Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Politics

The Northeast Braces for a Possible Power Shock From Trump’s Tariffs

Whether Canadian tariffs would even apply to electricity is still a question — but if they did, things could get expensive.

The Northeast Braces for a Possible Power Shock From Trump’s Tariffs
Illustration by Simon Abranowicz

Donald Trump reemphasized on Friday that he intends to impose 25% tariffs on Canada and Mexico beginning February 1, and while that date is rapidly approaching, the details remain sparse. Although the president has suggested the duties will be sweeping, covering everything from cars to lumber to oil, their impact on one key commodity — electricity — is very much in question.

The U.S. imports thousands of gigawatt hours of electricity from Canada every year, worth in the billions of dollars. While electricity from Canada makes up less than 1% of our nationwide power consumption, it’s a significant and growing source of low-cost, low-carbon power for some regions, especially the Northeast. Ontario Premier Doug Ford has threatened to cut off power exports into the U.S. entirely in retaliation for the tariffs. But even if he doesn’t, if the tariffs apply to electricity imports, then power flows across the border would still likely decline. That’s because domestic natural gas-fired power would suddenly become much more economical.

“Electricity from Canada competes against natural gas power plants,” Pierre-Olivier Pineau, a professor at the University of Montreal’s business school who studies electricity markets, told me. “The gas power plants would be so happy to have these tariffs.”

But whether the tariffs would or could apply to the trade of electricity is still a big open question. While it would be technically and administratively feasible to tax imports of electricity, Pineau told me, there’s no system set up to do that right now. “Electricity doesn’t go through customs,” he said.

Get the best of Heatmap in your inbox daily.

* indicates required
  • The U.S. International Trade Commission, the federal agency that advises on international trade and tariffs, told me it was not “able to speculate on tariffs being applied to electricity or how that would be done.” The public affairs officer sent me a report from the Commission, however, which confirmed that it would be unprecedented. It states that “imports of electrical energy are not considered to be subject to the tariff laws of the United States.”

    Regardless, officials in Maine and Massachusetts began warning about the impacts of potential tariffs on electricity last week. Governor of Massachusetts Maura Healey told business leaders that tariffs could increase electricity costs by $100 million to $200 million statewide, as approximately 5% to 10% of the electricity New England consumes comes from Canada. (I reached out to the Independent System Operator for New England, but the grid operator had no more clarity on whether or how tariffs on power imports would work. “We do not have expertise in international trade, and we’d be looking for guidance if or when a tariff is implemented. Beyond that, we’re not able to speculate at this time.”)

    The U.S. generally imports electricity from Canada in two different ways. Some of it is part of a “firm contract.” For example, the New York grid operator has a contract with Hydro-Quebec, a Canadian hydropower company, through 2030, to import up to 900 megawatts of capacity at a fixed rate. Hydro-Quebec also has an agreement with Vermont to supply about 25% of its annual electricity needs through 2038. John-Thomas Bernard, an energy economist at the University of Ottawa, told me that for those contracts, if the 25% tax applied, it would be passed directly onto customers.

    But most of the electricity the U.S. consumes from Canada is purchased in a daily or hourly market, where U.S. grid operators just buy whatever is cheapest. Tariffs would essentially force Canadian producers out of that market, Bernard said. “The bulk of what would have to be replaced on the U.S. side will come from gas.”

    Whether this would produce a noticeable cost increase for consumers would largely depend on the price of natural gas. In 2023, imports to New York from Quebec dropped precipitously because a drought reduced hydropower capacity, but natural gas prices were also especially low, so electricity prices were not significantly higher.

    Low natural gas prices are not guaranteed in the long term, of course. “Natural gas prices are very market driven, and the more we are reliant on natural gas in the northeast, the more demand you put on that supply, the more those prices are going to go up,” Daniel Sosland, president of the New England-based environmental nonprofit the Acadia Center, told me.

    And if the tariffs remained in effect in 2026, New Yorkers would be hit much harder. That’s when the Champlain Hudson Power Express, a power line that will deliver 1,200 megawatts of Canadian hydropower into New York City, is expected to be completed. The line will supply some 20% of New York City’s electricity demand.

    “I don’t know what the point of all this is,” Sosland told me. Electricity trade between the U.S. and Canada brings mutual benefits, he said. “The idea of tariffs and trying to create a fence along the system is going to be very destructive to customer cost, to clean air, to power reliability, because it’s going to foreclose all these other options that are on the table right now that provide benefits on both sides.”

    The exception to all of this is a small population of about 58,000 ratepayers in the state of Maine who live near the border and get virtually all of their electricity from New Brunswick, Canada. William Harwood, the public advocate for Maine, estimates these communities could see an increase of $6 to $7 per month on their electricity bills. Harwood didn’t have any additional insight into whether the tariffs would or could apply to electricity — he was merely looking into the impacts on constituents if they did. “They are electrically part of Canada,” he said.

    Editor’s note: This story originally misstated a unit of energy when referring to Canada’s energy exports. It’s gigawatt hours, not gigawatts. It’s been corrected.

    This story also has been updated to reflect Trump’s continued emphasis that tariffs will begin February 1.

    You’re out of free articles.

    Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
    To continue reading
    Create a free account or sign in to unlock more free articles.
    or
    Please enter an email address
    By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
    Energy

    The Nuclear Power Dealmaking Boom Is Real

    Thank data center developers and, yes, Trump.

    A nuclear power plant.
    Heatmap Illustration/Getty Images

    Whichever way you cut it, this has been an absolute banner year for nuclear deals in the U.S. It doesn’t much matter the metric — the amount of venture funding flowing to nuclear startups, the number of announcements regarding planned reactor restarts and upgrades, gigawatts of new construction added to the pipeline — it’s basically all peaking. Stock prices are up across all major publicly traded nuclear companies this year, in some cases by over 100%.

    “This year is by far the biggest year in terms of nuclear deals that has occurred, probably, since the 70s,” Adam Stein, the director of nuclear innovation at The Breakthrough Institute, told me. “It’s spanning the gamut from bringing a 40-year-old reactor back to things that have not even been proven scientifically yet.”

    Keep reading...Show less
    Blue
    Electric Vehicles

    AM Briefing: U.S. Power’s Record Surge

    On the Senate’s climate whip, green cement deals, and a U.S. uranium revival.

    U.S. Electricity Demand Surges to Back-to-Back Records
    Heatmap Illustration/Getty Images

    Current conditions: Flash flooding strikes the Southeastern U.S. • Monsoon rains unleash landslides in southern China • A heat dome is bringing temperatures of up to 107 degrees Fahrenheit to France, Italy, and the Balkans.

    THE TOP FIVE

    1. The U.S. broke electricity demand records twice in July

    An August 5 chart showing last month's record electricity demand peaks.EIA

    Keep reading...Show less
    Yellow
    Podcast

    Trump’s Move to Kill the Clean Air Act’s Climate Authority Forever

    Rob and Jesse talk through the proposed overturning of the EPA’s “endangerment finding” on greenhouse gases with Harvard Law School’s Jody Freeman.

    The Capitol.
    Heatmap Illustration/Getty Images

    The Trump administration has formally declared that carbon dioxide and other greenhouse gases are not dangerous pollutants. If the president gets his way, then the Environmental Protection Agency may soon surrender any ability to regulate heat-trapping pollution from cars and trucks, power plants, and factories — in ways that a future Democratic president potentially could not reverse.

    On this week’s episode of Shift Key, we discuss whether Trump’s EPA gambit will work, the arguments that the administration is using, and what it could mean for the future of U.S. climate and energy policy. We’re joined by Jody Freeman, the Archibald Cox Professor of Law at Harvard and the director of Harvard’s environmental and energy law program. She was an architect of the Obama administration’s landmark deal with automakers to accept carbon dioxide regulations.

    Keep reading...Show less