The tariffs and economic uncertainties driven by resurgent American protectionism have given Canada both the impetus and the opportunity to remove long-standing obstacles to our economic resiliency and potential. Interprovincial trade barriers are among the most significant such obstacles. It’s time for Canada’s federal, provincial, and territorial governments to work together, quickly and decisively, to bring down these barriers—creating jobs and driving economic growth across the country.

Internal trade barriers are a brake on our economic growth

Interprovincial trade barriers take many forms: geographical obstacles, limited infrastructure, export controls, different technical standards, and various regulatory and administrative burdens. And while these barriers impact industries in different ways, they nonetheless pose real costs for Canadian companies, costs that make it onerous—if not completely unprofitable—to do business across the country and achieve economies of scale.

There have been sporadic efforts to open up interprovincial trade, such as the Agreement on Internal Trade (1994) and the Canadian Free Trade Agreement (2017). Despite these efforts, interprovincial exports’ share of the Canadian economy has remained largely unchanged for more than 30 years, standing at 18.1% of GDP in 2023¹.

Interprovincial trade barriers were once vital to helping Canada’s provinces nurture and protect homegrown industries. But in a 21st century marked by new and unfamiliar economic and geopolitical tensions and uncertainties, they represent an outdated approach that is holding all Canadians back. It’s time for these barriers to disappear. Our research shows it will be more than worth it.

Removing these barriers would deliver an $881 billion economic boost

Eliminating interprovincial trade barriers would deliver a significant boost to the Canadian economy, partially offsetting the impact of US tariffs and improving the economic prospects for Canadian businesses nationwide.

According to our analysis, completely phasing out interprovincial trade barriers over the next five years could generate an additional $881 billion in economic output by 2040—a 2.4% GDP increase—and create 133,000 new jobs in the process. Clearly, the longer Canada leaves these trade barriers in place, the more money we leave on the table as a country.

Removing these trade barriers would benefit regions across Canada, according to our analysis. Western Canada’s economic output would grow by $318.8 billion by 2040, a 2.5% real GDP increase. The Central Canada economy would expand by $324.5 billion, increasing regional real GDP by 1.5%. Atlantic Canada would generate $169.7 billion in additional economic output, a 9.8% increase in the region’s GDP².

Our research also foresees economic growth outpacing employment growth in every region during this time. This suggests that removing these trade barriers will spur productivity growth across the country, helping Canada address the lagging productivity that has also acted as a drag on our economy and competitiveness.

Moreover, every industry in Canada would realize a net benefit if interprovincial trade barriers were removed—even sectors that face few such barriers today, such as pulp and paper. The largest gains would be experienced in service-oriented sectors (e.g., financial services, telecommunications, legal services) and construction, where removing technical or regulatory barriers that inhibit labour mobility and cross-provincial investment would unlock significant growth. Among goods-oriented sectors, forestry is projected to see the biggest impact, as the removal of protectionist measures would allow forestry firms to pursue export-led growth opportunities.

However, it’s important to note a change of this magnitude would undoubtedly result in some economic shifts. We would expect to see provinces and territories specialize in producing those goods and services in which they enjoy a competitive advantage, such as lower costs or higher productivity.

Governments must unite and act now to bring down these barriers

Eliminating—or even significantly reducing—Canada’s interprovincial trade barriers will be a complex undertaking. It will require leadership, collaboration, and a commitment to building a shared, nationwide prosperity. It demands openminded, meaningful involvement from not only federal, provincial, and territorial governments, but also the private sector, provincial regulatory bodies, trade unions, and Canadians more broadly.

The federal government is ideally positioned to lead this effort, fostering the dialogue and negotiation needed to accelerate fair and free trade within Canada. Prime Minister Carney has declared his intention to table legislation by July 1, 2025, to remove all federal barriers to interprovincial trade and labour mobility and eliminate all federal exceptions under the Canada Free Trade Agreement. This is a welcome and commendable goal—but it must be the first step of many. We encourage the federal government to act quickly to:

• Further reduce trade-impeding red tape across the broader public service
• Explore and design funding incentives to encourage provinces and territories to make progress on reducing internal trade barriers, such as linking federal transfers to key performance indicators
• Invest in infrastructure projects that facilitate greater, easier movement of goods across Canada.

Provincial and territorial governments must also take action. They can begin by acknowledging that these barriers exist, whether they were established intentionally (e.g., exports controls) or are the unintended consequences of regulatory decisions. They must overcome their own protectionist impulses to reduce and remove overt trade barriers, and work together to harmonize rules, standards, and regulations to ease labour shortages and reduce the cost and administrative burden of doing business between provinces. They must also partner with the federal government and the private sector to invest in and build the infrastructure that will enable cross-Canada trade to flourish and grow.

We must seize the moment—and secure Canada’s future

The upheaval in US trade relations has provided Canada with a once-in-a-lifetime opportunity to reinvigorate our economy and open new paths to growth, resilience, and prosperity. Undoing decades of internal trade barriers and unlocking the full potential of interprovincial trade will take time—but the work must start now. Deloitte is ready to help Canada’s government, industry, and business leaders understand and seize this critical moment in our country’s future.

To learn more, contact us.