Canada enjoys a strong trade relationship with the United States, but the announcement by the Trump administration of a 25% tariff increase has reignited discussions about the need to strengthen trade between Canadian provinces.

Several provincial premiers, including François Legault, are calling for greater openness in interprovincial trade in order to reduce Canada's economic reliance on international markets, particularly the United States.

Historical Dependence on the United States

In an interview with Néomédia, Louis Lévesque, President of the Public Policy Committee of the Association des économistes québécois, explains that this dependence is due to geographical proximity and the concentration of large population centers near the border.

"Approximately 80% of the Canadian population lives within 100 km of the U.S. border. Historically, our trade developed from north to south rather than between provinces," he emphasizes.

Interprovincial Trade Hampered by Non-Tariff Barriers

Although interprovincial trade seems logical in theory, the reality is much more complex. Many provincial regulations create non-tariff barriers that restrict the flow of goods and services across the country.

These restrictions mainly arise from provincial jurisdiction in key sectors such as construction, healthcare, and alcohol sales. Each province sets its own standards and regulations, which hinders economic exchanges.

In the construction sector, for example, differences in certifications and standards make it difficult for businesses to bid in another province. They often have to adapt to different regulatory requirements, which increases costs and reduces competitiveness.

Protectionism with Economic Consequences

These regulatory barriers exist partly to protect local jobs, as Louis Lévesque explains: "They allow local businesses to maintain an advantage, as they are already compliant with their province's standards and laws."

However, this protection comes at a cost. Reduced competition means higher costs for consumers and governments. "If Ontario entrepreneurs could bid on roadwork projects in Montreal, it would increase competition and lower prices," he adds.

Until recently, these issues were not a priority. However, with the uncertainty surrounding Canadian exports to the U.S., the situation may change. "We will see if concerns about our exports to the U.S. prompt us to take action to improve domestic trade," concludes Mr. Lévesque.

For now, the federal government does not have the constitutional authority to legislate in sectors under provincial jurisdiction.