Canada's Economy Needs Internal Boost Amid Trade Uncertainty

Canada's economy is heavily exposed to external trade disruption due to its high dependence on international demand. According to recent data, Canada's trade-to-GDP ratio was 63.51% in 2025, significantly higher than the US at 25.2%. This vulnerability can be attributed to Canada's smaller and weaker domestic market compared to the US.

The author suggests that rather than pursuing economic nationalism, Canada should focus on becoming a more competitive and productive economy. To achieve this, Ottawa must address internal barriers to trade by removing provincial rules that obstruct the movement of workers, goods, services, and investment. The International Monetary Fund estimates that fully implementing internal free trade could raise Canada's real GDP by nearly 7% in the long run.

The author also recommends exposing sheltered sectors to more competition by easing foreign ownership restrictions, particularly in telecommunications and aviation. Additionally, Ottawa should reward investment broadly instead of trying to pick winners firm by firm. The government has recently introduced temporary immediate expensing for some manufacturing and processing buildings, but this measure is too narrow and short-term.

The author suggests that Canada should move towards permanent, full expensing for productive investment in machinery, equipment, software, and technology. Pairing this with firm deadlines for project approvals would incentivize private capital to invest in the country's growth.