Analysis Reveals Trump’s Trade Deal Increased US Trade Deficit

A recent analysis from the Economic Policy Institute (EPI) indicates that the United States-Mexico-Canada Agreement (USMCA), a key trade initiative during Donald Trump‘s presidency, has resulted in more economic issues than it resolved. Released on a Thursday, the report highlights that the trade deal, signed into law in 2020, has failed to achieve its primary objective of reducing the US trade deficit with Canada and Mexico, which ballooned from $125 billion in 2020 to an estimated $263 billion by 2025.

The EPI report emphasizes the detrimental impact on the automotive sector, a critical industry that Trump aimed to revitalize. It reveals that imports of motor vehicles and parts from Mexico increased nearly twofold since the implementation of USMCA, soaring to $274 billion in 2024, compared to $196 billion in 2019. Specifically, imports of light-duty vehicles rose by 36%, while medium- and heavy-duty vehicle imports skyrocketed by 256%.

Furthermore, the analysis uncovers significant loopholes within the trade agreement that have allowed Chinese manufacturers to gain duty-free access to North American markets without offering reciprocal conditions for US firms. This has enabled Chinese companies to amplify their direct investments in Mexico by as much as 288% through 2023. The report concludes that the USMCA has exacerbated pressures on manufacturing jobs and worsened the trade balance with Mexico compared to the pre-USMCA era.

Yet, the report also presents a potential path forward. With the USMCA set for review next year, there exists an opportunity for the US, Canada, and Mexico to address these issues. Recommendations include closing the loopholes exploited by Chinese manufacturers, enhancing the Rapid Response Labor Mechanism to improve wages and working conditions, and revising intellectual property rights provisions that hinder local laws aimed at mitigating negative impacts from digital services.

Simultaneously, the American Economic Liberties Project‘s Rethink Trade program released an analysis on the same day, suggesting that Trump has not fulfilled his promises to lower the trade deficit or revive American manufacturing. The findings indicate that the US trade deficit grew more during the first nine months of 2025 than in the same period in 2024. Additionally, the country has experienced a loss of 49,000 manufacturing jobs since the start of Trump’s second term.

Lori Wallach, director of the Rethink Trade program, remarked that the data highlights a stark contrast to Trump’s claims regarding trade and manufacturing job creation. She criticized his trade agreements for prioritizing the interests of major corporations over the needs of American workers and businesses, stating, “The nine-month data show outcomes that are the opposite of President Trump’s promises to cut the trade deficit and create more American manufacturing jobs.”

As discussions continue regarding the future of USMCA, the findings from both the EPI and Rethink Trade reports underscore the challenges faced by the current administration in addressing trade deficits and revitalizing domestic manufacturing.