Does Canada have leverage in Trump trade war? What premiers, experts say

The prospect of steep new tariffs on Canada by U.S. President Donald Trump has reignited calls for retaliation and using more leverage in trade negotiations, but some experts say Canada has few options at its disposal.

Prime Minister Mark Carney said Thursday after meeting with premiers in Charlottetown that “everything is on the table” as governments weigh how to respond to the 50 per cent tariff threat, but declined to specify exactly what the “full range” of available options are — or whether they would include retaliatory measures.

“We don’t need to respond in advance,” he told reporters. “In fact, I think it would be counterproductive at this stage to respond in advance. But it’s important to know what your options are.”

He added that he and the premiers had discussed potential options, which would need approval from provinces and territories as some would be “directly” impacted.

“We are united in direction and objective and purpose and seriousness about the response,” Carney said. “We are going to support Canadian families, workers, businesses, full stop.”

Some premiers, however, have already started pushing their own ideas on how to hit back at the U.S.

Ontario Premier Doug Ford, who has called for “dollar for dollar” tariffs if the American duties go ahead on Aug. 19, has renewed his earlier calls for restricting energy and potash exports south of the border — products that are notably exempt from Trump’s executive orders.

So are critical minerals, which U.S. officials including Ambassador to Canada Pete Hoekstra have said the Trump administration remains keen on gaining access to under a future economic deal. The U.S. has also purchased stakes in Canadian mining companies, raising concerns.

British Columbia Premier David Eby told reporters Wednesday such a deal should be contingent on the U.S. dropping its tariffs and ceasing its attacks on Canada.

“If the prime minister calls British Columbia and says he needs support with some big sticks to have conversations at the table, then we’ll be there,” Eby said.

“At the end of the day, the United States needs to decide what they want to do: do they want a strong partner in Canada where we work together, or are they keen to go it alone? There’s not this middle road where you attack British Columbians on one hand, and the other hand you’re digging up our metals and minerals and bringing them south of the border.”

Notably, China — which the U.S. frequently says is the only other country besides Canada that retaliated over Trump’s initial tariffs last year — used its own vast critical minerals resources as leverage, blocking exports to the U.S.

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Those export restrictions were ultimately lifted last fall after Trump agreed to reduce or suspend many of its tariffs on Beijing following a meeting with Chinese President Xi Jinping in October.

Andreas Schotter, a professor of international business at Western University’s Ivy Business School, said in an interview that copying China’s approach may not have the same impact.

“China has so much more on its side (in terms of) leverage,” he said.

Beijing has amassed a “quasi-monopoly” on rare earth materials and other critical mineral mining and processing that the U.S., Canada and other allies are still seeking to counter, experts have previously told Global News.

G7 and other Western nations are scrambling to build resilient supply chains for the minerals used in everything from military hardware to semiconductors, and Canada is moving to expand development of its own vast mineral resources as part of that effort.

Schotter added that critical minerals could still be put on the table in negotiations, but as an opportunity rather than the “big stick” Eby proposed.

“Give Trump the win to announce, you know, that we are willing to go into a long-term agreement with minerals and … see the U.S. as a preferred buyer,” he said. “Make it sound fair. That’s the critical part.”

Schotter added Canadian officials should be further lobbying U.S. buyers of critical minerals to push that message to the Trump administration, noting the same should be done for energy.

Brian Clow, who served as deputy chief of staff to former prime minister Justin Trudeau and had a front-row seat to Canada-U.S. trade negotiations in Trump’s first term, told Global News that approach “may sound simple, but, it is a tried, tested, and true strategy working with the Trump administration.”

“You’ve got to utilize the relationships you have, find the people in the administration who can be reasonable, and try to talk these issues through and present proposals that are a win for both countries,” he said.

“The challenge now, though, is the Trump administration is just that much more emboldened, and they aren’t really looking to put water in their wine. They just want unilateral concessions from Canada.”

Clow added his best advice to the Carney government is “just keep talking” and not let the new tariff threat get in the way of progress.

“Negotiating against the behemoth United States of America, we’re always going to be the smaller partner. They’re always going to have more leverage over us than we do over them,” he said.

“But we aren’t powerless here.”

With diversification efforts still years away from being achieved, Schotter said it’s still in Canada’s best interest to promote energy and mineral partnerships with the U.S. under a future deal.

“We could (block exports to the U.S.), but what do we do with the crude from Alberta? Not much we can do,” he said. “At this point in time, we can fill lakes maybe with it.”

Alberta Premier Danielle Smith also says co-operation, not retaliation, is the best approach.

“I would say you don’t go into a discussion saying you’re going to punch somebody in the nose if they don’t give you what you want,” she said in an interview with Global News on Thursday after meeting with Carney and the premiers in Charlottetown.

“I think that the prime minister is being wise to say, let’s deal with the stages as they come. And the stage that we’re in right now is that there seems to be some sense of urgency over these next 27 days to try to get to an agreement.”

She continued: “We know what the irritants are from the American point of view, we also know some of the things that would be beneficial to the American economy if we can come to a deal on them.”

—With files from Global’s David Akin and Sophall Duch