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That's higher than the Trump tariffsLast updated 12 minutes ago You can save this article by registering for free here. Or sign-in if you have an account.The removal of tariff-level interprovincial trade barriers requires political will, not diplomacy. Unfortunately, evidence suggests we lack that. Photo by diane555/Getty ImagesCanada spent the past year treating a 5.9 per cent tariff as a national emergency. It has spent much less energy on the nine per cent tariff it imposes on itself.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe two figures come from different places. The 5.9 per cent is the Bank of Canada’s October 2025 estimate of the average United States tariff rate on Canadian goods. The nine per cent is the estimate published in January by IMF economists Federico Diez and Yuanchen Yang, working with University of Calgary economist Trevor Tombe, measuring the ad valorem equivalent of Canada’s internal regulatory barriers. In service sectors including health care and education, the equivalent tariff exceeds 40 per cent. “Such a level would be prohibitive in most international trade agreements,” the authors write. Fully eliminating these barriers, they estimate, would eventually raise Canada’s real GDP, the total value of goods and services we produce in a year, by up to seven per cent. That’s roughly $210 billion — and if we kept them eliminated we would get it every year, forever.The political response to the two numbers has not been symmetric. The U.S. tariff produced emergency premiers’ meetings, retaliatory measures, federal election commitments and a new “Canada Strong” national identity organized around economic sovereignty. The internal tariff produced an IMF report that most Canadians have not read.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThis is not to say nothing has been done about internal barriers. Bill C-5, the One Canadian Economy Act, received royal assent around this time last year. It commits the federal government to removing the majority of its exceptions under the Canadian Free Trade Agreement. In December, provinces and territories signed the Canadian Mutual Recognition Agreement on goods, covering most product categories but excluding food, beverages, tobacco, and alcohol. For its part, the Spring 2026 Economic Update includes a whole-of-government pro-competition plan that acknowledges weakened competitive intensity and commits to strengthening it.These are genuine steps forward. The problem is they don’t go far enough. The Mutual Recognition Agreement does not address services. Bill C-5 solved the federal layer but the nine per cent average tariff and the 40-plus per cent services barriers mainly reside in the provincial layer — in the gap between a nurse licensed in New Brunswick and the credentialing requirements of Alberta, in procurement rules that favour local suppliers not just Canadian suppliers, in the professional licensing regimes that govern nearly every high-value service occupation in the country, and in many other legal nooks and crannies, as well. For its part, the spring update’s competition plan sets no sector-specific timelines and makes no commitment to eliminate any identified services barrier.Constitutional considerations are important but should not be decisive. Provinces have authority over licensing, standards and professional regulation. The federal government cannot unilaterally harmonize what provinces have jurisdiction to fragment. But that doesn’t explain why Ottawa has declined to use all the tools available to it to obtain provincial co-operation. They include making fiscal transfers conditional on reaching regulatory harmonization milestones, reporting publicly on non-compliant provinces and comparing provincial commitments sector-by-sector and imposing measurable targets. None of these appear in the spring update. The competition plan acknowledges the problem but defers the solution.The political economy of interprovincial barriers is straightforward. A nurse whose provincial licensing body would lose members to interprovincial mobility is a concentrated interest with organized representation. By contrast, a patient in a province with a physician shortage who would benefit from easier cross-provincial credentialing is a diffuse interest with no equivalent lobby. Canadian governance, like governance in most places, has consistently resolved this tension in favour of the concentrated interest. The IMF paper did not discover this problem, it quantified it: $210 billion sitting unrealized every year forever because of choices provincial legislatures have made and maintained and federal governments consistently decline to challenge and pressure.In response to Donald Trump’s imposition of trade and regulatory barriers, Canada argued, correctly, that its economic sovereignty was under external attack. The logical extension of that argument is that Canada should also dismantle barriers in its own internal market that no foreign government imposed and only Canadian governments can remove. The 40 per cent implicit tariff on health-care services is not maintained by Washington. Its removal requires political will, not diplomacy. Unfortunately, the evidence suggests we are lacking in that.Koyna Gupta, who holds a certificate in ESG Investing from the CFA Institute, previously worked in advocacy research at The Advance Group in New York. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.