Despite being a single country, Canada’s internal trade is often hindered by a complex web of provincial and territorial regulations. These interprovincial trade barriers not only affect businesses but also impact everyday consumers by limiting choices and driving up costs. As Canada braces for potential U.S. tariffs, officials are looking to reduce these internal obstacles, which some experts argue are already inflating prices and restricting competition.
Everyday Products Affected by Trade Barriers
1. Car Seats
Regulations for car seats differ across provinces, making it difficult for manufacturers to sell the same product nationwide. Economist Jean Philippe Fournier highlighted an instance where Quebec and Ontario had different rules for seat stuffing, preventing Quebec consumers from using Ontario-made car seats. While Quebec later removed the restriction, similar inconsistencies still exist across provinces.
2. Dairy and Meat
Supply management policies allow producers to control the supply and pricing of dairy and meat products, effectively creating a monopoly-like system. According to economist Moshe Lander, this increases the cost of milk, cheese, eggs, and meat, forcing consumers to pay higher prices than they would in a competitive market.
3. Food Transportation
Food products transported between provinces often require additional inspections from both federal and provincial authorities. This increases costs for businesses, which are then passed on to consumers. Senior policy analyst SeoRhin Yoo explains that federal inspections are not required if a product stays within its province, creating inefficiencies in national food distribution.
4. Alcohol Regulations
Provincial monopolies on liquor sales significantly inflate prices. In Ontario, for example, consumers must order wine from British Columbia through the provincial liquor board, resulting in a 72% markup. In contrast, Manitoba allows direct shipping of Canadian wine, craft beer, and spirits. Many alcohol producers must obtain separate approvals and licensing for each province, adding to costs and limiting consumer choice.
Other Barriers Increasing Costs and Reducing Market Efficiency
5. Professional Licensing
Doctors, lawyers, and other professionals often need separate licenses to work in different provinces. This adds costs and limits mobility, exacerbating labor shortages in certain regions while increasing service costs for consumers.
6. French-Language Laws
Businesses operating in Quebec must comply with strict French-language laws, which some companies—such as GoodLife Fitness and Swiss Chalet—have cited as a reason for not expanding into the province. Economist Moshe Lander argues that these laws create a significant trade barrier within Canada.
7. Trucking Regulations
Trucking rules vary by province, covering vehicle sizes, weights, permits, and licensing. These inconsistencies create logistical challenges and increase transportation costs, which ultimately drive up prices for consumers. A report by the Macdonald-Laurier Institute found that eliminating these barriers could lead to economic growth, reduced inefficiencies, and lower costs.
8. Sales Taxes
Differing sales tax systems across provinces require businesses to adjust their pricing structures and tax collection methods. Small businesses often struggle to comply with the varied tax regulations, discouraging them from expanding into other provinces.
While external trade disputes, such as Trump’s proposed tariffs, dominate headlines, Canada’s own internal trade restrictions remain a major obstacle to economic growth and consumer affordability. Experts argue that addressing these barriers could provide immediate relief to Canadian businesses and households, fostering a stronger and more unified national market.
