Carlo Dade

Published in The Globe and Mail

February 20, 2025

Carlo Dade is the director of the Trade and Trade Infrastructure Centre at the Canada West Foundation and the incoming director for international policy at the School of Public Policy at the University of Calgary.

Canadian policy makers and analysts have some of the right ideas but, unfortunately, the wrong execution plans to respond to the challenges of the second Trump administration.

One of the best examples is removing the last remaining barriers to the movement of goods and labour within Canada as a means of reducing our trade dependency on the United States.

Doing so would make the country more resilient and more attractive to foreign investment, and there is overwhelming evidence, including work and advocacy by think tanks and academics across the country, that removing internal barriers to trade in Canada will improve the country’s overall GDP.

But there is little to no evidence that simply doing that alone will also lead to more domestic firms turning from trade with the U.S. to trade within Canada. Removing trade barriers is not as simple as sprinkling Jack’s magic beans and waking up the next day to find beanstalks of increased domestic trade. If Canadian policy makers want to use internal trade liberalization to help companies replace lost trade with the U.S. or find new opportunities to become less dependent on the U.S., then they will have to do the hard work to actually make that happen.

This means following the example of foreign trade liberalization.

When Canada signs a new foreign-trade agreement, provincial and federal government agencies do not sit back and wait for trade to magically appear. They apply extensive and intensive trade resources to help those firms not already in the new market to learn about, find opportunities, meet potential customers and grow in the new market. This includes information sessions at home, trade missions to foreign markets and similar services.

For increasing internal trade, think about a small firm in Lethbridge, Alta., that has a competitive product it sells in Western Canada and the U.S. Mountain West – Great Falls, Mont., Bozeman, Mont., Billings, Mont., Missoula, Mont., Kalispell, Mont., and Spokane, Wash., are all less than a day’s drive. But what does this Southern Alberta firm know about Quebec City, Moncton, Hamilton or St. John’s, markets that take longer to reach by plane than those it knows in the U.S. to reach by car?

Fortunately, Canada has an abundance – we would argue an overabundance – of export support services for businesses that could easily, but with thought and care, be repurposed to actualize increased domestic trade. This does not require waiting for the remaining internal trade barriers to be removed. Focusing on trade facilitation will pay greater immediate benefits. It will also enlarge the domestic constituency calling for even greater liberalization. A win-win. But only if we stop to think rather than rushing in to shoehorn existing policy priorities into the current crisis in order to “not let the current crisis go to waste,” as many analysts are fond of saying.

There is a larger, more important point here than having the correct focus on internal trade. Correcting the prevailing thinking about internal trade requires reforming how Canadian policy makers and analysts currently think about responding to the Trump challenge.

We are driving into a new era in the U.S. by looking in the rearview mirror of past work and practice without thinking about and adjusting to a radically altered reality. Going forward, we cannot afford a business-as-usual mentality. A first step to navigating this new reality is to stop and ensure that we have factored it into our thinking. If we do that with internal trade, we realize that an adjustment is needed – the focus needs to shift from removing barriers for the general good of the economy to providing resources to help firms trade within Canada.

To paraphrase Einstein, under this new reality with the U.S., if we have an hour to solve a problem, we need to spend 55 minutes making sure we understand what the problem is.