Why Canada Isn’t Blocking the Welland Canal and Other Trade War Questions Answered

Canada’s response to U.S. tariffs involves navigating complex trade retaliations, with trade experts and officials debating options like energy export duties, product bans, and controls over the Welland Canal. CBC News has fielded numerous suggestions from readers proposing aggressive tactics against the United States, prompting a review of what is legally and economically feasible in the ongoing trade dispute.

Energy Export Duties and Economic Risks

Applying export duties on Canadian energy is one frequently raised tactic. According to Don Drummond, former chief economist for TD Bank, export taxes remain an option, while former prime minister Jean Chrétien stated that an export tax on oil, gas, electricity, and potash might be necessary. Based on 2025 figures, Canadian goods represented 63 per cent of oil imports into the United States, alongside 81 per cent of imported electricity, 99 per cent of imported natural gas, and 80 per cent of imported potash.

However, Wolfgang Alschner, who serves as the University of Ottawa’s Hyman Soloway Chair in Business and Trade Law, cautioned that this kind of action could inflict deep, lasting harm on Canada through financial losses and damaged relations with its primary trading partner. Alschner noted that the U.S. could respond by diversifying away from Canada to find new suppliers. Trevor Tombe, an economist at the University of Calgary, and Christopher Ragan, the founding director of McGill University’s Max Bell School of Public Policy, each maintained independently that focusing retaliation on U.S. energy could rally Americans against Canada while playing straight into the hands of the U.S. administration. Prime Minister Mark Carney stated in July that he does not see the value in using energy exports as a bargaining chip, emphasizing that Canadians are reliable and trusted suppliers.

Targeted Product Bans and Provincial Retaliation

Proposals to ban specific U.S. goods have largely been implemented at the provincial level regarding alcohol, with every province except Alberta and Saskatchewan restricting sales. Saskatchewan introduced a retaliatory levy on U.S. alcohol. Finance Minister François-Philippe Champagne has not pursued a broader ban, emphasizing that Canada’s response will remain proportionate, strategic, and targeted.

In response, the U.S. plans to ban most imports of Canadian-made alcohol on Sept. 29. Tombe noted that Canada must carefully select target products that Canadians can easily replace while Americans cannot. Applying tariffs to harder-to-replace items like specific circuit boards or machinery would merely increase costs and complicate operations for Canadian importers, according to Tombe. U.S. President Donald Trump previously dropped tariffs on specific Canadian products, including cement, salt, and toilet paper. In 2024, Canada exported approximately $328 million worth of toilet paper, making it the largest international provider of the product to the U.S.

Control of the Welland Canal and Joint Seaway Administration

Public suggestions to block U.S. shipping through the Welland Canal overlook the binational structure of the waterway. The Welland Canal sits on the western half of the St. Lawrence Seaway, connecting the St. Lawrence River to the Great Lakes. The canal utilizes eight locks located entirely in Ontario to move vessels between Lake Ontario and Lake Erie by adjusting water levels.

The seaway is jointly overseen by the U.S. and Canada. The Great Lakes St. Lawrence Seaway Development Corporation administers the American side as a federal agency within the U.S. Department of Transportation, according to Canadian Press reporting. In Canada, the federal government owns the Canadian portion of the seaway, while the non-profit St. Lawrence Seaway Management Corporation handles its operation. Additionally, the U.S. controls several critical locks, including installations in New York state between Lake Ontario and Montreal, and locks in Michigan connecting Lake Huron and Lake Superior. Toronto-based international trade lawyer John Boscariol has analyzed the legal and operational framework governing these shared transit routes.