On March 4, 2025 the United States imposed a 25% tariff on a range of goods exported from Canada into the United States. While the import tariff included in the Executive Order signed by US. President Donald Trump provides for a lower 10% tariff on energy resources – including electricity – the threat of higher reciprocal tariffs may be applied in addition to the current exemption for electricity. Canada may also elect to impose an export tariff up to 25% on electricity. Historically, electricity imports into the United States were not subject to tariff laws or regulations.
Canada exports significant amounts of electricity into the United States – with the volume of exports coming from a range of provinces into various states and wholesale electricity markets. In 2022, 2023 and 2024 Canada exported 65 TWh, 49 TWh and 30 TWh, respectively, of electricity into the United States (see figure below), which amounts to around 1% to 2% of total US electricity consumption.
The regions in the United States that receive the highest electricity imports are New England, New York, Minnesota, the Pacific Northwest and California. In addition, a number of crown corporations in Canada that oversee provincial electricity grids – including Manitoba Hydro and Hydro Quebec among others – have entered into long-term electricity exports contracts with utilities in the United States that are expected to continue for a number of years going forward.
It is not immediately clear how the import tariffs on electricity from Canada into the United States will be structured or implemented.
The total value of electricity exports from Canada into the United States was $2.6 billion in 2024, but was as high as $5.8 billion in 2022 when electricity prices increased as a result of high commodity costs for natural gas, oil and coal (see the following figure).
While the total volumes of electricity imports have declined in 2023 and 2024, the value on a per unit basis remains nearly double those from a decade ago.
While the overall structure of import tariffs on electricity exported from Canada into the United States is unclear, we can analyze the potential financial impact. If a 25% tariff were implemented on all electricity imports to the United States from Canada through 2019 to 2024 on an ex post (after the event) basis, the total cost would have ranged from $629 million in 2019 to as much as $1.5 billion in 2022. If a 10% tariff were applied in a similar manner, the total cost would have ranged from $250 million in 2019 to $580 million in 2022. On a $/MWh (per unit) basis, the impact of a 25% tariff would have ranged from around $9/MWh in 2020 to as much as $22/MWh in both 2022 and 2024. While electricity exports to the United States in 2024 were at their lowest level in over a decade, the value of the exports on a $/MWh (and total) basis remains high.
The impact of the tariff on US electricity customers will range depending on what part of the country they reside in and how total costs are allocated to different customer classes. The regions that import the most energy from Canada – including New England, New York, Michigan and Minnesota – would be expected to experience the greatest impact.
Using national level data from the Electricity Information Agency (EIA), the impact on US electricity customers – assuming the entire import tariff is applied fully to the US and there is no decrease in imports from Canada – we can estimate what the impact on electricity costs for US consumers would be as a result of the import tariff. First, the impact would be on the “commodity” cost of electricity, which excludes transmission and distribution costs, and accounts for around 61% of the total cost of electricity in the United States (see following figure).
Applying the 25% and 10% tariff to exports from Canada on the total cost of electricity – as reported by the EIA[1] – would result in an increase in commodity costs of around 0.14% to 0.35% for US electricity consumers.
While this impact seems limited, given the importance of electricity in nearly all industrial, commercial and residential applications, it would be expected that this price increase would be incorporated to a large extent in the broader inflation indices that are currently around 3%. Additionally, with the majority of electricity imports from Canada to the United States concentrated in certain regions, it is expected that the price impact would be greater in those regions compared to those with little electricity exchange with Canada.
[1] The total cost of electricity can be found here: https://www.eia.gov/electricity/state/unitedstates/