Potential Loss of Electricity for 1.5 Million Americans Due to Trump's Tariffs on Canada
It's seldom recognized that a substantial portion of our American electricity comes from our northern neighbors, Canada. Unfortunately, there are whispers that Canada might halt this energy flow if a particular upcoming President implements significant tariffs on their nation.
This blunt suggestion was thrown into the mix this week by Doug Ford, the leader of Ontario, Canada's second-largest province. During a discussion with Michigan Governor Gretchen Whitmer, Ford announced his plan to restrict electricity exports to Michigan, New York, and Minnesota if Trump carries out his promise to levy tariffs against Canada.
As per the Associated Press, Ford stated, "It's a last resort. I don't think President-elect Trump wants that to happen. We're sending a message to the U.S. If you attack Ontario, you attack the livelihoods of Ontarians and Canadians. We will use every tool in our arsenal to protect Ontarians and Canadians. Let's hope it never comes to that."
Ford also pondered the possibility of limiting the export of crucial minerals essential for electric car battery manufacturing. This move could negatively impact EV manufacturers in the U.S., particularly Tesla, a close ally of Trump's CEO, Elon Musk. Ford also speculated about restricting Canadian alcohol exports to the U.S.
An analysis from the Electrical Information Administration highlights the intricate energy relationship between the U.S. and Canada. Over the years, Canada has exported more electricity to the U.S. than it has imported, though recently, this balance has started to shift. In 2023, electrical sales from Canada to the U.S. amounted to around $3.2 billion. Ontario supplied power to over 1.5 million U.S. households last year, the Associated Press reveals.
Before the election, numerous economists predicted that if Trump implemented significant tariffs on various countries worldwide, this move could result in substantial financial repercussions for American households. Supporters of Trump's proposal generally characterize it as a "bargaining" strategy, designed to wrangle political and economic concessions from the countries he targets. "The President will use these tariffs as bargaining chips—this should be kept in mind," said former National Economic Council director Larry Lindsey, speaking in a recent interview with Fox News. "It's ultimately the outcome of the bargain that will determine whether this was a successful strategy," Lindsey concluded.
I'm unsure how potent a "[bargaining] tactic" it is to openly express that Trump has no intention of carrying out his threat, but we'll have to see if the incoming President can, as his "book famously put it", strike a deal.
The potential impact of tariffs on tech companies using crucial minerals for electric car battery manufacturing is a concern, as Ford suggested limiting their export. In the future, technology advancements in electric vehicles could be hindered if these minerals become scarce due to trade restrictions.
During discussions on trade policies, the role of technology in shaping the future of international economic relations cannot be overlooked. With advancements in digital technologies, new avenues for cooperation and competition between nations emerge, requiring a nuanced approach to policy-making.
