Hillcrest Energy Technologies. (CSE: HEAT)
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Though former U.S. President Donald Trump’s tariff threats have long cast a shadow over U.S.-Canada relations, many in Canada had hoped for amicable negotiations that might lead to exemptions. However, recent signals from the Canadian government suggest that these long-standing trade partners may be gearing up for a serious confrontation.
According to informed sources, Canada is exploring the possibility of imposing export taxes on key commodities it ships to the U.S.—including uranium, oil, and potash—should Trump proceed with broad, sweeping tariffs. Officials emphasize, however, that retaliatory measures such as export taxes, particularly on essential commodities, would be a last resort. But if a full-blown trade war escalates, this option may become unavoidable.
The U.S.-Canada trade relationship is one of the largest bilateral trade partnerships in the world, with annual two-way trade nearing $1 trillion. Energy and metals comprise a significant portion of this trade. Canadian crude oil and electricity account for 60% and 85% of U.S. imports in each category, respectively. Furthermore, Canada is the leading supplier of U.S. steel, aluminum, and uranium, providing 34 critical minerals and metals that the U.S. economy heavily relies upon.
Specifically, the U.S. imports much of its oil from Canada, with some refineries highly dependent on cheaper Canadian heavy crude oil, with no viable substitutes available. Should costs rise, the U.S. Midwest—a region whose refineries rely on Canada for nearly half of the crude they process into gasoline and diesel—would be hit the hardest.
While oil is often at the forefront of attention, Canada is also the largest foreign supplier of uranium to the U.S. Due to uranium’s dual-use nature in both civilian and military domains, Canada already enforces export controls. With no domestic uranium production within the U.S., its supply depends almost entirely on imports. Canada supplies about a quarter of the uranium consumed by U.S. nuclear reactors, with much of it sourced from ultra-high-grade mines in the province of Saskatchewan. Cameco, the world’s second-largest uranium producer, exports its uranium primarily to nuclear power plants across the Americas.
Additionally, Canada’s western provinces provide American farmers with significant amounts of potash for fertilizer. Meanwhile, the U.S. Department of Defense has been investing in Canadian projects to secure critical minerals like cobalt and graphite, aiming to reduce reliance on Chinese supply chains.
Given these factors, some analysts predict Trump may exempt mineral and energy commodities from blanket tariffs and focus on targeting manufacturing industries in Canada and Mexico. However, sources indicate that if energy products are spared while tariffs are applied to other Canadian goods, Canada would have little choice but to retaliate with export taxes.
If Trump enacts 25% tariffs on all imports, including those from Canada, the Canadian economy would face significant strain. However, applying export taxes on commodities like uranium and oil carries substantial risks to Canada’s economy as well, given that energy products alone account for roughly 30% of Canadian exports to the U.S.
Steve Verheul, Canada’s former chief trade negotiator, suggests that export taxes could serve as a tool in negotiating exemptions from U.S. tariffs. He proposes that Canada might impose taxes on energy products like oil, natural gas, or even food in order to secure broader exemptions for other industries. Canada’s Deputy Prime Minister and Finance Minister, Chrystia Freeland, has also indicated that retaliatory tariffs could include critical minerals and metals. Nevertheless, Prime Minister Justin Trudeau’s government prioritizes avoiding a trade war with its top trading partner.
Domestically, implementing export taxes may spark significant political rifts within Canada. Uranium, oil, and potash production is concentrated in the western provinces of Alberta and Saskatchewan, where provincial leaders have already expressed strong opposition to such measures. Alberta Premier Danielle Smith and Saskatchewan Premier Scott Moe have both publicly criticized the concept of export taxes, stating such policies would hurt their provincial economies while deepening existing tensions between western provinces and the federal government.
For now, the Trudeau administration walks a fine line, balancing the need to counter potential U.S. tariffs while avoiding long-term economic or political fallout—both domestically and across its largest and most important trading relationship.
