This article originally appeared in the Hill Times.
By Philip Cross, March 2, 2026
While natural resources always have been a mainstay of this country’s economy, Canadians often are ambivalent about our dependence on resources. However, their attitudes are shifting thanks to United States President Donald Trump’s tariffs on our exports. With our manufacturing sector buckling, Canadians are realizing that it’s easier to expand existing overseas markets for commodities—such as energy and mining—than develop new ones for manufactured goods.
Higher prices for energy and mining products have driven Canada’s recent export growth. Initially, the surge was fuelled by energy, especially oil and gas after Russia’s invasion of Ukraine created shortages. Since 2022, metals and mineral prices have risen roughly 35 per cent, driven by supply constraints, geopolitical disruptions, and rising demand from electrification, grid modernization, and expanding data centre infrastructure.
Fuelled by higher prices, energy and mining have solidified their position as Canada’s leading exports. Energy and mining already were a hefty 30.4 per cent of merchandise exports in 2015; by November 2025, their share jumped to 41 per cent, displacing autos, which shrank to a 10-per-cent share. Standouts among exports include natural gas, gold, and copper.
Faced with higher U.S. tariffs, Canada needs to expand exports to other countries. Mining exports do this automatically because more than half are shipped outside the U.S. (only agricultural products export more overseas). Most manufactured goods remain heavily dependent on the U.S. market, ranging from 93 per cent for autos to 80 per cent for consumer and investment goods. Energy is an exception to the diversification of resource exports, with 88 per cent going to the U.S. due to Canada’s reluctance to build more pipelines to access receptive overseas markets. Limiting oil and gas exports to the U.S. market depresses the price we receive for these products.
Despite buoyant prices, mining and energy export volumes remain below pre-pandemic levels. This mirrors the weak response of domestic production to higher prices, especially mining where output fell outright over the last two years. This partly reflects the long lags in building new mines, oilsands plants, and liquefied natural gas (LNG) terminals. However, this delay is compounded by the growing number of regulations and obstacles erected by the Justin Trudeau government to slow down many resource projects: the Impact Assessment Act alone delays projects up to eight years.
For decades, federal policymakers have favoured manufacturing industries such as autos and high-tech products. The 1989 Free Trade Agreement with the U.S. was designed to revitalize and expand our manufacturing sector. Other policies that encourage manufacturing include the lowest corporate tax rate, generous subsidies, bailouts for major auto companies facing collapse in 2009, and even defence procurement, which has become a form of industrial policy.
By comparison, government attitudes to energy and mining often vacillate between benign neglect and overt hostility. Then-prime minister Trudeau epitomized this bias when he addressed the World Economic Forum in 2016 and proclaimed that he wanted Canada to be “known for our resourcefulness, not our resources.” Canada’s reluctance to develop its resources contrasts with the enthusiasm of Americans, especially for their shale oil and LNG industries. The U.S. profitably buys our natural gas at low prices for American domestic consumption while exporting its natural gas to Europe at much higher prices.
Canada has the potential to substantially expand energy and mining output. Geology blessed us with ample raw materials; our companies and workers are experienced in developing these products; the Toronto Stock Exchange investment infrastructure is the world’s best (home to 40 per cent of publicly listed mining companies worldwide); and we have a solid reputation as a reliable supplier that respects the rule of law.
Producers are ramping up investment in response to higher prices. Capital spending has risen more than 50 per cent for oil, natural gas, copper, nickel, gold, and potash since 2021. These investments will soon result in more production, ratcheting up the roles of energy and mining in our economy.
The continuing growth of Canada’s energy and mining sectors is remarkable given the tepid support they receive from some governments. The resilience of these industries demonstrates that market forces and accumulated know-how—not government industrial policies—ultimately determine the economy’s long-term structure. Rather than propping up manufacturing with artificial demand and costly investment subsidies, governments should capitalize on strong overseas demand for Canada’s energy and mining resources.
Philip Cross is a senior fellow at the Macdonald-Laurier Institute. Prior to joining MLI, Cross spent 36 years at Statistics Canada specializing in macroeconomics.
