WASHINGTON—If President Donald Trump imposes 25 percent tariffs on imported goods from Canada on March 4, as he pledged to do on Feb. 27, drivers across the Midwest and utility ratepayers in the Pacific Northwest will be among the first to see prices at the pump and in their electric bills increase.
That consensus was among potential tariff-related impacts identified by the 2,200 public utility commissioners, regional transmission operators, and state regulators who attended the Feb. 23–26 National Association of Regional Utility Commissions’ (NARUC) Winter Energy Policy Conference in Washington.
Trump’s vow to place 25 percent tariffs on Canadian and Mexican imports and an additional 10 percent on goods from China, raising the levy to 20 percent, was an ambient topic that filtered into many presentations and discussions during the annual NARUC event.
Utilities, grid operators, and energy developers were particularly concerned about how tariffs on Canadian goods, including on aluminum, would affect ratepayers and the oil refineries that provide much of the gasoline and heating fuel across the Midwest.
American Gas Association (AGA) President and CEO Karen Harbert said a 25 percent tariff on Canadian natural gas would leave electricity rate-payers in some states “particularly exposed.”
“There are parts of our country that are going to really feel it. It’s going to be uneven if these tariffs come into play,” she said, noting “the state of Washington is 100-percent dependent on Canada’s natural gas.”
‘Free Trade in Our DNA’
U.S. Chamber of Commerce Global Energy Institute President Marty Durbin said the chamber “has free trade in our DNA” and instinctually opposes tariffs but added not all tariffs are the same.“There is an appropriate use of tariffs for national security reasons, but the indiscriminate use of tariffs in the way that it has been” discussed by Trump, “we think is a mistake” that “is going to raise costs, and … consumers are the ones who are going to pay the price for that.”
Durbin said “the integrated energy dynamic” between Canada and the United States includes “refineries throughout the Midwest and elsewhere, even in the Gulf Coast, that have been purposely designed to be able to—only be able to—process the heavy crude we get from Canada.”
Should the president follow through with his proposed tariffs, “it will have an impact on consumers very quickly,” he said. “Within days or weeks, you will start to see prices of gasoline increase,” especially in the Midwest.
American Clean Power Association (ACPA) CEO Jason Grumet said imposing tariffs on mineral and metal imports from Canada could ensnare “a renaissance in American manufacturing” and “core aspects of our economic and physical security.”
Developing the domestic supply lines to “re-shore” manufacturing in the United States will take time, and right now, the nation cannot meet its own needs without importing aluminum, copper, and other materials from Canada, he said.
“Supply chains are complicated things. You don’t get to bring them all back at the exact same time,” Grumet said. “China spent 20 years, piece-by-piece, stealing our intellectual property and manufacturing capacity, and we’re going to basically have to bring it back piece-by-piece.
“And that means” he continued, “if you build a facility, you need pieces, components. Those components are coming from all over the world, and by definition, a ‘universal tariff’ does tend to affect just about everybody.”
Grumet said the ACPA understands why Trump sees tariffs as a negotiating tool and why “they are absolutely required,” although it believes the levies should be more targeted.
“We have other companies dumping products and doing things that are unfairly cannibalizing American competition,” he said. “But if we really want a renaissance in American manufacturing, we’re going to have to recognize that we have a global manufacturing community and make choices that are more precise.”
U.S. Energy Association President and CEO Mark Menezes said deliberating the pros and cons of tariffs in terms of short-term impacts and long-term payoffs is “a tough one.”
“It’s safe to say President Trump’s mind is made up. He’s absolutely convinced” tariffs are an effective trade tool and has been for more than 40 years when he first “engaged in public policy in the Reagan administration in the 80s,” espousing tariffs as a way to “drive other nations to the negotiating table.”
Expect “a bit of a bumpy ride” if the president levies tariffs on March 4 that will leave “consumers feeling that at the pump,” Menezes said.
But it’s part of “an integrated approach to economic policy. and you can’t look at it in isolation.”
