The Future of Commerce Podcast

Canada-U.S. electricity tariffs: The consequences and opportunities

Episode Summary

Electricity trade between the U.S. and Canada is more than just numbers on a balance sheet—it's a critical component of energy security, pricing, and sustainability. In this episode, we break down the ongoing tariff tensions, their impact on consumers and businesses, and the long-term opportunities they create. From rising electricity costs to energy independence strategies, we explore how policy shifts, trade disputes, and grid modernization are reshaping the North American energy landscape. Will the U.S. reduce its reliance on Canadian power? Can renewable energy and nuclear expansion fill the gap? Tune in to find out.

Episode Notes

The Canada-U.S. electricity trade has long been a stable pillar of the North American energy grid. But with new tariffs, retaliatory surcharges, and shifting energy policies, what does the future hold? Inspired by Canada-U.S. Electricity Tariffs: The Consequences and Opportunities, this episode unpacks the complex trade dispute that started with a 10% U.S. tariff on Canadian electricity and led to Ontario’s 25% retaliatory surcharge—affecting over 1.5 million U.S. homes and businesses.

We discuss:

• Why the U.S. and Canada are so dependent on each other for electricity
• How tariffs could drive up costs for consumers and industries
• Potential energy independence strategies, from nuclear expansion to renewables
• The risks of disrupting a shared energy grid
• Why the future of North American energy may be more localized and diversified

What You’ll Learn in This Episode:

1. The Tariff Battle and Its Immediate Impacts

• The Trump administration’s 10% tariff on Canadian electricity and Ontario’s 25% retaliatory surcharge on key U.S. states.
• How this could increase U.S. household electricity bills by $100 per month in affected regions.
• Why the tariffs were quickly suspended—but uncertainty remains.

2. The Bigger Picture: Why Canada-U.S. Electricity Trade Matters

• Canada has traditionally supplied far more electricity to the U.S. than it imports.
• Cross-border power trade is critical for grid stability, especially in extreme weather events.
• The U.S. increased its electricity exports by 70% in 2023, making the trade more balanced than before.

3. The Push for U.S. Energy Independence

• Tariffs could boost domestic energy production, accelerating:
  • New nuclear power plants (with support from federal incentives).
  • Expanded solar and wind farms to diversify supply.
  • Increased oil and gas exploration to fill short-term gaps.
• The challenge of scaling up new power sources quickly enough to replace Canadian imports.

4. The Risks of Grid Disruptions

• Canada and the U.S. have a deeply connected grid, meaning tariffs could weaken energy security on both sides.
• Droughts in Canada reduced hydropower availability, increasing reliance on U.S. electricity exports.
• If grid separation continues, both countries may need to invest heavily in energy storage and new transmission lines.

5. The Future of Energy in North America

• The U.S. government and private sector are investing heavily in nuclear energy, with:
  • Microsoft and Google backing new nuclear projects.
  • The ADVANCE Act streamlining licensing for new nuclear reactors.
  • States repurposing coal plant sites for nuclear expansion.
• Will energy trade remain a pillar of the U.S.-Canada relationship, or will we see a shift toward localized energy solutions?

Key Takeaways:

• Electricity tariffs create uncertainty for businesses, consumers, and the energy sector.
• Energy independence efforts are ramping up, but replacing imports isn’t a short-term fix.
• The U.S. and Canadian grids are deeply connected, and disrupting that relationship could have serious consequences for reliability.
• Nuclear, renewables, and modernized grids could define the future of North American energy.

Subscribe to our podcast for insights on energy policy, trade dynamics, and the future of sustainable power. Visit The Future of Commerce for expert analysis on how businesses and consumers can navigate the evolving energy landscape. Share this episode with energy professionals, policymakers, and anyone invested in North America’s energy future.