Key facts
- Canada is the top customer for 26 US states and a top-three customer for 45 of the 50 states.
- Canada supplies the vast majority of US natural gas and electricity imports, and about 60% of crude oil imports.
- Canada is the world's top supplier of potash, a key component in fertilizer.
- A previous Canadian ban on US alcohol exports led to a 78% year-over-year drop in US wine exports to Canada.
- Canadians made 800,000 fewer trips to the US in April compared to the same period in 2024, costing the US an estimated C$3.3bn in revenue last year.
- A majority of Canadians (76%) support Ottawa's stance in the trade dispute, despite job security concerns.
Canada possesses significant economic leverage over the United States and President Donald Trump, with potential retaliatory measures that could impact the US economy. Canada is the top customer for 26 US states and a top-three customer for 45 of the 50 states, providing substantial room for maneuver in the ongoing trade dispute.
Prime Minister Mark Carney is finalizing a list of strategic retaliatory duties focused on steel, dairy, appliances, agricultural equipment, electronics, and pulp and paper. However, broader measures are being considered by some provincial leaders. Ontario Premier Doug Ford has suggested an energy surcharge on electricity exports to the United States, a move that could impact millions of homes and businesses in Michigan, Minnesota, and New York. Ford also highlighted Canada's critical role as a supplier of potash, essential for fertilizer, and critical minerals like lithium, nickel, and graphite.
Canada is a major supplier of US energy imports, providing the vast majority of natural gas and electricity, and about 60% of crude oil. While not currently part of the countermeasures, the possibility of halting these energy exports has been explicitly mentioned by various political officials. Ford has indicated that an "energy surcharge is on the table" and that the US "won't get a grain of sand out of Ontario."
Canada has already demonstrated its ability to inflict economic pain. A previous ban by most Canadian provinces on US alcohol from liquor store shelves, in response to earlier US tariffs, led to a devastating blow to the US alcohol industry. US wine exports to Canada fell 78% year over year, a loss of C$494 million, with similar drops reported for American spirits. This boycott remains in place in 11 of the 13 Canadian provinces and territories.
Furthermore, grassroots decisions by Canadians to avoid travel to the US have resulted in significant revenue loss for American businesses, estimated at C$3.3 billion last year. Some US cities and states have launched targeted advertisements to encourage Canadians to return.
Despite potential short-term economic pain for Canada, estimated to trim its GDP by 0.3% to 0.6%, a majority of Canadians support Ottawa's firm stance against the Trump administration. A recent poll indicated 76% of Canadians back the government's decision to walk away from trade negotiations, even with concerns about job security.
The timing of these actions could also be politically significant, with US midterm elections approaching and the economy a central issue for voters. States like Michigan and Maine, which border Canada and rely heavily on exports to it, are key battlegrounds. British Columbia Premier David Eby noted that US consumers will face higher prices on a range of goods, from plywood to cut flowers, due to US tariffs. Ford has also suggested targeting Republican US states with retaliatory measures to ensure "America's economy feels the pain."