Following a Wednesday meeting with Canada’s premiers over the current U.S.-Canada tariff row, Canadian Deputy Prime Minister Chrystia Freeland appeared to threaten restrictions on exports of critical minerals to the United States: “Some premiers proactively identified products that their provinces produce and export to the United States and which the U.S. relies on and which should be considered as part of the Canadian response. This included some critical minerals and metals.”
The United States indeed relies heavily on Canada for many critical minerals. For minerals in which the United States depends primarily on imports to meet its demand, Canada is the leading import source for twenty-three minerals. China is the only other country on which the United States relies for more minerals. While the Canadian government seems to be posturing with its threat of restricting mineral exports, the incoming Trump Administration may not take such threats lightly, given the importance of these minerals to the U.S. economy and military.
In 2017, President Trump signed Executive Order 13817, which noted America’s reliance on mineral imports and warned, “This dependency of the United States on foreign sources creates a strategic vulnerability for both its economy and military to adverse foreign government action…that can disrupt supply of these key minerals.” Canada’s mineral threat is exactly the type of foreign government action that Trump’s executive order warned of. The United States, however, can credibly levy its own mineral threats.
The incoming administration could threaten to block Canadian mineral projects from Defense Production Act (DPA) Title III grants, vowing to award grants solely to U.S. mineral projects. Under the DPA, Canada is considered a “domestic source” and thus eligible for DPA grants. The Trump Administration could halt the review of Canadian projects under consideration for DPA grants, and it could also pause further disbursements of funds to Canadian recipients of DPA grants, including the nearly $50 million in commitments to four Canadian mineral projects.
The Trump Administration could, too, threaten to impose its own restrictions on minerals that the United States exports to Canada. While Canada exports far more minerals to the United States, the United States does export some mineral products—from ore and concentrate to metal and scrap—to Canada. Restrictions on U.S. mineral exports to Canada could negatively impact U.S. exporters by removing a revenue source, but the Trump Administration could help fill the revenue void by using DPA funds to purchase these previously exported minerals.
The president has broad unilateral authority under the DPA to purchase industrial resources, which includes minerals. To make the purchases, the Trump Administration could tap the DPA’s $1 billion in unobligated funds, and it could tap an additional $450 million to $900 million, depending on the final defense appropriations bill for fiscal year 2025. These mineral products can then be stockpiled in the so-called “DPA inventory,” which existed during the Cold War and whose value in 1963 reached $1.5 billion (over $10 billion in 2024 dollars).
While stockpiling mineral products like ore, concentrate, and scrap is less preferable than stockpiling metal that can be used in manufacturing with minimal additional steps, this stockpiling effort could accompany the Trump Administration’s push to onshore domestic mineral processing capacity: the first Trump Administration’s Department of Energy issued guidance making U.S. mineral processing projects eligible for billions of dollars in direct loans under the Advanced Technology Vehicle Manufacturing program. Notably, state-backed investment into processing, when combined with export controls on ore and concentrate, can incentivize the building of processing facilities, as evidenced in Indonesia. With more U.S. processing facilities being built, the U.S. government could then sell the stockpiled ore, concentrate, and scrap to U.S. processors.
However, would the incoming Trump Administration actually be willing to follow through on these threats? The answer appears to be “yes.”
The first Trump Administration sought to reduce America’s vulnerability to import disruptions like export controls by increasing domestic mineral production, which these policies would achieve. Importantly, the above policies would also make the United States more self-reliant, and in September 2024, Trump pledged to make the United States “truly self-reliant” with minerals. Thus, Canada’s mineral threat could spur the incoming administration to levy and follow through on its threats in pursuit of US mineral self-reliance.
In the U.S.-Canada mineral dynamic, Canada is not the only one with mineral leverage; the United States has plenty of leverage, too. Yes, Canada has lots of mineral production, but the United States has lots of untapped minerals—and lots of money it is willing to pump into the mineral sector. More importantly, the United States has an incoming president willing to both levy and follow through on its trade threats toward Canada, as evidenced by Trump’s first term. If Canada isn’t more careful, it might find its mineral bargaining chips matched, or even trumped, by the United States.
