Commerce Secretary Wilbur Ross said Chinese products brought into Mexico are ending up in the United States.
"Mexico's trade deficit with China is approximately equal to their trade surplus to us; it's not an accident," Ross told CNBC on Thursday.
And he acknowledged Chinese goods dumped in Mexico are finding their way into the U.S.
"The rules of origin in [the North American Free Trade Agreement] need some tightening," he added. "Rules of origin are what let material outside of NAFTA to come in and benefit from all the taxes and tariff reductions within NAFTA."
"It was a silly idea to let a lot of outside stuff in. The whole idea of a trade deal is to build a fence around participants inside and give them an advantage over the outside. So there's a conceptual flaw in that, one of many conceptual flaws in NAFTA."
His comments came as President Donald Trump said he agreed to pleas from Mexican and Canadian leaders not to withdraw immediately from NAFTA, The New York Times reported.
And he warned the U.S. could still put out if it did not get a better deal.
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