U.S., Mexico, and Canada took a step on Friday toward easing commercial tensions in the region, as leaders of the three countries signed a new pact overhauling and updating their quarter-century-old free-trade zone.

The morning ceremony at the Park Hyatt hotel in Buenos Aires celebrating the recast North American Free Trade Agreement occurred on the sidelines of a Group of 20 summit of advanced and developing economies. It came after last-minute negotiations by the U.S. and Canada to end U.S. tariffs on steel and aluminum...