As Ontario hikes cost of electricity exports, Lutnick says more tariffs are coming

Commerce Secretary nominee Howard Lutnick speaks in the Oval Office of the White House after President Donald Trump signed an executive order, Thursday, Feb. 13, 2025, in Washington. (AP Photo/Ben Curtis)

WASHINGTON — Ontario placed a 25 per cent surcharge on electricity exports to the United States on Monday as Canada braced for steel and aluminum duties the Trump administration is set to deploy on Wednesday.

“I feel terrible for the American people, because it’s not the American people who started this trade war,” Ontario Premier Doug Ford said Monday at a news conference called to announce electricity price increases for about 1.5 million homes in three U.S. states.

“It’s one person who’s responsible -- that’s President Trump.”

Canadian leaders have vowed to push back against U.S. tariff threats after President Donald Trump launched -- and partly paused -- a trade war with Canada and Mexico last week.

Ford called on Alberta Premier Danielle Smith to reconsider her opposition to using oil and gas exports to retaliate against the tariffs. Smith quickly shot down the idea, calling it “self-destructive.”

Energy and Natural Resources Minister Jonathan Wilkinson said provincial leaders are taking different approaches. Wilkinson said the federal government is not “interested in escalating this fight” with Washington.

Turmoil in the markets continued Monday as Wall Street responded to the ongoing tariff uncertainty and Trump’s refusal to rule out a recession.

While U.S. Commerce Secretary Howard Lutnick said Sunday that Trump will follow through on his plan to impose 25 per cent tariffs on steel and aluminum imports into the U.S., the billionaire financier added Trump’s most recent tariff threat -- against Canada’s dairy and lumber exports -- would not take effect until April.

“Canada is supposed to have a free-trade agreement with us -- 250 per cent on dairy products. It’s outrageous,” Lutnick told NBC’s Meet the Press. “And you know the president is going to respond to it. But he’s agreed not to respond until April 2.”

Trump floated on Friday the idea of hitting Canadian lumber and dairy with “reciprocal” tariffs as soon as Monday or Tuesday.

The president’s team spent the weekend on U.S. TV news programs repeating the claim that Canada imposes 250 per cent dairy tariffs. They did not explain how dairy duties actually work or note that the U.S. also has industry-related tariffs of its own and a highly subsidized agricultural market.

Under the Canada-United States-Mexico Agreement on trade, also called CUSMA, most importers don’t actually pay those high tariffs on Canadian dairy. Canada uses “tariff rate quotas,” which place a limit on the quantity of a product that can be imported at a lower tariff rate.

CUSMA was negotiated during the first Trump administration to replace the North American Free Trade Agreement. It is up for mandatory review next year.

One minute after midnight on March 4, the Trump administration imposed tariffs of 25 per cent on almost all Canadian and Mexican imports, with a lower 10 per cent levy on Canadian energy.

On Thursday, after days of market chaos, Trump signed an executive order delaying those tariffs for goods that meet the rules-of-origin requirements under CUSMA. In response, Canada paused its second wave of retaliatory tariffs.

Trump pushed ahead with those levies using the International Economic Emergency Powers Act (IEEPA) -- a national security statute that gives him authority to control economic transactions -- after he declared an emergency on fentanyl trafficking at the northern border.

Ottawa responded with a plan to boost border security but Canadian officials have said the Trump administration’s use of fentanyl to justify tariffs is farcical.

Foreign Minister Melanie Joly, who has described relations with the Trump administration as a “psychodrama,” has said the president wants to weaken Canada through devastating duties.

“And once he has weakened us, possibly try to annex Canada,” Joly said last week.

Trump has repeatedly claimed he wants to make Canada a U.S. state.

When asked about the legitimacy of the tariffs Sunday, President Trump’s top economic adviser Kevin Hassett insisted Canada is a major source of fentanyl.

“I can tell you in the situation room I’ve seen photographs of fentanyl labs in Canada that the law enforcement folks were leaving alone,” the National Economic Council director told ABC News.

U.S. Customs and Border Protection data shows only a small volume of fentanyl crosses illegally into the United States from Canada. It reports just 13.6 grams of fentanyl seized by northern Border Patrol staff in January.

The White House has not responded to a request for comment or information about the administration’s claims regarding Canada and fentanyl. The U.S. Drug Enforcement Administration -- the federal agency tasked with combating illicit drug trafficking and distribution -- has not responded to a request for information.

The department’s national drug threat assessment for 2024 does not mention Canada. It does mention Mexico, China and India.

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Kelly Geraldine Malone, The Canadian Press

— With files from Allison Jones in Toronto

This report by The Canadian Press was first published March 10, 2025.