Can Quebec cut energy exports to the U.S. amid tariff war? An expert says we shouldn’t

A Hydro-Quebec truck is seen in Montreal, Sept.1, 2023. (THE CANADIAN PRESS/Christinne Muschi)

As tempting as it may be to take a tit-for-tat approach to the United States tariff war against Canada and turn off the lights to the country’s northeastern states, Concordia University economic professor Moshe Lander warns we may want to take the high road – for our own benefit.

“If you really want to get people’s attention, you can turn out the lights,” he said. “That would certainly make the U.S. take notice but I have a feeling that they [Canada] would lose the PR battle.”

Saturday, U.S. President Donald Trump signed an executive order forcing a 25 per cent tariffs on Canadian imports and a 10 per cent tariff on energy.

• READ MORE: SAQ to remove American products from its shelves starting Tuesday

At the same time, Prime Minister Justin Trudeau announced counter tariffs on American goods.

The move has some on social media calling on Hydro-Quebec to cut energy to the United States right before the Super Bowl.

However, Lander explains the blowback could be so severe it could turn Americans against their neighbours to the north.

“Most Americans are looking a little confused as to what exactly is going on,” he explains. “But if you see the lights go out, then it’s going to be pretty clear that, yeah, maybe Canada is a more formidable foe than we thought, and the incentive will be to go after them in a way that I don’t think would be in Canada’s best interests.”

Ontario Premier Doug Ford has already threatened to cut off his province’s supply of energy to several states, while Quebec Premier François Legault said on Saturday that he plans to impose penalties on American companies doing business with his government.

“We must stand up to protect our economy and our jobs,” he said.

Monday, Hydro-Quebec told CTV News that it was monitoring the situation closely, “including how these could be applied to our energy sales on our short-term markets south of the border.”

“We will adjust our activities to limit impacts in Quebec,” the public utility company added.

Hydro-Quebec notes that from 2019 to 2023, it sent an average of 21 terawatt-hours (TWh) per year to the United States.

That’s the equivalent of supplying electricity to two million homes for a year.

Who pays?

Lander muses that Hydro-Quebec might be better off reminding Americans that they get their energy from their northern neighbours.

“Why not spend on a slick advertising campaign and show Americans that we power their businesses, we power their homes, we power their governments?” he said. “The idea, then, is that maybe Americans will say, ‘Yeah, that’s right. They are our friends. Why are we doing this to them?’”

Lander adds that the tariff may actually cause prices to go up south of the border.

• READ MORE: Trump Tariffs: Legault wants to penalize U.S. businesses

“If you’re large enough that you don’t have to eat the tariff yourself, you can push this onto your consumers,” he said. “In the case of Hydro-Quebec, in the case of the Alberta oil and gas sector, they’re probably large enough that they’ll be able to resist having to eat the tariff themselves, and they’ll be able to push a good portion of it onto American consumers.”

That means, according to the professor, that Americans could see their gas, oil and electricity bills go up.

He says Canadians will most likely only see backlash from the tariff if the companies aren’t able force Americans to pay the full bill.

“They [the companies] could either eat it on their bottom line, in which case they have less profits and less money being transferred over to the province, or they could pass it along to Canadian consumers,” said Lander. “Or they’re going to take it out of their workers, and they’re going to try and cut their pay...or lay off workers.”

History lesson

Canada is the number one supplier of energy to the United States, including more than 99 per cent of U.S. natural gas imports, 85 per cent of U.S. electricity imports and 60 per cent of U.S. crude oil imports in 2023.

More locally, Hydro-Quebec has been exporting energy to New York state for more than 100 years, “beginning with the construction of the 200-MW Les Cèdres–Dennison intertie" in 1914.

Additional exports to the New England states from Quebec started in the 1980s, and currently account for half of Hydro-Quebec’s exports.

“To date, this line has transmitted more than 100 billion kilowatt hours of clean and reliable electricity,” Hydro-Quebec notes on its website.

The Crown corporation adds it prides itself on selling clean, reliable electricity, at competitive prices across northeastern North America, including to Ontario and New Brunswick in Canada, and New York State and New England in the U.S.