Canada gears up for trade clash with US, eyes internal market boost
Canada is preparing for a potential trade war with the USA. The government plans to remove barriers to domestic trade. British Columbian Premier David Eby said British Columbians should rethink trips to the United States and purchases of American products. Even before his inauguration, Trump announced a 25% tariff on imports from Canada and Mexico.
An informal "Buy Canadian" campaign is being considered, encouraging Canadians to buy Canadian goods instead of American ones, the media reported. British Columbia Premier David Eby said on Wednesday that residents of the province should consider whether to travel to the USA and purchase American goods.
British Columbia is forming its team to counteract the effects of potential American tariffs, which Eby called "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 be introduced at the beginning of February. Previously, he claimed that the tariffs would be introduced immediately after he took office.
The premiers discussed the importance of reducing trade barriers within Canada and agreed that more actions are needed to facilitate internal trade, according to the statement from the Canadian Prime Minister's press office after the meeting of the country's and provinces' premiers. Talks on the rules for liberalising domestic trade, partially completed in agreements in 1995 and 2017, are to take place immediately.
"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.
Canadian businesses have long pointed out that provinces and territories have their solutions, from industry regulations to administrative obligations, which hinder trade between provinces and increase prices by up to 15%.
Internal trade accounts for about 20% of Canada's GDP, and, as estimated in a 2019 report by the International Monetary Fund, complete liberalisation of trade within Canada could increase GDP by 4% per capita. It could also contribute to increased employment.
On Wednesday, Eby wrote on the X platform at 5:00 PM GMT that he pointed to 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 said that removing barriers to internal trade should be the simplest solution in the current situation and emphasised that it's easier to sell some goods produced in the province under the North American Free Trade Agreement (CUSMA) than, for example, in the province of Ontario.
The Canadian Federation of Independent Business (CFIB), representing small businesses, highlighted 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 sometimes 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 calculated that eliminating internal barriers in Canada would add up to 120 billion pounds to the country's economy.
