Ontario is giving the U.S. a shock to the system… by removing shocks from their system.
What happened: Ontario threw its biggest counterpunch yet against new U.S. tariffs, levying a 25% tax on all electricity exports to New York, Michigan, and Minnesota. The province supplies these states with enough electricity for about 1.5 million homes and businesses.
- Premier Doug Ford said the measures would stay in place until the 25% tariffs on Canadian imports are completely removed (none of that ‘one-month pause’ stuff).
- He also said he would “not hesitate” to up the tax or even cut off electricity exports entirely.
Why it matters: Electricity is viewed as a strategic export to target, as the U.S. typically imports much more from Canada than it exports. Other provinces, like Québec and Manitoba, have the option to follow suit.
Yes, but: The plan could backfire. For one, Canadian imports don’t contribute that much to the U.S. (less than 1% of the total generation between the two countries). Trade tables are also turning, as some utilities imported more than they exported for stretches of last year.
Plus: Disruptions to electricity exports could gum up the highly interconnected North American grid. Trade is a vital part of grid balancing — matching a grid’s electricity output and consumption. If it gets out of whack, it could lead to an increased risk of blackouts.—QH