By Daniel Teeter and Christopher Cotton, Queen’s Economics Department

While Canada champions free trade on the international stage, its internal market remains fragmented by a web of provincial regulations, a lack of infrastructure, and other barriers to businesses operating across provincial borders. Our recent JDI Policy Insight article, “Breaking Down Canada’s Internal Trade Barriers,” considers the impediments to within-Canada trade, the costs of these barriers, and summarizes 22 potential reforms and investments that may help alleviate the barriers.

The Cost of Division

The paper underscores a startling reality: interprovincial trade barriers are potentially as costly as a 7% tariff on goods crossing provincial lines, inflating consumer prices by an estimated 7.8% to 14.5%. This artificial inflation stifles competition, hampers innovation, and curtails economic growth. The authors estimate that dismantling these barriers could boost Canada’s GDP by up to $161 billion annually, or an additional $2,300 to $4,000 per Canadian per year. Yet, despite these potential gains, such barriers persist.

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