America can do fine without Canadian oil and lumber, U.S. President Donald Trump told an audience at the World Economic Forum (WEF) in Davos.
“We don’t need their oil and gas. We have more than anybody,” Trump said during his virtual participation in a forum session on Jan. 23, during which he delivered a speech and took questions from top international banking, finance, and oil industry CEOs.
Amid the Trump tariff threat, some Canadian officials have floated the possibility of using energy exports to the United States to retaliate, an idea strongly opposed by Alberta Premier Danielle Smith.
Since his election, Trump has threatened to impose 25 percent tariffs on Canada over border security concerns.
Canadian officials say while they are taking action to address the president’s border security concerns, retaliation could be a last resort option.
They have also emphasized the importance of trade integration between the two countries.
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Trump appeared to brush aside that argument during his Davos talk, saying, “We don’t need them to make our cars, and they make a lot of them.” Automotive manufacturing supply chains between southern Ontario and the state of Michigan are deeply integrated.
Trump also said the United States doesn’t need Canadian lumber as it has its “own forests.”
The U.S. president made the comments during a long answer to a question about how fast he would do away with regulations and bureaucracy. Trump said the U.S. economy would perform even better during his second term and this would in part come by “demanding respect from other nations.”
He first mentioned Canada, saying it’s been “very tough to deal with over the years,” adding the United States has a “tremendous deficit with Canada.”
“We’re not going to have that anymore, we can’t do it,” he said.
Trump then said what he has often repeated in recent weeks about Canada becoming a U.S. state.
“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.
Trump had said in December the United States was “subsidizing Canada to the tune of over $100 billion a year,” but he upped the stakes during his Davos address, saying the United States has a “$200 billion or $250 billion deficit” with Canada.
An analysis by TD Bank, using data from Statistics Canada, says Canada’s merchandise trade surplus with the United States last year was on track to reach $100 billion. Meanwhile using data from the U.S. Census Bureau, which uses a different measurement, the U.S. deficit was roughly $65 billion in 2024.
“With respect to Trump’s assertion that the U.S. subsidizes Canada to the tune of US$200 billion per year, it’s unclear where this number is derived,” wrote TD economists in the Jan. 21 note.
TD also looked at Canadian energy exports to the United States, valued at nearly $170 billion. Without those, the United States would have a trade surplus of around $60 billion, wrote the economists.
Canada has been accounting for around half of U.S. petroleum imports, according to the U.S. Energy Information Administration.
The crucial importance played by oil exports to the United States has become a bone of contention among Canadian first ministers as they prepare potential retaliation.
Prime Minister Justin Trudeau said “everything is on the table” in terms of retaliation, including using energy exports. Trudeau told reporters on Jan. 23 he discussed with Alberta Premier Smith if oil and gas exports could be used as a form of leverage against the United States if tariffs are imposed.
Smith has rejected the idea of imposing taxes on energy exports and has pushed for diplomacy over retaliation.
