In his Oval Office meeting with
Prime Minister Mark Carney
last Tuesday,
President Donald Trump
repeated his refrain that the U.S. doesn’t need or want anything Canada produces, listing off a litany of goods he said his country would rather make itself. But can the U.S. really do without our stuff?
We checked with economists and industry experts to see just how much the U.S. relies on eight of our biggest exports, and whether Trump is right in thinking they can go it alone.
Automobiles
Trump made it clear during his meeting with Carney that the U.S. does not want Canadian-made vehicles. “We want to make our own cars, we don’t really want cars from Canada,” said Trump. “At a certain point, it won’t make economic sense for Canada to build those cars.”
But North America’s car industry is one of the most integrated in the world, originating with
the Auto Pact that was signed by the U.S. and Canada in 1965.
In 2024, Canada sent nearly 1.1 million vehicles to the U.S. and the U.S. exported nearly 630,000 vehicles to Canada, according to the Bank of Montreal.
Charles Bernard, lead economist at the Canadian Automobile Dealers Association, said it will take billions of dollars in investment and 15 to 20 years for the American auto industry to replace the supply of vehicles it imports from Canada and Mexico.
“The
tariff effects
are certainly going to be negative for these companies, but moving back production would be even more costly,” said Bernard. “He (Trump) paints a great image for the Americans about an industry that kind of made the nation and bringing it back, but there are structural elements that don’t make it a possibility.”
However, Bernard said Canada should be concerned about future investments in the industry if the country is no longer seen as having reliable tariff-free access to the U.S. market.
Auto parts
Like automobiles, auto parts were supposed to be subject to a 25 per cent tariff, but the White House confirmed on May 1 that Canadian parts made in compliance with the
Canada–United States–Mexico Agreement (CUSMA)
would be exempted.
Bernard said this decision was made following pressure from the U.S. auto companies that warned the tariffs on auto parts would lead to higher production costs and higher prices for vehicles.
“The industrial tissue that links these three countries, you can’t necessarily break them and recreate it in America right away,” said Bernard. “Not only will it have a direct impact on your ability to produce cars, but the cost would be extremely high.”
According to the Canadian Chamber of Commerce Business Lab, Canada and Mexico account for 58 per cent of U.S. auto parts imports. It is also estimated that car parts cross the Canada
–
U.S. border six times on average before final assembly.
“You can’t recreate that same optimization in four years,” said Bernard. “You would need to readjust your supply, there would be suppliers in Canada that they wouldn’t find in the U.S., because they don’t have the expertise.”
Lumber
Trump has said the U.S. does not need
Canadian lumber
and, on March 1, he signed an executive order to accelerate U.S. domestic production of timber, lumber, paper and other forest products by deregulating logging on federal lands.
The Canada
–
U.S. softwood lumber dispute goes back decades, with combined countervailing and anti-dumping duties on Canadian lumber currently sitting at just over 14 per cent. These levies are expected to go up to 34 per cent this fall. Trump has threatened to impose additional tariffs on top of the duties already in place but so far has not done so.
This is because the U.S. relies heavily on Canadian lumber and paper pulp products. Canada supplies 24 per cent of the U.S.’s softwood lumber, which will be hard to replace.
Ian Dunn, president and chief executive of the Ontario Forest Industries Association, said it would take five to 10 years for the U.S. to replace the Canadian market share.
“They would have to build new capacity, and they would have to build new mills,” said Dunn. “A lot of mills in the U.S. south and pacific northwest, have shut down or curtailed in the last 16 to 18 months.”
Canada is also a large source of paper pulp, a key input for thousands of different products including paper towels and toilet paper. Canada produces one-third of the world’s northern bleached softwood kraft pulp and 75 per cent of total capacity in North America.
“Big U.S. companies that supply (paper towel to) Walmart and Costco really need that northern bleached softwood kraft,” said Dunn.
Crude oil
Canada is the biggest source of crude oil for the U.S., exporting four million barrels of the product per day. About 90 per cent of Canada’s oil exports go to the U.S., mainly shipped through pipelines from Alberta to American refineries and south to the U.S. gulf coast.
Rory Johnston, an oil market researcher and former economist at the Bank of Nova Scotia, said the Canadian and American oil trade “is arguably the two most integrated petroleum systems on the planet.”
“The whole flow — so you have quality, you have geography, and you have pipelines, which basically exclude a functional capability for the United States to completely displace Canadian oil,” said Johnston. “And even if (they) could, it would take a decade or more and hundreds of billions of dollars.”
The costly process would include the U.S. having to retrofit refineries, build new pipelines and reverse existing pipelines — which Johnston calls a “gigantic headache.”
He added that U.S. oil production has slowed for decades and the recent drop in demand and prices due to trade headwinds could lead to production going into reverse.
“At those prices, we’re likely going to stall out on U.S. crude production growth already, if not begin to contract outright,” said Johnston. “So, the opposite of drill baby drill.”
Despite Trump’s rhetoric, crude oil is currently exempt under CUSMA.
Steel and aluminum
Aside from autos, steel and aluminum are the only goods on which Trump has applied 25 per cent sector-specific tariffs. Trump’s issue with
Canadian steel
and
aluminum
has carried over from his first term, when he imposed Section 232 tariffs on Canadian metals in 2018.
“If we make it in the United States, we don’t need it to be made in Canada,” said Trump in early February.
Despite the imposition of tariffs in 2018, U.S. production capacity of steel and aluminum did not meaningfully increase, according to the Royal Bank of Canada. Overall, RBC said Canada’s exports of steel and aluminum to the U.S. have increased by 35 per cent to US$17.7 billion since 2018.
Canadian steel supports important U.S. industries like defence, manufacturing and shipbuilding. The North American steel market is also highly integrated, which allows it to better compete in the global market, which is subject to major overcapacity issues driven by China.
Canadian aluminum and steel are also important for the U.S. auto industry, which can source the two metals in a cost-effective way. Bernard said nearly 60 per cent of aluminum used in U.S.-made cars is from Quebec.
“That’s a great example of the American president and his team understanding that it’s such a high amount of connected tissue, they can’t start tariffing every layer of it,” said Bernard. “Because that would mean layoffs right away for companies.”
The Canadian aluminum sector can also produce more than its U.S. counterpart, because Canada has more access to electricity. The U.S. simply does not have enough electricity capacity to power the number of aluminum smelters needed to meet domestic demand, according to the Aluminum Association of Canada.
Potash
Potash
, a key nutrient for plants and input in fertilizers, is essential for agriculture worldwide.
Canada leads the world in exports of potash, accounting for nearly 41 per cent of all global trade of the product, according to Natural Resources Canada. The only other countries that rival Canada’s output are Russia and Belarus at 18 per cent and 16.6 per cent respectively.
The U.S. is the major destination for Canadian potash, with Canada supplying nearly 80 per cent of its needs.
“We’re the largest producer of potash in the world,” said Pierre Gratton, president and chief executive of the Mining Association of Canada. “So, it’s no surprise they are heavily reliant on our potash.”
In response to criticism over what a tariff on potash would mean for American farmers, Trump lowered the tax to 10 per cent, before eventually announcing CUSMA exemptions for Canadian goods, including potash.
U.S. production of potash accounts for just one per cent of demand, according to the Fertilizer Institute. The Russian and Belarusian potash industries also face challenges after the U.S. imposed trade sanctions on the two countries after Russia’s invasion of Ukraine in 2022. Recently, Russia and Belarus have also floated the possibility of export controls on potash, to secure domestic supply and drive up market prices of the commodity. Any hopes of replacing Canadian supply in the near-term remain impropable for the U.S.
Other critical minerals
In 2024, U.S. imports of non-fuel minerals and metals reached US$167 billion, 24 per cent of which came from Canada,
the largest single source, according to the Royal Bank of Canada.
Canada remains the U.S.’s biggest supplier of nickel and zinc and its second largest source of copper.
On March 20, Trump signed an executive order to increase U.S. domestic production of
critical minerals
by speeding-up the approval and permitting of mineral production projects. Trump has said he would like to see U.S. reliance on Chinese minerals reduced
,
as China remains the leading international producer of critical minerals.
“They (the U.S.) are our largest market for many commodities and they’re not really in a position to replace a number of them,” said Gratton. “They’re going to continue to rely on Canada for a number of critical minerals, even if they ramp up their own production.”
For example, Gratton said there are few nickel projects in the U.S. In 2023, Canada produced 158,668 tonnes of nickel, ranking sixth in global
production, according to Natural Resources Canada. Nickel remains a key input for lithium-ion batteries for electric and hybrid vehicles.
Gratton said Canada can play a crucial role in replacing China’s supply of critical minerals to the U.S.
“China controls the markets of many commodities, not least of which are rare earths, which have some pretty important applications in national defence and high tech,” said Gratton. “So, the U.S. does need to find some alternative sources.”
Movies
On May 4, Trump threatened to impose a 100 per cent tariff on films made in “foreign lands” following a meeting that took place with Hollywood actor Jon Voight.
“What they have done is other nations are stealing the movies, the movie-making capabilities from the United States,” Trump told reporters on May 5. “We are making very few movies now; Hollywood is being destroyed.”
Many governments offer general tax credits to entice production companies to film in their country.
In Canada, for example, the Alberta government’s Film and Television Tax Credit offers a 22 per cent refundable tax credit on eligible costs incurred by foreign-owned productions. In 2023-2024, the Canadian film production sector contributed $11.04 billion to Canada’s GDP.
Andrew Addison, senior vice-president of strategic communications at the Canadian Media Producers Association, said the industry remains confused on how Trump plans to practically implement such a levy, given a film is not a physical good that crosses the border.
Addison added that the film industry is highly integrated between Canada and the U.S.
“If you look at the film industry, there is no physical thing that gets moved back and forth. At any given time, hundreds of people from both sides of the border
could be instantaneously working on stuff,” said Addison. “The way the business works (isn’t conducive to) the initial tariff proposal that was put out by the president.”
• Email: jgowling@postmedia.com
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