Ontario Cancels $100M Starlink Contract Amid Trump Tariff Clash

Retaliatory Measures Escalate Canada-US Trade Tensions / Reuters

In a bold move, Ontario, Canada’s second most populous province, has terminated a $100 million contract with Starlink, Elon Musk’s satellite internet venture, as a direct response to the 25% tariffs imposed by U.S. President Donald Trump on Canadian goods. This decision, announced by Premier Doug Ford during a press conference, underscores a growing trade war between the two nations, with Ontario leading the charge in retaliatory actions against what Ford described as an economic assault on the province and the country. The Starlink deal, originally inked in 2024 to bring high speed internet to rural and northern Ontario, has become a high profile casualty in this escalating dispute, reflecting both economic and political motivations tied to Musk’s close relationship with Trump.

The termination of the Starlink contract is just one piece of a broader strategy unveiled by Ford to counter the U.S. tariffs, which took effect recently and have sparked outrage across Canada, Mexico, and China. Ontario’s government has also banned U.S. companies from securing provincial procurement contracts, a move that could lock American firms out of tens of billions of dollars in annual revenue. Additionally, the Liquor Control Board of Ontario, a major alcohol distributor, has begun pulling American liquor brands from its shelves and online listings, with stores across the province actively removing products to comply with the new directive. Ford emphasized that these measures aim to protect Ontario’s economic interests, stating, “We refuse to support businesses that back policies harming our people and our nation.”

Beyond the immediate actions, Ford hinted at further escalation if the U.S. persists with its tariff policy. He raised the possibility of imposing a 25% surcharge on electricity exports to the United States, a critical resource for several American states, and even suggested the potential to halt power supplies entirely. Ontario also threatened to restrict exports of critical minerals, which are vital for industries like technology and manufacturing, adding another layer of pressure on the U.S. economy. These steps align with Canada’s national retaliation plan, which includes tariffs targeting $20 billion worth of U.S. imports, with additional duties on $125 billion more in goods set to follow after a 21 day consultation period. Together, these measures signal a unified Canadian front against Trump’s trade policies.

The roots of this conflict trace back to Trump’s stated goals for the tariffs, which he claims are designed to force Canada, Mexico, and China to tighten border security and curb the flow of illegal substances, particularly fentanyl, into the United States. However, the policy has drawn sharp criticism from affected nations, who view it as an unfair economic penalty rather than a solution to security concerns. In Ontario’s case, the decision to scrap the Starlink deal carries added significance due to Elon Musk’s prominent role as a Trump ally, currently leading the Department of Government Efficiency in the U.S. administration. This connection likely amplified Ford’s resolve to target the contract, turning a practical internet connectivity project into a symbolic battlefield in the trade war.

For Ontario residents, particularly those in underserved rural and northern regions, the cancellation disrupts a plan to connect 15,000 homes and businesses to reliable high speed internet by mid 2025. The province had touted the Starlink partnership as a cornerstone of its $4 billion investment in digital infrastructure, aimed at bridging the connectivity gap in remote areas. With the deal now void, attention turns to potential alternatives like Canadian based Xplore, though questions linger about whether such providers can match Starlink’s global satellite capabilities. The shift could delay progress on rural internet access, a pressing need for communities long reliant on outdated or limited services, while also raising costs if new contracts require renegotiation or expedited deployment.

On the U.S. side, the fallout extends beyond Starlink’s lost $100 million deal. American companies face exclusion from Ontario’s $30 billion procurement market, a significant blow to industries ranging from construction to technology. The removal of U.S. liquor brands from Ontario stores further dents export revenues, affecting distilleries and distributors already grappling with global supply chain challenges. Meanwhile, Trump’s Commerce Secretary, Howard Lutnick, suggested that some tariffs against Canada and Mexico might be scaled back as early as the day following Ford’s announcement, hinting at a possible de escalation. Yet, Ford remained steadfast, warning of a prolonged struggle and vowing to “stand firm” against any further economic aggression.

This trade dispute echoes earlier tensions during Trump’s first term, when tariffs on Canadian steel and aluminum prompted similar counter measures. The current clash, however, appears more multifaceted, with Ontario leveraging its energy and mineral resources as bargaining chips. If Ford follows through on threats to limit electricity or mineral exports, the impact could ripple across North America, straining the U.S. Canada Mexico Agreement (USMCA) and reshaping trade dynamics for years to come. Canada’s federal government, backing Ontario’s stance, has signaled readiness to expand its tariff list, potentially targeting up to $155 billion in U.S. goods, a scale that underscores the seriousness of this economic standoff.

For those tracking the Canada US trade war developments, Ontario’s actions highlight the intersection of policy, symbolism, and real world consequences. The Starlink cancellation, while a relatively small financial hit for SpaceX given its four million plus global customers, serves as a loud statement of defiance. It also raises broader questions about how provinces and states might wield economic tools in future disputes, especially as global supply chains grow more interdependent. As negotiations loom, with potential tariff adjustments on the horizon, the situation remains fluid, but Ontario’s aggressive response has undeniably heightened the stakes.

Ultimately, this episode reveals the fragility of cross border cooperation when political agendas collide with economic realities. For rural Ontarians awaiting better internet, American businesses eyeing procurement deals, or policymakers on both sides of the border, the fallout from Ontario’s Starlink contract termination and related measures will resonate far beyond the immediate headlines. Whether it leads to a resolution or a deeper rift depends on the next moves in this high stakes trade chess game, with players like Ford and Trump showing no signs of backing down just yet.