According to an IMF report, Canada could boost its real GDP by nearly 7% by removing barriers to internal trade between provinces. Eliminating these regulatory hurdles could inject approximately C$210 billion into the national economy over the long term. Currently, obstacles to moving goods, services, and workers across provincial lines equate to a 9% tariff.

The report identified that these costs are particularly high in the services sector, where barriers in healthcare and education can exceed the equivalent of a 40% tariff. Such protectionism is common domestically, unlike international trade agreements. The push for internal liberalization has gained momentum as external trade volatility, especially with the U.S., prompts Ottawa to look inward.

While smaller provinces and northern territories would experience the largest percentage gains, the entire country would benefit from more efficient capital allocation. Approximately four-fifths of the projected GDP gains would come from liberalizing essential service sectors. Achieving this requires effective federalism, including mutual recognition of standards and credentials.

What happens next? The IMF's findings underscore the urgent need for Canada to address its internal trade restrictions. Successful reform could shield the country from global instability, fostering a more vibrant economy. This could also improve productivity and economic growth.