US President Donald Trump told global business leaders on Thursday (Jan 23) they should manufacture products in the United States to avoid import tariffs and enjoy low tax rates.
Trump, speaking by videoconference from Washington to the World Economic Forum in Davos, Switzerland, warned of new US tariffs in "differing amounts" for all countries.
"My message to every business in the world is very simple: come make your product in America and we will give you among the lowest taxes of any nation on earth," Trump told a panel of business executives.
"But if you don't make your product in America, which is your prerogative, then very simply, you will have to pay a tariff," Trump said. "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."
Trump has proposed a 15 per cent corporate tax rate for companies that manufacture in the US, subject to approval from Congress.
Trump began his presidency on Monday without immediately imposing the tariffs he had promised during his election campaign, including a 10 per cent duty on global imports and 60 per cent on goods from China.
But he said at that time that Canada and Mexico faced a 25 per cent duty on Feb 1 on goods they send to the US because of illegal immigration and illicit drug shipments, including fentanyl, across their US borders. Trump on Tuesday extended the Feb 1 deadline to China, threatening a 10 per cent duty.
Trump has said Canada and Mexico must stop the flow of migrants and fentanyl, but there has been no discussion of negotiations over the issue. Trump has said in recent days that the European Union would also face tariffs.
"We're going to be demanding respect from other nations," Trump said.
Trump singled out Canada for its "tremendous" annual trade surplus with the US, which he erroneously stated as US$200 billion (S$271 billion) to US$250 billion.
Canada's goods surplus with the US was US$64.3 billion in 2023, according to US Census Bureau data, largely because of over US$130 billion worth of US imports of Canadian crude oil and petroleum products.
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He said Canada, the second largest US trading partner after Mexico, "has been very tough to deal with over the years" on trade issues, adding that the northern US neighbour could avoid tariffs by becoming the 51st US state.
"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," Trump said. "We don't need their oil and gas. We have more than anybody."
New US tariffs on Canada and Mexico would effectively tear up a free trade agreement underpinning more than three decades of duty-free North American trade.
Trump said he wanted the US to have a "level playing field" with China on trade and decried the "massive" US trade deficit with China, which he erroneously stated as US$1.1 trillion, a figure that corresponds with the global US goods trade deficit through the first 11 months of 2024.
The US goods trade deficit with China was US$279.1 billion in 2023, down from a peak of US$418.2 billion in 2018, according to Census Bureau data.
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"We don't have to make it phenomenal," Trump said, referring to US-China trade. "We have to make it a fair relationship. Right now, it's not a fair relationship,"
Trump did not provide new clues to specific next steps by his administration to implement tariffs.
All of his top economic cabinet picks are still awaiting US Senate confirmation, including Treasury secretary nominee Scott Bessent, Commerce secretary nominee Howard Lutnick and US Trade Representative nominee Jamieson Greer.
US Senate Majority Leader John Thune told Reuters the Senate may vote on Bessent's nomination over the weekend. Lutnick, who heads brokerage Cantor Fitzgerald, faces a Senate confirmation hearing on Wednesday, but none has been scheduled for Greer.
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