Canada's Internal Trade Strategy: Can It Compensate for U.S. Tariffs?

While the initiative has potential, experts caution that Canada’s unique challenges may limit its impact on economic growth.

As Prime Minister Mark Carney steps into his role, one of his key initiatives revolves around addressing the economic repercussions of U.S. President Trump's tariffs on Canadian exports. His proposed solution? A significant boost in trade activities within Canada. By vowing to dismantle internal trade barriers, Carney aims to enhance Canada’s economic resilience by Canada Day, July 1.

Highlighting a commitment to fortifying the nation’s economy, Carney emphasized that by cultivating a robust Canadian market, the country can create a stronger economic foundation independent of external pressures. His government has successfully pushed new legislation through Parliament, aimed at eliminating trade restrictions and regulations that have long hampered the flow of goods and labor across provinces and territories.

“We will give ourselves more than any foreign nation can ever take away by building one Canadian economy — the strongest economy in the G7,” Carney asserted, spotlighting the nation's potential.

However, the challenges facing this initiative are substantial. Canada’s ten provinces and three territories have historically operated under varied trade regulations, often creating confusion and hurdles for businesses trying to operate across borders. Economists have pointed out that while deregulating these barriers is fundamentally sound policy, the vast geographical expanse of Canada and its relatively modest population of 40 million mean that internal trade alone is unlikely to fully replace the significant economic exchange with the U.S. market any time soon.

Despite these concerns, the consensus among experts remains that advancing internal trade will yield considerable long-term benefits. Nonetheless, whether this approach can effectively offset the losses incurred from international tariffs remains to be seen. As the country approaches the legislative deadlines set by Carney, the focus is now on how quickly provinces will adapt to and embrace this new trade ethos.