Canada and the United States have managed to sidestep a trade war for the moment, following Feb. 3 phone calls between Prime Minister Justin Trudeau and U.S. President Donald Trump. 

A 30-day halt of potential U.S. tariffs on Canadian goods was announced shortly afterwards, in exchange for enhanced border enforcement measures to address Trump’s concerns over purported illegal immigration and drug smuggling.

Originally announced on Feb. 1 and scheduled to take effect on Feb. 4, the measures would have imposed 25 per cent tariffs on all Canadian goods and 10 per cent tariffs on energy exports from Canada, including oil, coal, natural gas, critical minerals and electricity.

Shortly after Trump announced plans to impose tariffs on Canadian goods, the federal government revealed that it would strike back with tariffs of 25 per cent on $30 billion in imported U.S. goods, which would remain in effect until the U.S. reversed its tariffs.

In December 2024, in response to Trump’s threats, the Canadian government shared that a total of $1.3 billion had been allocated to strengthen security along the Canada-U.S. border, including funding for new technology and personnel. After his discussions with Trump, Trudeau also pledged to appoint a new fentanyl “czar” as well as to classify Mexican cartels as terrorists under Canadian law. 

Furthermore, Canada plans to establish a “Canada-U.S. Joint Strike Force” aimed at combatting organized crime and money laundering, with $200 million in Canadian funding allocated to launch the effort.

Impacts on Canadian mining 

Before the proposed U.S. tariffs were delayed by 30 days, several industry voices had expressed concern about the potential impacts that tariffs could have on Canada’s mining industry, as well as the negative consequences these measures would have on the U.S. 

“The imposition of tariffs on Canadian minerals and metals products runs counter to American national security and economic interests,” said Pierre Gratton, president and CEO of the Mining Association of Canada, in a Feb. 2 statement. “These tariffs will disrupt the essential flow of mineral and metal resources, exacerbate vulnerabilities in critical mineral supply chains that both nations have been working to address and raise the costs of doing business for our U.S. customers.” 

Gratton highlighted that in 2022, 52 per cent of Canada’s mineral exports, totalling more than $80 billion, were headed to the U.S. He added that both countries should prioritize strengthening the Critical Minerals Collaboration, an agreement aimed at boosting production and establishing supply chains for critical minerals that the U.S. relies on imports for. This agreement was finalized in January 2020 during Trump’s first presidential term.

Gratton emphasized that U.S. tariffs would lead Canada’s mining sector to seek out new markets and strengthen existing ones, as well as secure alternative sources of inputs essential for the operation of mining facilities, ultimately harming U.S. businesses in the process. He also encouraged the federal government to address long-standing barriers to Canada’s economic growth, such as removing internal trade barriers, simplifying complex and costly regulatory processes and improving uncompetitive tax policies. 

Speaking out 

In 2018, during his first presidential term, Trump imposed a 25 per cent and 10 per cent tariff respectively on certain steel and aluminum imports from Canada. Following the decision, the Globe and Mail reported that steel exports to the U.S. plummeted by 38 per cent.

The Aluminum Association of Canada (AAC) had also condemned the decision to impose tariffs on Canadian goods. The AAC includes three key primary aluminum producers in its membership: Alcoa Corp., Aluminerie Alouette and Rio Tinto, which between them operate nine smelters across Canada, with eight located in Quebec and one in British Columbia.

“This situation will unfortunately impact workers and consumers in America with the immediate increase on the price of aluminum,” said Jean Simard, president and CEO of the AAC, in a Feb. 2 statement.

Meanwhile, the Aluminum Association, which represents U.S. aluminum production, also issued a Feb. 1 statement in response to the tariffs. Charles Johnson, the association’s president and CEO, emphasized that the U.S. is a powerhouse in aluminum production and fabrication, but this strength depends on imports of upstream aluminum—both smelted and scrap—from Canada. 

Johnson stated that approximately two-thirds of the primary aluminum used annually in the U.S. comes from Canada, highlighting that even if all U.S.-based smelters operated at full capacity, they would still fall short of producing enough metal to meet demand. The association urged Trump to exempt aluminum supplies that are essential for U.S. manufacturers from the tariffs.

The United Steelworkers (USW), North America’s largest private-sector union, which represents 225,000 workers across several sectors, including mining, has also called on Trump to reverse his plans to impose tariffs and instead focus on finding trade solutions.

“The USW has long called for systemic reform of our broken trade system, but lashing out at key allies like Canada is not the way forward,” said David McCall, president of USW International, in a Feb. 1 statement. “The key to eliminating unfair competition, confronting global overcapacity in crucial sectors, and stemming the flow of unfairly traded products making their way into North America is targeted tariffs on countries that violate our trade laws and greater coordination with our trusted allies—not sweeping actions that undermine crucial relationships.”

Canada’s steel industry, which directly employs 23,000 people, is largely dependent on the U.S. for steel exports, with few alternative options for selling the metal to alternative markets. Canada’s major steelmakers include Algoma Steel, based in Sault Ste. Marie, Ontario; Cleveland-Cliffs Inc. of the U.S., which owns Stelco; and Luxembourg’s ArcelorMittal, owner of Dofasco. All have substantial steel operations in Ontario.

As reported by the Globe and Mail, although the U.S. produces approximately 80 million tonnes of steel each year, five times more than Canada, it still imports around 10 million tonnes to meet its needs.

Tariffs’ effect on oil sector 

Echoing the concerns of other sectors, Pathways Alliance, a consortium of Canada’s largest oil sands producers, released a Feb. 1 statement in which Kendall Dilling, president of Pathways Alliance, described the decision to impose tariffs as “disappointing” and warned that it would harm both countries.

“Long-standing trade across all sectors has made both our countries stronger,” he said. “We hope these tariffs can be quickly reversed to restore a healthy trade relationship.”

Dilling pointed out that the lower tariff on energy signifies the importance of the energy relationship between the two countries. However, he emphasized that this tariff would still raise costs for gasoline and other energy sources in the U.S., while simultaneously damaging Canada’s economy.

He also called on Canada to recognize the contributions of the oil sector and to avoid exacerbating the situation by restricting energy trade or imposing export tariffs on Canadian energy to the U.S.

Shifting focus to alternative markets

Amid the flurry of statements from Canadian companies, Taseko Mines issued its own on Feb. 3. The company remarked that U.S. tariffs would not impact sales from its wholly owned Gibraltar copper-molybdenum mine in south-central B.C., as shipments are sold to international metal traders and delivered to Asian markets. 

“Although these new tariffs will not directly impact our business, as a North America focused copper producer, we are hopeful that a more constructive trade relationship will emerge for copper and other critical minerals, for the benefit of both Canada and the United States,” said Stuart McDonald, president and CEO of Taseko Mines, in the statement. “Going forward, we believe Canada must continue to diversify its economy by redoubling efforts to expedite development of critical mineral mines.”

At a press conference on Feb. 3, Premier David Eby shared that he had spoken with leaders of major mining and refining companies in B.C. They revealed that they are shifting operations to redirect products like copper and aluminum to alternative markets, highlighting what he called a “historic reordering” of global trade patterns—one in which he said British Columbia will not be excluded. Eby noted that the provincial government and Crown corporations have been instructed to avoid contracting American companies during the procurement process for major projects.