President Donald Trump has said the US does not need Canadian energy, vehicles or lumber as he spoke to global business leaders at the World Economic Forum.
Trump also reiterated his threat to impose tariffs on the country, saying it can be avoided if the neighbouring nation chose to “become a state” of the US.
“You can always become a state, and if you’re a state, we won’t have a deficit. We won’t have to tariff you,” he said to gasps in the hall in Davos.
Trump has threatened to impose up to 25% tariffs on Canadian imports, possibly by 1 February.
The renewed threat of tariffs has been met with deep unease by the trade-dependent Canada.
But it has also said it will consider significant countermeasures, including a “dollar-for-dollar” response if the Trump administration follows through.
Roughly 75% of Canada’s exports head south. In contrast, Canada accounts for a much smaller 17% of US exports, though it is the second largest US trading partner, behind Mexico.
Trump in his remarks on Thursday said Canada had been “very tough to deal with over the years”.
“We don’t need them to make our cars, we make a lot of them, we don’t need their lumber because we have our own forests… we don’t need their oil and gas, we have more than anybody,” he told forum attendees via video link from Washington DC.
Trump reiterated the assertion that the US has a trade deficit with Canada of between $200bn and $250bn. It’s not clear where he got that figure.
The trade deficit with Canada – expected to be $45bn in 2024 – is mostly driven by US energy demands.
The North American auto industry also has highly integrated supply chains.
Auto parts can cross the borders between the US and Mexico and Canada multiple time before a vehicle is finally assembled.
Trump has also tied the tariffs to border security, saying it will be imposed unless Canada increases security at the shared border.
Canadian Prime Minister Justin Trudeau has repeatedly said that everything is on the table in response if the tariffs are imposed.
That includes a tax or embargo on energy exports to the US, though some of Canada’s provincial leaders disagree with that response.
On Thursday, Trudeau told reporters that Canada’s goal is to avoid US tariffs altogether but it will step up its response “gradually” to seek the quick removal of levies if they are imposed.
