U.S. Tariffs on Canadian Energy Resources Take Effect

The White House on March 3 confirmed that the Trump administration would proceed with the 10 percent tariff on Canadian energy resources effective March 4.  Last month, the  administration announced its intent to impose a 10 percent tariff on Canadian energy resources and 25 percent tariffs on other goods from Canada and Mexico. Several leaders and lawmakers criticized the move, arguing that it would increase electricity costs and gas prices for U.S. consumers.

The 10 percent tariff on Canadian energy is expected to have a far-reaching impact on electricity costs in the New England region, which shares a large volume of energy interchange with Canada. ISO New England filed a proposal with the Federal Energy Regulatory Commission on Feb. 28 describing a mechanism to collect customs duties on electricity imports from Canada if directed by the federal government when the tariffs take effect. The grid operator estimates the import duties from a 10 to 25 percent tariff on Canadian electricity could total $66 million to $165 million per year.

The Canadian government stated in February that it opposed the tariffs and would consider retaliatory action if the U.S. enforces the tariffs. Canada responded by imposing a 25 percent tariff on $30 billion in U.S. goods, which included a broad list of items ranging from poultry and fruits to unmanned aircraft manufactured in the U.S. Canadian authorities stated that these tariffs, which went into effect on Feb. 2, will remain in place until the U.S. lifts the tariffs on Canadian goods.

U.S. lawmakers have also criticized the tariffs, warning of sharp cost increases for U.S. consumers. Massachusetts Governor Maura Healey stated a 10 percent tariff on petroleum and natural gas imports from Canada could cost Massachusetts $370 million annually and over $1 billion for the New England region.