On April 28th, Canada’s snap election will take place, with members of Parliament elected to the House of Commons as part of the 45th Canadian Parliament and potentially a new Prime Minister. When Justin Trudeau stepped down as Prime Minister, Mark Carney assumed the position after winning the leadership election for the Liberal Party. Carney announced snap elections to capitalize on the growing support for the Liberal Party, which has stemmed primarily from the new trade war with the United States. Although Carney and the Liberals have gained ground, especially compared to how unpopular Trudeau had become, Pierre Polieuvre and the Conservatives are trailing by 6% as of April 10th. The challenge for Polieuvre has been pivoting to address both the ongoing trade war with the United States and the ongoing rhetoric from President Trump regarding making Canada the 51st state. The threat to Canada’s sovereignty, whether it is nothing more than aggressive rhetoric or not, has become a significant concern to many Canadians.
President Trump has implemented and halted various tariffs on America’s northern and southern neighbors, Canada and Mexico. The current trade war between the two nations has introduced a vulnerability to America’s electrical grid.
On March 10th, Ontario Premier Doug Ford announced that in response to America’s tariffs on Canada, Ontario would enact a 25% surcharge on all electricity exports to the United States. Had this surcharge gone into effect, it would have impacted approximately 1.5 million American households and businesses in New York, Michigan, and Minnesota, with a daily price tag of up to $400,000. Trading electricity with Canada is good, as it provides a more diverse market for electricity. Canada is a strong ally of the United States, and ongoing economic turmoil is bad for both nations. These tariffs have highlighted a vulnerability in America’s electrical grid, but have simultaneously shown the importance of having a strong and equal trade partnership with America’s northern neighbor.
Canada is Heavily Integrated into America’s Electrical Grid
For obvious geographical reasons, the United States is the only country that trades electricity with Canada. As a result of this unique trade relationship, Canada is significantly integrated into America’s electrical grid. Spanning over 30 major cross-border transmission lines, bilateral electricity trade provides $2.3 billion in annual revenue. Historically, Canada has enjoyed the more profitable side of this relationship due to Ontario’s important role in delivering power to the American Northeast with an average annual trade surplus of $1.4 billion. Although historically, Canadian exports regularly surpassed American exports, beginning in 2023, the imbalance started to level out as monthly US exports to Canada increased by 70% due to drought conditions making hydroelectric power generation in Canada less reliable. Canada relies heavily on hydroelectric power generation, as demonstrated by 35,589,238 of the 61,591,446 megawatt hours produced in Canada in December 2024 coming from hydroelectric power.
One of the reasons America imports electricity comes from a place of necessity due to the restrictive federal and state environmental and regulatory policies, including section 401 of the Clean Water Act and the Endangered Species Act, as well as overly aggressive state policies, such as New York states Climate Superfund Act, which have made it nearly impossible to build natural gas power plants or pipelines in the Northeastern United States. However, there has been a promising ongoing push by developers in the region to simplify the permitting process and to support pipeline construction to allow gas to flow from the Marcellus shale gas basin to the northeast. This push has the support of the Trump administration, given his earlier executive order declaring a national emergency on energy. Furthermore, of the several recently canceled interstate natural gas pipeline projects that would have increased power supply to the northeast, including the Atlantic Coast Pipeline and the Penn East Pipeline, the 124-mile-long Constitution Pipeline has gained renewed support from President Trump and Secretary of Energy Chris Wright’s push to unleash American energy dominance. The completion of this pipeline will help lower regional electricity prices and make the northeast less reliant on Canadian electricity exports.
Electricity transmission between Canada and the United States spans over a century. The first international transmission line opened in 1909 and has since expanded to 31 high-voltage major transmission lines that facilitate the international exchange of electricity. Furthermore, although many American states use Canadian-produced electricity, since 2012, approximately 85% of all Canadian electricity exports have gone to seven states: New York, Vermont, Michigan, California, Maine, Minnesota, and North Dakota.
As a result of a deep history of electrical grid integration, Canadian-produced electricity has become essential to millions of Americans. Additionally, a deeply integrated electrical grid has further added benefits of market diversification and increased reliability, which, combined with a greater availability of power production methods and fuel, can hedge against future price fluctuations, mutually recognized security threats, such as cyber attacks and physical sabotage, and unforeseen natural disasters. Although it is a minor portion of all annually consumed electricity in the US, to those seven states, especially those in New York, Michigan, and Minnesota, any further threat of price hikes would be detrimental to an already growing, complicated trade relationship.
Conclusion
Regarding neighbors, the United States couldn’t have been luckier with Canada. With a deep history of strong trade, it makes sense that both economies have become naturally integrated. The transfer of electricity between the two countries is a testament to the inherent trust that has historically existed between the US and Canada. As a result of the traditionally strong relationship with Canada, one of the only few problems with importing electricity from Canada, revealed by the ongoing trade war between the two nations, is that even though Canadian electricity exports accounted for only 0.29% of American electricity demand in 2024, the U.S. can lose oversight of anything across the border if Canada chooses to restrict access or significantly increase prices. For this reason, any potential economic conflict must be handled judiciously and patiently, ensuring that the American and Canadian citizens who rely on each other for electricity do not suffer unnecessarily.
Electricity trade between the US and Canada is mutually beneficial and logical for reasons including geographical proximity, continental resource abundance, and aligned national security interests. However, the US must address the ongoing issues with its restrictive policies that prevent simple updates to existing and the construction of new energy infrastructure, so that, if necessary, America can meet the electricity needs of its citizens entirely domestically.
