Before We Tax Oil Exports… Potash Looks Like A Slam Dunk for the Win…

With Alberta heading toward a referendum, Ottawa should look closely at a more targeted source of leverage over the United States.

Canada is running out of reasons to keep its strongest economic cards in its pocket.

After the latest round of trade negotiations collapsed, the United States imposed 50% tariffs on $27.6 billion worth of Canadian goods on August 22. Canada has responded with matching tariffs on $27.6 billion of American products, set to take effect September 8 (Government of Canada).

Oil naturally dominates discussion of what Canada could do next. We supplied 63.4% of all crude oil imported by the United States in 2025, shipping about 3.9 million barrels a day south (Canada Energy Regulator), and has led to calls from all sides, including two recent Alberta Conservative Premiers, Kenny and Redfern, to apply an export tax to Canadian oil.

But oil comes with a serious domestic political cost.

On October 19, Albertans will vote on whether or not their government should begin the legal process toward a future binding referendum on separation. An Angus Reid poll this month found 33% prepared to begin that process, with many supporters describing their vote as a message to Ottawa (Angus Reid Institute).

Despite the fact that oil makes up only ~20% of Alberta’s GDP, and an export tax almost certainly wouldn’t impact the price oil companies received, that looming referendum makes this a particularly bad moment for Ottawa to deliberately raise the cost of exporting Alberta’s defining industry.  A situation Danielle Smith has been quick to exploit. 

But there is another commodity that gives Canada extraordinary leverage while leaving the Alberta referendum largely out of the equation – and offering no compelling reason not to act: Potash.

Despite their naysaying, America needs Saskatchewan. Bigly. 

Potash provides potassium, one of the three main nutrients in commercial fertilizer. About 95% of global production goes into agriculture.

Canada is the world’s largest producer and exporter, shipping 22.9 million tonnes out of the country in 2024, almost 39% of all potash traded globally. The United States bought 53% of those exports, and every one of Canada’s 10 active potash mines is in Saskatchewan (Natural Resources Canada).

Saskatchewan estimates that it supplies 86.9% of U.S. potash imports (Government of Saskatchewan).

Washington recognizes the vulnerability itself: Potash was added to the U.S. Critical Minerals List last year because of its economic importance and exposure to supply disruption (U.S. Geological Survey).

Replacing Canadian supply quickly would be difficult, if not completely impossible. Canada, Russia and Belarus account for most global potash exports. Any American effort to replace Saskatchewan product would mean competing for a limited pool of supply, much of it originating in countries Washington has spent years trying to isolate economically (Natural Resources Canada).

We have already seen what constrained supply can do. After Russia’s invasion of Ukraine disrupted fertilizer markets, the global price of muriate of potash rose 53% between January and April 2022 (U.S. Department of Agriculture).

A Canadian export charge could therefore raise U.S. costs while also supporting higher prices in other markets, making it easier for Canadian producers to redirect any displaced supply if needed.

How much excess potash would Canada actually have to absorb?

Not much.  Probably none.

A 2025 study estimated that a 10% increase in the U.S. import price of potash reduces short-run demand by only about 4%. American farmers have limited ability to substitute away from potassium, so most of the effect shows up through higher input costs rather than disappearing demand (Annan and Reimer, 2025).

Canada shipped roughly 12 million tonnes of potash to the United States in 2024. If demand fell by 4%, that would mean roughly 480,000 tonnes of displaced product over a full year, before accounting for sales redirected elsewhere.

Potash is also far easier to store than oil. Canpotex reports roughly 700,000 tonnes of storage capacity across its logistics network (Canpotex 2025 Stakeholder Report). Potash does not require tanks, pipelines or underground caverns. It is non-combustible and can be stored in bulk, although it must be protected from moisture because it can cake and become corrosive. Dry covered storage is preferred, with temporary outdoor storage possible under proper conditions (JUSTIA Regulations).

The tax could help pay for that disruption itself.

Canada exported about $4.2 billion worth of potash to the United States in 2025 (Natural Resources Canada).

A 10% charge on a trade flow of that size would represent roughly $420 million in gross annual revenue before changes in demand or trade patterns. Ottawa could use that revenue to support Saskatchewan producers, finance temporary storage, or even purchase temporarily displaced product for later resale.  

Best news: $420 million paid by Americans – not Canadians.  Driving up the price of food in the USA – not Canada. 

Saskatchewan would still bear some limited risk. Potash generated $9.3 billion in provincial mineral sales last year. Any measure should therefore be temporary, targeted and paired with a clear support plan (Government of Saskatchewan).  But the reality is that just the threat could prove sufficient… 

So now, let’s follow the fertilizer to the ballot box…

The political case is likely stronger than the economic one.  And it wouldn’t take long for GOP politicians to do the math – recognize the risk to their present majorities in the House and Senate – and quickly urge the President to reverse course on his bargaining positions. Meaning the threat alone could be enough to move more than a few needles.

Higher potash prices flow directly into farm budgets across the American Midwest, where producers are already dealing with rising input costs and little support – compounded by a series of disputes with the Trump administration that has left many farmers deeply disillusioned with their former MAGA champion. 

This week, Trump authorized an additional 300,000 tonnes of lower-tariff foreign beef imports in an effort to reduce record beef prices, drawing widespread criticism from cattle producers and Republican politicians in farm states (Reuters).

Midwestern farm and biofuel groups are also fighting proposals for expanded refinery exemptions from federal biofuel rules, warning that they would reduce demand for corn and soybeans (Reuters).

Another fertilizer increase would land with a particular loud thud in states with unusually competitive elections – and with Republicans at substantial risk. 

In play?  Three Senate seats (Ohio, Iowa and Nebraska) in high potash consuming states, already seen as “toss up” races, where a 10% spike in the cost of potash could help them flip to the Democrats, and 7 House seats in the same states plus Indianna – 5 GOP seats seen as toss ups, and 2 Democratic seats that are recently vulnerable due to Gerrymandering and need protecting.  These are almost all the most strategic seats the Democrats need to take / defend in order to wrest control of both the Senate and the House – and put a quick end to Trump’s overreach. Senate campaigns in Alaska and Maine also show promise and would be unaffected. 

Canada can lead farmers, agricultural organizations and vulnerable politicians to conclude that continuing the trade war is costing them too much – and bring pressure to bear.  And if they don’t succeed… majorities in the House and Senate seem a lot more within reach for Democrats. 

Use the pressure to build something stronger at home.

There is an environmental case for choosing our leverage carefully too.

Canada still has to build a cleaner, more competitive economy after this trade war ends. Turning Alberta oil into Ottawa’s central weapon risks pushing energy and climate policy even deeper into regional grievance at precisely the moment Canada needs durable agreement on electricity, infrastructure and the energy transition. Potash avoids much of that political baggage.

And if an export charge raises substantial revenue, some of it could support Canadian farmers through precision application, better soil testing and nutrient-efficiency technologies that reduce waste and improve productivity.

A temporary trade measure could leave behind a more resilient agricultural system.

That should be a broader principle for Canada’s response: every retaliatory measure should strengthen our ability to withstand the next trade fight.

Potash may not be the only card. Iron ore deserves examination too. While nowhere near as powerful an incentive as potash, there are several specific steel mills in the USA that rely heavily upon iron ore from Canada – all in states where races are critical: Pennsylvania (3 GOP house seats), Michigan (1 Senate and several house races) and Ohio (again).  None of those mills could quickly or cheaply source alternatives. And adding an export tax would not significantly impact sales in the short term. 

Other strategically placed commodities may offer similar leverage.

Canada has spent much of this trade war being reminded how dependent we are on the United States.

Dependence runs both ways.

With Alberta heading toward a referendum, American farmers already under pressure, Saskatchewan dominating an essential agricultural input and competitive elections running through the farm belt, potash offers Ottawa a remarkably targeted pressure point.

We need to put it on the table.