Ontario slaps 25% levy on U.S.-bound electricity in latest trade war volley

Ontario is imposing a 25 per cent surcharge on all U.S.-bound electricity as part of its retaliatory measures against U.S. President Donald Trump's tariffs on Canadian goods.

The new levy took effect Monday and will add about $10 per megawatt-hour to the cost of power heading south, the province says. It will generate an estimated $300,000 to $400,000 per day, money that will be used to support workers and businesses hit by U.S. tariffs.

"Believe me when I say I do not want to do this," Ontario Premier Doug Ford said at a news conference Monday.

"I feel terrible for the American people, because it's not the American people who started this trade war. It's one person who's responsible, that's President Trump," he said.

Ontario provides electricity to roughly 1.5 million customers in the northern border states of New York, Michigan and Minnesota. Ford said the surcharge will cost the average household or business in these states an additional $100 per month on their power bills.

He added the magnitude of the levy could be increased if the Trump administration continues to escalate its trade war against Canada.

"Until these tariffs are off the table, until these tariffs are gone for good, Ontario will not relent. We will not back down," Ford said alongside Ontario Energy Minister Stephen Lecce.

The province has also taken American booze off LCBO shelves and banned U.S. companies from government procurement contracts, in addition to the federal government's initial round of retaliatory tariffs on $30 billion worth of U.S. goods.

The electricity surcharge is being imposed by a directive from Lecce to the province's electricity system operator, which will require any generator selling electricity to the U.S. to add what's being called a Tariff Response Charge.

The system operator will then collect the money generated by the surcharge on behalf of the government on a monthly basis.

Last week, Trump temporarily paused implementation of 25 per cent tariffs on Canadians exports "compliant" with the terms of the Canada-U.S.-Mexico Agreement (CUSMA) until April 2. But both Ford and Ottawa have said retaliatory measures will move ahead until the tariffs are lifted.

"Pausing some tariffs, making last-minute exemptions — it will not cut it. We need to end the chaos once and for all," Ford said Monday.

He also reiterated his previous threat to stop flows of electricity from Ontario to the U.S. altogether if the trade war lingers on.

Asked about a specific threshold that may compel him to take that step, Ford declined to be specific.

"If necessary, if the United States escalates, I will not hesitate to cut the electricity off completely," Ford said. "Let's just see how this rolls out. [Trump] changes his mind almost every single day."

WATCH | Ford on his threshold for cutting off power: 

What would it take for Ford to cut off electricity to the U.S.?

1 hour ago

Duration 1:12

Though he wouldn't give a specific date, Ontario Premier Doug Ford isn't ruling out his threat to cut off electricity flowing from Ontario to several American states if the U.S. moves ahead with sector-wide tariffs.

Ford urged other provinces — in particular Alberta, which sends more than four million barrels of oil per day south of the border — to look at similar moves.

"A message to Premier (Danielle) Smith: one day, I think you might have to use that trump card and give approval for an export tax," he said.

"You want to talk about a trump card? That will instantly change the game, instantly, when the Americans — and I know the Americans — all of a sudden their gas prices go up 90 (cents) to $1 a gallon, they will lose their minds. So we need to at least put that in the window."

Smith has said Alberta needs to take action, but she won't curtail or impose counter-tariffs on oil and gas shipments. Saskatchewan Premier Scott Moe, who leads a province that exports vital uranium and potash to the U.S., has similarly expressed a reluctance to impose export tariffs.

Ontario won't need to buy U.S. electricity this summer: Lecce

During the news conference, Lecce noted that most of the year, Ontario sells many times more electricity from the U.S. than it purchases.

Depending on energy demands in New York, Michigan and Minnesota, those states will sometimes then re-sell surplus electricity that originated in Ontario to other states, particularly along the I-95 corridor down the eastern seaboard.

When Ontario does buy U.S.-generated electricity, it is most often in the peak summer months.

Asked if Ontario could face reciprocal surcharges come the warmer season, Lecce said the province's electricity system operator is "fully confident in its ability to keep the lights on" with power generated in Ontario and Quebec.