(WASHINGTON) — The tariffs the Trump administration is imposing on Canada could disrupt the longstanding trade of electricity between the United States and its northern neighbor, effectively raising energy bills in multiple U.S. states.
President Donald Trump ignited a trade war on Canada and Mexico immediately upon taking office, announcing on Inauguration Day that he expected to place 25% tariffs on both countries. After weeks of back and forth, the trade war escalated further after Ontario slapped a 25% surcharge on electricity sent to the U.S. in response to Trumps’ tariffs.
The tariffs will likely have reverberations for Americans who use electricity imported by Canada, as the U.S. and Canada are each other’s largest energy trade partners, according to Washington, D.C.-based research institute Center for Strategic and International Studies (CSIS).
The history of electricity trade between the U.S. and Canada
The U.S. and Canada have been trading electricity for more than a century — long enough to have established an integrated grid, which offers a sense of security for both countries’ energy needs, according to Ontario-based utilities association Electricity Canada.
The electricity interdependence between the two countries was borne out of complementary needs — Canadians tend to use more electricity in the winter for heating, while demand is higher in the U.S. during the summer for cooling, according to Electricity Canada. An integrated grid offers strategic balance and reliability for both countries. according to the Canada Energy Regulator (CER).
The cumulative volume of energy trade between the U.S. and Canada has consistently risen year over year, according to the CSIS.
For the better part of the last two decades, the U.S. has imported “significantly more” electricity from Canada than it has exported, according to the U.S. Energy Information Administration. The balance shifted in the fall of 2023, however, because severe drought significantly reduced the amount of hydropower generated in Canada.
In 2023, electricity exports from the U.S. to Canada were valued at about $1.1 billion and electricity imports from Canada to the U.S. were valued at $2.9 billion, according to the CER.
Tariffs could cause Americans’ electricity bills to increase
Since the integrated electricity system between the U.S. and Canada was built on the idea of tariff-free trade, introducing tariffs is “hugely disruptive” and will be felt by citizens of both countries, according to Electricity Canada.
Both American and Canadian consumers and businesses can expect to pay more for electricity, the association said.
On Monday, Ontario Premier Doug Ford announced a 25% surcharge on electricity from Ontario to the U.S. Customers in states that import the most electricity from Ontario — like Minnesota, Michigan and New York — could see higher prices as a result.
Ford said during a press conference on Monday that he would “not back down” until the tariffs are abolished “once and for all.”
“Believe me when I say I do not want to do this,” Ford said. “I feel terrible for the American people who didn’t start this trade war.”
Ford suspended the surcharge on Tuesday after a “productive conservation about the economic relationship between the United States and Canada,” he wrote on a statement posted to X.
Other states that are top importers of Canadian electricity include California, Nevada, Arizona, North Dakota, Vermont, New Hampshire and Maine, according to the CSIS.
The amount of electricity imported from Canada is a small portion of the overall power supply in the U.S., but the transmission connections are an important component of markets in northern states, according to the EIA.
On Tuesday, Trump imposed another round of tariffs on Canadian steal and aluminum products in response to Ontario’s surcharge on electricity.
Trump also announced that he planned to declare a national emergency in the regions of the U.S. impacted by the surcharge but did not provide any specifics on actions the government might take.
ABC News’ Michelle Stoddart and Max Zahn contributed to this report.
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