Canada Tariff Biggest Threat To Great Lakes Since War Of 1812

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For the U.S. and Canada, a looming Canada tariff fight threatens the Great Lakes, posing the biggest threat to Great Lakes trade since the War of 1812.

In America, President Donald Trump has repeatedly threatened to impose a stiff 25% tariff on Canadian imports. Time is short. As America’s February 1 deadline looms, resolution seems unlikely. If this bitter trade war gets underway and escalates, the integrated flow of Great Lakes maritime trade—a critical economic engine for both countries–is at real risk of a breakdown unseen since Great Britain and America fought for control of Lake Ontario and Lake Erie.

For both allies, an ugly, no-holds-barred trade dispute is uncharted territory. If, as both sides have warned, “everything is on the table,” the prospect of wider economic contagion—even a virtual shut-down of Canada-U.S. collaboration on the Great Lakes—is within the realm of the possible.

The conditions for an uncontrolled escalation cascade are in place.

If President Donald Trump imposes a 25% tariff on Canadian imports, an irked Canada seems set to respond in kind, potentially tariffing Canadian exports of oil and other critical goods to the United States. Complicating matters, President Trump is in something of a box, unable to back down without some sort of escape hatch, and he seems unlikely to de-escalate if confronted.

A tough response from Canada will be painful for the American public. If swing voters in the Republican Party’s midwestern strongholds are suddenly confronted with massive gas price hikes, energy disruption and other trade-tariff-driven perturbances, the Trump Administration will be tempted to lash out. A brief—and quickly resolved–spat with Colombia over alien repatriation almost immediately led to a punishing tariff, visa processing disruptions, and threatened the imposition of crippling sanctions.

Further escalation with Canada, if it comes, will be hard to contain to tariffs. Spillover of trade-tariff contagion into other areas of the once-solid U.S.-Canada relationship carries enormous risks as the tightly integrated collaborative functions that tie the two countries together start fraying.

Take the Great Lakes. The Great Lakes Marine Transportation System is a sprawling economic engine that powers both countries. The shared, 2,300-mile deep-draft inland navigation system is the longest in the world. The combined economic yield from Great Lakes maritime cargo operations, as ships wind through the massive maritime border zone, is massive.

According to a 2023 study by the Great Lakes Saint Lawrence Seaway Corporation, the Great Lakes St. Lawrence Seaway network supports 241,286 jobs and $36 billion in economic activity annually.

Uninterrupted trade through the Great Lakes has gone on for so long and with so little fuss, “America First” border theorists risk taking the benefits of this massive shared maritime highway for granted. It is worth cautioning the economic shock-and-awe advocates in Washington that the Great Lakes economic engine is fragile, and it only turns a profit if both Canada and the United States work together.

Canada Tariff Fight Threatens Great Lakes

The Great Lakes catapulted into economic significance after World War II. In 1959, America and Canada opened the first modern locks of the Saint Lawrence Seaway, a deep-water channel to the Great Lakes. The massive building project offered a way for oceangoing cargo ships to enter and transit the inland lake system, opening raw materials, agricultural commodities and manufactured goods from the North American heartland to a global market.

Successful management of the Great Lakes Saint Lawrence Seaway is a complex enterprise, involving close collaboration between the U.S. and Canadian Coast Guards. A long-standing cooperative ice-clearing response system was on full display just days ago, when American and Canadian ice breakers worked together to free a Canadian-flagged cargo ship.

U.S.-Canada collaboration on the Great Lakes is continually evolving, spanning from collaborative law enforcement, spill response and emergency efforts. In late 2024, Canadian and U.S. representatives began work on a Cooperative Vessel Traffic Service (CVTS) system, “to improve collaboration in data exchange, augment situational awareness, and reduce risk of human error across the Great Lakes Marine Transportation System.”

But all this could go away very quickly.

The risk for the United Stats is that few analysts realize the United States is a disproportionate economic beneficiary from Great Lakes commerce.

The numbers don’t lie.

While Canada gets $9.6 billion in economic activity from Great Lakes trade, the United States gets $26.3 billion, with the Republican strongholds of Indiana, Ohio and Michigan serving as the primary economic beneficiaries. Disrupting Great Lakes commerce will wreak particular havoc on Indiana, which extracts $15.1 billion dollars of economic activity from the Great Lakes-St. Lawrence Seaway System.

With a number of choke-points on inland waterways, Canada can shut down the Great Lakes. Five Canadian and two American locks facilitate the movement of ships from Quebec to Lake Ontario. Eight Canadian-run locks on the Welland Canal connect Lake Ontario to Lake Erie. An American-run lock controls transit between Lake Superior and Lake Huron.

Disruption of Great Lakes transit through any—or all—of these locks poses a real hazard. If Canada decided to simply take a half-measure, and close the Welland Canal to U.S. ships or refuse to allow ships planning to call on U.S. harbors passage through the locks, that would put an immediate stopper on 78% of the Seaway’s economic activity. That’s not trivial–in 2022, 3152 vessels transited those locks. Iron ore, steel, road salt, coal and petroleum coke made up the primary industrial cargoes, while wheat, soybeans and corn dominated the agricultural cargoes.

There are a lot of ways for a Great Lakes trade standoff to play out. In Quebec, Canada could stopper the entrance to the St. Lawrence Seaway, denying entrance to any ships they wish. In October 2023, an eight-day strike at the locks delayed 150 ships, inflicting some $100 million dollars in economic damage a day.

A cargo stoppage on the Great Lakes would be an economic catastrophe. But, as the Joni Mitchell song goes, sometimes “you don’t know what you got till it’s gone.” It is worth wondering if, after two hundred years of peaceful, organized commerce along the largest inland deep-draft waterway on the planet, the brash “American First” analysts are undervaluing that quiet legacy of friendship. Due the risk posed by Trump’s distaste for incremental, collaborative economic gains, the Canada tariff threat is the biggest hazard to Great Lakes commerce since the War of 1812.