NewsCanada braces for trade tensions as internal barriers fall

Canada braces for trade tensions as internal barriers fall

Canada is gearing up for a potential trade conflict with the USA. The government plans to eliminate obstacles to domestic trade. British Columbian Premier David Eby has stated that British Columbians should rethink trips to the United States and purchases of American products. Before taking office, Trump announced a 25% tariff on imports from Canada and Mexico.

Our most important goal remains to prevent harmful American tariffs, wrote Prime Minister Trudeau.
Our most important goal remains to prevent harmful American tariffs, wrote Prime Minister Trudeau.
Images source: © Getty Images
Katarzyna Kalus

An informal "Buy Canadian" campaign is being contemplated, which encourages Canadians to choose Canadian goods over American ones, media reports suggest. British Columbia Premier David Eby emphasized on Wednesday that residents of the province should reconsider whether to travel to the USA and purchase American goods.

British Columbia is assembling its own team to mitigate the effects of possible American tariffs, which Eby described as "the deliberate economic attack on families in our province, in our country, by the president of the United States."

US President Donald Trump announced that 25% tariffs on imports from Canada and Mexico could take effect at the beginning of February. Earlier, he had claimed that the tariffs would be implemented immediately after he took office.

The premiers discussed the significance of reducing trade barriers within Canada and agreed that more measures are necessary to facilitate internal trade, according to a statement from the Canadian Prime Minister's press office following the meeting of the country's and provinces' premiers. Talks on the rules for liberalizing domestic trade, partially realized in agreements from 1995 and 2017, are planned to occur promptly.

"Our first goal remains preventing harmful U.S. tariffs, but Team Canada is ready with a strong national response if we need one," wrote Trudeau on the X platform on Wednesday (Eastern Time).

Canadian businesses have long indicated that provinces and territories have their own solutions, from industry regulations to administrative obligations, which impede trade between provinces and increase prices by up to 15%.

Internal trade contributes to about 20% of Canada's GDP, and as estimated in a 2019 report by the International Monetary Fund, full liberalization of trade within Canada could lift GDP by 4% per capita. It could also lead to increased employment.

On Wednesday, Eby wrote on the X platform that he highlighted these growth opportunities during the meeting. "The challenge posed by the tariff threat is also an opportunity to focus on growing our economy here at home by making it easier to buy and sell products across provinces – an opportunity we should seize," he added.

Obstacles between provinces in Canada

The media also quoted Nova Scotia Premier Tim Houston, who stated that removing barriers to internal trade should be the simplest resolution in the current scenario and emphasized that it's sometimes easier to sell certain goods produced in the province under the North American Free Trade Agreement (CUSMA) than, for instance, in the province of Ontario.

The Canadian Federation of Independent Business (CFIB), representing small businesses, emphasized in a report from last year that 88% of small businesses believe that removing internal trade barriers should be a government priority.

Obstacles between provinces are occasionally so significant that some businesses find it easier to trade with the USA than within Canada, and half of the businesses do not even attempt to seek new domestic markets outside their own province. The CFIB estimated that eliminating internal barriers in Canada would add up to 200 billion Canadian dollars to the country's economy.

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