From last night's debate transcript:

Lester Holt: Let me follow up with Mr. Trump, if I can. You’ve talked about creating 25 million jobs, and you’ve promised to bring back millions of jobs for Americans. How are you going to bring back the industries that have left this country for cheaper labour overseas? How specifically are you going to tell American manufacturers that you have to come back?

Donald Trump: Well, for one thing, and before we start on that, my father gave me a very small loan in 1975, and I built it into a company that’s worth many, many billions of dollars with some of the greatest assets in the world, and I say that only because that’s the kind of thinking that our country needs. Our country’s in deep trouble. We don’t know what we’re doing when it comes to devaluations and all of these countries all over the world, especially China, they’re the best, the best ever at it. What they’re doing to us is a very, very sad thing, so we have to do that. We have to renegotiate our trade deals.

And Lester, they’re taking our jobs. They’re giving incentives. They’re doing things that, frankly, we don’t do.

Let me give you an example of Mexico. They have a VAT tax. We’re in a different system. When we sell into Mexico, there’s a tax. When they sell – an automatic 16 percent approximately. When they sell into us, there’s no tax. It’s a defective agreement. It’s been defective for a long time, many years, but the politicians haven’t done anything about it.

Now in all fairness to Secretary Clinton, yes, is that okay? Good. I want you to be very happy. It’s very important to me. But in all fairness to Secretary Clinton, when she started talking about this, it was really very recently. She’s been doing this for 30 years. And why hasn’t she made the agreements better? The NAFTA agreement is defective just because of the tax and many other reasons, but just because of the tax.

There are is a bunch of bad economics in here (as well as in the rest of the debate) but I'm going to focus on his example.

RI: Mexico does have a 16% VAT. However this tax is applied to all goods sold in Mexico. It doesn't matter if they are made in Mexico or in the US. Similarly all goods sold in the US are equally unaffected by this tax, regardless of where they are made.

Therefore this tax is not a form of protectionism as it provides no incentive to manufacture goods locally in Mexico. That is why this tax is allowed under NAFTA. If the US implemented a similar tax it would not help bring jobs back to the US, unlike what Trump claimed last night.