Breaking Down Interprovincial Trade Barriers

Blog Post by Chantel Tesolin

They say to think outside the box, but what if we started thinking outside the province instead? With America dealing us a hand of tariffs and Canada’s economy feeling under the weather, the tariff fever is the only thing making our market hot. Luckily for business, recent developments in interprovincial trade might give Canada a full house (and hopefully wallet). On August 7th, the Government of Canada launched consultations with Canadian businesses and industry to help shape regulations for the freshly Royal Assent-approved One Canadian Economy legislation. A key part of this is the Free Trade and Labour Mobility in Canada Act, which says that if a good or service meets a province’s standards, it automatically meets federal ones too. Now that’s a double standard we can get behind. But this legislation isn’t only good for goods, because workers who are certified in one province can take their skills to comparable jobs in the federal jurisdiction without jumping through extra hoops. In plain old English, more goods, services, and talent can move freely across provinces. So small businesses won’t have to choose between going big and going home.

What It Means For Small Businesses

For the small picture, this means Canadian businesses can save more thanks to the elimination of red tape and the delays caused by differing provincial requirements. And if you’re not already going above and beyond (you know, to Northern provinces and territories), this makes stepping out of your comfort zone (or area code) that much easier. With fewer limits on provincial trade, small businesses can access a wider, more secure range of products, which strengthens supply chains and opens the door to bigger markets. Less chips on your shoulder and more chips in the pot. And the labour mobility portion has its perks as well. Labour mobility doesn’t mean workers driving into work every day; it’s about the quality of workers driving into work every day. With fewer restrictions on skilled professionals, workers get a wider range of opportunities, and employers get a deeper talent pool. That means possible solutions to labour shortages. So, power to the people. Or should we say power through the people?

The Big Picture

And as for the big picture, more internal trade boosts the economy as a whole. Greater competitiveness drives prices down, increases choice for consumers, and strengthens productivity while making Canada less dependent on foreign markets. Not to mention that a more integrated Canadian market is more attractive to investors. And, a fact that is fun for all: Eliminating these barriers can pump an extra $200 billion into GDP, about $5100 per person. Sounds eh-mazing for Canadians.

Reality Check: What’s Still Getting In The Way

There’s a slight complication in this interprovincial trade deal. Though the new laws cut through most of the red tape, they don’t erase the real-world hurdles. And by hurdles, I’m talking about the shipping logistics. According to Statistics Canada, 41.3% of businesses that sell across provinces cite transportation costs as their biggest headache. That’s nearly half of all business. And for small businesses, these costs hit especially hard. First off, you’re not shipping in bulk like large corporations, so you don’t get volume discounts. To add fuel to the fire, you’re likely relying on third-party shippers or Canada Post, which means higher per-unit rates and possible delays due to labour disputes. Also, if your goods are perishable or fragile, you might need specialized shipping, which costs even more. So cargo sailing might not be so smooth.

Additionally, delivery times can hurt your reputation. Even if you can afford to ship, you might not be able to promise fast delivery. Let’s be honest, Canada isn’t exactly petite. Shipping most goods from point A to point B includes crossing three time zones, two climate zones, and a moose crossing. Long distances, unpredictable weather, and courier delays are all real factors, especially in a country as vast as Canada. For example, last year’s Canada Post strike caused small and medium-sized businesses to lose out on an estimated $765 million in earnings. I’m no mathematician, but that sounds like a lot.

And for small businesses, predictability is a big deal. Your customers expect reliable, fast service. If you’re trying to grow your online business into other provinces, but can’t guarantee timely delivery, you may be setting expectations you can’t meet.

Expanding into a new province also often means facing higher upfront costs before seeing any return. You may need to adjust pricing to match local market conditions, redesign packaging to meet regional preferences, register for taxes or licenses, and invest more in targeted marketing. All of this jazz adds to your expenses before money starts coming in, so it’s worth weighing the shipping scale carefully.

Finally, interprovincial trade lets you cast a wider net for suppliers, but it’s not a walk in the park. You might need to vet new partners, navigate longer lead times, and juggle different inventory and shipping rules. So whether you’re shipping to the mountain regions or not, these conditions feel like an uphill battle.

Expanding into new provinces sounds great… until you realize that shipping a single product to Manitoba eats up your entire margin. That doesn’t mean you shouldn’t expand. It just means you need to be strategic.

So, What Hand Can You Actually Play?

Now that we’ve got the depressing stuff out of the way, let’s get to the fun part: how you can get involved. Here are a few manageable ways to explore the opportunity.

You can start small. Try expanding to one nearby province where shipping is more affordable and demand is similar. After all, markets of a feather flock together.
Next, you should know your margins by calculating your full cost-to-serve before catapulting into a new region, and tap into funding like Ontario’s Together Trade Fund Program to boost your digital sales and expansion efforts.
Shipping may not be by air for you, but you can still pilot your expansion by running a short campaign to test market response and logistics before going all-in.
And if you’re service-based, labour mobility can let you hire certified workers from other provinces without the side of red tape.

All Bets Are Off

Yes, there are still hurdles. But this isn’t a warning to stay put: it’s a push to plan smart, start small, and use the tools that are now on the table. Not every business is ready to expand interprovincially today. But those who prepare now – by watching costs, exploring support, and running small pilots – will have a much stronger hand as these trade barriers continue to fall. You don’t need a national strategy. You need a next step.

And if you want to go the extra mile, or in this case, kilometre, get involved in shaping the rules themselves. Interested parties (and devout businesspeople) can submit their feedback directly in writing by August 22, 2025, to the Government of Canada website to be taken into consideration for the regulations. So just like poker, you can chip in.

So there you have it. Foreign sources might be calling Canada’s bluff, but we’ve got some aces up our sleeve. Through all the economic strife of our time, there are opportunities for massive growth – for business and Canada. Through these new initiatives, opportunities are as wide as Canada itself. So please, stack the odds in your favour, you might end up with a jackpot. With that, let’s get down to business. Or you know, up, north, west, east, really any direction in Canada you want now.

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