U.S. President Donald Trump is pushing his allies in North American and Europe to the brink of a global trade war. More than anyone, Canada finds itself under the gun: Facing not only 25 per cent steel and aluminium tariffs but general 25 per cent tariffs on top of those. Its leaders are on a lobbying blitz to avert economic warfare.
One of Canada’s best offers to America is one that has gotten precious little attention. Ottawa, alongside Helsinki, hopes to usher in a new era of American shipbuilding—building a new fleet of modern icebreakers to help North America defend its Arctic waters. But Trump’s trade jingoism could throw that whole plan into doubt.
In the president’s rationale for his bellicose trade policies with his northern neighbors, he has repeatedly insisted that control over the Arctic is an urgent priority for his White House. Access to the critical minerals in the high north and a desire to counter Chinese control of the ice-laden waters are both reasons, the administration has said, to annex Canada and seize Greenland.
But Trump has inherited a plan to help America access and defend the resource-rich north and compete with Beijing’s strategic ambition in the Arctic without needing to expand its borders at all.
This agreement, if followed through, could even help the United States build out a new shipbuilding yard to produce exactly the kind of ships its navy desperately needs. But if the White House decides to pursue its trade war, these places could be put on ice.
In July, then-President Joe Biden announced the signing of the ICE Pact, a partnership, with Ottawa and Helsinki, “to collaborate on the production of polar icebreakers and other capabilities.”
The deal, Biden said at the time, would be essential to build more icebreakers better and cheaper. That would be essential, the administration said, to “support the country’s economic, commercial, maritime, and national security needs in the Polar regions.”
But the U.S. is still far behind. A 2023 assessment estimated that the U.S. Coast Guard would require about eight to nine new icebreakers to fulfill its missions in the Arctic and Antarctic.
“Are we where we need to be?” Adm. Linda Fagan, then-commandant of the U.S. Coast Guard, said late last year at the Halifax International Security Forum. “The short answer is: We’re behind.”
During the winter months, the passages in the Arctic require the use of heavy icebreakers to sail through and escort other ships—be they commercial, scientific, military, or cruise ships. Even in the summer, medium icebreakers are still generally required for safe passage. (Even though the Arctic is warming, it is not clear when, or if, Arctic summers will see days with no ice at all.)
Russia and China both have a complement of icebreakers capable of moving cargo, research personnel, and military assets through the Arctic. The degree of the gap means Washington can’t go on ignoring it any longer. “We are behind as a nation,” Fagan went on. “This isn’t an Alaska issue. This is a United States sovereignty and defense issue.”
Canada has more icebreaker capacity than the United States, but not by much: Boasting just two heavy and seven medium icebreakers, although Ottawa is in the process of , mostly to replace its aging ships. (“Better than one is not anything to brag about,” Canadian Defense Minister Bill Blair, sitting next to Fagan, quipped.) Finland is similarly equipped, with eight icebreakers, while Denmark and Sweden have a few others between them.
By contrast, Russia operates around 40 icebreakers, several of them nuclear-powered. China, which describes itself as a “near-Arctic state,” has three medium icebreakers and is in the midst of developing a nuclear-powered heavy icebreaker. Russian President Vladimir Putin and Chinese President Xi Jinping have signaled their intent to cooperate more closely, including on icebreaking, in opening up the “Polar Silk Road” through the Arctic.
“The growing influence of competitors and adversaries in the Arctic is driven by the rapid expansion of their icebreaker fleets,” Paul Barrett, chief communications officer for Davie, told Foreign Policy.
Davie is the Quebec-based company tasked with designing and building Canada’s next generation of icebreakers. They are likely to be the core of the ICE Pact programs.
“Despite ambitious shipbuilding programs,” Barrett said, “the West remains severely outmatched.”
It’s something that newly-confirmed Defense Secretary Pete Hegseth agrees with, at least in principle. “We need to vastly increase our ability to build ships and submarines,” Hegseth said at a press conference in Brussels. “Not just for ourselves but to honor obligations to our allies as well.” Citing “bloat” at the Pentagon, Hegseth lamented that advanced systems often taken seven or more years to complete.
With a scramble on to secure both the critical shipping lanes and strategic resources present in the Arctic, closing this capability gap has become more and more important.
In 2013, the United States drew up plans to build four to five new heavy icebreakers, followed by a number of medium ships. These ships, however, have been marred by delays and are not slated to enter service until at least 2029.
The idea behind ICE Pact was to help build more ships faster, and for less money.
Agreed-to on the margins of the NATO summit last summer, the three nations signed a memorandum of understanding in November. It lays out how the three countries can exchange sensitive, even classified, information on the technical aspects of these ships; how it can build out supply chains to actually build the ships; and how they can exchange trained personnel to work on the projects.
Canada already has multiple shipyards capable of producing these icebreakers, while Finland has a massive shipbuilding industrial base and world-leading companies—Wärtsilä produces some of the most powerful engines in the world, while Aker Arctic has a huge amount of experience designing and testing icebreakers.
In 2023, Davie Shipbuilding acquired Helsinki Shipyard, once the world’s largest builder of ice-faring vessels. The company had struggled in recent years, as it had been owned by Russian companies—first by the state-owned United Shipbuilding Corporation, then later by a private holding company. Western sanctions hampered its ability to operate, particularly following Moscow’s full-scale invasion of Ukraine in 2022.
In buying out the Finnish shipyard, Davie laid the groundwork for a formal partnership between Canada and Finland, one of the newest members of NATO.
Given that Trump returned to office threatening to wreak economic havoc on Canada and Europe—even threatening to seize territory in the north, citing America’s national interest—the ICE Pact seemed to represent a ray of hope.
Both government officials and an industry source told Foreign Policy that Canada has been scrambling to try to implement the ICE Pact faster than initially planned.
“Trump was very, very, very interested by this ICE Pact,” Mélanie Joly, Canada’s foreign minister, said at an event in December held by the Montreal Council on Foreign Relations.
When Canadian Prime Minister Justin Trudeau and his finance minister traveled to Mar-a-Lago to meet with the president-elect in December—in a trip aimed at preventing a suite of tariffs Trump had promised—the icebreaker deal was on the table. Joly recounted that the only problem was that it didn’t go far enough. “He wanted to make sure we’d do more.”
Blair, acknowledging that there are “some real challenges in shipbuilding in all of our nations,” said the agreement would help share “capability and design” across all three countries. “We’re all seized with a sense of urgency,” he went on.
In late January, however, Trump changed his tone. In a briefing, just days after his inauguration, Trump proclaimed that the United States would be acquiring 40 new “big icebreakers. Big ones,” although he didn’t say from where he planned on acquiring them.
Instead, Trump reframed the ICE Pact as a net loss for the United States. “All of a sudden, Canada wants a piece of the deal,” the president told reporters. “I say, ‘Why are we doing that?’”
On the contrary, though: ICE Pact could mean more production capacity inside the United States.
This year, Barrett said, “Davie expects to acquire an established U.S. shipbuilder and strengthen America’s ability to get icebreakers, and other specialized ships, into service at speed.”
Linking the three countries—sharing investment, industrial bases, designs, and technology—could amount to nothing less than “an American and Western shipbuilding renaissance,” he said.
Contrary to Trump’s insistence that Canada is freeloading on the deal, a Canadian official told Foreign Policy that the ICE Pact could be a significant economic opportunity for the United States.
“One of the objectives here is not just to focus on the three partners of ICE Pact—but, eventually, to kind of create a market,” a Canadian official told Foreign Policy in a background briefing.
While Ottawa might have been optimistic about averting the trade war, Trump nevertheless announced plans to slap 25 percent tariffs on Canadian imports. The Trudeau government earned a 30-day reprieve on those duties only after a series of last-minute calls with the president, only to find itself facing a fresh suite of aluminum and steel tariffs, on top of the looming 25 per cent general tariff.
Asked in January what impact the tariffs might have on the icebreaker deal, Canadian officials made it clear that the economic measures harmed virtually every facet of the continental relationship—including those that rely on the tightly integrated U.S.-Canada supply chains.
Slowing down, even freezing, this shipbuilding plan could delay efforts to exploit the natural resources opened up by a thawing Arctic. It is estimated the Arctic could hold up to a fifth of the world’s gas reserves, as well as a smaller percentage of global oil reserves, and a massive trove of critical minerals.
Leaving North America without an adequate naval presence in the north would also be a green light to Moscow and Beijing to step up their activities in the Arctic. Just last month, U.S. and Canadian fighter jets were scrambled to meet Russian jets flying in international airspace in the high arctic.
Icebreakers are the core capability necessary to access the Arctic, but they are not the only one. Late last year, Canada unveiled its Arctic foreign policy, aimed primarily at countering the increasing Chinese and Russian presence in the north. The policy details “a number of potential threats,” from increased Russian air activity in the north to dual-use Chinese “research vessels and surveillance platforms [used] to collect data” in Arctic waters.
As Matthew Funaiole and Aidan Powers-Riggs, of the iDeas Lab, wrote in Foreign Policy last year: “The ICE Pact serves as a creative first step in chipping away at China’s shipbuilding dominance.”
“It’s something that we need to be able to get done,” Ranj Pillai, the premier of Yukon, told Foreign Policy. While icebreakers are a critical foundation, he said, projecting power into the Arctic—in a way that can guard against foreign threats, guard critical infrastructure, and help build infrastructure for those who live there—will mean ports, bases, roads, fiber-optic cables, and other naval assets such as submarines.
“There’s an opportunity now,” Pillai said. “I think we can even move faster.”
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