Trump says Canada can avoid tariffs if it becomes a U.S. state

Experts say U.S. President Donald Trump’s push for the OPEC+ alliance of oil exporting countries to bring down the cost of oil conflicts with the Republican leader’s own plans to make America energy-dominant.

Trump made the comments in a wide-ranging address to the World Economic Forum in Davos, Switzerland on Thursday. He also promised his audience tax cuts if they move manufacturing to the U.S. — and threatened to impose tariffs if they don’t.

“I am also going to ask Saudi Arabia and OPEC to bring down the cost of oil. You got to bring it down,” Trump said, appearing via video link from the White House.

“Which, frankly, I’m surprised they didn’t do before the election. That didn’t show a lot of love by them not doing it.”

Trump said he would demand that interest rates drop if oil prices go down.

The president’s speech came on his third full day back in office. Trump signed a stack of executive actions this week, rapidly charting a new path forward for the United States.

He campaigned on U.S. energy dominance and signed an executive order upon his return to the White House declaring an energy “emergency” as part of his plan to reduce regulatory hurdles. Trump has said it will allow the country to “drill, baby, drill.”

But industry experts said his comments Thursday contradict his vow to increase oil production in the U.S. while also cutting inflation for American consumers.

“The U.S. energy dominance agenda is mutually contradictory with ‘OPEC lower your oil prices,'” said Heather Exner-Pirot, an adviser to the Business Council of Canada.

If the members of the OPEC+ alliance decide to increase production, that would lower prices, she said. Lower prices would displace American supply, which is much costlier to produce.

American producers are now close to breaking even with oil at $70-a-barrel. They would want prices to go up if they are to increase drilling.

“There is no coherency or consistency in what he’s saying on oil markets,” said Exner-Pirot, who is also director of energy, natural resources and environment at the Macdonald-Laurier Institute in Ottawa.

Trump also threatened to impose 25 per cent across-the-board tariffs on Canadian imports but added there would be no duties if the country becomes a U.S. state. He said again in his Thursday speech that America doesn’t need Canadian energy.

“Canada’s been very tough to deal with over the years,” he said.

But about 60 per cent of U.S. crude oil imports come from Canada. That means nearly a quarter of the oil America consumes every day comes from north of the border.

Rory Johnston, a Toronto-based oil market researcher and founder of Commodity Context, posted on social media that Trump wants to make “U.S. refinery feedstock — and U.S. consumer pump prices — more expensive via tariffs on Canadian crude.”

“While at the same time reducing the value of U.S. oil production by urging that OPEC+ produce more,” he added. “It’s … a choice.”

Exner-Pirot said she has a theory about the inspiration for Trump’s OPEC comments. She said American oil producers may have warned the president that they can’t ramp up production as he’s promised.

The president also had a phone call with Saudi Arabia’s Crown Prince Mohammed bin Salman earlier Thursday. Trump said he was informed during the call that the kingdom wants to invest $600 billion in the U.S.

Trump told the Davos crowd he would get that sum increased to $1 trillion.

Exner-Pirot said she suspects that Trump is “saying things based on his mood in the past 24 hours.”

Exner-Pirot said Trump’s moves on energy policy “are mutually incompatible with reducing energy prices for Americans and lowering inflation.”

Asked to react to Trump’s claim that the U.S. doesn’t need Canadian oil, Premier Danielle Smith’s press secretary Sam Blackett said the premier’s message “has not changed.”

“A U.S. tariff will hurt American and Canadian consumers, and we should be focused on developing out trade relationship through diplomacy, not threats,” he added.

“In a negotiation, both sides will say all kinds of things and use different tactics. It’s important when this happens to remain calm and diplomatic while continuing to carry out Alberta’s and Canada’s strategy.”

Following her meeting with Trump at his Florida home earlier this month, Smith said it seemed that “the president was interested” in importing more Canadian oil and gas.

“There does seem to be an understanding on the part of the president about how we might be able to get more oil and gas to the United States,” she said.

Trump has also said he wants to stop buying oil from Venezuela and Iran, posted on social media about imposing sanctions on Russia and has stuck to his threat of hitting Canada and Mexico with steep tariffs.

“Everything he is saying cannot all happen,” Exner-Pirot said.

Trump laid out a carrot-and-stick approach for private investment in the U.S., promising global elites lower taxes if they bring manufacturing to the U.S. and threatening to impose tariffs if they don’t.

“Come make your product in America and we will give you among the lowest taxes as any nation on earth,” Trump said. “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.”

In the largest hall in the Davos Congress Center — seating capacity 850 — Trump’s appearance drew nearly standing-room-only turnout. The crowd included diplomats, human rights advocates, academics and business leaders. His return to the White House and his barrage of executive orders have been the talk of the town this week in the snowy Swiss town.

At times, Trump drew a few groans, like when he derided “inept” members of the outgoing Biden administration. The loudest laughter came when WEF President Borge Brende said Trump had called Chinese President Xi Jinping over the weekend, and the U.S. leader quickly corrected him: “He called me.”

The reaction from the audience was mixed. Some attendees enjoyed the attention from Trump.

“I was impressed (by) the force of his convictions and by what he said. I don’t share his opinion on many topics, but I thought he was well prepared and knew who he was talking to,” said Benedict Fontanet, a Swiss lawyer.

Others cringed at the “America First” ambitions of Trump yet again.

“It’s absolute determination to ‘make America great again’ at the expense of the rest of the world,” said Agnes Callamard, secretary general of Amnesty International. “It’s favouring American workers at the expense of workers everywhere … There’s nothing, nothing about the rest of the world.”

Files from The Associated Press were used in this report