Canada’s secret leverage in U.S.-trade war: How lithium and cobalt could reshape trade negotiations with Trump

Former Conservative cabinet minister James Moore warns that U.S. President Donald Trump views the fates of Canada and the United States as interconnected, making it impossible to separate trade disputes from other bilateral issues when renegotiating the Canada-United States-Mexico Agreement (CUSMA). Moore, who served as industry minister under prime minister Stephen Harper, argues that Trump sees tariffs, fentanyl concerns, security issues, and CUSMA as part of one comprehensive relationship rather than distinct policy areas. Moore sees Canada’s abundance in critical minerals, an area the U.S. is currently dependent on China for supply, as Canada’s strongest leverage in helping hammer out a more favourable renegotiation of CUSMA for Canada. The Hub spoke with Moore to better understand Canada’s options as it navigates an increasingly complex bilateral relationship. Here are four key takeaways from the interview: 1. Canada’s negotiating team is well-positioned but faces structural challenges: Canada’s ambassador to the U.S., Kirsten Hillman, and other key officials bring exceptional expertise, but they must navigate Trump’s unpredictable approach and Mexico’s potential to prioritize its own interests over trilateral cooperation. 2. Critical minerals offer an untapped bargaining chip: Canada’s lithium, cobalt, and other precious metal resources could form the basis of a mutually beneficial arrangement that addresses U.S. national security concerns while providing economic benefits to Canada. 3. Regional politics complicate Canada’s response strategy: Different provinces face varying levels of economic impact from U.S. and Chinese trade disputes, creating internal political tensions that affect national unity and bargaining positions. 4. Allow Trump to claim victory while protecting Canadian interests: Moore advocates for a “win-win” approach where Trump can declare success publicly while Canada secures long-term economic stability and market access. Strong negotiating team faces structural challenges Moore praised Canada’s current diplomatic leadership, particularly Ambassador Hillman’s deep expertise in trade negotiations. “She was one of the chief negotiators for Canada” on the Trans-Pacific Partnership, he noted, describing her ability to navigate complex multilateral negotiations involving linguistic nuances and competing national interests. However, Moore warned about Mexico’s track record of prioritizing its own interests. “Mexico threw Canada under the bus in the CUSMA negotiations,” he said, noting that Mexico’s initial separate deal with the United States forced Canada to accept less favourable terms like mandatory six-year reviews and a 16-year termination clause. Critical minerals are an untapped bargaining chip  Moore sees Canada’s mineral resources as a potential game-changer in bilateral negotiations. “We have incredible capacity on lithium and cobalt and other precious metals that are deep in the earth,” he said. He described these as “strategic assets” with “military components” that could form the basis of new alliances. He suggests Canada could structure investment regulations to favour allies, creating “breadcrumbs to the United States on a preferential basis,” while maintaining flexibility for future adjustments. This approach, providing access to and the refining of minerals, he says, could address Trump’s focus on supply chain security, while generating significant economic benefits for Canada. Currently the U.S., along with most countries, is heavily dependent on China for the refining of critical minerals, including an estimated 73 percent of cobalt, 95 percent of graphite, 98 percent of manganese, and 72 percent of lithium. These minerals are essential for making everything from electric vehicle batteries and smart phones to military weapons. “There’s an opportunity for us domestically in terms of getting that investment capacity to use Canadian jobs, Canadian capacity, Canadian engineering, Canadian expertise, in order to access those minerals and then to forge relationships and alliances on a security basis with our historically most trusted trading partner in the United States,” Moore explained. Canada has an abundance of 34 critical minerals and metals, found in areas like The Ring of Fire, in northern Ontario, which is critically important to Canada because the area contains some of the world’s richest deposits of nickel, cobalt, chromite, and other essential minerals needed for new technologies. Regional divisions complicate national strategy Moore highlighted how Canada’s distinct provinces face varying economic impacts from trade disputes, creating internal political challenges. Using RBC Economics data, he explained that provinces like Ontario, Quebec, and New Brunswick face the greatest negative impact from U.S. tariffs, while Saskatchewan, Manitoba, and Nova Scotia are most affected by Chinese trade restrictions. “But in the middle, the one province that has [experienced] the least impact from both Trump’s tariffs and from China’s tariffs is Alberta,” Moore observed, noting the province faces less acute economic pressure from either dispute. “Culturally, they’re not quite as misaligned on the conservative side [from the Trump White House], and economically, they’re not being hit as acutely as other parts of the country are.” Allow Trump to claim victory Moore advocates for a pragmatic approach that prioritizes long-term Canadian interests over short-term political optics. “Let Donald Trump say that he won the deal,” he argued, comparing successful negotiations to hockey trades where both teams benefit rather than zero-sum competitions. “If we play the long game and recognize the benefit of Canada of having an open, tariff-free, mostly over 90 percent tariff-free access to the U.S. market with a binding agreement that has a generational commitment to it, that benefit for us is so overwhelming,” Moore explained. He believes the key to a good deal is ensuring any agreement doesn’t hurt “our pocketbook and doesn’t hurt our security, doesn’t hurt our sense of national cohesion.” This strategic patience could help Canada secure durable economic arrangements that outlast Trump’s presidency, while managing the immediate political challenges of dealing with an unpredictable negotiating partner. This commentary draws on a Hub podcast. It was edited using AI. Full program here.