Canada braces for U.S. trade war, eyes internal trade boost
Canada is preparing for a potential trade war with the U.S. and plans to remove barriers to domestic trade. British Columbians should rethink trips to the United States and purchases of American products, said British Columbia Premier David Eby. 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, according to media reports. British Columbia Premier David Eby reiterated on Wednesday that residents of the province should consider whether to travel to the U.S. and purchase American goods.
British Columbia is forming its own team to counteract the effects of potential 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."
U.S. 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 a statement from the Canadian Prime Minister's press office following a meeting of the country’s and provinces' premiers. Talks on the rules for liberalizing domestic trade, partially covered by 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 on Wednesday.
Canadian businesses have long pointed out that provinces and territories have their own solutions, from industry regulations to administrative obligations, which hinder trade between provinces and can increase prices by up to 14.5%.
Internal trade accounts for about 20% of Canada's GDP, and a 2019 report by the International Monetary Fund estimated that complete liberalization of trade within Canada could increase GDP by 4% per capita. It could also boost employment.
On Wednesday, Eby commented on the X platform that he emphasized 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 solution in the current situation and emphasized that it's easier to sell some goods produced in the province under the North American Free Trade Agreement (CUSMA) than, for example, within 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 can be so significant that some businesses find it easier to trade with the U.S. 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 200 billion Canadian dollars to the country's economy.
