Ontario Cancels Starlink Deal Permanently, Even if U.S. Tariffs Are Lifted

Ontario Premier Doug Ford has announced that the province will permanently cancel its $100 million contract with Elon Musk’s Starlink, even if the U.S. lifts the 25% tariffs imposed on Canadian imports. The decision, which Ford described as a “point of principle,” comes amid escalating trade tensions between Canada and the United States, sparked by tariffs introduced by U.S. President Donald Trump.

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The Starlink Contract: A Brief Overview

The now-canceled deal, signed in November 2024, was intended to provide high-speed satellite internet to rural and northern communities in Ontario. Starlink, a division of Musk’s SpaceX, has been a key player in delivering internet to underserved areas globally, including Canada. The contract was seen as a significant step toward bridging the digital divide in Ontario’s remote regions.

However, the deal has been a point of contention since its inception. In February 2025, Ford initially threatened to cancel the agreement as a retaliatory measure against the U.S. tariffs. While the threat was temporarily withdrawn when the tariffs were delayed, Ford has now made the cancellation permanent, regardless of future tariff decisions.

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Ford’s Justification for the Cancellation

Ford cited the U.S. tariffs and Musk’s perceived role in supporting Trump’s administration as key reasons for the decision. “We’re ripping up Ontario’s contract with Starlink. It’s done. It’s gone. We won’t award contracts to people who enable and encourage economic attacks on our province and our country,” Ford said during a press conference on March 5, 2025.

Ford also criticized Musk directly, suggesting that his involvement in the Trump administration’s policies made the deal untenable. “If they come out and sue us, so be it,” Ford added, indicating that the province is prepared to face potential legal challenges from SpaceX.

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The Broader Context: U.S.-Canada Trade Tensions

The cancellation is part of Ontario’s broader response to the U.S. tariffs, which have strained relations between the two countries. Trump’s administration imposed a 25% tariff on most Canadian imports, sparking a trade war that has led to retaliatory measures from Canada. In addition to canceling the Starlink deal, Ontario has removed U.S. alcohol from its liquor stores and banned American companies from bidding on provincial contracts.

While Trump recently delayed the tariffs until April 2025, Ford’s government has made it clear that the Starlink cancellation is final. “We’re not going back there. It’s done,” Ford said, emphasizing that the decision is about standing up for Ontario’s economic interests.

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Implications for Ontario and Starlink

Impact on Rural Communities

The cancellation raises questions about how Ontario will address the digital divide in rural and northern areas. Starlink was expected to provide high-speed internet to thousands of residents who currently lack reliable connectivity. With the deal off the table, the province will need to explore alternative solutions, such as partnering with Canadian satellite providers like Telesat, which is developing its Lightspeed network. However, Telesat’s service is not expected to launch for several years, leaving a potential gap in coverage.

Starlink’s Response

Elon Musk has not publicly commented on the latest cancellation. When the deal was initially threatened in February, Musk responded with a dismissive “Oh well” on social media. Starlink’s overall business is unlikely to suffer significantly, as it remains a leading provider of satellite internet globally.

However, the cancellation could encourage other governments to seek alternatives, particularly in light of Musk’s controversial ties to Trump’s administration.

Legal and Financial Fallout

The financial implications of the cancellation are still unclear. The Ford government has not disclosed whether Ontario will face penalties for breaking the contract, but legal action from SpaceX is a possibility. Ford has indicated that the province is willing to fight the matter in court if necessary.

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What’s Next?

The cancellation of the Starlink deal highlights the growing economic and political tensions between Canada and the United States. As Ontario navigates the fallout, the province will need to find new ways to deliver high-speed internet to its rural communities while managing the broader implications of its trade retaliation measures.

For Starlink, the loss of the Ontario contract is a setback but not a critical blow. The company’s global reach and strong customer base will likely cushion the impact. However, the situation underscores the challenges of operating in a politically charged environment, where business decisions can quickly become entangled in international disputes.