convenience of maintaining the North American Free Trade Agreement and working together with Canada to carry out a successful renegotiation for the benefit of all three countries", the statement read.
The reports say the order could come as early as this week, but may be no more than a threat used so the US can renegotiate a better deal.
Trump's top advisers had been embroiled in a debate over how aggressively to proceed on reshaping US participation in Nafta, with hard-liners favoring a threatened withdrawal as soon as this week and others advocating for a more measured approach to reopening negotiations with Canada and Mexico.
"Scrapping Nafta would be a disastrously bad idea", Republican Senator Ben Sasse of Nebraska, who was a Mr Trump critic during the campaign, said Wednesday in a statement.
"It is my privilege to bring NAFTA up to date through renegotiation".
The development came after POLITICO reported that White House aides were drafting an executive order on withdrawing from the pact, prompting an uproar from Republicans in Congress anxious about disrupting business ties that now support 14 million American jobs.
The administration appeared to be divided Wednesday over how and when to proceed, as officials balanced a newfound cautiousness with the desire to rack up accomplishments before Trump's 100th day on the job.
Trump decides to keep Nafta for now
During his election campaign Mr Trump called Nafta the " single worst trade deal ever " and a " killer " of USA jobs. Trump said he believes "the end result will make all three countries stronger and better".
Trump could withdraw from NAFTA - but he would have to give six months' notice. And it is unclear what would happen next. The law Congress passed to enact the trade pact might remain in place, forcing Trump to wrangle with lawmakers and raising questions about the president's authority to raise tariffs on Mexican and Canadian imports. But this week he fuelled trade tensions by imposing new duties on softwood lumber imports from Canada and vowing to defend United States dairy farmers against quotas imposed in Canada. Trump has also been railing against changes in Canadian milk product pricing that he says are hurting the American dairy industry.
"I am very upset with NAFTA".
U.S. trade with its Nafta partners has more than tripled since the agreement took effect, rising to US$1.1 trillion past year.
"Even if he notifies Mexico and the U.S. of his intentions, that doesn't mean he has to leave", said Beatriz Leycegui, who was Mexico's deputy minister on foreign trade between 2006 and 2011.
Another senior White House official declined to comment on "rumors" of specific actions.
Some Republican lawmakers warned the administration that scrapping the 1994 agreement would be a "disaster", triggering backlash from the USA business community and recriminations from Ottawa and Mexico City.
The letter spelled out few details and stuck with broad principles.
Texans in Congress had reacted with concern on Wednesday after reports surfaced that Trump was considering taking the first steps of possibly unwinding the agreement. Trump has repeatedly derided NAFTA as a "disaster" and claimed the deal resulted in millions of lost USA industrial jobs, mostly to Mexico.
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