Canada’s Ontario province has hit US power exports with a 25 per cent surcharge as the nation steps up its retaliation against Donald Trump’s tariffs.
The levy will have an impact on 1.5mn homes and businesses in Michigan, Minnesota and New York and cost families and businesses in the three states up to $400,000 a day, Ontario premier Doug Ford said on Monday.
“On an average, this will add around $100 per month to the bills of hard-working Americans,” Ford said, adding that “until the threat of tariffs is gone for good, Ontario will not relent”.
He also said that, “if necessary, if the United States escalates, I will not hesitate to shut the electricity off completely”.
Ontario’s threat to the North American power grid highlights how the president’s tariffs on Canada and Mexico, the US’s two biggest trading partners, are taking a growing economic toll on the US economy. Trump last week imposed 25 per cent tariffs on most Canadian and Mexican goods, but eventually U-turned by creating a carve-out for those subject to the sweeping United States-Mexico-Canada Agreement.
Several other Canadian provinces supply US states in the Midwest and west through cross-border transmission lines. The premier of the oil-rich province of Alberta, Danielle Smith, on Monday said the country’s oil hub would “continue to provide energy to the United States and support America’s vision of global energy dominance”.
But she cautioned Canada should prioritise the expansion of infrastructure to export its crude to other markets in Europe and Asia.
“We want to get more products from the west coast of Canada to the east coast as well and to the northern coast. We need to find new markets for that extra oil and gas, and we want to be a safe, secure and reliable supplier for European and Asian allies,” she said at S&P Global’s CERAWeek conference in Houston.
The North American Electric Reliability Corporation, a regulatory body that monitors the reliability of the power systems in the US and Canada, warned last week that energy stability could be imperilled if the two countries restricted cross-border electricity and gas supplies in a trade war.
“If some of the sabre-rattling around ‘turning off exports’ occurs, it could create a significant resource adequacy problem for the Canadian provinces that benefit from US exports as well the [US] states along the border that benefit from Canadian imports,” said Jim Robb, Nerc’s chief executive.
Ontario’s Independent Electricity System Operator confirmed it had implemented the charge Ford requested on all electricity exports to US jurisdictions.
“As requested in the minister’s letter, the IESO is applying a charge of $10/MWh to electricity exports, which equates to a charge of approximately 25 per cent,” it said.
The US consumed $2.1bn worth of electricity imports from Canada last year, according to BloombergNEF, a research group.