Industry groups in Canada breathed a sigh of relief Monday when U.S. President Donald Trump agreed to pause tariffs on Canada after a phone call with Prime Minister Justin Trudeau.
But Canada is not out of the woods yet, they argue, and now is the time to dismantle some interprovincial trade barriers to blunt the impact of future tariffs Trump may decide to impose.
Canada’s Committee on Internal Trade met last week to discuss how to open up trade between Canada’s provinces.
“By working together with our provincial and territorial colleagues to remove internal trade and labour mobility barriers, we can unlock new market opportunities, attract investment and boost economic growth,” Anita Anand, minister of transport and internal trade, said in a statement after the meeting.
The Canadian Chamber of Commerce says it is encouraging to see political momentum on removing barriers between provinces, but it needs to be sustained.
“With the growing uncertainty in our trade relationship with the U.S., we can’t afford to ignore opportunities to strengthen trade within our own borders,” Randall Zalazar, director of government relations at the Chamber, told Global News.
“Governments across Canada need to keep this momentum going, both to boost our economy and to improve long-term stability.”
Dennis Darby, president and CEO of Canadian Manufacturers and Exporters, told Global News that in the short term, Canada should prepare to support any businesses that would suffer losses or any Canadians that would lose their jobs as a result of Trump’s threatened tariffs.
But there are long-term problems Canada should start tackling now, he said.
“We need to start looking at those long-term things, everything from interprovincial trade barriers right through to long-term ways to attract more investment,” he said.
“If the U.S. didn’t exist and we had to trade east-west [within Canada], we’re not as set up to do that as we could be.”
The 2024 fall economic statement cited International Monetary Fund numbers on how much opening up internal trade could grow Canada’s economy.
“According to a study by the International Monetary Fund, Canada could increase its GDP per capita by as much as 4 per cent—or $2,900 per capita estimated in 2023 dollars through liberalization of internal trade in goods,” the budget document said.
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Matt Poirier, vice-president of the Retail Council of Canada, said removing regulatory barriers would make trade more efficient, but he isn’t very hopeful.
“This is one of those advocacy graveyards that everyone talks about. And we talk in circles but nothing really gets done,” he said.
Among the sectors watching closely is agriculture, which is export-reliant.
“Over 80 per cent of what we grow in Canada — the wheat, the barley, the canola — we export internationally,” said Kyle Larkin, executive director of Grain Growers of Canada.
Larkin said this is because many grain farmers find it difficult to drive their own produce to grain elevators in neighbouring provinces because of different regulations around trucking.
While most grain farmers wouldn’t mind a two-hour drive across a provincial border, it’s not as simple as that.
“One province may allow you a maximum weight of X, while another province may allow a lower weight. So you’re not allowed to transport as much grain as you would like. And you may have to do more round trips. It causes major inefficiencies in the way that grain farmers deliver their grain,” he said.
Poirier said Canada’s retail sector has long called for a harmonization of transport corridors.
“If a tractor-trailer has to stop at the Manitoba border and unhitch its wagon because it’s a whole set of different regulations going from Ontario or Alberta or take the long way around by detouring through the United States, that has a cost to it,” he said.
A trades professional licensed in one province would have to get re-licensed to work in another province. Darby said Ottawa should work to make it easier for someone to get accredited in another province.
“If you’re a welder in Alberta and you’ve met the requirements, then that should be sufficient to work in Ontario, Quebec or Atlantic Canada,” he said.
Zalazar, from the Canadian Chamber of Commerce, said most provinces are open to mutually recognizing accreditation, with three notable holdouts.
“A mutual recognition pilot project is already in motion, with seven provinces and three territories on board. If the remaining three provinces – British Columbia, Quebec and New Brunswick – step up and join, we could see real economic benefits. The government of Canada estimates [this would give] a $200-billion boost to Canada’s economy,” Zalazar said.
Darby said this would not necessarily mean falling professional standards.
“Canada’s been involved in mutual recognition regulations with Europe and U.S. for years and years. It doesn’t tend to be the lowest common denominator [that is accepted]. It tends to be who has the best regulation, which is the most comprehensive and is the fairest,” he said.
What about alcohol sales?
Some experts say one sector where consumers often feel the effects of those barriers is the sale and purchase of alcohol across provincial lines.
Some provinces, however, are changing course.
Starting this month, wineries in B.C. can now directly ship wine to consumers in Alberta, the result of an interprovincial deal that was agreed to last year.
The process allows Albertans to order wine from more than 300 B.C. wineries in exchange for the Alberta government getting its share of applicable taxes.
The agreement will run for one year and will be evaluated.
Premier David Eby said in a statement that the new direct-to-consumer program is “a win” for wineries and for communities that rely on the industry.
“By working collaboratively with Alberta, we’re supporting economic growth and strengthening ties between our provinces,” Eby said in a press release.
Michelle Wasylyshen, president and CEO of Ontario Craft Wineries, said with the ‘Buy Canadian’ sentiment growing, now was the time to make alcohol trade between provinces easier.
“Anything that can be done to reduce barriers for VQA wines is long overdue. As a first step, we support consumers’ ability to order Canadian VQA wine directly to their homes — wherever the winery is and wherever they live in Canada,” she said.
Larkin said making it easier to transport intermediary goods across provinces will help consumers.
“A lot of Canadian barley goes to Canadian craft breweries and distilleries. But a lot of those processing plants, be they breweries or distilleries, are hampered by some of our internal trade barriers,” he said.
“That’s why when you go to the liquor store, you’re seeing a lot of American products. What we would love to see is more Canadian products.”
With 30-day tariff break, will Canada get serious on easing internal trade?
