Skip to main content
RBC Thought Leadership Geopolitics, Trade and the Economy Heavy Lifting: How Canadian manufacturers can decarbonize despite trade turmoil
Geopolitics, Trade and the Economy
Geopolitics, Trade and the Economy

Heavy Lifting: How Canadian manufacturers can decarbonize despite trade turmoil

Canada is bracing for a new trade war after the U.S. slapped 25% tariffs on Canadian steel and aluminum in an effort to re-shore its own industries.

Read time 3 minutes

Canada is bracing for a new trade war after the U.S. slapped 25% tariffs on Canadian steel and aluminum in an effort to re-shore its own industries. While it’s easy to lose sight of climate-change challenges amid trade turmoil, Canada’s decarbonizing efforts in its heavy industries can emerge as a strength that would help the sector face these headwinds.

However, fully capitalizing on these strengths would require Canada to address critical hurdles, including financing gaps for industrial-scale deployment, slow permitting for resource projects, and the need for stronger policy alignment with major trading partners. By strategically leveraging its clean-energy endowment and critical minerals supply, Canada can turn near-term economic pressures into long-term competitive advantages for its heavy industries such as cement, iron and steel, and petrochemicals.

We highlight a few of Canada’s strengths here:

  1. Late-stage startups are leading the charge: As we highlighted in Climate Action 2025: A year for rewiring, the mega deals that characterized Canadian heavy industry innovators in the early 2020s have given way to a more sober fund-raising environment, with venture deals in 2024 amounting to $158 million, a fraction of the funds raised in previous years. While funding, especially for early-stage innovations, is more challenging than ever, late-stage startups are actively deploying their carbon-reducing innovations in partnership with large, incumbent players in cement, petrochemicals, and pulp and paper.
  2. Clean power is Canada’s superpower. The country’s rich endowment of low-cost hydroelectric power has differentiated Canadian industries in several areas. Such advantages span aluminum smelting and iron and steel production. Additionally, electric arc furnaces under development in Ontario powered by clean electricity sources are set to produce low-carbon steel that would help lower the industry’s emissions.
  3. Canada is poised to leverage a critical advantage: As a leading global producer of commodities such as potash, nickel, aluminum, and uranium, Canada’s metals and mining industry could buck the economic headwinds facing other sectors. As we highlighted in Climate Action 2025, mining companies are incorporating decarbonization technologies and practices into their operations, which are being recognized by end-users keen on decarbonizing their supply chains. The key for Canada will be to bring the commodities to market faster and position itself as the West’s critical minerals hub. This will require more financing for junior mining companies and faster permitting to bring mines online. In addition, industries and government will also need to build logistics and transportation infrastructure to remote location with First Nations buy-in, consent and partnerships. Read more about Canada’s critical minerals advantage here.

Canadian industries are well positioned to deliver commodities the country and global markets need, without losing sight of sustainability. Canada would benefit from using its energy endowment to responsibly power its industries, and continue to innovate to bring new technologies to commercial reality.

For more climate briefings and analyses, subscribe to our mailing list here to get our reports and bi-weekly newsletter Climate Crunch.

Vivan Sorab is Senior Manager, Clean Technology, at the RBC Climate Action Institute

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. The reader is solely liable for any use of the information contained in this document and Royal Bank of Canada (“RBC”) nor any of its affiliates nor any of their respective directors, officers, employees or agents shall be held responsible for any direct or indirect damages arising from the use of this document by the reader. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates. This document may contain forward-looking statements within the meaning of certain securities laws, which are subject to RBC’s caution regarding forward-looking statements. ESG (including climate) metrics, data and other information contained on this website are or may be based on assumptions, estimates and judgements. For cautionary statements relating to the information on this website, refer to the “Caution regarding forward-looking statements” and the “Important notice regarding this document” sections in our latest climate report or sustainability report, available at: https://www.rbc.com/our-impact/sustainability-reporting/index.html. Except as required by law, none of RBC nor any of its affiliates undertake to update any information in this document.

Read This Next

Trade Zone: The costs—and the economic prize—of the West Coast Oil Pipeline

Weighing the costs and economic benefits for the proposed West Coast Oil Pipeline

Trade Zone: Deal or no deal? What’s next for CUSMA

What does the no deal by the deadline really mean for North American trade

Climate Crunch: Canada’s hunt for transformers and talent

Plus, Canada is going global with its nuclear ambitions

Important Notice Regarding Information on this Website and Caution Regarding Forward-Looking Statements

The information on this website is intended as general information only and does not constitute an offer or a solicitation to buy or sell any security, product or service in any jurisdiction; nor is it intended to provide investment, financial, legal, accounting, tax or other advice, and such information should not to be relied or acted upon for providing such advice. Nothing herein shall form the basis of or be relied upon in connection with any contract, commitment, or investment decision whatsoever. The reader is solely liable for any use of the information contained herein, and neither Royal Bank of Canada (“RBC”, “we”, “our” and “us”) and its subsidiaries nor any of RBC’s affiliates nor any of their respective directors, officers, employees or agents shall be held responsible for any direct or indirect damage arising from the use of any information contained herein by the reader.

From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including on this website, in filings with Canadian securities regulators or the U.S. Securities and Exchange Commission, and in other communications. Such statements are subject to our caution regarding forward-looking statements. Forward-looking statements on our website include, but are not limited to, statements relating to our economic and sustainability related objectives, vision, commitments, goals and targets as well as potential events and actions. By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct, and that our objectives, vision, commitments, goals and targets will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors – many of which are beyond our control and the effects of which can be difficult to predict – could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. ESG (including climate) metrics, data and other information contained on this website are or may be based on assumptions, estimates and judgements. For cautionary statements relating to the information on this website, refer to the “Caution regarding forward-looking statements” and the “Important notice regarding this report” sections in our latest sustainability report, available at: https://www.rbc.com/our-impact/sustainability-reporting/index.html.

Except as required by law, none of RBC nor any of its affiliates undertake to update any information on this website.

All expressions of opinion on this website reflect the judgment of the authors as of the date of publication and are subject to change. We do not guarantee the accuracy of the information or expressions of opinion presented herein and they should not be regarded as a complete analysis of the subjects discussed. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC or any of its affiliates.

All references to websites are for your information only. The content of any websites referred to on this website, including via website link, and any other websites they refer to are not incorporated by reference in, and do not form part of, this website.  This website is also not intended to make representations as to sustainability-related initiatives of any third parties, whether named herein or otherwise, which may involve information and events that are beyond our control.