US, Canadian battery sectors eye 'huge potential' to partner despite trade feud

Rising trade tensions between the US and Canada have cast a shadow over efforts to create an integrated North American supply chain for lithium-ion batteries used in electric vehicles and energy storage systems, according to a panel of industry groups and market participants on both sides of the border.

But previous initiatives and investments have built a foundation that can endure if the trade partners can end a deepening feud that threatens to hike materials prices and impede cross-border business, panelists agreed.

"We are kind of at a low point in trust between us," Robert Tremblay, western policy manager at Energy Storage Canada, said on an Aug. 27 webinar co-hosted by the Solar Energy Industries Association and Energy Storage Canada. "That is going to be ... a barrier to building a North American supply chain."

The US-Canada trade relationship has soured during President Trump's second administration, with Canada recently announcing 15% to 50% tariffs targeting about $20 billion in imports from the US, starting Sept. 8. Those counter tariffs came after the US imposed 50% tariffs on a range of Canadian imports on Aug. 22 in response to failed trade talks.

Despite the trade conflict, Tremblay said there is "huge potential" to collaborate on batteries and clean energy supply chains in general.

"At the end of the day ... politics aside, I think we're still fundamentally similar nations with low cultural and geographic barriers," Tremblay said. "If we're thinking about the growth of a North American battery supply chain, or even more broadly, just a North American clean economy that includes critical minerals, I think that certainty and trust is what needs to come back and to grow."

Canada is looking to its neighbor and other trading partners as it seeks to further develop its reserves of minerals used to manufacture batteries, including graphite, lithium, cobalt, nickel, copper and rare earths.

Amid worsening relations with the US, however, Canada has deepened its ties with China on various clean energy technologies. China, the world's largest battery maker, also remains a major exporter of lithium-ion batteries to the US, despite a recent buildout of manufacturing capacity in North America and new US supply chain restrictions on Chinese shipments.

China accounted for nearly 64% of US lithium-ion battery imports in the first half of 2026, compared with 3.5% from Canada, according to the S&P Global Market Intelligence Global Trade Analytics Suite.

'Opportunities for investment'

The US and Canada have prioritized collaboration on critical minerals and battery manufacturing, partly to reduce their reliance on China, including during Trump's first administration. In January 2020, for instance, the US and Canada issued a joint action plan to collaborate on critical minerals, including battery-grade materials, to boost North American supply chains.

The countries have jointly funded numerous cross-border investments on critical minerals for batteries and other technologies, Emily Burlinghaus, director of energy storage manufacturing and supply chain at the Solar Energy Industries Association, said on the webinar.

"There's also been strong private sector cooperation across the value chain," she added. "There are a lot of opportunities for investment, both domestically in each country, and opportunities for continued cross-border cooperation."

South Korean battery giant LG Energy Solution Ltd. has built factories in both countries, including facilities in Spring Hill, Tennessee; Lansing and Holland, Michigan; and Jeffersonville, Ohio, in the US, and Windsor, Ontario, in Canada.

The company plans to exceed 50 gigawatt-hours of lithium-iron-phosphate battery cell capacity for energy storage at the five facilities by the end of 2026, executives said on an earnings call in July, reiterating a prior target.

"One of the great things about LG is that we were able to leverage our capacity built in both countries to meet the markets where they are, bringing jobs across the borders," Dylan Leazes, senior manager for policy and government affairs at US energy storage subsidiary LG Energy Solution Vertech Inc., said during the webinar.

Whether markets are favoring electric vehicles or energy storage, "we can meet that with Canadian cells, with US cells and systems, et cetera," Leazes said. "This is part of our longer-term strategy to continue diversifying our supply chains and building that battery ecosystem on both sides of the border that will then be able to serve both sides of the border."

Teodora Durca, a senior associate on federal matters at Toronto-based public affairs firm Sussex Strategy Group, pointed to current negotiations over the US-Mexico-Canada Agreement (USMCA) as an opportunity for the North American battery supply chain.

"There's already existing integration with our critical mineral supply chains, and although there are several points of contention in the agreement right now, those negotiations are very much ongoing," Durca said. "Whatever form [USMCA] will take in the future .... that'll provide the groundwork for companies to further cooperate, to integrate, and to form new agreements across borders."