Donald Trump has dubbed April 2 ‘Liberation Day,’ a significant date after his election victory when he will enact a series of new reciprocal tariffs. The US president’s tariffs are expected to raise energy and utility bills, previous reports have claimed. New York state and regions like New England depend a lot on electricity generated in Canada, which exports a large amount of electricity to the US every year.
How could the bills be impacted?
In March, Ontario Premier Doug Ford said he was planning to halt the transmission of electricity from his province to the US. This would not just crimp supply but also lead to prices soaring.
In response to Trump’s 25% tariffs on Canadian imports, Ford threatened to impose a 25% surcharge on electricity exports to Michigan, New York, and Minnesota, the USA Today reported. New York heavily relies on Canadian electricity, particularly imports from Hydro-Québec and Ontario’s Independent Electricity System Operator (IESO). The New York Independent System Operator (NYISO), which manages the state’s electrical grid, stressed that Canada and the US have one of the most integrated electric grids in the world.
“The reliable and uninterrupted flow of electricity across the Canadian interties is critical to protect the health, safety, and welfare of New York citizens and residents across the Northeast U.S.,” the NYISO said.
The US and Canada have been each other’s biggest electricity trading partners. The tariff fight between Canada and the US reportedly threatens to throw off a supply-and-demand balancing act that is able to prevent blackouts and keep power prices in check, per grid operator filings and energy experts.
The US happens to be a net importer of Canadian power. It bought 2,700 gigawatt hours last year, or about 50% more than it sold to Canada, EIA data reveals. The US Northeast relies more on Canadian electricity than most of the country, so the consequences of pricier or curtailed electricity could be steeper there.
“The NYISO (New York Independent System Operator) and neighboring system operators have serious concerns that applying export tariffs to electricity may have serious adverse effects on reliability and wholesale electric markets,” New York’s grid operator said in its filing with the Federal Energy Regulatory Commission.
Back in March, several grid operators told Reuters it was unclear whether the tariffs will apply to electricity. Apparently, there is no precedent for them and the White House did not particularly say whether it would target power.
Canadian Energy Minister Jonathan Wilkinson said in March that US consumers will face higher gasoline, electricity, home heating and car prices, should the tariffs go into effect. “We will see higher gasoline prices as a function of energy, higher electricity prices from hydroelectricity from Canada, higher home heating prices associated with natural gas that comes from Canada and higher automobile prices,” Wilkinson told CNBC’s Megan Cassella in an interview.
