Wang et al. evaluate how cross-border electricity tariffs alter power system efficiency, decarbonization, and reliability in North America. The authors use ten years of New York electricity market data and power-system simulations to quantify what happens when trade barriers hit interconnected grids.
Tariffs above about 55% on Ontario imports, or about 90% when extended to Quebec, nearly eliminate affected imports under historical market conditions. Replacing those low-carbon, hydropower- and nuclear-rich imports forces the grid to rely on fossil-fuel generation. That substitution raises carbon emissions and electricity prices while shrinking economic welfare.
The work tracks how reduced access to Canadian power damages physical operations. Lower import capacity shrinks operating reserves that provide spare capacity during unexpected shortages, increases reliance on oil-fired plants during summer peaks, and raises the risk of forced power cuts during severe winter disruptions.
For capital allocators and grid planners, the takeaway is absolute. Punitive tariffs on cross-border power flows undermine system reliability and undo decarbonization progress under the guise of trade protection.
Reference: Wang et al. Cross-border electricity tariffs undermine power system efficiency, decarbonization and reliability in North America. Nature Communications — https://doi.org/10.1038/s41467-026-77773-w