Despite his pledge to reform the North American Free Trade Agreement (NAFTA), President Trump’s trade policies have failed to put North American workers first, according to a new report. A new report by the Economic Policy Institute.
Trump replaced NAFTA with the United States-Mexico-Canada Agreement (USMCA) in 2020. But the USMCA did not succeed in fixing the severe downward pressures on jobs and wages that have plagued U.S. manufacturing economies in the generation following NAFTA.
An EPI analysis shows that manufacturers across the country have cut or furloughed more than 576,000 jobs since the agreement was signed. The US trade deficit with Mexico and Canada doubled from $125 billion in 2020 to $263 billion in 2025.
In an important auto industry that Trump has said he wants to restore, imports of vehicles and parts from Mexico nearly doubled after the USA-Mexico-Canada Agreement, rising from $196 billion in 2019 to $274 billion in 2024. Over the same time period, light vehicle imports from Mexico rose 36% while medium and heavy vehicle imports increased a whopping 256%.
Despite new labor reforms in the United States-Mexico-Canada Agreement—some of which are worth preserving and expanding—the overall wage gap in the manufacturing sector continues to drive companies’ decisions to exploit Mexico’s low-wage, low-standards work environment. Manufacturing wages in Mexico are just $2.76 per hour, just 10% of U.S. manufacturing wages. This has created a race to the bottom in labor and pollution standards to produce competitive duty-free goods in North American markets.
The US-Mexico-Canada Agreement also left a large loophole for Chinese manufacturers to exploit duty-free access to North American markets without reciprocal market access for US manufacturers. Chinese companies expanded their direct investment footprint in Mexico by up to 288% until 2023.
The US-Mexico-Canada Agreement now faces final review, requiring the three countries to agree by July 1, 2026, to extend the agreement for another 16 years. Trump and his negotiators should use this opportunity to establish a model that protects workers while preserving the mutual benefits of trade. This requires stronger regional and labor rules, closing loopholes to unfairly traded foreign content, and expanding cooperation to enforce strong rules in all three countries.
“Trump exploited dissatisfaction with the North American Free Trade Agreement (NAFTA) and its destruction of US manufacturing. But the USMCA created more problems than it fixed. Today, the pressure on manufacturing jobs and the deteriorating trade balance with Mexico are worse than they were before the USMCA,” said Adam S. Hirsch, chief economist at EPI, who wrote the report. “The USMCA requires significant reform and renegotiation to make the North American economy truly put workers first.”
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