Trump's tariff warning met with threat from Ontario that would make energy 'unaffordable' in Michigan & U.S.

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Colourful trees during the Autumn season seen by electricity pylons in Mississauga, Ontario, Canada on October 16, 2022. (Photo by Creative Touch Imaging Ltd./NurPhoto via Getty Images)

Michigan residents could soon pay a lot more for electricity if President-elect Donald Trump's tariff's are imposed on Canada as the nation's most populous province says it would restrict electricity exports.

Ontario Premier Doug Ford said the government is contemplating restricting electricity exports to Michigan, New York State and Minnesota in a move that he said would make electricity unaffordable for Americans. 

"It's a last resort," Ford said. "I don't think President-elect Trump wants that to happen. We're sending a message to the U.S. If you come and attack Ontario, you attack livelihoods of people in Ontario and Canadians, we are going to use every tool in our tool box to defend Ontarians and Canadians. Let's hope it never comes to that."

Last month, Trump said he would impose a 25% tariffs on products from Mexico and Canada coming into the U.S unless they stem the flow of migrants and drugs.

"On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders," he wrote last month while complaining that "thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before," even though violent crime is down from pandemic highs.

How did Trump respond?

On Thursday, Trump was asked about the comments from Ford and appeared to be unbothered.

"That's okay if he that does that. That's fine," Trump told CNBC when asked about Ford's remarks on the floor of the New York Stock Exchange. 

Trump said the U.S. is ‘subsidizing’ Canada. 

"We have a great relationship. I have so many friends in Canada but we shouldn't have to subsidize a country. We're subsidizing more than a $100 billion dollars a year. We shouldn't have to be doing that," Trump said.

The CNBC reporter said Trump told him off camera that they hope they can work something with Canada.

Ontario threatens U.S. alcohol ban

The threat of banning the export of electricity also came with barring an import: American-made alcohol.

A senior official with Ontario's government said it is contemplating restricting Ontario's liquor control board - the largest alcohol purchaser in the world and the main retailer in the province - from buying American-made alcohol.

How much oil and electricity does Canada supply the U.S.?

About a third of Canada's trade to the U.S. is energy and, in 2023, Ontario powered 1.5 million U.S. homes and is a major exporter to Michigan, Minnesota, and New York.

Canada supplies more oil to the U.S. than any other country. About 60% of U.S. crude oil imports are from Canada, and 85% of U.S. electricity imports as well. 

"If you put a 25% tariff on oil from Alberta that increases every gallon of gasoline by one dollar," said Ford, who is chairman of a council of premiers for Canada's 10 provinces and three territories. 
Canada sold $170 billion worth of energy products last year to the U.S. It also has 34 critical minerals and metals the Pentagon is eager for. 

Ontario's Deputy Prime Minister Chrystia Freeland said after Wednesday's meeting with the premiers that a number of provincial premiers voiced support for a robust response to the tariffs, including critical minerals being exported to the U.S.

Will Canada cut off oil exports to America?

Freeland did not mention oil but said "obviously other ideas were discussed as well" when asked if Canada is considering cutting off oil exports to America. 

Nearly $2.7 billion (3.6 billion Canadian dollars) worth of goods and services cross the border each day. Canada is the top export destination for 36 U.S. states.

Canadian Public Safety Minister Dominic LeBlanc, who along with  Canada's Prime Minister Justin Trudeau had dinner with Trump at Mar-a-Lago recently , said they plan to share details of those border plans with the incoming Trump administration in the coming days. 

Kristen Hillman, ambassador to the U.S., said the trade deficit was also raised, saying the U.S. had a $75 billion trade deficit with Canada in 2023.

How will a 25% tariff impact Americans?

Trudeau said this week that U.S.-imposed tariffs would be  "absolutely devastating" for the Canadian economy , but it would also mean real hardship for Americans. 

Economists say companies would have little choice but to pass along the added costs,  ramatically raising prices for goods such as food, clothing, automobiles, alcohol and others. 

The Produce Distributors Association, a Washington-based trade group, has said tariffs will raise prices for fresh fruit and vegetables and hurt U.S. farmers when the countries retaliate. Canada imposed duties in 2018 against the U.S. in a tit-for-tat response to new taxes on Canadian steel and aluminum.

How is Canada responding to the Trump's threats?

Canadian officials have said it is unfair to lump Canada in with Mexico. U.S. customs agents seized 43 pounds of fentanyl at the Canadian border last fiscal year, compared with 21,100 pounds at the Mexican border.

Most of the fentanyl reaching the U.S. - where it causes about 70,000 overdose deaths annually - is  made by Mexican drug cartels using precursor chemicals smuggled from Asia. 

The U.S. Border Patrol reported 1.53 million encounters with irregular migrants at the southwest border with Mexico between October 2023 and September 2024, compared to 23,721 encounters at the Canadian border during that time.