Power grids are the new front in the unfolding trade war with the United States, but Ontario Premier Doug Ford's decision to use electricity as leverage carries major risks worth considering.
On Thursday, Ford said Ontario will charge 25 per cent more for electricity shipped to 1.5 million Americans across Minnesota, New York and Michigan starting Monday in response to U.S. President Donald Trump’s tariffs. The premier has also threatened to shut off power completely to the three U.S. states by early April if the tariffs remain.
"You touch the stove once, you get burned, you don't touch that stove again," Ford said. "We're going to make sure that we follow through with what we said we were going to do."
Larry Hughes, an energy system expert and professor at Dalhousie University, told Canada’s National Observer that cutting the U.S. off from electricity carries significant downsides that must be weighed if that option is seriously being considered. A policy directive under former President Barack Obama, states the United States considers electricity (and energy broadly) an “enabling function” of critical infrastructure. That characterization means energy is deemed a “uniquely critical” component for the functioning of the economy.
For now, “Ford has backed off turning off the electricity,” Hughes said. “Adding a surcharge is not the same. We’ll have to see how much this annoys the Americans.”
“If we start turning off energy supplies … I think that would give the Americans an excuse to be even more belligerent,” Hughes said, adding it could be considered “an attack on their critical infrastructure.”
Beyond critical infrastructure, it’s a significant shot across the bow of the American economy to make electricity more expensive for states importing from Canada. Affordable electricity is a key input for industrial and manufacturing businesses, and rate hikes hit American pocketbooks.
Canada exports more electricity into the U.S. than it imports, but in recent years, the gap is closing, suggesting there is limited leverage in using electricity exports as a tool to force Trump to back down from his tariff war.
From 2020 to 2024, Canada’s electricity exports to the U.S. have fallen about 46 per cent. At the same time, Canada’s imports over that same period have grown roughly 142 per cent.
Even though in recent years Canada has exported less and imported more, the country is still fetching increasingly more cash for its electrons. In 2024, the value of Canadian electricity exports was worth $3.1 billion up from $2.5 billion in 2020 thanks to higher prices per megawatt hour.
But Canada is spending much more on imports, too. In 2020, Canada imported $286-million worth of electricity, compared to $1.3 billion in 2024.
“Electricity exchanges across the United States and Canada — historically each other’s largest electricity trading partners — remain relatively small, representing less than one per cent of their respective total generation,” reports the U.S. Energy Information Administration. “However, the trade is important to grid balancing — constantly matching electricity consumption to electricity production — and helping to shore up electricity supply during low hydropower production periods particularly on the western coast of Canada.”
Hughes said if Canadian provinces began cutting the U.S. off from electricity, the U.S. could turn around and do the same. And that could harm certain regions.
Canada does not have an East-West power grid connecting the country, or even robust power grids effectively connecting regions within the country. Instead, Canada relies on North-South connections with the U.S. States on the border. In a crisis, many Canadian provinces would be unable to help one another. Due to droughts that are becoming more intense and frequent because of climate change, hydro reservoirs have less generating capacity, and as a result, last year both British Columbia and Manitoba (two provinces with significant hydro resources) had to import electricity from the U.S. to help meet demand.
Nova Scotia is also a good example of the interconnectedness between the two countries. The maritime province is phasing out its coal power plants by 2030 to meet federal requirements, and aims to add more wind, battery storage, and hydro power from Muskrat Falls to do that. In the meantime, however, it is using gas to balance the grid, and it gets its gas from the U.S via a pipeline through New Brunswick.
“Our electricity system in Nova Scotia won't work if the natural gas is cut off,” Hughes said. “We need natural gas in Nova Scotia, and if it was to be cut off, we'd be in trouble.”
The risk of some provinces using electricity exports as leverage could put vulnerable provinces that had nothing to do with the decision in the cross-hairs of American retaliation.
Energy and Natural Resources Minister Jonathan Wilkinson said in a statement that the goal of Canada’s retaliatory tariffs is to pressure Americans by focusing the government’s response on American goods that are sold in large quantities.
“In terms of other measures, we haven’t taken anything off the table, and provincial and territorial governments are free to add additional measures,” Wilkinson said. “This is an evolving conversation, but that’s not to say that we will not be looking to do more. There are other tools in our toolbox, including energy and critical minerals, that may become part of this conversation down the road.
“To be clear, though — we don't want that,” he said. “At the end of the day, we want to see the tariffs lifted.”
The trade blows between two long time allies this week have been chaotic. On Tuesday, Trump imposed 25 per cent tariffs on Canadian goods and a 10 per cent levy on energy (a spokesperson for Wilkinson’s office said the Trump administration has not clarified which rate applies to electricity). Canada responded with 25 per cent retaliatory tariffs on $30-billion worth of American products and Prime Minister Justin Trudeau said tariffs on another $125 billion in goods would follow after three weeks.
Then, Trump announced a month-long reprieve for the auto sector on Wednesday, and on Thursday paused tariffs on goods considered compliant with the Canada-United States-Mexico Agreement until April 2.
Both Ford and Trudeau have said they will not back down from retaliatory measures until all tariffs are removed.
"We have to follow through until he drops tariffs completely," Ford said.
— With files from the Canadian Press
John Woodside / Local Journalism Initiative / Canada’s National Observer
Comments
The only thing Americans respect is strength. If everyone acts like oil and gas Smith in Alberta the Yanks would just ask for more on a daily basis. You have to make them miss something they need and the US voting public needs to be made to realize what that man and his bunch are actually doing to them. Of course they don't really care about us because they've been led to believe there's a golden age near. What they don't realize is that a golden age of any kind does not happen overnight.
This is unprecedented for Canada and all actions are new and all are unsettling and all are risky but what are we supposed to do 'just stand there'.
Since one of Trump's objectives is to force Canadian auto manufacturers to move to the USA, the manufacturing states will need more electricity. So, reducing electricity export or increasing its price would be an appropriate counter measure.
It's time for Energy East West North. EEWN would send abundant zero emission electricity to all three coasts and supply power a good part of the transition, especially new green industries. It would enable provinces to share / trade electricity more effectively than a hodge podge of individual interties, and would standardize equipment. The time zones allow for unique trading opportunities that take advantage of lower rates in non peak periods to be sent down the line to other provinces during their daily peak demand periods. Maintenance and replacement of equipment and building new generation capacity can also be offset in separate provinces and territories by the presence of a national smart grid bringing power from afar.
The federal government has special powers that permit it to cross all provincial and territorial boundaries, especially if the feds own the infrastructure. TMX is the ironic precedent because it survived a challenge by BC with both the BC Court of Appeal and the Supreme Court of Canada giving it unanimous approval.
There is no economic or moral justification for another oil / gas pipeline when there already is enough spare capacity in the existing pipes, and in the light of the approaching peak in world ol demand and the ongoing fight with climate change. But that shouldn't put the brakes on another kind of energy corridor.
Could not agree more. I’m for selling O&G for awhile at the same time as ramping down production, with none of it going to the U.S. What really sickens me is the latest gambit of encouraging FM to take out long term loans and get involved in O&G. How nice. FN end up with stranded assets eventually, along with what’s left of the loan debt.
It is painful to Ford-haters that he's the only one that seems to really be understanding the existential nature of this fight, and that WE cannot "de-escalate", we have to escalate until the bully de-escalates.
That is such well-known psychology, in every sport, business and politics. Still, everybody but (no, I can't believe this either) Doug Ford is just in denial. This war. You have to HIT.
If we could get a Team Canada going, it would be a bonus that Smith has held back the ultimate card. We can escalate up to oil.
After we cancel the F-35. (Though I bet that works, all by itself.)
Having the election be between Ford & Trump worked very well for Ford indeed. I’m not sure cutting off electricity would do as well, and I’m glad he’s modified his position while still keeping pressure on. Smith has not so much been holding something back, as working for her real bosses, apparently not Albertans. She could get off her butt and service the electrical inter-tie between Ab. and B.C. though. Apparently it’s a shambles on the Ab. side. If we escalate up to oil it’s the Federal government that makes that call not Ab. Either oil, nat gas, or cancelling F 35s would drive trump into ballistics. Would be interesting to see what the legal issues would be for cancellation. Why do we need what is primarily a stealth fighter-bomber again?
Do you think there are sufficient NATO forces/materiel to meet need if the US washes its hands of us? Or ... it's not as though there aren't other possibilities! China, Russia and their allies come to mind.
Canada hasn't met its NATO spending commitment since 1990, and was under-target during all of the 70s, as well.
Neither is Europe a likely source, since they're busy beefing up their own supplies.
Long term, Canada can place orders for European jets and submarines, both conventional and nuclear powered. Nuclear propulsion is expensive, but the advantages are having 20+ years between refueling and extremely long ranges while submerged below the Arctic ice, and the fact their very presence is a big deterrent to foreign intrusion. There are at least three European choices in both air and sea defence.
My guess is that European plane and ship building companies would be open to joint projects where Canada not only sends money, but also retools existing shipyards and airplane plants at home (e.g. Irving, Seaspan, Davie, Bombardier ...) to participate in production.
Trump cozying up to Putin should be reason enough to immediately leave the American orbit, cancel the F35 order and pay the penalty, after first deducting Canada's financial contribution to its initial development. Let Trump flail away mindlessly until he's in a corner, then short him the metals and critical minerals the US needs for its industry, including defence. In doung so, Canada will have to beef up its intelligence capabilities.
Short term, Canada is perfectly capable of developing things like relatively inexpensive drones for both air and sea defence purposes at home, and mass producing them in big quantities.
Canada has lots of brain power abd industrial capacity. Let's put them to use.