Expanding further into Canada hasn’t always the first choice for many Canadian businesses, as companies eying territorial growth have traditionally looked south before east or west, for a range of practical reasons.
Firstly, the American consumer market is much bigger, and easily eclipses that of Canada’s.
Second, despite being on different sides of a national border, many businesses find more cultural similarities in nearby American markets. For example, a Vancouver-based business may see more consumer preference parallels in Seattle than Calgary, while those in Toronto may find their buyers have more in common with New Yorkers than Montrealers.
Furthermore, in such a vast country, domestic businesses can face more challenges getting their products onto store shelves in faraway provinces than neighbouring states.
Finally, there have long been a series of legislative and regulatory interprovincial trade barriers that have made it harder to do business across the country.
However, as trade with the United States becomes more unpredictable, regulators are looking to make it easier for Canadian companies to expand domestically. Though hurdles remain, businesses that are able to overcome them may find new opportunities to grow here at home; especially now, as more consumers look to buy Canadian.
What is interprovincial trade?
Interprovincial trade refers to the buying and selling of goods and services across provincial or territorial lines within Canada. Though it sounds simple enough, certain barriers have historically made it harder for Canadians to expand their business within their own country.
Over the years attempts have been made to lower those barriers, most notably in the form of the Canadian Free Trade Agreement, which was enacted on Canada Day of 2017.
In its original form, the agreement included 53 exemptions, many tied to federal procurement rules, which were revoked by Prime Minister Carney on Canada Day in 2025.
The real barriers to interprovincial trade
Despite the federal government’s recent efforts, many of the barriers that stand between Canadian businesses and cross-provincial expansion remain unaddressed.
There may not be extra taxes or tariffs placed on items crossing provincial lines, but a patchwork of standards and requirements between jurisdictions has made it more challenging to sell in other parts of the country.
For example, some provinces maintain strict language rules, packaging requirements, or product sizes specifications, each of which need to be addressed to sell into those markets.
As the federal government works to lower those barriers, individual provinces have also taken it upon themselves to strengthen domestic business relations.
For example, on June 1st Ontario signed a free trade agreement with Alberta and Prince Edward Island intended to make trade easier between the provinces, adding to prior agreements that Ontario has with four others.
According to a recent report card by the Canadian Federation of Independent Business (CFIB) some provinces are doing a better job than others in addressing interprovincial trade challenges.
Nova Scotia and Ontario earned top marks (A) for ease of interprovincial trade, followed by Manitoba (A-) and British Columbia (B+). On the opposite end of the spectrum, Canada’s three territories received a “D” grade, while Newfoundland and Labrador and Quebec each earned a “C-“.
Why businesses should look across Canada now
As efforts to reduce interprovincial trade barriers continue both at the federal and provincial levels, the country’s domestic businesses are also benefitting from a meaningful boost in support by local consumers.
According to one recent survey 91% of Canadians are either already adjusting their spending to favour domestic businesses or intend to soon. The survey found that 65% now check labels to ensure they’re buying Canadian, 46% are doing more research on domestic brands, and 44% are avoiding certain products from across the border.
With ongoing cross-border trade policy volatility, legislative efforts to lower interprovincial trade barriers, and a consumer-base seeking more Canadian options, now may be the best time for local businesses to consider domestic expansion.
Some interprovincial differences that businesses may want to consider
Building a greater presence here at home can offer Canadian businesses a more stable and reliable path to growth, but not every business is well suited to sell from coast-to-coast-to-coast.
Before seeking to grow your domestic operations it’s important to do your homework. For example, Canadian businesses are advised to research any differences in packaging, labelling, marketing, or product specification requirements that exist in other parts of the country as part of their domestic expansion plans.
They also need to consider logistical challenges associated with reaching customers in a country this vast at a reasonable price point and within a reasonable timeframe. Part of those plans need to confront the reality that Canada’s freight and shipping industries have proven themselves prone to labour disputes in recent years, including recent actions among rail, post office, parcel delivery providers, shipping port workers and airport workers. As a result, those looking to do more business within the country should be prepared with alternative options.
Unlike selling into the market immediately south, expanding east or west within Canada may require additional considerations to help manage time zone differences. With six different time zones spanning four hours, doing business in faraway provinces may require an adjustment to working hours, support staff in local markets, or a satellite office in another province.
Finally, Canadian expansion requires a consideration of legal and tax implications. Goods and services are taxed different across the country, and businesses need to understand those nuances before doing business elsewhere. They may also need to incorporate a new business in each province, or seek country-wide incorporation, to legally operate in the new locale.
Where to find answers to your questions on interprovincial trade
Those looking to expand domestically are encouraged to speak with the legal, financial, logistics and banking partners to get a better sense of the opportunities and barriers that remain. They can also visit The Trade Hub to explore the latest insights and analysis from RBC’s Thought Leadership team.
Not every business is well suited for interprovincial trade. Whether it offers a strong opportunity will depend on a range of factors, such as their specific product, service or industry, consumer preferences across Canadian markets, American tariff exposure, legal, tax, administrative and logistic challenges, and more.
At the same time, diversification is always a good policy. With new barriers being built along the international border and others coming down between provinces, now could be a well-timed moment for Canadian businesses to reevaluate whether interprovincial trade offers an opportunity for them.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
