The US would then just stop importing that electricity and funnel the power in from domestic sources. The electricity comes in from Canada because it’s cheap, not because the US can’t make electricity. Canada would shoot itself in the foot with this move.

You just outlined what would be the purpose of Canada doing this - to cause power prices to go up in the US.

Yes, but at the cost of Canadian businesses losing revenue

Depends on how easily the Canadian electricity can be replaced. The market is pretty tight right now.

yes, any options that are all upsides with no downsides are already part of the status quo

Where would the US be without cheap electricity?