What leverage does Canada, which sells about 70% of its goods to the US, actually have in this spiralling trade dispute with its southern neighbour, who also happens to be the world's largest economy?
Canada is the top customer for 26 US states, including Maine, Michigan, and Wisconsin, and the top three for 45 of the 50 American states, suggesting Prime Minister Mark Carney has room to manoeuvre in a trade fight.
Carney’s planned Canadian retaliatory duties are strategic ‘dollar‑for‑dollar’ countermeasures focused on steel, dairy, appliances, agricultural equipment, electronics, pulp and paper, though the list is still being finalised.
Polls suggest a majority of Canadians would be unhappy if his government went in the other direction and made significant concessions to the US. That sentiment is shared by Ontario Premier Doug Ford, one of Trump’s most vocal critics north of the border, who responded to the tariff threats by telling the US president to “kiss my ass”.
Here are some areas that Canada can apply economic pressure.
Energy and critical minerals
Carney noted that Canada supplies the vast majority of US natural gas, electricity and about 60% of crude oil imports.
“I don’t think they want us to stop sending any of that energy,” he said. Squeezing the US on energy is not in the current countermeasures, although it was not ruled out – and not all provincial premiers have been keen to use that leverage.
Ford, whose Ontario province hosts Canada’s auto manufacturing industry, is open to how far the dispute could go and said that an “energy surcharge is on the table”. He briefly floated a 25% surcharge in 2025 on all electricity exports to the United States, which his government estimated would impact 1.5 million homes and businesses in Michigan, Minnesota and New York.
Canada also supplies important commodities such as potash – the world’s top fertilizer supplier – and has significant reserves of critical minerals like lithium, nickel and graphite. The US is Canada’s top destination for overall mineral exports – another point where Ottawa could apply pressure.
Ford also said in an interview with the Associated Press that the US “won’t get a grain of sand out of Ontario”.
Purchasing power
Canada has already proven that it can cause economic pain in the US. Before trade talks broke down, a decision by most provinces to ban US alcohol from liquor store shelves dealt a blow to that industry in the US.
American wine exports to Canada fell 78% year over year, a $357m loss in export value, according to government data. The ban remains in 11 of the 13 Canadian provinces and territories and is a point of frustration for the Trump administration.
Even with a slight uptick in road trips to the US in April, Canadians made 800,000 fewer trips that month compared to the same time in 2024, resulting in a $2.35bn loss in revenue for the US last year.
Political pressure
Timing and Canadian political will could also be a tool for negotiations. Canadians will feel economic pain in this dispute – the most recent tariffs of 50% on about $20bn of Canadian imports could trim 0.3% to 0.6% off the country’s GDP in the short term.
Still, a majority in the country broadly back Ottawa’s decision to drive a hard bargain against the Trump administration, and other Canadian political leaders have shown a united front.
A weekend poll from Angus Reid indicated that some 76% of Canadians support Ottawa’s decision to walk away from trade negotiations even as they worry for their own job security.
The US midterm elections are fast approaching, with the economy front and centre for voters and the Republican hold on Congress looking tenuous. Two of the biggest Senate races are in Michigan and Maine, which both border Canada and send most of their exports there.
Under current law, Trump’s global tariffs would cost American households about $1,100 annually. Any further increase in the costs of goods and the wider impact of the trade dispute could further sour the American public on the economy.
On Monday, Carney said that US workers will be hurt by Trump’s threat to increase tariff on autos and auto parts from Canada to 50% after 1 January. “What is the message sent out to the workers in Michigan, Ohio, Kentucky, Alabama? These workers depend absolutely on Canada, their largest consumer,” he said.
On CNN, BC Premier David Eby noted US consumers will see the impact of US tariffs on goods ranging from plywood for new homes to fishing poles. “It is a bizarre policy for Americans. It’s going to hurt them.”
Ford, one of the most vocal Canadian leaders opposing the Trump administration's tariffs, also did not rule out specifically targeting Republican US states with retaliatory measures and “making sure America’s economy feels the pain”. For the midterms, he said: “If I were allowed to, I’d be down there door‑knocking”.
