US-Canada Trade War: Ontario to Cut Electricity, Minerals

Ontario's threat to cut electricity and critical mineral exports to the US signals a hardening of Canada's response to Washington's tariff escalation, adding energy and mineral security to an already volatile North American trade dispute. The move matters for Mexico's business environment because it sharpens the contrast between Ottawa's retaliatory posture and Mexico City's cooperative negotiating strategy, a distinction US officials have cited in extending more favorable treatment to Mexican steel, auto and mineral exports. 

Ontario Premier Doug Ford is threatening to shut off electricity and critical mineral shipments to the United States if Washington keeps escalating its trade fight with Canada, raising the stakes just as President Donald Trump prepares to impose 50% tariffs on Canadian autos, auto parts and steel starting January 1, 2027.

Ford said he would begin cutting Ontario-produced power and minerals to the US if the dispute continues to intensify. The province supplies roughly 6% of Michigan's electricity through four cross-border transmission lines with a combined capacity of 2,000 megawatts. "He better have a pack of batteries," Ford said, referring to Trump's threats against Canadian manufacturing.

It is not the first time Ford has floated cutting off resources as leverage. He has previously argued that Canada's constitution gives provinces jurisdiction over critical minerals and that Ontario has "the right to make sure that the people that buy our critical minerals are friends."

Talks Collapse, Tariffs Take Effect

The threat follows the breakdown of US-Canada trade talks on Aug. 21, when Prime Minister Mark Carney walked away from the negotiating table. Washington responded by imposing 50% tariffs on roughly US$20 billion worth of Canadian goods, including autos, parts and steel. Carney has said Canada will retaliate dollar-for-dollar starting Sept. 8, and has not ruled out targeting US energy supplies as part of that response.

Trump escalated further on Aug. 24, announcing on Truth Social that tariffs on all Canadian cars, trucks, auto parts and steel would rise to 50% on Jan. 1, 2027, while goods manufactured in the US would face no duties at all. He accused Canada of years of unfair trade practices toward US farmers and said the country "will be treated like a State no longer." 

The framework under negotiation before talks collapsed would have cut US auto tariffs on Canada from 25% to 15% and steel and aluminum duties from 50% to 25%, according to Mexico Business News, which reported that markets reacted immediately, with shares of Ford and Stellantis falling roughly 4% and Canadian steelmaker Algoma Steel dropping more than 8%.

Why Ontario's Minerals Matter

Ontario's leverage rests heavily on its mining sector. The province's Sudbury Basin, where Vale and Glencore operate, is among the world's largest nickel-producing regions, supplying a metal critical to stainless steel, electric-vehicle batteries and defense applications. Cameco's Blind River refinery in northern Ontario is the world's largest commercial uranium-refining facility, while the province's Ring of Fire deposit holds chromite, cobalt, nickel, copper, titanium and platinum-group elements.

Canada exported US$28.8 billion worth of critical minerals to the United States in 2025, roughly 57% of its total critical-mineral exports, according to Natural Resources Canada. Losing that supply would complicate Washington's parallel push to reduce dependence on Chinese processed minerals.

Ford has used energy as leverage before, imposing a 25% surcharge on electricity sold to Michigan, Minnesota and New York in March 2025 after Trump threatened to double steel and aluminum tariffs; both sides ultimately backed down. Despite the renewed threat, Ford said Ontario "power[s] 1.5 million homes and businesses" in the US and insisted he still favors negotiation over confrontation, saying Canada should keep talking rather than "walking away from the table."

Mexico Charts a Different Path

While Canada moves toward retaliation, Mexico has taken the opposite approach, and the contrast has shaped how Washington is treating its two USMCA partners. According to a Mexico Business News analysis, US purchases from Mexico grew 6% year-on-year between January and November 2025 to US$492.5 billion, while imports from Canada fell 7% to US$351.2 billion, even though Mexican exporters faced a somewhat higher effective tariff rate. The gap largely reflects Mexico's avoidance of direct retaliation, in contrast with Canada's countermeasures on US autos, steel, aluminum and liquor.

Mexican President Claudia Sheinbaum said she remains "optimistic" about reaching a deal with Washington, as Economy Minister Marcelo Ebrard continues talks in the capital aimed at lowering the 50% US tariffs on Mexican steel and aluminum and 25% duties on Mexican autos, Mexico Business News reported. Mexico is separately pushing to eliminate tariffs on vehicles and industrial inputs entirely as part of the ongoing USMCA review.

Mexico is also positioning itself in critical minerals, though from a different angle than Ontario's export leverage. The country is seeking negotiated access to 13 minerals it lacks or produces only in limited volumes, including lithium, nickel, cobalt and platinum, while promoting its own standing as a top global producer of silver, copper, fluorite and zinc. Mexican and US officials have also folded a minerals cooperation plan into the broader USMCA framework, prioritizing joint development of copper, silver, lithium, graphite and zinc projects.

For now, Ford says he is not abandoning diplomacy. "I never believe in walking away from the table," he told the Associated Press. "Continue negotiating and see where we go." But with the January tariff deadline approaching and Canada's own retaliation set for Sept. 8, Ontario's electricity and mineral exports remain squarely on the table as a bargaining chip,  one that, unlike Mexico's conciliatory strategy, Canada appears increasingly willing to use.