Canada’s critical minerals sector would suffer a significantly less punishing blow from U.S. President Donald Trump’s threatened tariffs compared with the broader Canadian economy if he moves ahead.
Mr. Trump earlier this week temporarily backed off from imposing 25-per-cent tariffs on most Canadian imports, but the risk remains high, with the possibility that he’ll follow through after the 30-day reprieve runs out.
But amid this uncertainty, much of Canada’s resource sector can expect less pain than other parts of the economy. That’s because Mr. Trump’s 10-per-cent carve-out on tariffs for energy would also apply to a broader swath of the resource sector, including critical minerals.
Mr. Trump’s executive order on Feb. 1 said the 10-per-cent tariffs would apply to “energy resources,” which it defined as crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, hydro power and critical minerals.
The far less punitive tariff threat on critical minerals shows that Mr. Trump is cognizant that the United States relies on Canada for a huge swath of its resource needs, and imposing a 25-per-cent tariff would be far too damaging for American consumers, said Pierre Gratton, chief executive officer of the Mining Association of Canada.
“He was clearly thinking, ‘Oh, we need these commodities. We can’t do too much harm here,’” he said.
Given that dynamic, very few Canadian miners are very worked up about the prospect of the tariffs.
“None of our members are hitting the panic button,” Mr. Gratton said.
Fifty-six per cent of Canada’s minerals and metals exports went to the U.S. in 2023, including critical minerals such as uranium, potash and nickel, none of which the U.S. produces in large quantities. If U.S. customers want to buy fewer critical minerals from Canada, in many cases it would be forced to source them from hostile countries such as Russia and China.
Mark Selby, CEO of Canada Nickel Corp., which is developing the Crawford nickel project in Ontario, said that even if Mr. Trump moves ahead on tariffs in critical minerals, his company will still likely end up selling its nickel into the U.S. because the country doesn’t really have other good alternative suppliers.
“If the U.S. shuts the doors on our nickel, they’ll have to get it from somewhere else, and they’ll struggle,” he said.
Foreign mining giants Vale SA and Glencore PLC operate massive nickel mines and refineries in Canada, supplying about 60 per cent of the U.S.’s imports of the metal.
Hugues Jacquemin, CEO of Northern Graphite Corp., in a statement called the Trump carve-out for critical minerals “a small mercy.” Northern Graphite operates Canada’s only graphite mine in Quebec.
“It still would have been an unwelcome hit to our customers,” Mr. Jacquemin added. “And we’re not out of the woods yet.”
Source: The Globe and Mail
