By Fen Osler Hampson

March 9, 2026

Donald Trump’s third Gulf war will almost certainly decide the fate of his presidency and the Republican Party in the November congressional elections.

As the conflict widens under the hardline leadership of Mojtaba Khamenei—the son and successor to Iran’s longstanding supreme leader—the humanitarian and global economic fallout are devastating.

In an ironic twist, this colossal disaster may have just handed Prime Minister Mark Carney the ultimate “get out of jail” card in his difficult relationship with Trump.

For months, Canada has been under the thumb of Trump’s hostile trade war. Trump’s tariffs on steel, aluminum, and autos are slowly suffocating Canada’s manufacturing sector. The administration has also made it clear that Canada’s dairy, digital and other protected sectors of our economy will be on the chopping block when CUSMA renewal talks begin in July.

But with the effective closure of Strait of Hormuz and global oil prices eclipsing $100 per barrel for the first time in years, the power dynamic has fundamentally shifted.

In a new twist of fate, the ghost of Jimmy Carter has entered the Oval Office and Trump is spooked. Following the Iranian revolution and the overthrow of the Shah in 1979, long queues and skyrocketing prices at the gas pump sounded the death knell for Carter’s presidency, along with his failure to resolve protracted Iranian hostage crisis before the 1980 election.

Although the United States is now the world’s major producer of oil and energy self-sufficient, it cannot insulate itself from rapidly rising energy prices that are set in global markets. U.S. gasoline prices have jumped 50 cents in less than a week, with Californians seeing prices hitting a staggering $5.15 per gallon.

For a president who promised a “golden era of energy dominance”, the rising price of energy is not just an economic headache, it is an existential threat as price increases are felt not just at the pump but in the price of eggs, milk and just about everything else that Americans consume that must be shipped or processed.

Trump’s administration is already under enormous pressure, as underscored by the U.S. Treasury’s recent stopgap sanctions waiver for Russian oil sales to India, which Treasury Secretary Scott Bessent has already signalled may become a blanket waiver to alleviate the price shock.

Canada, conversely, is a stable, democratic, and high-capacity energy producer.

If Trump wants to bring U.S. gasoline prices down and avoid the “Carter Curse,” he needs more Canadian heavy crude. This reality may breathe new life into the Keystone pipeline (now known as South Bow). Trump has already said he would like to see the pipeline built after Biden killed the project on the first day of his presidency.

For Carney, the path forward is a new, crisis-driven grand bargain. As Trump is buffeted by a political hurricane of his own making, this is not the time to go wobbly and beg for exemptions and special treatment.

In current circumstances, the project assumes even greater importance and urgency, a national energy security lifeline Trump will want to fast-track to replace stranded Middle Eastern oil supplies.

However, Canada’s leverage extends well beyond the oil patch. The war has also paralyzed the Middle Eastern aluminum industry. Smelters in the UAE, Bahrain, Saudi Arabia and Qatar, which provide a significant portion of the world’s primary aluminum, are seeing their exports trapped by the war and by the closure of the Straits of Hormuz.

This has created a critical supply gap that is also affecting prices and American production. Manufacturers from Ford and GM to aerospace giants have already complained about high prices because of Trump’s tariffs. They may now be facing acute shortages that could halt assembly lines. Maintaining a 50% tariff on Canadian aluminum in this environment is no longer just protectionism; it is economic suicide.

Pleas by U.S. industry groups to lift these punitive tariffs will become a roar. Trump needs Canada’s smelters to keep the American heartland running, and that, too, gives Mark Carney leverage.

The same logic applies to the agricultural sector. As global natural gas prices spike by 70%, the cost of producing nitrogen-based fertilizers has skyrocketed. The Middle East is a massive exporter of urea and ammonia. With those channels now blocked, U.S. farmers in the Corn Belt are staring at bankruptcy just as the planting season is about to begin.

Canada is the world’s most stable producer of potash and nitrogen-based fertilizers. By ensuring a steady flow of fertilizers, Canada can help alleviate a food-inflation crisis that will further sour the American electorate.

For Carney, the path forward is a new, crisis-driven grand bargain. As Trump is buffeted by a political hurricane of his own making, this is not the time to go wobbly and beg for exemptions and special treatment.

It is a moment to proactively press for a “safe haven” accord where Canada offers guaranteed, priority access to energy, aluminum, and fertilizers, which are critical to stabilize the U.S. economy and prices for American consumers.

In exchange, we must insist that Trump’s levies on steel, aluminum and autos must be permanently lifted before CUSMA talks start.

The revenue windfall for Alberta and Saskatchewan is already pouring in, with oil royalties poised to erase provincial deficits if the war continues. However, the real windfall is the strategic leverage it gives Canada.

The third Gulf war is a disaster of historic proportions, but also a singular opportunity to drive home the reality that, in a world of violent conflict and closed straits, a reliable, resource-rich neighbour is worth a lot more than any tariff revenue.

If Donald Trump wants to avoid the fate of Jimmy Carter, he will have to exchange his trade war for a new “Made in Canada” partnership.

Policy Contributing Writer Fen Osler Hampson, FRSC, is the Chancellor’s Professor and Professor of International Affairs at Carleton University, and president of the World Refugee & Migration Council. He is co-chair of the Expert Group on Canada-US Relations.