Trump’s Trade Deal Faces Criticism for Increasing Trade Deficit

A recent analysis from the Economic Policy Institute (EPI) has raised significant concerns about the effectiveness of the United States-Mexico-Canada Agreement (USMCA), a cornerstone of former President Donald Trump‘s trade policy. The report, published on March 15, 2024, asserts that the trade deal has “created more problems than it fixed,” particularly regarding the trade deficit with Canada and Mexico.

The analysis reveals that the trade deficit has escalated dramatically since the USMCA was enacted in 2020, increasing from a combined $125 billion to $263 billion by 2025. This rise is especially pronounced in the automotive sector, where imports of motor vehicles and parts from Mexico nearly doubled, reaching $274 billion in 2024, a sharp increase from $196 billion in 2019. EPI senior economist Adam S. Hersh highlighted that light-duty vehicle imports surged by 36%, while medium- and heavy-duty vehicle imports skyrocketed by 256% during this period.

In addition to the burgeoning trade deficit, the report identifies significant loopholes that have allowed Chinese manufacturers to access North American markets without reciprocal arrangements for U.S. producers. This has resulted in a staggering 288% expansion of Chinese investment in Mexico through 2023. The analysis concludes that the USMCA has exacerbated pressure on U.S. manufacturing jobs and worsened the trade balance with Mexico.

With the USMCA set for review in 2025, the report offers recommendations aimed at addressing these issues. Suggestions include closing loopholes that enable Chinese firms to exploit the agreement, enhancing the Rapid Response Labor Mechanism to improve wages and working conditions, and revising intellectual property rights provisions that currently hinder local regulations addressing negative impacts from digital services.

The findings from the EPI report align with a separate analysis released by the American Economic Liberties Project, which noted that the U.S. trade deficit has increased more significantly in the first nine months of 2025 compared to the same period in 2024. The group also revealed a loss of 49,000 manufacturing jobs since Trump began his second term, further undermining his promises to bolster domestic manufacturing.

Lori Wallach, the director of the Rethink Trade program at the American Economic Liberties Project, emphasized that the data contradict Trump’s assertions regarding the trade deficit and job creation in the manufacturing sector. She criticized the trade agreements for prioritizing the interests of large corporations over the needs of American workers, suggesting they fail to tackle the root causes of the trade deficit.

As discussions regarding the future of the USMCA unfold, the opportunity exists for the U.S., Canada, and Mexico to reassess trade policies to better serve their economies and workforces. Addressing the critical issues highlighted in these reports may be essential for shaping a more equitable and effective trade environment in North America.