With American tariffs hanging over Canada like the sword of Damocles, it’s time to end restrictions on trade within Canada once and for all.
The United States is Canada’s largest export market, with 77% of Canada’s exports heading south of the border.
President Donald Trump’s threat to place a 25% tariff on all Canadian goods other than energy (and a 10% tariff on energy) coming into the United States may have been paused, but the threat itself remains very real. There’s every chance Trump changes his mind and simply imposes the tariffs once this initial 30-day pause comes to a close.
How should Canadians respond?
This trade threat also opens up an opportunity for Canada to complete a long-lost project of Confederation. Right now, it’s easier for provinces to trade with many other countries than with each other. That has to change.
Canada’s leaders shouldn’t waste another second before getting to the negotiating table and tearing those domestic trade barriers down. Research shows that the benefits of ending interprovincial trade barriers could outweigh the impact of Trump’s threatened 25% tariffs.
Interprovincial trade barriers are a series of rules, quotas and regulations that limit the mobility of goods and services from one province to another. There are currently more than 400 carve-outs in Canada’s internal trade agreement. And those carve-outs have meaningful consequences.
Consider the case of a nurse who wants to move from one end of the country to the other. Let’s call her Colleen. Nurses are required to register with a provincial college. If Colleen wants to move from British Columbia to Quebec, she needs to get re-licensed to practise in another province. This is a process that can take months and might discourage Colleen from moving at all. Or she might move and then spend months trying to get certified. That’s an interprovincial trade barrier that hurts both the economy and the health-care system.
Another example is trucking. Consider the case of Bill, a trucker bringing goods from Saskatchewan to Nova Scotia. Nova Scotia has different rules for load weights and that means Bill might have to offload some of his goods before he gets to Nova Scotia or travel with fewer goods than his truck can fit to meet Nova Scotia’s stricter guidelines. Bill’s company might just decide to sell fewer goods to Nova Scotians or give up on the Nova Scotia market altogether.
A final example is Shirley, a craft beer lover. Shirley used to live in British Columbia but has since moved to Ontario. She has a favourite craft beer from Vancouver. In Ontario, as is the case in every province other than Manitoba, Shirley can’t order alcohol from another province and simply have it sent to her. That’s a bummer for Shirley, who can’t have her favourite beer, but it’s also a major roadblock to Shirley’s favourite craft brewery, which can’t sell directly to customers beyond British Columbia’s borders.
These cumbersome interprovincial trade rules are holding Canada back and cost the Canadian economy $200 billion a year, according to the Canadian Federation of Independent Business.
If Trump follows through with his tariff threat, there could be a recession. Canada can’t afford to leave $200 billion a year on the table a moment longer.
The time has come for Canada to finally deal with the internal trade issues that have held our country back from being truly united for far too long.
Jay Goldberg is Ontario director of the Canadian Taxpayers Federation