Is Canada's freshwater the next big trade dispute with the US?

Canada's vast freshwater resources may become a focal point as drought-stricken US regions seek solutions

Is Canada's freshwater the next big trade dispute with the US?

On his 100th birthday, Thomas Kierans was stopped by a reporter in St. John’s, Newfoundland and Labrador, to discuss his bold but unrealized infrastructure projects, according to a Financial Post feature.

Known locally for his ambitious ideas, the former engineering professor had envisioned large-scale developments, including a fixed-link tunnel connecting Newfoundland to Labrador and the Rock Arena, designed to be built inside the Southside Hills.

However, his most ambitious concept, conceived in the 1950s, aimed to harness freshwater through an approach inspired by Dutch dykes. 

Kierans' Great Recycling and Northern Development Canal proposed damming James Bay, allowing seasonal runoff and surrounding rivers to convert the saltwater body into a renewable freshwater source.

His vision included channeling this water south to the Great Lakes, Canadian Prairies, and the American Southwest, refilling underground aquifers and addressing long-term water shortages in both Canada and the US.

He estimated the project would cost $100bn, with 90 percent of the water intended for export to the US. “I think the good lord wants me to stick around for that one,” he remarked to the reporter.

Kierans passed away months after his centennial, long before former US President Donald Trump ignited a trade war with Canada.

Today, tensions focus on tariffs, but Trump has also expressed interest in Canada’s natural resources, including critical minerals, oil, forests, Arctic territories, and freshwater.

Water became a focal point in September when Trump suggested redirecting Columbia River water from British Columbia to California, addressing drought and wildfire risks.

Though his comment was widely dismissed, it underscored a pressing reality: the US faces growing water shortages while Canada holds vast freshwater reserves.

Climate change has intensified droughts across states such as California, Texas, and New Mexico, with major rivers, including the Rio Grande and Colorado River, struggling to sustain demand.

Even the Norfolk naval base in Virginia faces a crisis as groundwater depletion threatens infrastructure.

With Canada home to two million freshwater lakes and shared access to four of the Great Lakes—Erie, Huron, Ontario, and Superior—Trump’s interest is unsurprising.

The Great Lakes account for 20 percent of the world’s surface freshwater. Lake Superior alone holds enough water to flood North and South America to a depth of 10 centimetres.

The lakes serve as an economic powerhouse, supporting a regional economy exceeding $8tn, making it the world’s third-largest economy behind the US and China if considered independently.

Despite the appeal, the Great Lakes remain protected under stringent regulations, including the Great Lakes Compact.

Signed into law by former US President George W. Bush in 2008, the agreement prohibits large-scale diversions, requiring any withdrawn water to be replenished.

Quebec and Ontario have similar protections, ensuring that no sudden policy shift could result in unrestricted US access to Canadian water.

Historically, Canada and the US have maintained water agreements based on mutual compliance.

However, Daniel Macfarlane, an environmental studies professor at Western Michigan University, warned that a leader disregarding these agreements could create “a whole lot of problems.”

The US has historically enforced international agreements through economic sanctions or military intervention, but if it were to breach water treaties, enforcement mechanisms remain uncertain.

According to a New York Times report, Trump allegedly told Commerce Secretary Howard Lutnick he wanted to “tear up the Great Lakes agreements and conventions,” a message reportedly relayed to Canadian officials in February.

As the US faces an ongoing mega-drought and growing wildfires in March, concerns about water scarcity continue to escalate.

Macfarlane suggested that in a future scenario, a US administration with congressional support might attempt to dismantle protections and push for large-scale water diversion projects.

“The US government has to take a whole country approach,” he said. “I can see scenarios where the federal government goes, ‘OK, well, we need water and some of that Great Lakes water, well, we need it more in California or Arizona than we do in the Great Lakes.’”

Trump’s comments about redirecting water were not unique, nor was Kierans the only engineer to propose large-scale water transport projects.

In the 1960s, the North American Water and Power Alliance (NAWAPA), devised by engineering firm Ralph M. Parsons Co., proposed collecting runoff from Alaskan and Canadian rivers, channeling it through the Rocky Mountain trench, and delivering it to the US Southwest.

The plan, endorsed by Utah Senator Frank Moss, was compared to the Louisiana Purchase in scale and ambition. It projected US$25bn in construction costs and aimed to supply 33 US states and Mexico while generating US$2bn in annual revenue for Canada.

However, opposition from environmental groups and financial constraints ultimately halted NAWAPA’s progress.

Peter Annin, director of the Mary Griggs Burke Center for Freshwater Innovation at Northland College in Wisconsin, believes fears of a modern-day Great Lakes water grab remain exaggerated.

Instead, he pointed to increasing investments in wastewater recycling, with US cities such as El Paso and San Diego advancing efforts to convert sewage into potable water.

“What we’re seeing are some extraordinary investments, remarkably, including by major cities, to turn their sewage into drinking water,” Annin said.

California has embraced large-scale wastewater recycling, with Los Angeles and San Diego pledging to convert 100 percent of sewage into drinking water by 2035.

Annin argued that if the US adopted water conservation at scale, it could solve its shortages without relying on Canadian water.

“In the grand scheme of things, Canadians, in particular, have a lot more important things to worry about right now than the United States stealing their water,” he said.

Beyond freshwater access, Canadian fisheries remain vulnerable to trade tensions.

John Neate, CEO of Great Lakes Food Co. Ltd., exports smelt and other fish species from Lake Erie, with half of the five-million-pound catch sent to California. His business now faces uncertainty due to potential tariffs.

“We are not too happy about it,” said Vito Figliomeni, executive director of the Ontario Commercial Fisheries’ Association. “We just can’t react fast enough to a lot of the changes that are happening in the US government right now.”

Trump’s proposed cuts to the Environmental Protection Agency (EPA) further exacerbate concerns.

Budget reductions could impact invasive species management, particularly efforts to control sea lampreys, a major threat to the Great Lakes fishery.

Additionally, staffing cuts at the EPA’s Chicago office have already weakened enforcement against industrial pollution.

Gail Krantzberg, a professor of engineering and public policy at McMaster University, sees the erosion of US federal oversight as the biggest threat to Great Lakes water quality.

“The clear and present danger to the Great Lakes region and the waters here is just the erosion of the US federal civil service,” she said.

During Trump’s first term, he proposed cutting the Great Lakes Restoration Initiative by 90 percent, though bipartisan pressure prevented it.

Now, with funding up for renewal, concerns remain that further reductions could lead to increased pollution and weakened conservation efforts.

Krantzberg warned that neglecting wastewater treatment and invasive species management could result in severe ecological damage.

However, she also sees economic opportunity for the Great Lakes region. As climate change renders parts of the US uninhabitable, she predicts migration toward water-abundant areas.

“When the situation becomes, ‘Well, I’m not rebuilding that house that has burnt down four times in a forest fire… or maybe the flooding in Manhattan becomes intolerable,’ then where am I going to go?” she said.

“I’m going to go where there’s water and there are jobs. And where is that? The Great Lakes.”