US hurting itself, not Canada, by imposing tariffs on energy

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United States President Donald Trump is only biting the hand that feeds his country’s nuclear power system if he follows through on his threat to impose a 10 per cent tariff on uranium and other energy-related imports.

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Devan Mescall, a professor at the University of Saskatchewan’s Edwards School of Business, said the uranium industry is better positioned to deal with tariffs in the short term than other industries, in part because there are no available alternatives.

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“The demand is not really going to change with the price because you’re not going to start and stop nuclear reactors,” Mescall said.

Another factor working in Canadian uranium suppliers’ favour is that nuclear reactors do not need to be refuelled on a regular basis; most only need to be topped up every 18 months to two years.

“It’s not like filling up our cars with gas,” Mescall said.

American uranium customers would also have trouble finding alternative sources; they don’t have many cheaper options.

Russia historically filled around 12 per cent of the U.S.’s needs, but its uranium has been banned. The U.S. does not produce a large amount domestically, just 101.8 tonnes of uranium in 2023.

Canada, meanwhile, produced 7.4 kilotonnes of uranium worth around $1.1 billion in 2022, according to Natural Resources Canada. That same year, 27 per cent of the uranium used in American reactors came from Canada.

“They don’t really have a lot of other options to go get that uranium from,” Mescall said.

You’re not going to start and stop nuclear reactors

All these factors mean that any additional costs brought on by tariffs are likely to be borne by American customers, with Canadian suppliers continuing to sell ore at the market rate.

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Mescall said this would likely lead to an increase in U.S. electricity bills. Nuclear makes up about 30 per cent of the power supply in around 12 states, some of which are of political importance for the current presidential administration.

“It includes really important swing states, like Pennsylvania and North Carolina,” Mescall said.

Further development of nuclear power is part of the Trump administration’s overall energy agenda. Secretary of Energy Chris Wright signed an order calling for the U.S. to lead the world in developing affordable commercial nuclear power. Mescall said putting tariffs on Canadian uranium runs contrary to that goal.

Overall, if tariffs stay in place for an extended period, there is a small possibility that investment in the uranium sector could be affected — but with countries around the world looking to build and develop power sources that do not emit carbon, that outcome is not a probable one, he added.

“That’s probably a bit unlikely because there’s just such a growing demand worldwide for nuclear energy and uranium.”

Saskatoon-based Cameco Corp., the world’s largest producer of uranium, has said it’s prepared to take a “measured” approach to tariffs if they are implemented.

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Canada and the U.S. have a long relationship of developing a civilian nuclear sector that has been beneficial for both countries, and nuclear power is an important energy source for the artificial intelligence industry.

“We will continue to push for unencumbered trade in nuclear goods and services between Canada and the United States, allowing our countries to support each other in achieving prosperity,” Cameco said in an emailed statement. 

Whether the tariffs are brought in or not, some industry observers are calling on Canada to step up when it comes to enriching uranium for use as reactor fuel.

Juzel Lloyd, a climate and energy analyst at the Breakthrough Institute, said Russia’s invasion of Ukraine has led many countries to turn away from enriched Russian uranium.

“It’s time for Canada to leverage its strengths to redefine the global nuclear supply chain and establish a more secure, reliable future for the nuclear industry,” Lloyd wrote in a piece published by the Macdonald-Laurier Institute, an Ottawa-based think tank.

Lloyd noted Canada currently supplies 20 per cent of the world’s uranium and adding additional domestic enrichment capability would expand the Canadian supply chain while strengthening its global position.

To achieve that, however, work needs to be done to encourage the construction and expansion of enrichment facilities, including legislative changes.

“The first step is to amend the Nuclear Safety and Control Act to include provisions that provide clearer pathways for licensing and operating enrichment facilities,” she wrote.

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