Will Trump’s tariffs lead to higher energy and utility bills? Here’s what you need to know

Donald Trump has declared April 2 as ‘Liberation Day,’ marking the date when his administration plans to implement a series of reciprocal tariffs. Among the various sectors affected, energy costs are a growing concern. With New York state and New England relying heavily on Canadian electricity imports, the new tariffs could lead to a significant spike in energy and utility bills.

How could electricity bills be impacted?

In March, Ontario Premier Doug Ford warned that he was considering stopping electricity exports to the US in response to Trump’s proposed 25% tariffs on Canadian imports. This could tighten supply and drive up energy costs. Ford also suggested imposing a 25% surcharge on electricity exports to Michigan, New York, and Minnesota, according to USA Today.

New York, in particular, depends on Canadian electricity through imports from Hydro-Québec and Ontario’s Independent Electricity System Operator (IESO). The New York Independent System Operator (NYISO), responsible for managing the state’s power grid, emphasized that Canada and the US share one of the most integrated electric grids in the world.

“The reliable and uninterrupted flow of electricity across the Canadian interties is critical to protect the health, safety, and welfare of New York citizens and residents across the Northeast U.S.,” the NYISO stated.

The US-Canada electricity trade and its significance

The US and Canada are each other’s largest electricity trading partners. The potential tariff conflict threatens to disrupt the supply-demand balance that has traditionally helped prevent blackouts and control prices, according to energy experts and grid operator filings.

Currently, the US is a net importer of Canadian electricity, having purchased 2,700 gigawatt-hours last year—50% more than it sold to Canada, according to the US Energy Information Administration (EIA). The Northeast US relies more heavily on Canadian electricity than other regions, making it particularly vulnerable to increased prices or supply restrictions.

Concerns over tariffs on electricity

New York’s grid operator has expressed strong concerns about the potential effects of export tariffs on electricity markets. In a filing with the Federal Energy Regulatory Commission (FERC), NYISO and other system operators warned that the tariffs could lead to serious reliability issues and increased wholesale electricity prices.

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However, it remains unclear whether the tariffs will directly impact electricity. Several grid operators told Reuters in March that there is no historical precedent for such a move, and the White House has not explicitly stated whether power imports will be targeted.

Higher costs for US consumers?

Canadian Energy Minister Jonathan Wilkinson has warned that if the tariffs are enforced, US consumers could see increased costs across multiple sectors, including energy, fuel, and automobiles.

“We will see higher gasoline prices as a function of energy, higher electricity prices from hydroelectricity from Canada, higher home heating prices associated with natural gas that comes from Canada, and higher automobile prices,” Wilkinson told CNBC in an interview.

As the situation unfolds, businesses and consumers in the US Northeast will be watching closely to see how these tariffs might affect their electricity and utility bills in the months ahead.