Canada may depend heavily on the United States for trade, but Ottawa still has significant economic leverage as the trade dispute with President Donald Trump intensifies.
Canada sends about 70% of its goods exports to the United States, making the US by far its most important trading partner. But the relationship is also highly valuable to American states and businesses, with Canada serving as the top customer for 26 US states and ranking among the top three export markets for 45 of the 50 states.
That gives Canadian Prime Minister Mark Carney room to respond to Washington without necessarily targeting the entire US economy at once.
For now, Carney’s planned retaliation involves strategic “dollar-for-dollar” countermeasures targeting products such as steel, dairy, appliances, agricultural equipment, electronics, pulp and paper.
Canada’s Finance Department is also expected to announce additional measures aimed at protecting Canadian workers and businesses.
Energy Could Be Canada’s Biggest Weapon
One of Canada’s strongest sources of leverage is energy.
Canada supplies the vast majority of US imports of natural gas and electricity and around 60% of US crude oil imports, according to Carney.
“I don’t think they want us to stop sending any of that energy,” Carney said.
Energy exports are not currently part of Canada’s planned counter-tariffs, but Canadian officials have indicated that the option remains available if the dispute escalates.
Ontario Premier Doug Ford has also suggested that an energy surcharge could be considered.
In 2025, Ford briefly proposed a 25% surcharge on electricity exports to the US, a measure his government estimated could have affected around 1.5 million homes and businesses in Michigan, Minnesota and New York.
Such a move could put pressure on American consumers and businesses, particularly in northern states that rely heavily on Canadian electricity.
Potash and Agriculture
Canada also has considerable leverage through agricultural commodities.
The country is the world’s leading supplier of potash, a key ingredient in fertiliser used by American farmers.
Ford has argued that US agriculture depends heavily on Canadian resources.
“I’d love to see [Trump] run cars without any oil. I’ll love to see him grow vegetables and fruit without the potash,” Ford said.
A disruption in potash supplies could raise costs for American farmers and potentially increase food production expenses.
Critical Minerals
Canada is also rich in critical minerals, including lithium, nickel and graphite.
These minerals are increasingly important to industries involved in electric vehicles, batteries, advanced manufacturing and clean-energy technologies.
The United States is Canada’s largest destination for mineral exports, meaning American industries could be vulnerable if Ottawa restricted or disrupted supplies.
Canada could therefore use critical minerals as another bargaining tool while attempting to avoid measures that would cause excessive damage to its own economy.
Pressure on Key US States
Canada’s economic relationship with individual US states could also give Ottawa political leverage.
Canadian consumers and businesses could target products and services originating from states whose economies depend heavily on Canadian demand.
Because Canada is the largest export market for 26 US states and ranks among the top three for 45 states, retaliatory measures could affect businesses well beyond Washington.
This creates a political dimension to the trade dispute: American governors, business groups and lawmakers could pressure the Trump administration to reach a settlement if tariffs begin hurting their local economies.
Public Opinion Strengthens Carney’s Position
Carney also appears to have domestic political support for taking a tougher stance.
Polls suggest that many Canadians would oppose significant concessions to Washington, while Ontario’s Ford has emerged as one of Trump’s most outspoken critics.
Ford’s blunt response to Trump’s tariff threats — telling the US president to “kiss my ass” — reflected the growing anger among some Canadian political leaders.
For Carney, maintaining public support while protecting Canada’s economy will be a delicate balancing act.
A High-Stakes Trade Battle
Canada’s challenge is that the US remains its dominant trading partner. Ottawa therefore has to be careful not to use economic weapons that inflict greater damage on Canadian businesses and consumers than on Americans.
But Canada’s access to energy, electricity, oil, potash, critical minerals and the US market itself gives it several avenues for retaliation.
The most effective strategy may therefore be targeted pressure rather than an all-out economic confrontation.
As the dispute develops, Carney will have to decide how far Canada is willing to go — and whether the economic pressure it can apply will be enough to persuade Trump to reconsider his tariff strategy.
