Highlights

• Canada holds vast reserves of 34 critical minerals crucial for emerging technologies, with an estimated gross value exceeding $300 billion.
• U.S. tariffs on Canadian mineral imports are creating trade tensions and potentially disrupting established supply chains.
• The global demand for critical minerals is expected to double by 2030 and triple by 2040, highlighting their strategic importance.

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The growing importance of critical minerals has intensified trade tensions between Canada and the United States, particularly following the imposition of tariffs by U.S. President Donald Trump. These minerals, essential for modern economies and national security, are at the center of a dispute that some experts say could disrupt trade and investment. Recently, Prime Minister Justin Trudeau reportedly told executives that Trump was serious about the idea of annexing Canada, citing the nation's vast reserves of critical minerals as a reason. Following Trump’s election in November 2024, he introduced tariffs of 25% on most Canadian imports and 10% on energy and resource exports, including uranium and critical minerals. On February 1, 2025, additional tariffs were applied to steel and aluminum, further complicating trade relations.

The Importance of Critical Minerals

As reported by Daniel Johnson at CTV News (opens in a new tab) in Canada, critical minerals are essential to Canada's economy and national security. According to the Critical Minerals Centre of Excellence, a mineral is considered critical if its supply chain is threatened and if Canada has the potential to produce it. These minerals are crucial for the transition to a low-carbon digital economy, energy security, and industrial growth. Natural Resources Canada highlights their role in economic development and environmental sustainability, positioning Canada as a key player in the global supply chain.

The Canadian government recognizes 34 critical minerals, including lithium, nickel, cobalt, copper, rare earth elements, and graphite, which are particularly important for emerging technologies like electric vehicles (EVs), renewable energy, and defense applications. The International Energy Agency (IEA) estimates that demand for these minerals will more than double by 2030 and triple by 2040, potentially reaching 35 million tonnes annually.

Canada's Critical Mineral Reserves and Economic Impact

Canada holds significant deposits of key critical minerals. A TD Economics (opens in a new tab) report estimates that six priority minerals—_lithium, graphite, nickel, cobalt, copper, and rare earths_—have a gross value exceeding $300 billion, contributing over $500 billion to GDP during the lifespan of mining projects. Natural Resources Canada (opens in a new tab) identifies key mineral resources across the country, with major deposits in Saskatchewan (potash, uranium, helium), Quebec (lithium, graphite, rare earth elements), and British Columbia (copper, aluminum, zinc). Almost every province and territory have critical mineral reserves, smelters, or refining projects.

The U.S. Interest in Canadian Critical Minerals

The U.S. is highly dependent on critical minerals for clean energy, defense, and high-tech industries. Experts say that Canada’s rich mineral supply makes it a vital partner, particularly as the U.S. seeks to reduce reliance on China and Russia for these materials. According to Tim Pickering, founder of Auspice Capital Advisors (opens in a new tab), securing "friendly supply chains" is essential for U.S. energy and military needs.

However, the recent tariffs have complicated trade relations. Tim Timmins (opens in a new tab), an expert from Gowling WLG, (opens in a new tab) notes that while the U.S. already has stable and competitive access to Canadian minerals, the new tariffs could disrupt existing supply networks, increase costs, and discourage investment in mining and processing. He warns that a trade war could be counterproductive, potentially forcing Canada to seek alternative markets outside North America.

Outlook and Potential Consequences

According to the Canadian media, the trade dispute over critical minerals is likely to disrupt supply chains and slow down investments in both countries. While Trump’s decision to impose tariffs suggests an effort to strengthen domestic industries, some experts believe it acknowledges the U.S.'s reliance on Canadian mineral resources. If tensions escalate, Canada may shift its focus to other global markets, raising costs across industries and potentially reducing North American competitiveness in key sectors.

In the short term, the tariffs are expected to cause regulatory challenges and market uncertainty. Whether Canada and the U.S. can negotiate a resolution remains uncertain, but experts caution that a prolonged dispute could have widespread economic consequences for both countries.