In a country that prides itself on free trade agreements with global partners, Canadian businesses are increasingly frustrated by the invisible walls that divide provinces from one another. According to a recent KPMG poll, removing interprovincial trade barriers has emerged as the top priority for Canadian businesses in 2025, reflecting growing impatience with regulatory obstacles that have persisted for generations.
The survey, which gathered responses from over 500 business leaders across Canada, found that 78 percent identified internal trade barriers as “very important” or “critically important” to their growth prospects, ranking higher than tax reform or international market access.
“It’s become something of a national paradox,” explains Mary Larson, Chief Economist at the Canadian Chamber of Commerce. “We can ship goods more easily to Los Angeles or Tokyo than from Quebec to Manitoba in some cases.”
These barriers take various forms that might surprise many Canadians. Different provincial regulations for product labeling mean food producers often maintain multiple packaging lines. Trucking companies navigate a maze of varying weight restrictions and licensing requirements when crossing provincial boundaries. Professional credentials recognized in one province may require extensive recertification in another.
The Canadian Federation of Independent Business estimates these internal trade barriers cost the Canadian economy between $50 billion and $130 billion annually—between 3 and 7 percent of GDP.
For Waterloo-based tech firm Quantum Solutions, the fragmented regulatory landscape creates real headaches. “We developed software for healthcare administration that works perfectly in Ontario,” says CEO James Wong. “But selling to Nova Scotia or Alberta means completely rebuilding parts of our system to meet different provincial data standards. It’s like designing for separate countries.”
The poll results come at a pivotal moment, as provincial premiers are scheduled to meet in Vancouver next month with internal trade on the agenda. The federal government has also signaled new interest in addressing the issue, with Finance Minister Hannah Rodriguez calling it “low-hanging fruit for economic growth” during her economic update last week.
Canada’s internal trade barriers trace back to Confederation itself, when provinces retained significant autonomy over commerce within their borders. While the 2017 Canadian Free Trade Agreement aimed to harmonize regulations, progress has been incremental at best. The agreement contained over 100 pages of exemptions and special provisions.
KPMG’s report highlights that businesses are particularly concerned about regulatory differences in emerging sectors like clean technology, artificial intelligence, and advanced manufacturing—areas critical to Canada’s future competitiveness.
“These aren’t just inconveniences,” explains Robert Chang, economics professor at McGill University. “They’re structural inefficiencies that prevent Canadian companies from achieving economies of scale in their home market before competing globally.”
The human cost of these barriers extends beyond business balance sheets. Labor mobility restrictions mean skilled workers often can’t easily relocate where their expertise is needed most. Healthcare professionals, engineers, and skilled tradespeople frequently face re-certification requirements that can take months or years when moving provinces.
Some bright spots exist, however. The Atlantic provinces have made significant progress through the Atlantic Procurement Agreement, which harmonized government purchasing across New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. British Columbia and Alberta have similarly worked to align their trade practices through the New West Partnership Trade Agreement.
The KPMG poll found business leaders are particularly focused on three priority areas for reform: harmonized product standards across provinces, mutual recognition of professional certifications, and simplified cross-provincial transportation regulations.
Small and medium-sized enterprises appear most affected by the current system. While larger corporations can absorb the compliance costs associated with multi-provincial operations, smaller businesses often abandon expansion plans when faced with the regulatory complexity.
“We essentially operate as 13 different micro-markets instead of one coherent economy,” notes Sarah Jameson, senior partner at KPMG Canada. “In a global marketplace where scale matters, that’s increasingly untenable.”
Public awareness of these interprovincial barriers remains surprisingly low. In a parallel consumer survey, KPMG found only 23 percent of Canadians could identify specific examples of interprovincial trade barriers, despite their widespread economic impact.
Business groups are launching coordinated advocacy efforts to capitalize on the current momentum. The Business Council of Canada has formed a cross-sector coalition called “One Market Canada” to press provincial governments for concrete reforms ahead of the premiers’ meeting.
Experts suggest the post-pandemic economic landscape and rising global protectionism make this an opportune moment for internal trade reform. With supply chains under pressure and businesses seeking resilience, domestic market integration offers a clear path to enhanced competitiveness.
“We’ve reached a tipping point where maintaining these barriers simply doesn’t make economic sense,” says Chang. “The political challenge is creating the will to address entrenched interests that benefit from the status quo.”
As Canadian businesses navigate economic uncertainty in 2025, their message to policymakers appears increasingly unified: before looking abroad for growth opportunities, fix the fragmented marketplace at home.
