⁠There is a problem with viewing Canada as having little leverage in a trade dispute with the United States: the economic relationship between our two countries is far more complicated—and far more important to both countries—than their relative economic size might suggest.

Canada has leverage. Not because we’re bigger than the United States—we obviously aren’t—but because after decades of economic integration, the U.S. depends on Canada for some very specific things that aren’t easily replaced.

Start with oil.

The United States is the world’s largest crude-oil producer, pumping more than 13 million barrels a day₁. On that basis, it might appear that the United States has little need for Canadian oil.

The reality is considerably more complicated.

American shale production is predominantly light, sweet crude. But substantial U.S. refining capacity—particularly in the Midwest and on the Gulf Coast—has been specifically designed and invested in to process heavier crude.

Where does America get most of its imported crude? Canada.

Canada is overwhelmingly the largest supplier of crude oil to the United States, accounting for roughly 60% of U.S. crude imports₂. That supply cannot readily be replaced. Refineries are multibillion-dollar industrial facilities designed around particular crude slates, while pipelines and transportation infrastructure have been built around these supply chains over decades₃.

Then there’s electricity.

Canada and the United States operate deeply interconnected electrical grids, with dozens of major transmission connections across the border. Canadian hydroelectricity and other generation help supply markets including New York, New England, the Midwest and the Pacific Northwest₄. These aren’t simply Canadian exports; the two systems have evolved together to balance supply, demand and reliability.

Then uranium.

The United States operates the world’s largest nuclear-power fleet and imports much of the uranium required to fuel it. Canada is one of its most important suppliers and has frequently been its largest foreign source₅. Saskatchewan contains some of the richest uranium deposits in the world.

Then agriculture.

American farmers need potash. A lot of it.

The United States imports the overwhelming majority of the potash it consumes₆, and Canada supplies the overwhelming majority of those imports₇. Saskatchewan isn’t just a major source of uranium; it also possesses one of the world’s great potash resources₈.

Tariffs can change the price of Canadian potash entering the United States. They cannot readily create an alternative source of comparable scale and proximity.

Then aluminum.

Canada is by far the largest foreign supplier of primary aluminum to the United States₉. Canadian smelters—particularly those in Quebec, supported by abundant hydroelectricity—feed American manufacturers producing everything from automobiles to aircraft.

Tariffs similarly do not create new American smelting capacity in the short term. Their immediate effect is to increase the cost of an imported industrial input.

This illustrates an important feature of the Canada–U.S. economic relationship.

Canada cannot realistically engage in a conventional economic contest with an economy roughly ten times its size. Matching the United States tariff for tariff across every category would therefore carry significant risks for Canada.

But Canada's leverage is not based on economic size.

It is concentrated in particular commodities, infrastructure and supply chains that are strategically important and difficult to replace quickly: heavy crude, electricity, uranium, potash, aluminum and critical minerals, along with deeply integrated manufacturing and transportation networks.

At the same time, Canada remains highly dependent on the United States. The United States is by far our most important trading partner. The economic dependence therefore runs in both directions, but it is not symmetrical.

That distinction matters.

Canada’s vulnerability is concentration: we sell an enormous share of our exports to one customer.

The American vulnerability is different. In several strategically important areas, Canada is an exceptionally large, geographically secure and infrastructure-connected supplier. Replacing some of that Canadian supply would require alternative suppliers, additional transportation infrastructure, new domestic productive capacity, or some combination of the three.

Canada's longer-term response to this vulnerability is likely to include greater diversification: pipelines and ports, LNG infrastructure, expanded European and Asian trade, reduced interprovincial trade barriers, critical-mineral development, joint defence initiatives, Arctic investment, and infrastructure that provides Canadian producers with alternatives to the American market.

That takes years.

In the meantime, Canada's negotiating position rests on a relatively straightforward economic reality: while Canada is substantially more dependent on the United States overall, the United States has significant dependencies on Canada in several strategically important sectors.

That gives both countries strong incentives to maintain a functioning economic relationship.

The United States is negotiating with its largest customer for American exports and one of its most important suppliers of energy, fertilizer, nuclear fuel, industrial materials and manufactured goods.

For Canada, a prolonged trade dispute with its largest customer carries obvious economic risks.

For the United States, a prolonged trade dispute with a deeply integrated and strategically important supplier carries risks of its own.

Understanding both sides of that equation is essential to understanding Canada's negotiating position.

 James Pelmore is a Private Wealth Manager at Foundation Wealth Partners. Foundation Wealth Partners LP (“FWP”) is registered as a Portfolio Manager and Exempt Market Dealer in all Canadian provinces and the Yukon territory.

1. U.S. crude oil production — 13.6 million barrels per day in 2025; world’s largest producer.
   U.S. Energy Information Administration (EIA)

2. Canada — approximately 60% of U.S. crude oil imports; Canadian crude represented approximately 24% of total U.S. refinery throughput in 2023.
   U.S. Energy Information Administration (EIA)⁠

3. Canada — primary source of U.S. crude oil imports; 3.9 million barrels per day imported from Canada in 2025.
   U.S. Energy Information Administration (EIA)⁠

4. Canada–U.S. electricity grid — at least 33 major cross-border transmission interconnections.
   U.S. Energy Information Administration (EIA)⁠

5. Uranium — Canada supplied 36% of uranium delivered to U.S. civilian nuclear operators in 2024, the largest source.

   U.S. Energy Information Administration — Uranium Marketing Annual Report

6. Potash — U.S. net import reliance approximately 92%; Canada is the dominant source of U.S. potash imports.
   U.S. Geological Survey — Mineral Commodity Summaries 2026

7. Potash — approximately 85% of U.S. potash imports came from Canada in 2023.
   U.S. Department of Agriculture (USDA)

8. Nitrogen fertilizer — just over 25% of U.S. nitrogen-fertilizer imports came from Canada in 2023.
   U.S. Department of Agriculture (USDA)⁠

9. Aluminum — U.S. aluminum production, consumption, import reliance and principal foreign suppliers.
   U.S. Geological Survey — Mineral Commodity Summaries 2026