Canada's green sectors benefit from US-Canada trade tensions

The trade conflict between the US and Canada is complicating efforts to reduce carbon emissions in both countries. Canada already faces tariffs on steel and aluminum, and more tariffs are expected soon. President Trump previously mentioned tariffs on auto imports from Canada and Mexico, but these might not take effect immediately. Canada is a leader in producing low-carbon aluminum and is developing its electric vehicle (EV) industry. However, the tariffs could threaten Canadian exports of important minerals and equipment needed in the US for electrification. The US has shifted away from environmental policies, making it harder for Canada to reduce emissions despite having a pro-climate administration in the past. The potential impact of tariffs on the auto industry is significant. As Canada exported C$78.8 billion in autos to the US last year, higher tariffs would raise prices, affecting both gas and electric cars. However, the costs for traditional gasoline vehicles might increase more than electric vehicles, potentially benefiting the EV market. Canada is working to build a stronger domestic ecosystem for electric cars and batteries. The country is rich in essential minerals and invests heavily in attracting EV and battery manufacturers. However, many plans for local production have faced delays. Experts suggest Canada can lessen the impact of US tariffs by using more of its own minerals and fostering local collaborations. Additionally, as America rolls back environmental policies, Canada could become a hub for clean-tech investments. Meanwhile, both aluminum and steel from Canada support not only the auto industry but also green technologies. Canada's aluminum production is considered among the cleanest due to hydroelectric power use. Rising costs from US tariffs might push American companies towards Canadian producers. As Canada seeks to diversify its trading partnerships, new opportunities may arise, especially in Europe where policies favor clean production. While the trade dispute poses immediate challenges, many believe that the broader goal of decarbonization will continue to drive collaboration and competition between Canada and the US in the coming years.