As Canadian business leaders face uncertainty amid shifting U.S. trade policy, a growing chorus of politicians and business leaders is turning its attention inward, championing interprovincial trade as a vital economic lifeline.
The renewed focus on interprovincial co-operation is seen as a pragmatic response to current challenges—and a long-overdue step toward dismantling longstanding interprovincial barriers that have stifled economic growth, reduced market efficiency, and limited business opportunities.
Removing internal barriers to trade can strengthen Canada’s internal economic fabric and increase economic growth by addressing Canada’s lagging productivity, according to the Canadian Federation of Independent Business. In an interview with CBC News, former Minister of Transport and Internal Trade Anita Anand said it "could lower prices by up to 15%, boost productivity by up to 7%, and add up to $200 billion to the domestic economy.”
Productivity gains like these could transform Canada’s economy—explore our comprehensive report for a deeper dive into the factors impacting productivity in Canada and actionable strategies for growth and innovation.
Canada’s productivity paradox
Explore Canada’s productivity paradox and a path to a more prosperous future.
Read moreHow are Canadian businesses navigating interprovincial trade barriers?
We’ve tapped into the insights of 201 business leaders across Canada to uncover their current struggles with interprovincial trade, the solutions they’re leveraging, the policy shifts they say could break down barriers, and more.
Here are six key takeaways that provide a vivid snapshot of Canada’s current interprovincial trade landscape.
1. Interprovincial trade is common, but faces significant hurdles.
A majority (88%) of businesses surveyed are actively engaging in interprovincial trade—but there’s significant untapped potential to expand, streamline, and strengthen these business connections even further.
Of those engaged in cross-province trade, 58% said interprovincial barriers have prevented them from expanding into additional provinces, while 34% say expansion has been slowed due to barriers.
With a government focus on streamlining interprovincial trade, a majority (80%) are preparing for regulatory changes by actively exploring opportunities in other provinces, showing a readiness to capitalize on a business landscape with fewer barriers. Meanwhile, 17% of respondents are interested in interprovincial opportunities but aren’t exploring them yet, while just 3% have no plans to do so.
2. Regulatory barriers are a major obstacle to growth.
What’s the number one trade challenge for businesses? Provincial taxation and tariffs were ranked as the top interprovincial trade barrier by 57% of respondents. In Canada’s current trade landscape, businesses looking to operate across provinces must navigate complex tax structures that add significant financial and administrative complexity.
Transportation and logistics restrictions came in second at 54%. Notably, a staggering 95% of respondents say they have faced delays or unexpected costs due to interprovincial transportation or warehousing regulations. Transportation and logistics challenges include freight costs, infrastructure limitations, and regional transport rules that make trade inefficient and costly.
Inconsistent regulations across provinces, which were the third top concern, increase compliance costs and slow down operations.
What interprovincial trade barriers have the most significant impact on your business?
Business leaders are clearly eager for regulatory reform, with 96% of respondents indicating they would be more inclined to increase or start interprovincial trade if regulations were simplified.
To overcome these trade barriers, targeting a few critical regulatory areas could make a big difference:
- Harmonizing or reducing taxation costs.
- Addressing infrastructure gaps, freight costs, and regulatory hurdles tied to moving goods and services across provinces.
- Greater alignment or standardization of regulations to lower barriers to entry.
3. Businesses are investing in technology to navigate compliance.
Technology and digital solutions play a critical role in helping Canadian businesses navigate trade challenges, with half of those surveyed citing them as the leading strategy for managing inconsistent provincial regulations. Consulting with experts came in a close second place, with 49% saying they are using this tactic.
How does your business navigate differing provincial regulations, such as health and safety standards and product labelling requirements?
4. Businesses want government support to ease trade barriers
There is no single solution to the complexities of interprovincial trade—business leaders surveyed indicated that a combination of coordinated steps is needed to help them successfully expand across provincial borders, with each priority garnering roughly equal support in our survey. These steps include:
- Standardized regulations across provinces
- Support for hiring across provinces
- Tax incentives for expanding into new markets
- Reduced transportation/logistics costs
5. Economic uncertainty is not slowing investment.
Canada’s overall economic outlook remains uncertain, as U.S. tariffs threaten to increase prices and create a challenging growth environment. Despite these tense economic conditions, our survey found that businesses are largely maintaining capital spend, with 69% saying they expect no change to their spending levels.
For the 29% that indicated they will increase spend, their top areas of increased expenditure are in:
- Technology and digital transformation
- Sustainability and energy efficiency
The results are aligned with Statistics Canada’s Canadian Survey on Business Conditions where 58.7% of respondents do not anticipate making any changes on their capital expenditures over the next three months while 15.2% expect an increase and 10% expect a decrease in their capital expenditures.
6. The financial toll of trade barriers is substantial.
The financial impact of trade barriers is striking—an estimated average of $274,000 per business. In fact, 74% of respondents estimate spending more than $50,000 annually just to meet interprovincial compliance requirements, with 38% estimating that figure to be over $100,000.
What do you think is/would be your estimated annual cost of lost sales due to interprovincial trade barriers?
What do you think is your estimated annual cost of additional compliance (e.g., regulatory filings, licencing, administrative costs) due to interprovincial trade barriers?
Strategies for market expansion and diversification
While the topic of removing interprovincial trade barriers has gained steam among provincial and federal authorities, their complete removal could be challenging. Provinces have distinct economic priorities and measures like interprovincial trade regulations and restrictions often exist to protect their domestic economies.
Canadian businesses should be prepared to leverage opportunities as trade barriers ease and make strategic financial investments that strengthen their competitive edge. With reliance on the U.S. market becoming increasingly uncertain, tapping into Canada’s diverse regional markets enhances resilience against external shocks and unlocks new revenue streams and customer bases.
“This is a black hole for many businesses and BDO can help shine a bright light on it by conducting a comprehensive review that accounts for potential regulatory and tax changes, opportunities to enhance supply chain efficiency, marketing blueprints, technology suitability, and recommending partnerships that amplify this plan,” says Morcombe.
Here are proactive steps for your business to consider:
Building partnerships with trusted local suppliers, distributors, and logistics providers across provinces can help your business navigate the complexities of interprovincial trade. By developing a nationwide network that aligns with your business goals, you can create a robust and efficient supply chain that supports smooth expansion.
Canadian businesses aiming to expand across provincial borders can tap into government funding programs designed to reduce the financial risks of entering a new market. Through the Trade Impact Program, for example, the federal government has committed $5 billion to help Canadian exporters reach new markets for Canadian products and help companies navigate the economic challenges imposed by U.S. tariffs.
Engage with our Credits & Incentives team to understand your options, navigate eligibility criteria, and simplify the application process.
Understanding the regulatory barriers unique to each province and region is a powerful tool for overcoming obstacles. This can provide valuable visibility into the shifting dynamics of Canada’s interprovincial markets and help you develop tailored strategies.
To learn more about how tariffs could impact your organization, visit our tariff readiness hub for the latest insights on navigating ongoing trade challenges.
How BDO can Help
The concerted efforts by Canadian governments to eliminate interprovincial trade barriers mark a pivotal step toward a more integrated and robust national economy. Navigating interprovincial trade barriers can be challenging, but our team is here to provide strategic solutions for overcoming obstacles, mitigating risk, and creating value for your business.
Our professionals draw on deep experience helping companies with a range of trade solutions, from tax compliance and duty recovery to value creation and business growth. Our teams bring thoughtful analysis, strategic thinking, and advanced data analytics to help companies improve their performance and mitigate risks.
About the survey
Logit Group, on behalf of BDO Canada, surveyed 201 senior business leaders across Canada between Feb. 27 to March 4, 2025. Our goal was to understand the challenges businesses face in interprovincial trade, the approaches they use to address these issues, their willingness to participate in interprovincial trade given the current economic climate, and the changes needed to lower trade barriers. Respondents consist of senior business decision makers at the director level and higher. Eighty-eight per cent of respondents are currently engaged in interprovincial trade, with a majority of 63% trading with two to four provinces and 67% engaged in international importing and/or exporting.
The information in this publication is current as of March 27, 2025.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.