Wilbur Ross, a billionaire investor and close friend of U.S. President Donald Trump, had originally been given the authority to reshape NAFTA and other trade deals to protect U.S. industries and jobs, but now has been ousted in favour of Robert Lighthouse.
Ross is U.S. Commerce Secretary; Lighthouse is the U.S. Trade Representative.
Lighthizer is a more experienced trade negotiator and more comfortable with Washington politics, has persuaded the White House to let him run the NAFTA file without having to answer to Mr. Ross.
Sources say the White House has told Canadian and Mexican officials to deal only with Mr. Lighthizer, a veteran trade lawyer and negotiator who worked in the Reagan administration.
Mr. Lighthizer has also made it clear to Foreign Affairs Minister Chrystia Freeland that he only answers to the President and Congress, sources say.
Prime Minister Justin Trudeau said this week he will not allow the U.S. to scrap the NAFTA provision for a disputes-settlement system, a point that former prime minister Brian Mulroney gained only because of last-minute insistence.