U.S. President Donald Trump took another swipe at Canada on Thursday, calling the long-standing ally “tough to deal with” and claiming the U.S. doesn’t need Canadian oil and gas.
Speaking virtually to the World Economic Forum in Davos, Switzerland, Trump also said he will press NATO members to increase their defence spending target to five per cent of GDP — more than triple Canada’s current spending.
Trump said his administration would be “demanding respect from other nations” that trade with the U.S. and quickly brought up his escalating feud with Canada.
“Canada has been very tough to deal with over the years, and it’s not fair that we should have a [US]$200 billion or $250 billion [trade] deficit,” Trump told the Davos crowd during a discussion moderated by several financial executives.
“We don’t need them to make our cars, and they 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.”
Trump also returned to his oft-repeated idea to make Canada the 51st U.S. state.
“As you probably know, I say you can always become a state,” he said. “Then if you’re a state, we won’t have a deficit, we won’t have to tariff you, et cetera, et cetera.”
Trump has previously threatened to use “economic force” to compel a merger with Canada, arguing earlier this month that the U.S. doesn’t “need” highly traded items like automobiles, lumber and dairy from Canada — despite the highly integrated supply chains solidified by the free trade pact that was renegotiated during his first term.
The U.S. Trade Representative says the goods and services trade deficit with Canada was US$53.5 billion in 2022. Canada sells more raw materials, particularly oil and gas, to the U.S. than it buys, with the U.S. turning those materials into goods it sells to Canada and many other countries.
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Trump has seized on the trade deficit as justification for putting 25 per cent tariffs on all Canadian imports, which he has said he plans to do on Feb. 1.
Despite efforts to secure a carve-out for oil and gas, Alberta Premier Danielle Smith said she is “not expecting any exemptions” for crude exports from her province after meeting with Trump at his Mar-a-Lago resort in Florida shortly before his inauguration Monday.
Economists have warned a tariff on Canadian energy exports will drive up gasoline prices for Americans and threaten Trump’s plans for “energy dominance.”
Trump signed an executive order on his first day in office that promises to “unleash America’s affordable and reliable energy and natural resources” by expanding drilling on federal lands and the processing and refining of raw materials, including critical minerals.
He also declared a “national energy emergency” to fast-track energy projects.
Trump says increased oil production would put downward pressure on energy costs, reducing inflation.
“We have more oil and gas than anybody,” he told the Davos crowd, referring to it as “liquid gold under our feet.”
The U.S. is already the world’s largest oil producer, with an average output of 13.2 million barrels per day last year. But it gets more than half of its crude oil from Canada, and many U.S. refineries are reliant on that product.
Canadian officials have sought to pitch an intensified energy partnership to U.S. lawmakers and Trump administration officials to try and get the U.S. president to back down from his tariff threat.
But they have also warned “everything is on the table” for a Canadian retaliation — including cutting off energy exports, which Smith has publicly disavowed.
Smith said Wednesday after a meeting with the other premiers and Prime Minister Justin Trudeau that talks about a response to Trump’s tariffs were “more positive” than they were a week before, when she refused to sign a joint declaration on a unified approach.
She said premiers agreed to explore more oil and gas pipelines to move product within Canada and export to other markets, and on “securing consent from individual provinces before cutting off or placing export tariffs on key exports from those provinces.”
“Alberta will continue to oppose any such extreme measures on our energy exports,” she said.
Trump told the Davos crowd Thursday that his tariffs on other countries “will direct hundreds of billions of dollars and even trillions of dollars into our treasury.”
He has also threatened 25 per cent tariffs on Mexico and a 10 per cent levy on China, and floated tariffs on the European Union and even Russia to force an end to the war in Ukraine.
Trump said Thursday he is pushing Russian President Vladimir Putin to enter negotiations with Ukraine to end the war.
He also repeated his pledge to increase NATO’s minimum defence spending target of two per cent of GDP to five per cent, but said he will be asking members to meet that threshold.
“I’m also going to ask all NATO nations to increase defence spending to five per cent of GDP, which is what it should have been years ago,” he said. “It was only at two per cent, and most nations didn’t pay until I came along.”
Canada has long missed the NATO target, spending less than 1.4 per cent of GDP on defence last year. The government’s defence policy update sets a 2030 timeline to reach 1.76 per cent.
Trudeau has promised to reach two per cent by 2032, but the parliamentary budget officer has raised doubts about whether that plan is feasible.
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