Critical Minerals: Canada’s Secret Weapon in the U.S. Trade Dispute
Canada’s rich supply of critical minerals could be the key bargaining chip against Trump’s escalating tariff threats.
Editorial Team (ET)July 1, 2025
The escalating trade tensions between Canada and the United States, fueled by former U.S. President Donald Trump’s renewed tariff threats, could shift the balance of economic power in North America. While Trump has downplayed Canada’s role in key industries, the reality is that the U.S. remains heavily reliant on Canadian critical minerals—essential for electric vehicle (EV) production, defense applications, and clean energy technologies. This dependence could turn Canada’s vast mineral resources into a powerful bargaining tool in any trade dispute.
Canada’s Critical Role in the U.S. Supply Chain
Despite Trump’s assertions that the U.S. doesn’t need Canadian imports, the numbers tell a different story. Each year, approximately $40 billion CAD worth of critical minerals cross the Canada-U.S. border. These include vast quantities of nickel, aluminum, and copper, alongside growing shipments of lithium, cobalt, and rare earth elements—all crucial for EVs and battery production.
According to TD Bank’s recent trade analysis, the U.S. is a net importer of 43 out of the 50 minerals deemed “high risk” for supply chain disruption. China remains the dominant supplier, but Canada provides over half of the U.S. nickel, zinc, tellurium, and vanadium—minerals vital to advanced manufacturing.
Trump’s Tariff Threats and Canada’s Response
Trump has threatened to impose 25% tariffs on Canadian imports, arguing that the U.S. can rely on domestic production. However, this claim runs counter to economic data and industry realities. A shift away from Canadian supply would force the U.S. to depend even more on China, a country it has repeatedly accused of unfair trade practices.
Canadian officials are preparing their own countermeasures, with Natural Resources Minister Jonathan Wilkinson suggesting retaliatory tariffs could include critical minerals. This move could significantly impact U.S. automakers and defense contractors, further complicating Trump’s stance on trade.
Canada’s Potential to Reduce U.S. Reliance on China
Beyond being a key supplier, Canada is positioning itself as an alternative to China for critical minerals. The country has some of the world’s largest reserves of lithium and rare earth elements—two essential components for EV batteries and high-tech electronics.
Industry leaders argue that increasing investment in Canadian mining projects could eliminate U.S. reliance on China altogether. However, Canada’s domestic mining sector faces hurdles. While there is only one large-scale lithium mine in production, nearly a dozen others are in advanced stages of development. To accelerate progress, both private investment and government support will be needed.
Securing Canada’s Economic Future
The Trump administration’s aggressive stance on tariffs has injected new urgency into Canada’s critical minerals strategy. By fast-tracking mining projects and reinforcing trade partnerships, Canada can strengthen its position in negotiations with the U.S. and cement itself as a global supplier of essential minerals.
While Trump may attempt to downplay Canada’s role, the reality is clear—without Canadian critical minerals, the U.S. faces a supply chain crisis. This economic leverage could be Canada’s most powerful tool in the face of escalating trade tensions.
