False Claims About Trade Deals: NAFTA as 'the Worst Deal Ever,' USMCA Similarities, Tariff Misrepresentations, and the Growing Trade Deficit with China
Tier 3Ongoing2015-06-16 to 2026-04-09
Factual Summary
Throughout his political career, Donald Trump has made a series of demonstrably false or misleading claims about trade policy, including characterizations of NAFTA, the nature of his replacement trade deal, who pays tariffs, and the trajectory of the U.S. trade deficit with China. These claims are contradicted by economic data, independent analyses, and research by the Federal Reserve and academic economists.
Trump repeatedly called the North American Free Trade Agreement (NAFTA) "the worst trade deal ever made" and "the worst trade deal maybe ever signed anywhere." He made this claim a centerpiece of his 2016 presidential campaign and continued to repeat it throughout his first term. While NAFTA was a subject of legitimate economic debate, with credible arguments on multiple sides regarding its effects on manufacturing employment, the characterization of it as the worst trade deal in history was not supported by economic consensus. NAFTA facilitated a tripling of trade among the United States, Canada, and Mexico and contributed to lower consumer prices and integrated supply chains.
In 2020, Trump signed the United States-Mexico-Canada Agreement (USMCA), which he described as "the biggest trade deal in the history of our country" and a "brand new" agreement that replaced NAFTA. Economic analysts across the political spectrum noted that the USMCA preserved the core structure of NAFTA while making targeted modifications. The Congressional Budget Office estimated the USMCA would have a modest positive effect on GDP, increasing it by 0.35 percent, and would raise employment by 176,000 jobs over six years. The nonpartisan Economic Policy Institute found that the trade deficit with Mexico and Canada widened after the USMCA took effect, reaching approximately $263 billion by 2025, up from $125 billion in 2020. CNN, the Council on Foreign Relations, and other outlets described the USMCA as "NAFTA 2.0" because of the extensive similarities between the two agreements.
Trump repeatedly claimed that China was "paying" the tariffs he imposed, stating "China is paying us billions and billions of dollars in tariffs" and similar formulations. This claim is false as a matter of basic economics. Tariffs are taxes paid by the importing company, which then passes the costs to consumers and businesses. A February 2026 analysis by the Federal Reserve Bank of New York found that American consumers and businesses paid approximately 90 percent of the tariffs imposed during 2025, including 94 percent of levies from January through August. A January 2026 paper by the Kiel Institute analyzing more than 25 million U.S. shipments calculated that American firms and consumers absorbed 96 percent of tariff costs. Earlier research during Trump's first term reached similar conclusions: a 2019 study by economists at the Federal Reserve Bank of New York, Princeton University, and Columbia University found that the tariffs on China resulted in a "complete pass-through" to U.S. import prices, meaning American importers bore the full cost.
The U.S. trade deficit in goods with China increased during Trump's first term, rising from $375 billion in 2017 to $419 billion in 2018, contradicting Trump's claims that his tariff policies would reduce the deficit. While the deficit narrowed somewhat in 2019 and 2020 (partly due to COVID-related disruptions), the overall goods trade deficit with all countries reached record levels under Trump's first term.
Primary Sources
1. Congressional Budget Office: "Economic Effects of the USMCA," April 2019
2. Federal Reserve Bank of New York, Liberty Street Economics: "Who Is Paying for the 2025 U.S. Tariffs?," February 2026
3. U.S. Census Bureau, trade in goods data, 2017 through 2020
4. Federal Reserve Bank of New York, Princeton, and Columbia: "The Impact of the 2018 Trade War on U.S. Prices and Welfare," 2019
5. Trump White House archives: "Remarks by President Trump on the United States-Mexico-Canada Agreement"
Corroborating Sources
1. CNN: "NAFTA is officially gone. Here's what has and hasn't changed," July 1, 2020
2. Council on Foreign Relations: "Trump and the Future of the USMCA," 2025
3. Economic Policy Institute: "Did Trump really fix NAFTA?: What USMCA failed to do and how to put workers first in North American trade"
4. CBS News: "Consumers and businesses paid nearly 90% of Trump tariffs in 2025, new analysis found," February 2026
5. Fortune: "90% of Trump's tariffs are paid for by American consumers and companies, New York Fed says," February 2026
6. Foreign Policy: "It's Official: Trump's Tariffs Have Failed," March 19, 2026
Counterarguments and Context
Trump and his supporters argue that tariffs are a necessary tool to protect American manufacturing, reduce trade deficits, and pressure trading partners into more favorable agreements. They contend that even if American consumers pay tariffs at the point of import, the tariffs shift production to the United States over time, creating domestic jobs and reducing dependence on foreign supply chains. Some economists, including Peter Navarro, Trump's trade adviser, have argued that the tariff burden is shared between exporting and importing countries and that the long-term benefits outweigh short-term costs. Regarding USMCA, the administration pointed to provisions on digital trade, labor standards, dairy market access, and rules of origin for automobiles as meaningful improvements over NAFTA. Regarding the trade deficit with China, some defenders argue that bilateral trade deficits are not the best measure of trade policy success and that the tariffs served a broader strategic purpose of confronting Chinese intellectual property theft and unfair trade practices. However, the specific claims Trump made are contradicted by the evidence: the USMCA preserved the fundamental structure of NAFTA, tariffs are paid by American importers and consumers (as documented by the Federal Reserve), and the goods trade deficit with China grew during his first term rather than shrinking as he promised.
Author's Note
This entry is classified as Tier 3 because the false claims are documented through Trump's own public statements and are contradicted by official government data, including Census Bureau trade statistics, Congressional Budget Office analyses, and Federal Reserve research. The entry focuses on demonstrably false factual claims rather than on the merits of trade policy itself, which involves legitimate differences of opinion among economists.