Rare Earth Exchanges

Brewing Tensions Over Rare Earths: Canada Weighs Export Ban Amid U.S. Tariff Threats

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Highlights

  • British Columbia Premier David Eby suggests blocking critical mineral exports to the US if Trump imposes 25% tariffs.
  • Canada supplies 16 of 50 critical minerals to the US, with strategic importance amid growing global competition.
  • Experts call for North American unity to counter China’s dominance in rare earth and critical mineral supply chains.

British Columbia  Premier David Eby (opens in a new tab) has hinted at a potential ban on exporting critical minerals to the U.S. if President-elect Donald Trump imposes proposed 25% tariffs on Canadian goods.

In a speech at the Natural Resources Forum, Eby underscored B.C.’s strategic importance, highlighting critical minerals produced in the province that are vital to U.S. industries, including defense. He cited the Trail smelter’s output of minerals essential for night vision goggles and electronic devices, emphasizing that the U.S. lacks alternative sources for these materials reports (opens in a new tab) CBC’s Akshay Kulkarni.

Eby’s proposal joins a patchwork of responses from other Canadian premiers. Some advocate electricity export bans, while others call for a unified national strategy to counter U.S. trade policies. The looming tariffs exacerbate existing tensions, particularly as Canada supplies 16 of the 50 minerals deemed critical by the U.S., with China’s recent export restrictions amplifying Canada’s importance.

Rare Earth Exchanges Takeaway

What are the real feasibility issues associated with retaliatory bans? How would an export ban on minerals impact Canadian industries and investments, especially as B.C. plans significant mineral projects worth $32 billion?  Over the long run, how will Canada safeguard its critical mineral sector while maintaining trade relationships with the U.S. amid escalating protectionism? Finally,  could this standoff weaken North American competitiveness in the global race for critical minerals, particularly against China’s dominance?

We suggest what is needed is North American unity. As premiers prepare for high-stakes trade negotiations in Washington, questions about unity, strategy, and the long-term repercussions of tit-for-tat measures loom large. The outcome could redefine the U.S.-Canada partnership in the critical mineral trade.

The brewing tensions between the USA and Canada over rare earth tariffs and export restrictions are counterproductive, especially when compared to China’s dominant and subsidized approach to critical minerals. China’s state-backed conglomerates control the lion’s share of global rare earth production, refining, and supply chains, benefiting from substantial government support, economies of scale, and strategic alignment. This dominance underscores why infighting among allies like the USA and Canada could be self-defeating.

Key issues include fragmentation, which weakens collective strength; collaboration at this stage is key for places like North America and the rare earths sector.

 A trade conflict between the U.S. and Canada over critical minerals would only exacerbate vulnerabilities and delay progress in building a resilient supply chain. Instead, both countries should prioritize collaboration, aligning strategies to reduce dependence on China and fostering a shared vision for the future of critical minerals and rare earths.

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