Commerce Secretary Wilbur Ross told CNBC on Thursday that Chinese goods dumped in Mexico are finding their way to the United States.
"Mexico's trade deficit with China is approximately equal to their trade surplus to us. It's not an accident," Ross said on "Squawk Box."
"The rules of origin in NAFTA 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," he continued. "So there's a conceptual flaw in that, one of many conceptual flaws in NAFTA."
Despite earlier indications, President Donald Trump, in separate Wednesday afternoon phone calls with Mexico and Canada, agreed not to terminate the North American Free Trade Agreement "at this time."
Ross told CNBC on Thursday that Canada and Mexico are ready to start renegotiating NAFTA. "If we could only get Congress to release the 90-day letter, we'll be going on our side as well," he added, referring to the 90 days notice that must be given before beginning formal talks on NAFTA.
Trump also tweeted about the trade deal on Thursday morning.
I received calls from the President of Mexico and the Prime Minister of Canada asking to renegotiate NAFTA rather than terminate. I agreed..
...subject to the fact that if we do not reach a fair deal for all, we will then terminate NAFTA. Relationships are good-deal very possible!
Ross, a billionaire who made his fortune investing in distressed assets, told CNBC two days ago that the White House was putting Canada on notice with a new import tariff on what it calls Canadian subsidies for lumber and a warning on Canadian trade practices the U.S. claims hurts American dairy farmers.