Ottawa and Ontario slash internal trade barriers while US tariff risks keep portfolios on edge
Canada is trying to lock in a seamless “one Canadian economy” just as the CUSMA review raise the risk of another trade shock to growth and corporate earnings.
Why this matters now
Removing internal trade barriers was a key priority for Prime Minister Mark Carney’s government in 2025, and the federal Free Trade and Labour Mobility in Canada Act is now the core of that push, according to BNN Bloomberg.
The goal is to cut duplication so goods, services and workers can move more freely inside Canada and reduce domestic friction at a time when external risks are mounting.
At the same time, the Canada‑US-Mexico Agreement (CUSMA) is up for review this year.
Stuart Trew of the Canadian Centre for Policy Alternatives said he sees internal trade reform as “fundamental” to Canada’s ability to respond to the “threat from the United States.”
He also noted that, even with CUSMA in place, the steel, aluminum, lumber and auto sectors have already been hit hard by tariffs.
What Ottawa is actually changing
Under Bill C‑5, the Free Trade and Labour Mobility in Canada Act, the federal framework does three main things, as reported by BNN Bloomberg and the Government of Canada:
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Goods that meet a province’s or territory’s rules are recognised as meeting comparable federal requirements.
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Services that meet a province’s or territory’s rules are recognised as meeting comparable federal requirements.
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Workers licensed or certified by a province or territory can work in comparable occupations under federal jurisdiction.
Ottawa argues this “removes duplication and red tape across the country” for workers, businesses and consumers, according to a federal press release cited by BNN Bloomberg.
The Act and regulations are scheduled to come into force on January 1, with a user guide promised for December 2025.
There are carveouts.
The federal regulations list exceptions, including food regulated under the Safe Food for Canadians Act, and the legislation also exempts areas such as food and alcohol.
Trew told BNN Bloomberg that alcohol — beer, wine and spirits — is a prominent example where provinces are still struggling to make cross‑border trade easier.
Ontario’s “mutual recognition” bet
Ontario is moving faster than most provinces to monetise internal trade by pushing mutual recognition of goods and services from other reciprocating jurisdictions under the Ontario Free Trade and Mobility Act, 2025.
The province says internal trade barriers cost the economy “up to $200bn every year” and argues that aligning standards will support economic integration across Canada.
As per the Ontario government, its draft regulation would:
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Treat goods approved in a reciprocating jurisdiction as meeting Ontario standards, without extra testing, approvals or fees.
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Grant equivalent authorisation in Ontario to businesses already authorised to provide a service in a reciprocating jurisdiction.
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Give OFTMA’s mutual recognition rules priority when they conflict with other Ontario laws.
The draft is on the Ontario Regulatory Registry for a 45‑day consultation.
Ontario is also using labour mobility as an economic lever.
The province says expanded “As of Right” rules will let qualified professionals such as doctors, architects, engineers, land surveyors and electricians from other parts of Canada work in Ontario for up to six months while they complete registration.
Starting January 1, the province says Canadians in certified professions will be able to start working in Ontario within 10 business days once regulators confirm their credentials, covering more than 50 regulatory authorities and 300 certifications, including 16 additional health‑regulated professions.
The province calls itself “Canada's largest interprovincial trader” and says mutual recognition will slash compliance costs, speed approvals and improve competitiveness as it looks for growth in domestic markets amid “global market instability and volatility.”
Business view: symbolism versus execution
Not everyone sees the federal law as the main driver of change.
Ryan Mallough, VP of legislative affairs at the Canadian Federation of Independent Business, told CTV News that the Act is “symbolically” a strong way to start the year but argued “it’s more the provinces than the feds we’re looking for action from.”
He also said 2026 now has to be about “tangible action on the ground” and added that it “needs to come quickly because the CUSMA threat is hanging over all of us.”
