In a shocking turn of events, Canada has retaliated against the United States’ new 20% electric vehicle tariff by cutting off nickel exports, a critical resource for American electric vehicle production. This abrupt move is poised to send shockwaves through the U.S. auto industry, which relies heavily on the $3.9 billion worth of Canadian nickel that flows into Detroit annually, fueling the nation’s electric dreams.
The imposition of the tariff by the Trump administration has ignited a fierce trade war with Ottawa, which is now armed with a suite of countermeasures. Canada has implemented a 15% export tax on raw nickel, targeting U.S. cathode manufacturers who have enjoyed duty-free access to this vital resource for years. Furthermore, a new carbon tracking mechanism will ensure that only Ontario’s low-emission nickel can access the fast lane of trade, leaving dirtier alternatives in the dust.
As the U.S. auto industry braces for impact, projections indicate a staggering 94,000 electric vehicle sales could vanish by 2026 due to skyrocketing costs attributed to the tariffs. The price of battery packs is expected to soar by nearly $1,000, crippling profit margins for automakers like GM, which has already slashed its 2026 production forecast by 50,000 units.
Meanwhile, Canada is not just standing by. The nation is redirecting its nickel supply to eager markets in Europe and South Korea, where demand for clean minerals is surging. In the first half of 2025 alone, Canadian nickel sulfate exports surged by 23%, as U.S. market share dwindled. Ottawa is strategically positioning itself as a key player in the global supply chain, while the U.S. risks becoming dependent on less environmentally friendly sources of nickel from Indonesia and the Philippines.
The implications of this trade standoff are profound. As the U.S. government grapples with its next steps—whether to carve out exemptions for Canadian nickel or double down on tariffs—one thing is clear: the battle for the future of electric vehicles is heating up. With Canada holding the cards, the stakes have never been higher for both nations. The clock is ticking, and the outcome of this standoff could reshape the landscape of the electric vehicle market for years to come.