Price shocks from Iran war could give Canada leverage in CUSMA talks: experts

WASHINGTON — Countries around the world are grappling with skyrocketing costs for key commodities like oil and fertilizer as the war with Iran continues to upend global trade.

With no end in sight, the war is likely to cast a shadow over trade negotiations ahead of the mandatory review of the Canada-U.S.-Mexico Agreement on trade — and could ultimately offer Canada more leverage in those talks.

“If you’re sitting in Washington and you’re seeing what’s happening to global markets, you’re going to be looking at your secure producers and suppliers perhaps slightly differently from the way you … might’ve been looking at them before the conflict began, which was solely in tariff terms,” said Fen Osler Hampson, a professor of international affairs at Carleton University in Ottawa and co-chair of the Expert Group on Canada-U.S. Relations.

Crude oil and natural gas prices shot up after Iran essentially closed the Strait of Hormuz in response to the United States-Israel bombing campaign.

A fifth of the world’s oil typically sails through the strait.

But oil and gas are not the only commodities being affected.

Fertilizer inputs and potash are also being held up, causing global prices to spike with just weeks to go until planting season.

American farmers are already feeling the brunt of U.S. President Donald Trump’s erratic foreign and trade policies. The Trump administration provided a financial bailout last year after farmers were pummeled by increased costs and dropping sales due to the president’s worldwide tariffs.

Aluminum prices also jumped after the Iran war began, sending shock waves through American industries already staring down Trump’s separate 50 per cent tariffs on the product.

Canada is an alternative supplier for many of those key commodities. Trump has claimed repeatedly that the United States doesn’t need anything from Canada; the war in the Middle East might suggest otherwise.

“Suddenly, your closer partners, with whom you might have had a slightly antagonistic relationship … it may be time to play nice because they have things that (Trump) wants in abundance,” Hampson said.

The relationship between Canada and the United States has been upended by Trump’s tariffs and his repeated calls for Canada’s annexation. Trump called Prime Minister Mark Carney a “governor” in a social media post earlier this week.

Canadian and Mexican officials have been preparing for tough negotiations on the continental trade pact known as CUSMA, which has been shielding both countries from the worst effects of Trump’s tariffs.

Trump has put into question his commitment to CUSMA, which was negotiated during his first administration. The president has called the deal “irrelevant” and has said it may have served its purpose.

The CUSMA review sets up a three-way choice for each country to make in July. They can renew the deal for another 16 years, withdraw from it or signal both non-renewal and non-withdrawal — which would trigger an annual review that could keep negotiations going for up to a decade.

Trump did have a lot of leverage going into the CUSMA review. His ever-changing tariff policy kept Canada and Mexico on edge and slowed investment as businesses in both countries searched for stability.

The Trump administration also has other tools to pressure the United States’ closest neighbours.

The Department of Justice recently launched an antitrust investigation into fertilizer producers — including Saskatchewan’s Nutrien — around collusion and price-fixing, Bloomberg reported last week.

The government of Saskatchewan is aware of the investigation, the province’s Ministry of Energy and Resources said in a media statement.

“Fertilizers are globally traded commodities in a highly competitive environment,” the statement said. “Pricing is determined by the market, not the producing companies.”

While it’s not clear if that investigation is directly linked to CUSMA negotiations, potash is certainly on the Trump administration’s mind as the Iran war continues.

Luke Lindberg, the undersecretary for trade and foreign agricultural affairs at the U.S. Department of Agriculture, told Politico recently that “any company or any part of the fertilizer supply chain who tries to use this opportunity to price-gouge American farmers and ranchers will not be tolerated, and I think that is the message that will be clearly delivered.”

The Iran conflict and the price shocks it has triggered should remind Washington that the United States depends on other nations when it sits down to talk about the future of CUSMA, said Inu Manak, senior fellow for international trade at the Council on Foreign Relations.

“We need to have trusted partners if we’re going to actually address some of these challenges and survive these shocks,” Manak said.

As a major commodity producer, Canada is essential to the U.S. industrial base, she added, pointing to potash, oil and the integrated market.

“I think in a way, the mindset going into the negotiations now is potentially shifting a bit and giving Canada space to sort of focus on those issues and to say, ‘Look, we want to work with you. We have been working with you for a very long time. Here are the things that maybe we can do to strengthen those bonds rather than to weaken them,'” she said.

Manak said Canada may also have gained leverage from the deep unpopularity of the Iran war among Americans — who are preparing to go to the polls for midterm elections in November.

That doesn’t mean Trump’s threats will stop, she added.

“Buckle up for a lot of uncertainty.”

This report by The Canadian Press was first published March 13, 2026.

— With files from Jeremy Simes in Regina and The Associated Press

Kelly Geraldine Malone, The Canadian Press