In his Oval Workplace assembly with
Prime Minister Mark Carney
final Tuesday,
President Donald Trump
repeated his chorus that the U.S. doesn’t want or need something Canada produces, itemizing off a litany of products he stated his nation would reasonably make itself. However can the U.S. actually do with out our stuff?
We checked with economists and business specialists to see simply how a lot the U.S. depends on eight of our largest exports, and whether or not Trump is correct in considering they will go it alone.
Cars
Trump made it clear throughout his assembly with Carney that the U.S. doesn’t need Canadian-made automobiles. “We need to make our personal vehicles, we don’t really need vehicles from Canada,” stated Trump. “At a sure level, it received’t make financial sense for Canada to construct these vehicles.”
However North America’s automotive business is without doubt one of the most built-in on the planet, originating with
the Auto Pact that was signed by the U.S. and Canada in 1965.
In 2024, Canada despatched almost 1.1 million automobiles to the U.S. and the U.S. exported almost 630,000 automobiles to Canada, in keeping with the Financial institution of Montreal.
Charles Bernard, lead economist on the Canadian Vehicle Sellers Affiliation, stated it should take billions of {dollars} in funding and 15 to twenty years for the American auto business to switch the availability of automobiles it imports from Canada and Mexico.
“The
tariff results
are actually going to be detrimental for these firms, however transferring again manufacturing can be much more pricey,” stated Bernard. “He (Trump) paints an awesome picture for the People about an business that type of made the nation and bringing it again, however there are structural parts that don’t make it a risk.”
Nevertheless, Bernard stated Canada ought to be involved about future investments within the business if the nation is not seen as having dependable tariff-free entry to the U.S. market.
Auto components
Like cars, auto components have been speculated to be topic to a 25 per cent tariff, however the White Home confirmed on Might 1 that Canadian components made in compliance with the
Canada–United States–Mexico Settlement (CUSMA)
can be exempted.
Bernard stated this determination was made following strain from the U.S. auto firms that warned the tariffs on auto components would result in larger manufacturing prices and better costs for automobiles.
“The commercial tissue that hyperlinks these three international locations, you possibly can’t essentially break them and recreate it in America straight away,” stated Bernard. “Not solely will it have a direct impression in your potential to supply vehicles, however the associated fee can be extraordinarily excessive.”
In response to the Canadian Chamber of Commerce Enterprise Lab, Canada and Mexico account for 58 per cent of U.S. auto components imports. It is usually estimated that automotive components cross the Canada
–
U.S. border six instances on common earlier than closing meeting.
“You may’t recreate that very same optimization in 4 years,” stated Bernard. “You would want to readjust your provide, there can be suppliers in Canada that they wouldn’t discover within the U.S., as a result of they don’t have the experience.”
Lumber
Trump has stated the U.S. doesn’t want
Canadian lumber
and, on March 1, he signed an government order to speed up U.S. home manufacturing of timber, lumber, paper and different forest merchandise by deregulating logging on federal lands.
The Canada
–
U.S. softwood lumber dispute goes again many years, with mixed countervailing and anti-dumping duties on Canadian lumber presently sitting at simply over 14 per cent. These levies are anticipated to go as much as 34 per cent this fall. Trump has threatened to impose further tariffs on high of the duties already in place however to date has not executed so.
It’s because the U.S. depends closely on Canadian lumber and paper pulp merchandise. Canada provides 24 per cent of the U.S.’s softwood lumber, which shall be arduous to switch.
Ian Dunn, president and chief government of the Ontario Forest Industries Affiliation, stated it could take 5 to 10 years for the U.S. to switch the Canadian market share.
“They must construct new capability, they usually must construct new mills,” stated Dunn. “A number of mills within the U.S. south and pacific northwest, have shut down or curtailed within the final 16 to 18 months.”
Canada can also be a big supply of paper pulp, a key enter for 1000’s of various merchandise together with paper towels and bathroom paper. Canada produces one-third of the world’s northern bleached softwood kraft pulp and 75 per cent of whole capability in North America.
“Huge U.S. firms that provide (paper towel to) Walmart and Costco really want that northern bleached softwood kraft,” stated Dunn.
Crude oil
Canada is the most important supply of crude oil for the U.S., exporting 4 million barrels of the product per day. About 90 per cent of Canada’s oil exports go to the U.S., primarily shipped by means of pipelines from Alberta to American refineries and south to the U.S. gulf coast.
Rory Johnston, an oil market researcher and former economist on the Financial institution of Nova Scotia, stated the Canadian and American oil commerce “is arguably the 2 most built-in petroleum techniques on the planet.”
“The entire movement — so you could have high quality, you could have geography, and you’ve got pipelines, which principally exclude a practical functionality for america to utterly displace Canadian oil,” stated Johnston. “And even when (they) might, it could take a decade or extra and tons of of billions of {dollars}.”
The pricey course of would come with the U.S. having to retrofit refineries, construct new pipelines and reverse current pipelines — which Johnston calls a “gigantic headache.”
He added that U.S. oil manufacturing has slowed for many years and the current drop in demand and costs attributable to commerce headwinds might result in manufacturing going into reverse.
“At these costs, we’re possible going to stall out on U.S. crude manufacturing progress already, if not start to contract outright,” stated Johnston. “So, the other of drill child drill.”
Regardless of Trump’s rhetoric, crude oil is presently exempt below CUSMA.
Metal and aluminum
Other than autos, metal and aluminum are the one items on which Trump has utilized 25 per cent sector-specific tariffs. Trump’s difficulty with
Canadian metal
and
aluminum
has carried over from his first time period, when he imposed Part 232 tariffs on Canadian metals in 2018.
“If we make it in america, we don’t want it to be made in Canada,” stated Trump in early February.
Regardless of the imposition of tariffs in 2018, U.S. manufacturing capability of metal and aluminum didn’t meaningfully enhance, in keeping with the Royal Financial institution of Canada. General, RBC stated Canada’s exports of metal and aluminum to the U.S. have elevated by 35 per cent to US$17.7 billion since 2018.
Canadian metal helps essential U.S. industries like defence, manufacturing and shipbuilding. The North American metal market can also be extremely built-in, which permits it to raised compete within the international market, which is topic to main overcapacity points pushed by China.
Canadian aluminum and metal are additionally essential for the U.S. auto business, which may supply the 2 metals in an economical method. Bernard stated almost 60 per cent of aluminum utilized in U.S.-made vehicles is from Quebec.
“That’s an awesome instance of the American president and his staff understanding that it’s such a excessive quantity of related tissue, they will’t begin tariffing each layer of it,” stated Bernard. “As a result of that may imply layoffs straight away for firms.”
The Canadian aluminum sector can even produce greater than its U.S. counterpart, as a result of Canada has extra entry to electrical energy. The U.S. merely doesn’t have sufficient electrical energy capability to energy the variety of aluminum smelters wanted to fulfill home demand, in keeping with the Aluminum Affiliation of Canada.
Potash
Potash
, a key nutrient for vegetation and enter in fertilizers, is crucial for agriculture worldwide.
Canada leads the world in exports of potash, accounting for almost 41 per cent of all international commerce of the product, in keeping with Pure Sources Canada. The one different international locations that rival Canada’s output are Russia and Belarus at 18 per cent and 16.6 per cent respectively.
The U.S. is the most important vacation spot for Canadian potash, with Canada supplying almost 80 per cent of its wants.
“We’re the most important producer of potash on the planet,” stated Pierre Gratton, president and chief government of the Mining Affiliation of Canada. “So, it’s no shock they’re closely reliant on our potash.”
In response to criticism over what a tariff on potash would imply for American farmers, Trump lowered the tax to 10 per cent, earlier than ultimately asserting CUSMA exemptions for Canadian items, together with potash.
U.S. manufacturing of potash accounts for only one per cent of demand, in keeping with the Fertilizer Institute. The Russian and Belarusian potash industries additionally face challenges after the U.S. imposed commerce sanctions on the 2 international locations after Russia’s invasion of Ukraine in 2022. Lately, Russia and Belarus have additionally floated the potential of export controls on potash, to safe home provide and drive up market costs of the commodity. Any hopes of changing Canadian provide within the near-term stay impropable for the U.S.
Different vital minerals
In 2024, U.S. imports of non-fuel minerals and metals reached US$167 billion, 24 per cent of which got here from Canada,
the most important single supply, in keeping with the Royal Financial institution of Canada.
Canada stays the U.S.’s largest provider of nickel and zinc and its second largest supply of copper.
On March 20, Trump signed an government order to extend U.S. home manufacturing of
vital minerals
by speeding-up the approval and allowing of mineral manufacturing initiatives. Trump has stated he want to see U.S. reliance on Chinese language minerals lowered
,
as China stays the main worldwide producer of vital minerals.
“They (the U.S.) are our largest market for a lot of commodities they usually’re not likely ready to switch various them,” stated Gratton. “They’re going to proceed to depend on Canada for various vital minerals, even when they ramp up their very own manufacturing.”
For instance, Gratton stated there are few nickel initiatives within the U.S. In 2023, Canada produced 158,668 tonnes of nickel, rating sixth in international
manufacturing, in keeping with Pure Sources Canada. Nickel stays a key enter for lithium-ion batteries for electrical and hybrid automobiles.
Gratton stated Canada can play a vital function in changing China’s provide of vital minerals to the U.S.
“China controls the markets of many commodities, not least of that are uncommon earths, which have some fairly essential purposes in nationwide defence and excessive tech,” stated Gratton. “So, the U.S. does want to seek out some various sources.”
Motion pictures
On Might 4, Trump threatened to impose a 100 per cent tariff on movies made in “international lands” following a gathering that came about with Hollywood actor Jon Voight.
“What they’ve executed is different nations are stealing the films, the movie-making capabilities from america,” Trump advised reporters on Might 5. “We’re making only a few motion pictures now; Hollywood is being destroyed.”
Many governments provide basic tax credit to entice manufacturing firms to movie in their nation.
In Canada, for instance, the Alberta authorities’s Movie and Tv Tax Credit score provides a 22 per cent refundable tax credit score on eligible prices incurred by foreign-owned productions. In 2023-2024, the Canadian movie manufacturing sector contributed $11.04 billion to Canada’s GDP.
Andrew Addison, senior vice-president of strategic communications on the Canadian Media Producers Affiliation, stated the business stays confused on how Trump plans to virtually implement such a levy, given a movie is just not a bodily good that crosses the border.
Canadian enterprise leaders say commerce diversification ought to be Ottawa’s high precedence: Léger ballot
Recruiting expats souring on the American Dream might give Canada an financial edge in duel with Trump
Addison added that the movie business is extremely built-in between Canada and the U.S.
“For those who have a look at the movie business, there isn’t a bodily factor that will get moved backwards and forwards. At any given time, tons of of individuals from either side of the border
might be instantaneously engaged on stuff,” stated Addison. “The way in which the enterprise works (isn’t conducive to) the preliminary tariff proposal that was put out by the president.”
• E-mail: jgowling@postmedia.com
Bookmark our web site and assist our journalism: Don’t miss the enterprise information you should know — add financialpost.com to your bookmarks and join our newsletters right here.
