Trump says Canada can become a US state to avoid tariffs
WASHINGTON - President Donald Trump used an address Thursday to the World Economic Forum to promise global elites lower taxes if they bring manufacturing to the U.S. and threatened to impose tariffs if they don’t.
Speaking by video from the White House to the annual summit in Davos, Switzerland, on his third full day in office, Trump ran through some of his executive actions since his swearing-in and claimed that he had a "massive mandate" from the American people to bring change.
Trump threatens to impose tariffs
The backstory:
Trump pledged in his inaugural address that tariffs would be coming in a speech in which he promised a golden era for America. He later said Canada and Mexico could be hit with the tariffs as soon as Feb. 1, though he signed an executive order requesting a report coordinated by the Secretary of Commerce by April. 1.
US President Donald Trump is seen on a large screen during his address by video conference at the World Economic Forum (WEF) annual meeting in Davos on January 23, 2025. (Credit: FABRICE COFFRINI/AFP via Getty Images)
"Come make your product in America, and we will give you among the lowest taxes as any nation on earth," Trump said Thursday. "But if you don’t make your product in America, which is your prerogative, then very simply, you will have to pay a tariff — differing amounts — but a tariff, which will direct hundreds of billions of dollars and even trillions of dollars into our treasury to strengthen our economy and pay down debt under the Trump administration."
What they're saying:
The outgoing prime minister, Justin Trudeau, and the leader of Alberta, Danielle Smith, recently argued that Canada is the energy superpower that has the oil and critical minerals that America needs to feed what Trump vows will be a booming U.S. economy.
Trudeau said Canada would retaliate if needed but noted Canada has been here before during the first Trump presidency when they successfully renegotiated the free trade deal.
Trump added Thursday, "They've allowed other nations to take advantage of the U.S., so we can't allow that to happen anymore."
Canada as a state?
What we know:
Trump also noted the nation’s deficit with Canada, and said that they could become part of the U.S. as the 51st state to avoid tariffs.
"We have a tremendous deficit with Canada. We're not going to have that anymore. We can't do it," Trump said, adding, "As you probably know, I say you can always become a state. Then, if you're a state, we won't have a deficit, we won't have to tariff you, etc. etc."
He added: "But Canada has been very tough to deal with over the years, and it's not fair that we should have a $200 billion or $250 billion deficit. 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, etc., etc. We don't need their oil and gas. We have ours, we have more than anybody."
Trump threatened to impose new tariffs on Mexico, Canada and China on 1st day in office
The backstory:
In late November, following his reelection win, Trump threatened to implement significant tariffs on Mexico, Canada, and China immediately upon taking office, as part of his strategy to address illegal immigration and drug trafficking.
Trump made the threats in a pair of posts on his Truth Social site, when he spoke against an influx of illegal migrants.
"On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders," he wrote, adding, "thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before."
He said the new tariffs would remain in place "until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! "
Big picture view:
If enacted, tariffs could lead to a sharp increase in prices for a wide range of products, from gasoline to cars. The U.S., being the world's largest importer, relies heavily on Mexico, China, and Canada as its top three suppliers, according to the latest Census data.