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Ontario Slaps 25% Surcharge on Power Exports as U.S. Commerce Secretary Vows More Tariffs

March 12, 2025
Reading time: 6 minutes
Full Story: The Canadian Press with files from The Energy Mix
Primary Author: Kelly Geraldine Malone, Allison Jones

Ian Muttoo/flickr

Ian Muttoo/flickr

Ontario slapped a 25% surcharge on electricity exports to the United States on Monday as Canada braced for steel and aluminium duties the Trump administration is set to deploy on Wednesday.

“I feel terrible for the American people, because it’s not the American people who started this trade war,” Ontario Premier Doug Ford said Monday at a news conference called to announce electricity price increases for about 1.5 million homes in three U.S. states.

“It’s one person who’s responsible—that’s President Trump.”

Last week, the North American Electric Reliability Corporation (NERC) warned that any move to restrict electricity supplies between Canada and the U.S. would cause “big problems” for both countries given the “symbiotic relationship” between their power grids, the Financial Times reports.

But Canadian leaders have vowed to push back against U.S. tariff threats after Donald Trump launched—then partly paused—a trade war with Canada and Mexico last week, The Canadian Press writes. Ford has threatened to go beyond surcharges and actually curtail electricity exports if Trump doesn’t stand down.

“If some of the sabre-rattling around ‘turning off exports’ occurs, it could create a significant resource adequacy problem for the Canadian provinces that benefit from U.S. exports as well the [U.S.] states along the border that benefit from Canadian imports,” NERC CEO Jim Robb told the Times.

On Monday, Democratic governors Tim Walz of Minnesota and Kathy Hochul warned that regular citizens in both states will now bear the burden of Trump’s tariffs, the Globe and Mail reports.

“The first victims of Trump’s trade war? Minnesotans struggling to pay their skyrocketing electric bill,” Walz wrote on social media.

“It is unfortunate that we must now consider reliability contingencies should the century-long energy partnership between New York and Canada be destroyed due to President Trump’s harmful, short-sighted actions,” Hochul wrote in a joint open letter with Senate Minority Leader Chuck Schumer (D-NY).

And in an alert to supporters, the Ontario Clean Air Alliance urged Ford to reduce the province’s reliance on the 70% of its current natural gas supply that comes from the U.S. “If ever there was a huge, potential win-win, it is by reducing our demand for this polluting fossil fuel (most of which is extra-polluting fracked gas), and creating jobs in Ontario by investing in low-cost, zero-carbon energy solutions,” the Toronto-based advocacy group wrote.

“The Ford government “is still planning to build more gas plants that will harm air quality in our communities, impact our climate, and lock us into volatile U.S. markets,” OCAA added. “It has to stop. We have to get Ontario out of the American gas trap ASAP.”

Ford, meanwhile, called on Alberta Premier Danielle Smith to reconsider her opposition to using oil and gas exports to retaliate against the tariffs, CP says. Smith quickly shot down the idea, calling it “self-destructive.”

Federal Energy and Natural Resources Minister Jonathan Wilkinson said provincial leaders are taking different approaches. Wilkinson said the federal government is not “interested in escalating this fight” with Washington.

Turmoil in financial markets continued Monday as Wall Street responded to the ongoing tariff uncertainty and Trump’s refusal to rule out a recession.

While U.S. Commerce Secretary Howard Lutnick said Sunday that Trump will follow through on his plan to impose 25% tariffs on steel and aluminium imports into the U.S., the billionaire financier added Trump’s most recent tariff threat—against Canada’s dairy and lumber exports—would not take effect until April.

“Canada is supposed to have a free-trade agreement with us—250% on dairy products. It’s outrageous,” Lutnick told NBC’s Meet the Press. “And you know the president is going to respond to it. But he’s agreed not to respond until April 2.”

But on Friday, Trump floated the idea of hitting Canadian lumber and dairy with “reciprocal” tariffs as soon as Monday or Tuesday.

The White House team spent the weekend on U.S. TV news programs repeating the claim that Canada imposes 250% dairy tariffs. They did not explain how dairy duties actually work . Nor did they acknowledge that the U.S. also has industry-related tariffs of its own and a highly subsidized agricultural market.

Under the Canada-United States-Mexico Agreement on trade (CUSMA), most importers don’t actually pay those high tariffs on Canadian dairy. Rather “tariff rate quotas” place a limit on the quantity of a product that can be imported at a lower tariff rate.

CUSMA was negotiated during the first Trump administration to replace the North American Free Trade Agreement. It is up for mandatory review next year.

One minute after midnight on March 4, the Trump administration imposed tariffs of 25% on almost all Canadian and Mexican imports, with a lower 10% levy on Canadian energy.

On Thursday, after days of market chaos, Trump signed an executive order delaying those tariffs for goods that meet the rules-of-origin requirements under CUSMA. In response, Canada paused its second wave of retaliatory tariffs.

Trump found a pretext for those levies using the International Economic Emergency Powers Act (IEEPA),  a national security statute that gives him authority to control economic transactions, after he declared an emergency on the allegedly high volume of southbound fentanyl trafficking at the northern border.

Ottawa responded with a plan to boost border security but Canadian officials have said the Trump administration’s use of fentanyl to justify tariffs is farcical. In reality, the overwhelming cross-border flow of fentanyl—and guns—is from the U.S. into Canada.

Foreign Minister Mélanie Joly, who has described relations with the Trump administration as a “psychodrama,” has said the president wants to weaken Canada through devastating duties. “And once he has weakened us, possibly try to annex Canada,” Joly said last week.

Trump has repeatedly claimed he wants to make Canada a U.S. state.

When asked about the legitimacy of the tariffs Sunday, Trump’s top economic adviser Kevin Hassett insisted Canada is a major source of fentanyl.

“I can tell you in the situation room I’ve seen photographs of fentanyl labs in Canada that the law enforcement folks were leaving alone,” the National Economic Council director told ABC News.

U.S. Customs and Border Protection data shows only a small volume of fentanyl crosses illegally into the United States from Canada. It reports just 13.6 grams of fentanyl seized by northern Border Patrol staff in January.

The White House has not responded to a request for comment or information about the administration’s claims regarding Canada and fentanyl. The U.S. Drug Enforcement Administration, the federal agency tasked with combating illicit drug trafficking and distribution, has not responded to a request for information.

The department’s national drug threat assessment for 2024 does not mention Canada. It does mention Mexico, China, and India.

The main body of this report was first published by The Canadian Press on March 10, 2025.



in Canada, Cities & Communities, Energy Politics, Finance & Investment, Heat & Power, Power Grids, United States

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