The Ontario government has applied a 25% extra charge on electricity exports to three US provinces starting Monday in response to US tariffs in Canada.
The additional charge will affect the electricity sales of 1.5 million homes and businesses in Michigan, Minnesota and New York, the Ontario government said. In total, it costs up to $400,000 per day.
A statement from the Ontario Prime Minister's office has introduced new market rules that require Canadian electricity sellers to add $10 per megawatt hour extra charge, which is equivalent to the cost of selling electricity, which is equivalent to a quarter of the average electricity value.
The additional charge is a response to a 25% tariff on Canadian and Mexican imports into the United States announced by the Trump administration last week.
Stock markets fell again on Monday as investors worry about growth in the trade war. The Dow Jones average fell by 550 points (over 1.3%) shortly after the 12pm EDT.
Trump has taken several steps to ease the blow to his tariffs.
Following the initial announcement, Trump exempts the carmaker from tariffs and has since been delayed for a month due to goods covered by the US-Mexico-Canada Agreement, the latest news on the North American Free Trade Agreement that Trump renegotiated during his first term.
“The easiest way to get to know the energy sector,” said Stephen Lexe, director of Ontario's Department of Energy. “In an age where prices for US, Canada and the US families are rising, we need to work together to strengthen trade and investment relations.”
The US is Canada's only trading partner, and the Canada and the US electric grid are highly integrated. In 2023, net electricity exports from Canada to the US were 27.6 terawatt hours, coming mainly from Manitoba, Ontario, British Columbia and Quebec.
A regulatory order from the Ontario Executive Council says the US ignores the rule of law by imposing tariffs on Canada. Following the doubling of US tariffs on China, similar claims have been made by China regarding the rules of the World Trade Organization.
The regulations also state that “tariffs pose existential threats to the employment of hundreds of thousands of people in the Ontario economy and the entire sector.”
