In a dramatic escalation of trade tensions, Canada has issued a stark warning to the United States: it may cut off nickel exports in retaliation for the Trump administration’s newly imposed 30% tariff on electric vehicles (EVs). This sudden move threatens to choke off a vital supply chain artery that has long connected Ontario’s Sudbury nickel mines to Detroit’s automotive giants. With no exemptions for Canadian nickel, the cost of EV production is set to skyrocket, potentially derailing the U.S. automotive industry’s ambitious 2030 electric vehicle targets.

The stakes are high. The Sudbury basin supplies approximately 185,000 tons of nickel annually, crucial for producing battery cathodes. As the tariff takes effect, the cost of an EV battery pack could surge by nearly $1,000, forcing manufacturers like GM and Stellantis to reconsider their production strategies. Ottawa is already mobilizing a counter-strategy that includes a potential 15% export tax on nickel concentrate and stringent CO2 tracking for exports, effectively leveraging its nickel resources as a bargaining chip.

In a market already reeling from supply chain disruptions, the implications are staggering. Analysts predict that the tariff could inflate the total cost of EV ownership by 6% and slash U.S. sales forecasts dramatically. If Canada enforces export restrictions, American manufacturers will face not just higher production costs, but also the risk of losing critical market share to European and South Korean competitors.

As negotiations unfold, the urgency is palpable. Canada’s nickel could become a pivotal factor in determining the future of North American EV production. With the U.S. government contemplating exemptions for Canadian materials, the pressure is mounting on both sides to reach a resolution before the automotive industry faces a full-blown crisis. The clock is ticking, and the outcome of this standoff could reshape the landscape of the North American electric vehicle market.