"I think she made one very catastrophic mistake and that was taking all of these illegals, you know, taking all of the people from wherever they come from," Trump said, adding he had "great respect" for the chancellor.
Some 890,000 migrants, many of them fleeing war in Syria, entered Germany in 2015 after Merkel opened her country's doors in response to massive pressure on countries along the so-called "Balkan route" into western Europe.
One MP deserted Merkel's centre-right Christian Democratic Union this weekend over her refugee policy, as the Chancellor tees up a re-election bid later this year.
While he allowed that Merkel was a "fantastic leader," the Republican said that Germany had "got a clear impression" of the consequences of her policy from a deadly December 19 terrorist attack in Berlin in which a hijacked truck was used to mow down Christmas market patrons, killing 12.
Trump also argued that the mass arrivals in 2015 were "the last drop that made the barrel overflow" in convincing British voters to back leaving the European Union in a June 24 referendum.
Pro-Leave campaigners warned in the wake of the crisis that refugees would flood into the UK, producing a poster showing a crowd of Middle Eastern men under the words "Breaking Point".
"Other countries will leave" the European Union in future, Trump prophesied.
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