DAVOS, Switzerland — President Donald Trump sparked audible reactions at the World Economic Forum on Thursday, January 23, 2025, when he casually suggested that Canada could become a U.S. state to avoid the sweeping tariffs he has proposed.
Speaking via live video feed from Washington, D.C., Trump used his first major speech as the 47th president to reiterate his hardline economic priorities and address perceived trade imbalances.
“As you probably know, I say, 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,” Trump said, referencing Canada.
His remark was met with gasps from the audience gathered in Davos.
The comment was part of a broader critique of U.S. trade relationships.
Trump claimed the U.S. is treated “very unfairly” on trade, singling out Canada for its contributions to the U.S. trade deficit—a figure he exaggerated as “$200 billion or $250 billion.”
Trade Deficit Claims
Trump’s comments about Canada focused on industries like automotive manufacturing, lumber, and energy.
“We don’t need them to make our cars, and they make a lot of them,” he said, overlooking the complex, cross-border supply chains integral to modern vehicle production.
He added, “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’s claims also disregarded the United States–Canada–Mexico Agreement (USMCA), a trade deal negotiated during his first term that was meant to strengthen economic ties between the three nations.
Tariff Threats
Though no formal action has been taken, Trump reiterated his plan to impose steep tariffs on imports from Canada and Mexico, suggesting a 25% rate could be enacted as early as February 1.
These tariffs, economists warn, would likely raise prices for U.S. consumers and disrupt industries reliant on imported goods.
The president’s tariff rhetoric reflects his ongoing belief that protectionist policies can address trade imbalances, a position criticised by many economists who argue that such measures often backfire, leading to higher costs and strained international relationships.
International Reactions
The response to Trump’s remarks at Davos underscored the unease among global leaders and economists about the direction of U.S. trade policy under his administration.
Faisal Islam of the BBC, who was present in the hall, reported hearing “gasps” at Trump’s suggestion that Canada become a U.S. state.
Canadian officials have not yet responded publicly to Trump’s comments, but political analysts noted that the statement is unlikely to be taken seriously in Ottawa.
“This is bluster, plain and simple,” said trade expert Sara Michaels.
“Canada has no intention of compromising its sovereignty, and comments like this only serve to sour relations further.”
Economic Implications
Economists widely agree that tariffs make imported goods more expensive for consumers and can harm domestic industries that rely on those goods.
Trump’s proposed 25% tariff could have significant ramifications for industries such as automotive manufacturing and construction, which are heavily integrated across the U.S.-Canada border.
While Trump’s comments were met with a mix of astonishment and scepticism at Davos, they reflect the continued unpredictability of U.S. trade policy under his leadership.
As February 1 approaches, businesses and international leaders will be watching closely to see whether Trump’s threats turn into action—or remain another example of his provocative rhetoric on the world stage.
