A strategy that comes with risks

Opinion

Hey there, time traveller!
This article was published 11/03/2025 (191 days ago), so information in it may no longer be current.

At least four Canadian provinces are considering restricting electricity exports to the United States, or imposing some form of additional charge on those exports.

The proposal is a viewed a powerful option in Canada’s escalating trade war with the U.S. — a measure that could potentially cause the Trump administration to back away from the punishing tariffs it has imposed, or threatens to impose, on Canadian exports — but the provinces must carefully consider whether interfering with southbound electricity exports could cause more problems than they solve.

For the past several weeks, Ontario Premier Doug Ford has threatened to halt the export of electricity from his province to the U.S., in retaliation for the American tariffs and tariff threats. He claims that doing so would “turn out the lights” in approximately 1.5 million homes and businesses in New York, Michigan and Minnesota.

Last week, he told reporters that “We’re going to ensure that the Americans understand how pissed off we are, how unified we are, how committed we are to working as a country to stand up for each other and our own independence on our own two feet. And I say we don’t let up until the president takes the threat off the table.”

Instead of cutting off exports, Ford announced yesterday that Ontario is imposing a surcharge of 25 per cent on electricity exported to the United States. He warned that the rate could go even higher in response to any further escalation by the Trump administration.

Here in Manitoba, Premier Wab Kinew told reporters last Thursday that Manitoba is also prepared to use its hydroelectric power as leverage in Canada’s trade war with the U.S. “When we look at those threats coming from Donald Trump’s administration, and you got the lower tariff level on electricity, energy, critical minerals … That’s a tell,” he said. “It reveals an area where we have strength, something that they really, really need.”

While Quebec has also said it is weighing whether to halt or limit electricity exports to the U.S., Canada’s other major electricity exporter, British Columbia, appears to be more hesitant to tax electricity exports or turn off the switch altogether. That province’s energy minister, Adrian Dix, told reporters last week that “It would not be good news for us … We could withstand that, but it would not be without consequences. Not just now, but over the next years and decades.”

The point Dix was making is that limiting electricity exports to the States would hurt his provincial utility’s revenues, and that would likely lead to higher electricity rates for British Columbians. The same is true for Manitoba, where a significant portion of Manitoba Hydro’s revenues are currently derived from power sales to the south. Without that income, Manitobans would be facing huge rate increases in order to keep the cash-strapped Crown corporation solvent.

The prospect of higher hydro rates is one compelling reason to think carefully about taxing or terminating electricity exports, but there is a second, equally compelling factor to consider.

The North American electrical power grid is an integrated network that connects electricity-generating utilities throughout Canada and the U.S. The grid is divided into nine jurisdictions, and there are a whopping 31 transmission lines that cross the Canada-U.S. border. Those lines don’t just ship power from Canada to U.S.; they also import power in the opposite direction.

The cross-border power grid plays a critical role in ensuring that the various jurisdictions connected to that network have adequate amounts of power during periods of high demand. For example, Manitoba sometimes needs to import power from the States during times of low water levels, or during cold snaps or heat waves.

Cutting off power exports from Canada to the U.S. — breaking contracts and forcing American utilities to scramble to purchase power elsewhere or face the prospect of blackouts — could backfire on us, by depriving Canadian provinces of reliable sources of on-demand backup power.

Given the absence of east-west power transmission lines capable of moving large volumes electricity between Canadian provinces, we could end up trying to buy power from the same American utilities we stiffed. Good luck with that.

Ford and Kinew are correct that America’s dependency on our electricity gives us leverage over that nation, which could be used to blunt Trump’s tariff threats. That leverage comes with significant risks for Ontarians and Manitobans, however. Before turning off the switch or imposing large surcharges, the two premiers would be wise to weigh both the benefits and the consequences of doing so.

They must ensure that their actions don’t cause more harm than good.