Morgan McLellan is co-founder and managing partner of Sovereign, a strategic, financial and crisis communications advisory firm.
On Tuesday, Ottawa unveiled retaliatory tariffs on $27.6 billion worth of U.S. goods after trade talks with Washington collapsed. By targeting networking equipment, electrical cabling, cooling systems, steel and aluminum, the measures could also raise the cost of building the infrastructure needed to power Canada’s AI economy.
But as confidence in the United States as a reliable economic partner continues to erode, we should expect calls for Canada to strengthen its AI and data sovereignty to grow louder.
The warning signs extend beyond Canada’s countermeasures. Bloomberg News recently reported that Nvidia has warned customers to expect price increases of up to 15 per cent for its coveted AI chips.
Exposing Canada’s reliance
Tariffs and supply-chain disruptions are making critical components more expensive and exposing Canada’s reliance on foreign chips, cloud platforms, computing infrastructure and AI models as an economic vulnerability, not merely a technology issue.
Given these risks, Canadians might be expected to rally behind building more data centres at home. But even amid rising economic nationalism, public support is far from assured.
Across Canada, proposed data centres are attracting grassroots campaigns both for and against their construction. Supporters see investment, jobs and the infrastructure needed to compete in AI. Opponents see enormous buildings consuming vast amounts of electricity and water, straining local infrastructure and enriching foreign technology companies.
Governments and developers may be tempted to dismiss some of this resistance as NIMBYism. That would be a serious mistake.
Data centres are the physical foundation of the AI economy, but they are often discussed as if they were simply large warehouses.
In reality, their potential effects extend far beyond the boundaries of an industrial site. Communities want to know who will pay for new electricity generation, whether household rates will rise, how much water will be used, what permanent jobs will remain after construction and who will ultimately control the data and computing power housed inside.
Those are legitimate questions and they are increasingly political ones.
Ontario recently released its Data Centre Playbook that would evaluate proposed projects based on economic development, digital sovereignty, community benefits, security and environmental considerations.
The province argues that attracting the right investments can help keep Canadian data in Canada and strengthen the country’s digital economy. Alberta, which has aggressively courted hyperscale investment, is holding public town halls on its AI data centre strategy as local opposition intensifies.
The communications challenge is that governments are often promoting these projects in national terms while communities experience them locally.
“AI sovereignty” may resonate in Ottawa but it’s less persuasive to residents worried about the impact on their community if these mega projects are built in their backyards. Likewise, promising billions in investment means little if the public believes most of the long-term economic value, intellectual property and control will flow to a foreign parent company.
Stakes are significant
Canada must also be more precise about what sovereignty means. Housing data on Canadian soil is important, but data residency alone does not guarantee technological sovereignty.
If the infrastructure, chips, cloud platforms and AI models remain controlled abroad, Canada may be hosting the digital economy without truly owning or directing it.
For businesses, the stakes are significant. Companies need reliable access to computing power if they are to adopt AI, improve productivity and compete globally.
Without domestic capacity, Canadian firms risk becoming more dependent on foreign infrastructure, foreign pricing and decisions made outside the country.
But developers cannot expect governments to carry the public argument for them. Social licence must be built before a project reaches its final approval stage, not improvised after opposition forms.
That means publishing credible information about power and water consumption, explaining who pays for grid upgrades, identifying permanent employment and tax benefits, and making enforceable community commitments.
It also means engaging critics respectfully instead of labelling every objection misinformation or anti-development.
Canada needs data centres, but not an unchecked race to approve every proposal carrying an AI label.
As the trade war exposes the risks of technological dependence, building domestic capacity is becoming more urgent. Whether Canada succeeds will depend not only on capital, electricity and land, but on public trust and a convincing answer to who benefits, who pays and who remains in control.
