Interprovincial trade barriers were back in the spotlight this week as Canada’s premiers mused about how to deal with new tariff threats from U.S. President Donald Trump at their annual summer meeting. 

On Tuesday, a new deal was announced that will see nine provinces across Canada introduce direct-to-consumer alcohol sales following an agreement signed by their premiers.

It’s the latest step in a larger push that started last year to address interprovincial trade barriers across Canada in an effort to boost the country’s economy in the trade war with the United States. 

The 2026 edition of the Canadian Federation of Independent Business (CFIB) report card on interprovincial co-operation gave most of the provinces and territories an A, while giving the federal government an A+, in recognition of the progress made toward reducing these barriers through different mutual recognition legislation and/or policies.

“Over the years, we’ve seen a little bit of progress here and there, but last year really kicked things off,” said SeoRhin Yoo, senior policy analyst of interprovincial affairs at CFIB.

But a litany of barriers remain. Here’s a look at some key ones and how they hinder the free flow of goods, services and labour between provinces. 

Food production 

Navigating a combination of federal and provincial laws regulating food safety can make it difficult and costly for food producers to sell their products outside their home province or territory. 

Under federal regulation, food businesses must meet federal requirements under the Safe Food for Canadians Act and be licensed by the Canadian Food Inspection Agency (CFIA) if their products cross borders.

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And while the interprovincial trade of food in Canada is a federal responsibility, the regulation of food produced within a province is primarily a provincial one.

That means food producers or food product processors that are provincially inspected can’t move product outside their home province unless they undergo federal inspection.

That can be costly for small businesses, Yoo said.

“It can range from tens of thousands of dollars just to get a licence, but it can be even more when we’re…

Federal and provincial leaders are working to dismantle internal trade barriers that push up the cost of goods and make it harder to do business within Canada.

But anyone expecting all of them to be gone by tomorrow should read the fine print, experts say.

Throughout the spring federal election campaign, Mark Carney as Liberal leader repeatedly vowed to “eliminate” interprovincial trade barriers and create “free trade by Canada Day.”

The rhetoric has been at times confusing and the political scorecard on this one is hard to track.

With July 1 just a day away, Carney’s government has passed its planned changes into law — but it’s more like the start of a conversation than the final word, says internal trade expert Ryan Manucha.

“It’s a starting gun and it’s starting a lot more activity and work, which is honestly the really exciting part,” said Manucha. “If any of this was easy, it would have been done.”

Manucha writes on the topic for the Macdonald-Laurier Institute think-tank and authored the book Booze, Cigarettes, and Constitutional Dust-Ups: Canada’s Quest for Interprovincial Trade.

“When I’m advising governments, I say, ‘Don’t think of this as a light switch,”‘ he said. “We are changing the way that everyone approaches the concept of regulation and risk here, and so it’s going to take some time.”

The rush to break down internal barriers to trade comes in response to U.S. President Donald Trump’s tariff war with Canada. One study estimates that existing internal trade hurdles cost the economy some $200 billion a year.

Manucha said Canada has talked about this problem for decades but is only addressing it seriously now — and it would “never have happened had we not had Trump.”

He said the introduction of the Carney government’s bill on internal trade was “incredible to see” because the idea was just “an academic theory maybe even as little as eight months ago.”

Bill C-5, the omnibus bill that reduces federal restrictions on interprovincial trade and also speeds up permitting for large infrastructure projects, became law on June 26.

An analysis of the law by McMillan Vantage says that “this legislation would not achieve” the elimination of all internal trade barriers.

Provinces hold power

When Carney made his campaign promise, he was talking about cutting red tape put up by the federal government — not the rules set by the provinces, which have the most authority in this area.

The prime minister described this effort as a sort of quid pro quo with the provinces.

“We’re getting rid of a bunch of duplicative federal regulations. We’re going to have a principle of one project, one review — and in exchange, they’re going to agree to eliminate all the barriers to trade and labour mobility,” Carney said…