How Canada could hit back to hurt the US economy - and Trump

What leverage does Canada, which sells about 70% of its goods to the US, actually have in this spiralling trade dispute with its southern neighbour, who also happens to be the world's largest economy?

Canada is the top customer for 26 US states, including Maine, Michigan, and Wisconsin. And it is in the top three for 45 of the 50 American states, suggesting Prime Minister Mark Carney has room to manoeuvre in a trade fight.

For now, Carney's planned Canadian retaliatory duties are strategic "dollar-for-dollar" countermeasures focused on steel, dairy, appliances, agricultural equipment, electronics, pulp and paper - though the list is still being finalised.

Polls suggest a majority of Canadians would be unhappy if his government went in the other direction and made significant concessions to the US. That sentiment is shared by Ontario Premier Doug Ford, one of Trump's most vocal critics north of the border, who responded to the tariff threats by telling the US president to "kiss my ass".

Canada's Finance Department said additional measures to protect workers and businesses would be announced on Tuesday.

Here are some areas where Canada can apply economic pressure.

Carney noted on Saturday that Canada supplies the vast majority of US natural gas and electricity imports and about 60% of crude oil imports.

"I don't think they want us to stop sending any of that energy," he said.

Squeezing the US on energy is not in the current countermeasures, although various political officials have said explicitly it wasn't ruled out - and not all provincial premiers have been keen to use that leverage.

Ford, whose Ontario province is home to Canada's auto manufacturing industry, is open to how far the dispute could go and said that an "energy surcharge is on the table".

He briefly floated a 25% surcharge in 2025 on all electricity exports to the United States, which his government estimated would have impacted 1.5 million homes and businesses in Michigan, Minnesota and New York.

The country is also a major source of important commodities including potash - a product in fertiliser for which Canada is the world's top supplier.

"I'd love to see [Trump] run cars without any oil. I'll love to see him grow vegetables and fruit without the potash," Ford said on Monday. "President Trump underestimates us, and that's the biggest mistake."

Canada also has significant reserves of critical minerals like lithium, nickel and graphite.

The US is Canada's top destination for overall mineral exports, another point where Ottawa could apply pressure.

Ford here also took the lead, saying in an interview with the Associated Press that the US "won't get a grain of sand out of Ontario".

Canada has already proven that it can cause economic pain in the US.

Even before trade talks broke down, a decision by most provinces to ban US alcohol from liquor store shelves - in response to the first wave of US tariffs early last year - dealt a devastating blow to that industry in the US.

American wine had a significant collapse in exports, one the Wine Institute called the "most significant market disruption in decades".

US wine exports to Canada fell 78% year over year, a $357m (C$494m; £261m) loss in export value, according to government data. The distillers association reported similar numbers - saying provincial bans have caused exports of American spirits to drop by more than 70%.

That boycott remains in place in 11 of the 13 Canadian provinces and territories. The ban is a point of significant frustration for the Trump administration.

While that alcohol boycott has been put in place by political leaders, there are also grassroots decisions by many Canadians that have hurt their neighbour's economy - such as avoiding travel to the US.

Even with a slight uptick in road trips to the US in April, Canadians made 800,000 fewer trips that month compared to the same time in 2024, before Trump returned to office, according to national data.

The travel boycott has meant a loss of about C$3.3bn ($2.35bn; £1.75bn) in revenue for the US last year. Some American cities and states have appealed for Canadians to return through targeted advertisements and special deals.

Timing and Canadian political will could also be a tool for negotiations.

Canadians know they will feel economic pain in this dispute - financial analysts estimated the most recent tariffs of 50% on about $20bn of Canadian imports could trim between 0.3% to 0.6% off the country's GDP in the short term.

Still, a majority in the country broadly back Ottawa's decision to drive a hard bargain against the Trump administration, and other Canadian political leaders have shown a united front.

A weekend poll from Angus Reid indicated that some 76% of Canadians support Ottawa's decision to walk away from trade negotiations even as they worry for their own job security.

The US midterm elections are fast approaching, with the economy front and centre for voters and the Republican hold on Congress looking tenuous.

Two of the biggest Senate races are in Michigan and Maine, which both border Canada and send most of their exports there.

The Yale Budget Lab calculates that under current law, Trump's global tariffs will cost American households about $1,100 annually.

Any further increase in the costs of goods and the wider impact of the trade dispute on businesses could further sour the American public on the economy.

On Monday, Carney said that US workers will be hurt by Trump's most recent threat to increase tariff on autos and auto parts from Canada to 50% after 1 January.

"What is the message sent out to the workers in Michigan, Ohio, Kentucky, Alabama? These workers depend absolutely on Canada, their largest consumer," he said, adding that Canada buys more American cars than the EU and other countries.

On CNN on Monday, British Columbia Premier David Eby noted US consumers will see the impact of the US tariffs in any number of goods.

"If you're building a new home, on plywood, if you're replacing your floor, on veneers, if you're getting married, on cut flowers, if you're going out fishing, on fishing poles," he said.

"It is a bizarre policy for Americans. It's going to hurt them."

Ford, one of the most vocal Canadian leaders opposing the Trump administration's tariffs, also did not rule out specifically targeting Republican US states with retaliatory measures and "making sure America's economy feels the pain".

As for the coming midterms, Ford said: "If I were allowed to, I'd be down there door-knocking".