Trump's proposed tariffs on Canadian energy could wallop New England, especially the north

Boston Globe

03-03-2025

With Canada supplying a significant portion of the electricity, refined petroleum, and natural gas used in New England, many experts agree that consumers will likely bear the brunt of Trump's tariff. Customers who live near the border are particularly dependent on Canadian energy, while farther south in Massachusetts, ratepayers are dealing with soaring utility bills that the tariffs would only exacerbate.
'We are interconnected, integrated, and Canadian resources are an essential and vital part of New England's overall energy supply system,' said John Gulliver, a retired energy attorney from Maine who serves as president of the New England-Canada Business Council.
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'When the system works well,' Gulliver said, 'you don't have to think about where it comes from.'
Trump
While he
While officials said the tariffs would not threaten the reliability of New England energy supplies, uncertainty over how they would be implemented is itself destabilizing, said Dan Dolan, president of the New England Power Generators Association, which represents most electricity producers in the region.
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'There are still way fewer answers than we would like less than a week before these potential tariffs go into effect,' he said.
The impacts of an across-the-board, 10 percent energy tariff would vary considerably by industry, by state, and by utility or distributor. For example, it would likely take months or longer for most electric utilities to recoup those costs
through rate increases;
gasoline prices, on the other hand, would likely go up immediately.
Some parts of New England would be hit much harder: Maine gets nearly all its gasoline and home heating oil from Canada, and some remote communities there and in Vermont also get electricity directly from the power grid in Canada.
'A 10 percent tariff on Canadian energy imports would have a significant and widespread impact on Maine people and businesses,' said Dan Burgess, director of the Maine Governor's Energy Office.
Perhaps the biggest unknown is how the Canadian government and businesses would respond to US tariffs. Some Canadian leaders
in response, which would amplify the pain from the energy tariffs. But a 'first phase' of countermeasures the government
Putting all that uncertainty aside, industry leaders and analysts expect tariffs to affect key energy products in northern New England in various ways.
Petroleum
Much of the gasoline burned in New England — particularly in the northernmost reaches — comes from two large facilities in Canada: The Irving Oil Refinery in New Brunswick and a Valero refinery near Quebec City that sends gasoline by pipeline to terminals in Montreal.
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That's where R.L. Vallee, Inc., usually gets gasoline for its 48 Maplefields stores in Vermont, New Hampshire, and upstate New York. But if tariffs drive up the
wholesale costs of gasoline from the Valero refinery
by, for example, 25 cents a gallon, 'that terminal is no longer competitive,' said chief executive Rodolphe 'Skip' Vallee. Instead, he might send his trucks twice as far, to a terminal in Albany.
Matt Cota, a Vermont lobbyist who represents fuel and propane dealers, said the additional transportation costs from getting supplies from elsewhere in the United States can be prohibitive, while smaller distributors have less flexibility to switch.
'It's six one way, half a dozen the other,' added Percy, the general manager of Fred's Energy. 'You're either going to pay the tariff or pay for transportation.'
Tom Kloza, an analyst for the Oil Price Information Service, expects tariffs to add 10 to 15 cents a gallon to the retail price of gasoline in northern New England in the short term. Over time, as new sources of refined petroleum come online, those higher prices could abate.
'This is going to be an annoyance,' he predicted. 'But it's not going to be a sea change.'
Natural gas
Unlike fuel dealers, companies that import natural gas by pipeline can't easily switch.
'We take nearly 100 percent of our gas from Canada,' said Neale Lunderville, CEO of Vermont Gas Systems, which connects roughly 58,000 customers in northwest Vermont to a Quebec pipeline. 'That's the bottom line.'
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Other pipelines bring natural gas from Nova Scotia, New Brunswick, and Quebec to Maine, New Hampshire, and Massachusetts. Since the networks are interconnected, Canada also imports some natural gas from the United States.
For those who rely on natural gas to heat their homes, the tariffs could pack a punch. Vermont Gas residential customers, for example, could see their bills jump by 4 to 5 percent, Lunderville said.
Electricity
Northern New England imports more Canadian electricity than any other region in the United States, according to Dolan, largely from massive hydroelectric facilities near James Bay, Quebec.
Hydro-Quebec, owned by the provincial government, sells about half its electricity exports to New England. About one-quarter of Vermont's electricity comes from Hydro-Quebec, the single largest source of power to the state.
Kerrick Johnson, Vermont's public service commissioner, is hopeful those contracts might be excluded from Trump's tariffs because they are technically between the state and a US subsidiary of Hydro-Quebec. Others point to vague language in
'Historically, electricity hasn't been subject to tariffs,' Bartlett said. 'So we're in uncharted waters.'
The border regions of Maine and Vermont are particularly exposed. Maine's lightly populated Aroostook and Washington counties aren't even connected to the New England power grid, with most of their electricity coming from New Brunswick.
Vermont Electric Cooperative, which serves about 33,000 members in the northern part of the state, gets about 42 percent of its electricity from Canada, according to chief executive Rebecca Towne. Towne said the tariffs could translate into a 2 percent increase in rates this year.
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Another wild card is that much of the electricity generated within New England comes from natural gas-burning power plants, according to Dolan, of the New England Power Generators Association. So although
fluctuations in oil and gas prices are common, tariffs would make any spikes more painful, Dolan said.
Towne hopes cooler heads will prevail.
'Canada, Hydro-Quebec have been such important partners for us, and they're literally our neighbors,' she said. 'Keeping those good ties and those conversations and that relationship open and working, even as we navigate the tariffs, is important.'