US doesn’t need Canadian energy or cars, says Trump
The United States does not need Canadian energy, vehicles or lumber, President Donald Trump said while speaking to global business leaders at the World Economic Forum.
Trump also reiterated his threat to impose tariffs on the United States, saying it could be avoided if the neighboring country chose to “become a state of the United States.”
“You could always become a state, and if you were a state we wouldn’t have a deficit. We wouldn’t have to impose tariffs on you,” he breathlessly said in the halls of Davos.
Trump has threatened to impose tariffs of up to 25% on Canadian imports before February 1.
The threat of new tariffs has deeply unnerved trade-reliant Canada.
But it also said it would consider significant countermeasures if the Trump administration acted, including a “dollar for dollar” response.
About 75% of Canada’s exports go south. In contrast, although Canada is the United States’ second-largest trading partner after Mexico, it accounts for a much smaller share of U.S. exports, at 17%.
In his speech on Thursday, Trump said Canada had been “difficult to deal with for many years.”
“We don’t need them to make our cars, we make a lot of them, we don’t need their wood because we have our own forests… We don’t need their oil and gas, we don’t need their oil and gas more than anyone else Have more,” he told forum attendees via video link from Washington, DC.
Trump reiterated that the U.S. trade deficit with Canada is between $200 billion and $250 billion. It’s unclear where he got that number.
The trade deficit with Canada is expected to reach $45 billion by 2024, driven primarily by U.S. energy demand.
The North American automotive industry also has a highly integrated supply chain.
Auto parts can cross the border between the U.S., Mexico and Canada multiple times before final assembly of the vehicle.
Trump also linked the tariffs to border security, saying tariffs would be imposed unless Canada strengthened security at their shared border.
Canadian Prime Minister Justin Trudeau has repeatedly said that if tariffs were imposed, everything would be on the table in response.
That includes imposing taxes or embargoes on energy exports to the United States, although some provincial leaders in Canada disagree with that response.
Trudeau told reporters on Thursday that Canada’s goal is to avoid U.S. tariffs entirely, but if the U.S. imposes tariffs, Canada will “gradually” ramp up its response and seek to quickly lift them.
Canada has also lobbied U.S. lawmakers to avoid tariffs and position itself as a reliable U.S. trading partner and secure source of energy and critical minerals.
Economists suggest the United States relies on Canadian products for energy security.
Canada’s energy exports will reach nearly US$170 billion (C$244 billion) by 2024, according to a recent analysis by TD Bank economists.
Trump also said on Thursday that companies should make their products in the United States if they want to avoid tariffs.
Tariffs are a central part of Trump’s economic vision – he sees them as a way to grow the U.S. economy, protect jobs and raise taxes.
The new president has given federal officials until April 1 to review whether there are any unfair practices in U.S. trade relations.
Reporting from Davos Economics Editor Faisal Islam.
