By David Lawder, Susan Heavey
(Reuters) -U.S. President Donald Trump told global business leaders on Thursday 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 U.S. 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% corporate tax rate for companies that manufacture in the U.S., 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% duty on global imports and 60% on goods from China.
But he said at that time that Canada and Mexico faced a 25% duty on Feb. 1 on goods they send to the U.S. because of illegal immigration and illicit drug shipments, including fentanyl, across their U.S. borders. Trump on Tuesday extended the Feb. 1 deadline to China, threatening a 10% 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.
CANADA CRITICISM
Trump singled out Canada for its “tremendous” annual trade surplus with the U.S., which he erroneously stated as $200 billion to $250 billion.
Canada’s goods surplus with the U.S. was $64.3 billion in 2023, according to U.S. Census Bureau data, largely because of over $130 billion worth of U.S. imports of Canadian crude oil and petroleum products.
He said Canada, the second largest U.S. trading partner after Mexico, “has been very tough to deal with over the years” on trade issues, adding that the northern U.S. neighbor could avoid tariffs by becoming the 51st U.S. 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 U.S. tariffs on Canada and Mexico would effectively tear up a free trade agreement underpinning more than three decades of duty-free North American trade.
CHINA ‘FAIR RELATIONSHIP’
Trump said he wanted the U.S. to have a “level playing field” with China on trade and decried the “massive” U.S. trade deficit with China, which he erroneously stated as $1.1 trillion, a figure that corresponds with the global U.S. goods trade deficit through the first 11 months of 2024.
The U.S. goods trade deficit with China was $279.1 billion in 2023, down from a peak of $418.2 billion in 2018, according to Census Bureau data.
“We don’t have to make it phenomenal,” Trump said, referring to U.S.-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 U.S. Senate confirmation, including Treasury secretary nominee Scott Bessent, Commerce secretary nominee Howard Lutnick and U.S. Trade Representative nominee Jamieson Greer.
U.S. 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.
(Reporting by Katharine Jackson and Caitlin Webber; writing by Susan Heavey; Editing by Chizu Nomiyama and Richard Chang)
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