President Donald Trump said the US doesn't need Canadian energy, cars or lumber during a speech to world business leaders at the World Economic Forum.
Trump also repeated his threat to impose tariffs on the country, saying it could be avoided if the neighboring nation chose to "become a state" of the US.
"You can still become a state and if you are a state we won't have a deficit." "We shouldn't be putting tariffs on you," he said, shocking the Davos room.
Trump has threatened to impose tariffs of up to 25% on Canadian imports, possibly starting on February 1. Advertisement
The renewed threat of tariffs has been met with deep concern in Canada, a country heavily dependent on trade.
But he has also said he would consider significant countermeasures, including a "dollar-for-dollar" response if the Trump administration implements the measure.
About 75% of Canadian exports go to the country's south. By contrast, Canada accounts for a much smaller share of 17% of U.S. exports, despite being the U.S.'s second-largest trading partner, after Mexico.
In his remarks Thursday, Trump said Canada has been "very difficult 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 timber because we have our own forests... we don't need their oil and gas, we have more than anyone else," he told the forum participants via video link from Washington, DC.
Trump repeated the claim that the United States has a trade deficit with Canada of between $200 billion and $250 billion. It is not clear where he got that figure.
The trade deficit with Canada - expected to be $45 billion by 2024 - is largely due to U.S. energy demand. The North American auto industry also has highly integrated supply chains.
Vehicle parts can cross the borders between the United States, Mexico, and Canada multiple times before a vehicle is finally assembled.
Trump has also tied the tariffs to border security, saying they would be imposed if Canada did not increase security at the shared border.
Canadian Prime Minister Justin Trudeau has repeatedly said that everything is on the table in response to the imposition of tariffs.
This includes a tax or embargo on energy exports to the United States, although some provincial leaders in Canada disagree with this response. On Thursday, Trudeau told reporters that Canada's goal was to avoid U.S. tariffs altogether, but that it would ramp up its response "gradually" to seek the swift removal of any tariffs that are imposed.
Canada also presents itself as a reliable trading partner and a secure source of critical energy and minerals for the United States, while pressuring U.S. lawmakers to try to avoid tariffs.
Canada offers to help Trump in his efforts to avoid a tariff war
Trudeau says there is "not a single chance in the world" that Canada will join the U.S.
Economists suggest the U.S. depends on Canadian products for its energy security.
By 2024, Canadian energy exports will be worth about $170 billion (C$244 billion), according to a recent analysis by TD Bank economists.
Trump also said Thursday that companies must manufacture 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 American economy, protect jobs and increase tax revenue.
The new president has ordered federal officials to review U.S. trade relations for unfair practices by April 1.
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