Canada Finally Opens Interprovincial Trade—But Only Because of a U.S. Trade War

The Canadian government’s sudden urgency to loosen interprovincial trade restrictions—particularly those that have blocked the free flow of liquor between provinces—is nothing short of absurd when considering how long these barriers have existed. The catalyst? The ongoing trade war between the United States and Canada, fueled by tariffs and retaliatory economic measures. After decades of economic fragmentation within its own borders, Canada has finally started to recognize the obvious: internal trade is just as crucial as international trade, if not more so. The question remains—why did it take so long, and what happens when the external pressure fades?

For years, Canada’s interprovincial trade barriers have functioned as an unnecessary bureaucratic mess, limiting the free movement of goods, services, and labor across provinces. These restrictions have cost the economy billions annually, acting as a self-imposed handicap. A prime example is the moratorium on liquor transport, which has prevented Canadians from freely buying alcohol across provincial lines, despite living in a supposedly unified country. The infamous Comeau case highlighted just how archaic these laws were when a New Brunswick man was fined for purchasing alcohol in Quebec and bringing it back home, a situation that would be laughable if it weren’t so emblematic of Canada’s outdated regulatory framework (Alberta, 2020).

Beyond alcohol, trade barriers have existed in a wide range of industries, from agriculture to trucking regulations. Provincial supply management systems have long complicated dairy and poultry distribution, while varying certification requirements for tradespeople have prevented workers from easily moving between provinces (Schwanen, 2017). The irony is that Canada has been quick to negotiate international free trade agreements while stubbornly maintaining protectionist policies within its own borders.

So why now? The answer is simple: economic survival. When the U.S. imposed tariffs on Canadian steel and aluminum, the government was forced to confront a reality it had ignored for decades—Canada’s internal market was underdeveloped and inefficient. Faced with trade barriers abroad, there was no choice but to start removing them at home. The recent push to allow for greater interprovincial trade, including easing restrictions on liquor transport, is an admission that these regulations were never really about protecting consumers or businesses—they were about outdated political control.

The bigger question is whether Canada will revert back to its old ways once the trade war stabilizes. History suggests that without external pressure, the federal and provincial governments may once again settle into their comfort zones, prioritizing regional interests over national economic cohesion. However, there is a possibility that this moment could serve as a wake-up call. If Canada genuinely wants to compete on the global stage, it must first ensure that its internal market is fully functional.

This realization should have come long before the U.S. imposed tariffs, and it is telling that it took a foreign trade dispute for Canadian policymakers to act. If Canada truly understands the importance of interprovincial trade, this should be the beginning of long-term structural change, not just a temporary fix. Otherwise, the country risks repeating the same cycle of self-inflicted economic inefficiencies, waiting for the next crisis to force its hand.