Canada’s Interprovincial Trade Barriers: A Self-Inflicted Wound in a Time of Economic Uncertainty

For a country that prides itself on being one of the most developed economies in the world, Canada has long suffered from an absurd and counterproductive system of interprovincial trade barriers. These restrictions make it harder for Canadian businesses to sell within their own country than to export to foreign markets. This shameful reality is not just an economic inefficiency—it reflects a broader erosion of national unity and cooperation that has plagued Canada for decades.

Today, with the looming threat of new U.S. tariffs on Canadian imports, political leaders are finally discussing the need to dismantle these barriers. But why did they exist in the first place? And will this moment of urgency finally lead to real change?

Interprovincial trade barriers take many forms, from taxes and regulations to outright bans on certain products crossing provincial lines. One of the most glaring examples is the Canadian wine industry. While American wineries can easily ship their products across state lines, a British Columbia winery faces more restrictions selling to Ontario than it does to many U.S. states.

Dan Paszkowski, president and CEO of Wine Growers Canada, highlights the frustration: “The majority of U.S. states now allow for direct-to-consumer delivery, whereas in Canada we’ve been fighting this for the same amount of time, over 25 years.” Meanwhile, in Ontario, any wine imported from B.C. must be funneled through the provincial liquor board, which then slaps on an outrageous 72% markup. The result? Fewer sales, less consumer choice, and inflated prices.

And it’s not just wine. These barriers affect everything from trucking regulations to professional licensing. UBC economist Kevin Milligan estimates that Canada’s inconsistent trucking rules alone add about 8% to the cost of moving goods across the country. That means higher prices for consumers, lower profits for businesses, and an unnecessary drag on economic growth.

The problem isn’t new. In 1995, the federal and provincial governments signed the Agreement on Internal Trade, committing to reducing these barriers. That agreement was later replaced in 2017 by the Canadian Free Trade Agreement, which had the same goal. Yet today, the patchwork of conflicting regulations remains, proving that political will has consistently fallen short of the rhetoric.

Why does Canada—supposedly a single nation—have so many barriers to internal trade? The answer lies in a deeply ingrained anti-nationalistic mindset that has taken root over the past several decades. Instead of seeing themselves as part of a unified economic entity, provinces have jealously guarded their own interests, prioritizing local political control over national prosperity.

This fragmentation is in stark contrast to the United States, where economic unity is a foundational principle. While individual states have their own regulations, they do not impose the same level of bureaucratic obstacles that Canadian provinces do. As a result, American businesses can operate across the country with far greater ease, fostering national economic strength.

In Canada, however, provincial governments cling to their regulatory fiefdoms, often justifying these barriers under the guise of protecting local industries or ensuring regional safety standards. While there are cases where local regulations serve a purpose, they are too often wielded as protectionist measures that hinder national cohesion.

The urgency to eliminate these trade barriers has increased dramatically due to rising tensions with the United States. Washington has repeatedly threatened new tariffs on Canadian imports, which would significantly harm Canadian businesses. If Canada cannot even trade freely within its own borders, how can it expect to compete effectively on the world stage?

Federal Transport and Internal Trade Minister Anita Anand recently stated that the government is making “incredible, fast-paced progress” in working with the provinces to eliminate these barriers. She suggested that, given the urgency of the situation, these obstacles could be removed within 30 days. While this optimism is refreshing, it also raises the question: If these barriers can be removed so quickly now, why have they been allowed to persist for so long?

If fully implemented, Anand’s proposals could lower prices by up to 15%, boost productivity by up to 7%, and add as much as $200 billion to the Canadian economy. These are not trivial numbers—they represent a massive opportunity to strengthen Canada’s economic resilience.

For decades, Canada’s failure to remove interprovincial trade barriers has been a national embarrassment. It is a self-imposed economic handicap that weakens our global competitiveness and betrays the very idea of a united Canada.

If ever there was a time to fix this problem, it is now. With international trade tensions rising and economic uncertainty looming, Canada must prioritize national unity—not just in sentiment, but in practical, tangible policy.

Eliminating these barriers is more than an economic necessity; it is a test of whether Canada can function as a truly united country. If we fail to act now, we will have no one to blame but ourselves when our businesses continue to struggle and foreign competitors leave us behind. It is time for Canadian leaders to put aside petty provincialism and act in the national interest. Our future depends on it.