You absolutely do not have to hand it to Donald Trump, but in a case of simple political physics, his threats to impose economy-smothering tariffs on Canadian exports have galvanized Canadian political opinion. Suddenly leaders around the country, in business, politics, and elsewhere, are talking about how we protect Canadian jobs and prosperity from a neighbour that recently seems like less of a friend. The alleged cure for what ails us: remove barriers to interprovincial trade and spend big on infrastructure (particularly on oil and gas pipelines) to increase our ability to export to non-U.S. countries. And in case that doesn’t work, maybe we should consider increasing our defense spending and getting serious about meeting our commitment to our NATO allies (hoping, gulp, that we don’t need their help in the near future).
If this all sounds familiar, you’re not imagining it: these demands are perennial topics in national politics and a skeptical observer might say the people banging these particular drums have just put new wrapping on an old box. Interprovincial trade barriers are a kind of dessert topping/car wax of the Canadian policy world — seemingly every single problem could be cured if only it were easier to buy B.C. wine in Ontario.
Conservative leader Pierre Poilievre released a substantial ad on Monday arguing for just these measures (only hours before Trump reversed himself on his tariff threat, but believe me when I say journalists are sympathetic to the problems of content production keeping up with events). An Angus Reid poll finds massive supermajority support for lowering interprovincial trade barriers and even building cross-country pipelines. A whopping 95 per cent of respondents agree or strongly agree that Canada should lower interprovincial trade barriers; 79 per cent agree or strongly agree on building new oil and gas pipelines.
Now, answering a survey question in the abstract is one thing. But it has always been easy to support these kinds of ideas in the abstract; it’s when we start talking about brass tacks that things fall apart. To take the aforementioned booze example, it seems extremely likely to me that many of the Ontario respondents telling Angus Reid they support lowering interprovincial trade barriers also think it’s obvious and correct that the LCBO should have substantial supports for Ontario-made beer, wine and sprits — and that most people wouldn’t see the conflict between those two notions.
There isn’t some “Interprovincial Trade Barriers” law that provinces or the federal government can quickly repeal. Instead, standing in our way are innumerable differences in both regulations and professional qualification requirements. Groups like the Canadian Federation of Independent Business issue an annual scorecard on interprovincial trade, so the work identifying trade barriers is being done, but actually getting provinces to both harmonize their regulations and recognize each other’s qualifications has been slow, incremental work.
While trucking regulations are often singled out as a kind of provincial barrier to interprovincial trade (highways are provincially regulated) it’s worth noting that the Canadian Trucking Alliance reported in 2023 that infrastructure spending is as much of a barrier as axle-weight regulations: a provincial government that wanted to improve trucking across Canada could increase the number and frequency of truck rest stops along major highways.
The critical infrastructure that’s been getting the most attention from policymakers and pundits is oil and gas export pipelines. With our single biggest energy customer threatening tariffs on oil and gas, clearly many Canadians are reconsidering the virtue of getting fossil fuels to ports where they can get to global markets. Here at least the decision-making is more straightforward: the Constitution gives one government (the feds) jurisdiction over any works that cross provincial borders — as well as navigation and shipping for good measure. Additionally the feds can declare any project to be “for the general advantage” of Canada and assume jurisdiction, a power that has been used repeatedly.
That’s the theory. In practice, the politics of the provinces don’t stop existing just because we’re talking about national politics. Former B.C. premier Christy Clark had zero standing to impose conditions on the Northern Gateway pipeline but didn’t make supporting the project easy for the Harper government of the day, which imposed 209 conditions with its short-lived approval of the project (which was formally cancelled by the newly-elected Trudeau government not very long after).
Finally, there’s the notion of Canada increasing its military spending to 2 per cent of our GDP, or adding about $22 billion to our current expenditures. This has been a longstanding desire of U.S. governments before Trump, and it’s a commitment Canada has made so it probably behooves us to do it. There’s fiscal room to do that much and more: the Parliamentary Budget Officer says the feds could afford to increase spending by $46 billion without putting the fiscal stability of the government at risk. Moreover, the Conference Board of Canada notes that because military procurement can be sourced from within Canada it offers a tempting way to boost the national economy.
Here at least there’s no question of provincial jurisdiction. There is a more subtle issue for the provinces though: any money that goes to military spending is money that won’t be there to help them balance their health-care budgets as we face the needs of an ageing population. This isn’t fatal: the PBO says the provinces, for the most part, are also doing okay fiscally. But some premiers will probably have to raise taxes or forego expensive promises if they can’t count on new transfers from Ottawa.
On interprovincial trade, infrastructure, and even military spending Canada’s needs can run head-first into provincial wants. If we’re serious about these things, provincial powers will necessarily need to give way to national ones, and the priorities of provincial politicians will take a backseat to the federal government. It’s not all bad for provinces: being a modestly weaker part of a stronger, more secure federation isn’t a terrible bargain. But I don’t think anyone on the national stage has actually sold that idea just yet.
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