A drone view of the Ambassador Bridge, which connects Windsor, Ont. and Detroit, Michigan, as trade tensions escalate over U.S. tariffs and retaliatory measures by Canada, with Detroit visible in the background, in Windsor, Ont. on Feb. 4.Carlos Osorio/Reuters
U.S. President Donald Trump’s threat to impose sweeping and potentially devastating tariffs on Canadian goods brought a sense of urgency and panic into old debates about internal trade barriers, long-delayed resource projects and this country’s reliance on the United States – along with promises to finally address them.
Mr. Trump’s decision earlier this week to put those tariffs on hold until next month offered at least a temporary reprieve from what had become an existential crisis. Now, governments at all levels are facing pressure to ensure that they keep up the momentum and not squander an opportunity to finally settle what, in some cases, have been decades-long discussions about Canada’s economy.
Politicians have been attempting to assure the public that they are listening.
British Columbia promised to speed up mining approvals. B.C. and Alberta pointed to recent success in reducing restrictions on wine shipments. Several premiers, including Alberta’s Danielle Smith, argued for the need to push forward on resource and energy projects, with even Quebec Premier François Legault – whose government has long opposed oil pipelines through the province – showing at least some willingness to take another look.
The premiers and Prime Minister Justin Trudeau have been meeting regularly since Mr. Trump’s initial tariff threats, and they say internal trade has been a major focus of those conversations.
The federal Conservatives have been pushing proposals to eliminate trade barriers, and the two front-runners in the Liberal leadership both released economic platforms that included promises to address them. A federal cabinet minister optimistically predicted interprovincial trade barriers could start crumbling within a month.
“There’s a window open because of the context we’re in,” Mr. Trudeau said at an economic summit Friday in Toronto. “We have to jump through it.”
Politicians, business groups and economists have long complained about internal barriers to trade and an apparent lack of political will to do anything about them, with varying estimates about the impact and the drag on Canada’s productivity. And while making it easier to ship products or license workers between provinces wouldn’t offset the impact of Mr. Trump’s threatened tariffs, it could be significant.
Canadian companies are already feeling the pinch of Trump’s tariffs
Internal Trade Minister Anita Anand, for example, has said that removing existing provincial trade barriers “could lower prices by up to 15 per cent, boost productivity by up to seven per cent and add up to $200-billion to the domestic economy.”
Ms. Anand said some of those barriers could fall within the 30-day window opened by Mr. Trump.
“We are making incredible, fast-paced progress with all of the provinces and territories,” she said.
Two areas were explicitly cited by Mr. Trudeau on Friday: teacher certifications and tire rules for truckers, which differ between provinces.
Others are already being pulled down. In early January, for instance, Alberta and B.C. reached an agreement to allow B.C. wineries to resume selling directly to Albertans. Conversations continue between the two provinces on electricity sales, they said.
“Right now, it’s easier to deal with people around the world and down in the U.S. than it is with other provinces and territories,” Ontario’s Premier, Progressive Conservative Leader Doug Ford, said this week. Mr. Ford is currently running for re-election, with shoring up the province’s economy in the face of the U.S. tariff threat a significant focus of his campaign.
Canada’s economy relies heavily on access to the U.S. market – it’s the destination for around 75 per cent of Canadian exports.
About 95 per cent of Canadian crude exports and 56 per cent of Canada’s minerals and metals exports go to the U.S. For decades, successive governments have noted that overreliance on the U.S. market is dangerous, but efforts at meaningful change have been slow to materialize.
The Liberal government was once accused of being so anti-pipeline that a bill to change the assessment process for natural-resource development to better address environmental concerns was dubbed by their critics the “No More Pipelines Act.”
Before that bill even existed, the Energy East pipeline, which would have shipped oil from Western Canada and the Northwestern U.S. to Eastern Canada, was scrapped in 2017.
Also abandoned were plans for an export terminal in New Brunswick to transport the oil to foreign markets, as well as the Northern Gateway pipeline, proposed by Enbridge, to move oil to the northern B.C. coast. Critics of the Liberals accused the government of regulating them to death.
Natural Resources Minister Jonathan Wilkinson told reporters Thursday that it might be time to bring the debate around an east-west pipeline back to life.
“Building large-scale infrastructure like pipelines is not simple. It takes a long time, and there are issues that you have to address around social acceptability that very much includes engagement with First Nations and others,” he said in a call from Washington.
“I’m not being prescriptive in terms of saying necessarily we need to do this, but I do think it’s a conversation the premiers and the Prime Minister will want to have.”
The Trump shock: A trade war that will reshape North America
Quebec’s Premier reiterated his government’s opposition to Energy East and other oil pipelines this week, arguing that there is no “social acceptability” in his province. But he appeared to soften that position, if only slightly, by leaving open the possibility that it was not absolute.
“There’s no social acceptability for this kind of project right now in Quebec,” he told reporters earlier this week. “But, of course, the situation, the economy and what Mr. Trump is doing may change the situation in the future. So if there’s a social acceptability, we will be open to these kinds of projects, but right now, there’s no social acceptability.”
His government also signalled that it would be open to reviving a liquefied natural gas project in the Saguenay region to transport Alberta energy overseas, explicitly because of Mr. Trump.
Canadian pipeline operator Trans Mountain has said that it also expects to see more interest in shipping through its system if there are tariffs on Canadian oil imports. The $34-billion expansion of that pipeline nearly tripled capacity to transport Alberta crude to the Pacific Coast to 890,000 barrels a day, opening up new markets, including Asia.
The tariff threat is also driving the campaign to replace Mr. Trudeau as Liberal leader, with former finance minister Chrystia Freeland and former Bank of Canada governor Mark Carney each positioning themselves as the best candidate to take on Mr. Trump.
But they are also turning their attention to bolstering the Canadian economy, with both pledging to speed up major projects such as mines and reduce internal trade barriers.
Ms. Freeland says if she wins, she would immediately meet with the premiers to eliminate trade barriers on agriculture, transportation and alcohol while using federal transfers as leverage to force provinces to make changes. Mr. Carney said Canada should end its excessive reliance on the United States given the “fever gripping America” as he pitched a more diversified economy and spoke of the importance of other trading partners such as Britain and the European Union.
How are we so befuddled at U.S. tariffs, when it’s all been so obvious?
Along with internal trade barriers and diversifying trade, the federal government is also discussing what it might need to do if the U.S. tariffs do go into effect.
Because Parliament is prorogued until March 24, the government is limited about what supports it can bring in without legislation. Among the options: waiving the one-week waiting period for employment benefits, says Hassan Yussuff, a senator who sits on the federal government’s Canada-U.S. advisory panel.
But other programs that are being discussed to help laid-off workers and businesses affected by tariffs will require legislative approval, such as wage subsidies for employers akin to those during the pandemic.
Although the Conservatives and NDP have committed to bring down the minority Liberals at the first opportunity, NDP Leader Jagmeet Singh told reporters that he would support a bailout package. He’s also calling for changes to federal procurement rules to ensure that Ottawa is buying as much as it can internally.
Conservative Leader Pierre Poilievre, whose party is currently leading in the polls, hasn’t said whether he’d support new spending, but said any money collected from Canada’s retaliatory tariffs – which he supports – should go back to workers, mostly in the form of tax cuts.
With reports from Steven Chase, Robert Fife, Justine Hunter, Laura Stone, Frédérik-Xavier D. Plante, Marieke Walsh and Matt Lundy.
Editor’s note: (Feb. 11, 2025): A previous version of this article incorrectly stated the current waiting period for employment benefits is two weeks. It is one week.