Critical minerals for EVs could provide Canada leverage amid Trump tariff threats

January 30, 2025

0 3 minutes read

A sample from the Shaakichiuwaanaan lithium project in the Eeyou Istchee James Bay region of Quebec.

U.S. President Donald Trump’s claim that the United States does not need Canadian imports would struggle to hold up in a trade war, with Canadian critical minerals for electric vehicles and other industrial uses among the products that would be tough to replace, according to recent analyses.

About $40 billion (CND) in critical minerals cross the Canada-U.S. border each year, according to Accelerate, an industry alliance advocating for Canada’s EV supply chain. That includes billions in copper, nickel and aluminum, and growing volumes of other metals vital to the automotive, defence and energy sectors.

The scale of imports demonstrate that Canadian critical minerals are “already important” to the United States, said Accelerate CEO Matthew Fortier.

“Then there’s the potential, which can be many times that,” he told Automotive News Canada.

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The United States recognizes 50 minerals as “high risk” of supply chain disruption and critical to industry. Yet the country is a net importer of 43 of those minerals, with China as the largest single source, according to a Jan. 21 TD Bank report analyzing the trade balance between Canada and the United States.

Shipments from Canada make up more than half the nickel, zinc, tellurium and vanadium used in the United States, the report adds. Canada also has “abundant reserves” of cobalt, graphite, lithium, and rare-earth materials that underpin EVs and other contemporary industrial products.

This reality runs counter to Trump’s dismissal of the role Canadian goods and raw materials play in the U.S. economy made virtually at the World Economic Forum in Switzerland Jan. 23.

“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, et cetera, et cetera.”

The U.S. president has repeatedly threatened 25-per-cent tariffs on Canadian imports entering the United States since taking office Jan. 20. He said they could be imposed as early as Feb. 1, though that timeline does not appear to be set in stone. A Trump executive order calling on the Secretary of Commerce and the Secretary of Homeland Security to investigate Canadian trade points to April 1 as the deadline for reporting findings to the White House, indicating tariffs may not be guaranteed.

Canadian officials have drawn up a list of retaliatory tariffs, which could include critical minerals, Canadian Natural Resources Minister Jonathan Wilkinson said earlier this month.

But instead of a threat, Fortier said trade with Canada represents an opportunity for the United States.

“Regardless of what somebody thinks they can do alone, it’s important to remind them that actually, we can offer value so they you can get to where you want to go more clearly.”

Canada has filled this role “for decades,” Fortier added, and on critical minerals, “offers more value than ever before.”

With lithium and rare-earth metal reserves among the world’s largest, Accelerate maintains that Canada can reduce or potentially eliminate the United States’ reliance on critical minerals from China.

Wilkinson, among other federal and provincial leaders, is pushing this same cooperative narrative.

“Rather than going down a path that will inevitably be lose-lose, I would suggest something completely different,” he said in Washington Jan. 15.

Facing an “increasingly aggressive China,” collective national and economic security for North America is best served building on the long-term partnership between Canada and the United States, he said.

Fortier said industry insiders in the United States understand Canada’s current and potential value. The hangup is getting that message through to the White House, he added.

But while Canada is a major importer of a handful of critical minerals the United States relies on, the latest wave of lithium, graphite, cobalt and rare-earth projects that would likely strengthen the country’s hand in trade talks have been slow to get off the ground.

Canada has just one large-scale lithium mine in production, while nearly a dozen others remain at the advanced stages of development, according to NRCan. With capital to get mines built in exceedingly short supply over the past four years, it is a similar story for a long list of other critical minerals projects across the country.

Getting more mines built remains an uphill climb that will take government support, private investors and a long-term game plan in a “famously cyclical industry,” Fortier said.

But the threats from Trump have injected new urgency to get shovels in the ground, he said. Doing so will bolster Canada’s position in talks with the United States, as well as set the country up to be a key global supplier of minerals the world needs, Fortier added.

“How we do it is superseded by the fact that we need to do it.”

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January 30, 2025

0 3 minutes read